03 October 2019Reading time: 3 minutes

Early this year it became clear that KPN has restructuring plans and therefor wants to merge its own brands. According to KPN this decision is needed to create a strategic stronger brand name, but it also holds possible cost reduction benefits for the Dutch telecom company. In May this year, subsidiary brand Telfort was already merged into KPN, which would have cost KPN already tens of thousands of customers.

However, at subsidiary brand XS4ALL there is a lot of resistance against KPN’s plans. Both customers and staff members of the internet provider fear that the unique identity of XS4ALL as an internet pioneer will be lost after the merger. Privacy and free modem selection are important for XS4ALL and the quality of their services has been praised for years.

The works council of XS4ALL has indicated that they are not afraid to take the matter to court if necessary, in order to get the merger cancelled. It remains to be seen what the outcome will be of this battle between KPN and XS4ALL.

As of December 1st 2019, the new CEO Dominique Leroy would take up office at KPN. She would replace Maximo Ibarra, who left the Dutch telecom company after only 1,5 year due to private circumstances.

However, Leroy has got discredited. Judiciary in Belgium has started an investigation in collaboration with the Belgian stock market watchdog (FSMA), into the possibility of front-running by Leroy. Before Leroy announced her switch from Proximus to KPN, she sold her share package in the Belgian telecom company with a total value of 285,000 euro in August. After she officially announced her switch to KPN, the stock price of Proximus shares plummeted. Leroy was allegedly approached by KPN in June.

The research is still in progress and therefor the outcome is at the moment of writing still unknown. Because of the timing and the duration of the process, KPN has withdrawn the appointment of Leroy as the new CEO at September 30th.

Besides the earlier mentioned struggles, KPN's results were also under pressure in the past period. The second quarter revenue decreased on an annual basis with 3,1 percent to 1,4 billion euro. According to KPN this could be explained by the current competitive pressure in the mobile telecom market and through less hardware income. The net profit of KPN plummeted with 9,8 percent on an annual basis to 142 million euro. Amongst others, this was caused by the restructuring costs of approximately 12 million euro according to KPN.

On October 25th, KPN will present its third quarter results which will show if the Dutch telecom company has recovered.

At this moment (24-09-2019) the stock price of KPN is 2,87 euro. Despite the volatile course of the stock price in the recent period, the share is now 25 percent higher compared to 1 year ago (also around 15 percent higher compared to 5 years ago).

The future price of the stock is subject to several political, industrial and sector specific as well as economic factors. Investors should consider these risks when making their investment decisions. Developments can be different at any time than investors anticipated on, which could result in capital losses.

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Vontobel products on KPN are tradable at DEGIRO.


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20/10/2020 23:08:39