KPN Profit Rises 41% On Mobile Operations

LONDON (Dow Jones) -- Dutch phone company Royal KPN on Tuesday said its quarterly profit rose 41%, helped by a one-off gain from the sale of its mobile satellite assets and a strong performance from its wireless division.

Net income for the first quarter improved to 384 million euros ($486.6 million) from 273 million euros a year earlier.

Analysts polled by AFX News expected a profit between 299 million euros to 335 million euros.

The profit figure included a 65 million-euro one-time gain associated with the sale of its global mobile satellite business Xantic.

Sales climbed 3.9% to 3 billion euros, thanks to the contribution from recent acquisition Telfort and as a higher number of working days contributed about 1% to revenue.

KPN's mobile division posted a 47% rise in operating profit, more than offsetting a 4% decline at the fixed-line division.

European telecom incumbents are battling to stem weaker sales in their fixed-line businesses while fending off increasing competition in the mobile arena. KPN operates in one of Europe's more-competitive markets.

Rivals range from Tele2 AB and Liberty Global's UPC in fixed-line to Deutsche Telekom's T-Mobile and France Telecom's Orange in mobile.

KPN shares rose 1.3% in Amsterdam morning trading.

KPN reaffirmed its 2006 outlook.

At the annual results in February, the company said operating revenue in 2006 would show a "low-single-digit" increase from 11.83 billion euros in 2005.

The company predicted 2006 earnings before interest, tax, depreciation and amortization will be "flat" from the 4.62 billion euros last year. KPN also said it sees free cash flow of at least 2 billion euros and capital spending of 1.8 billion euros.

Finally, KPN said that its plans to return capital to shareholders are on track.

KPN's European rivals Swisscom AG (SCM) , Deutsche Telekom AG (DT) and Telefonica (TEF) report first-quarter results later this week.

(END) Dow Jones Newswires "

Posted to the site on 9th May 2006