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KPN 4Q 06 Net -31%, To Return EUR2 Billion To Holders In 07
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AMSTERDAM -(Dow Jones)- Dutch telecommunications operator Royal KPN, Tuesday reported a 31% drop in fourth-quarter 2006 net profit and said it will return around EUR2 billion to shareholders in 2007.
KPN's fourth-quarter net profit attributable to shareholders was EUR427 million compared with EUR618 million in the last three months of 2005, when the figure was boosted by several exceptional gains.
Fourth-quarter sales fell 1.6% to EUR3.02 billion from EUR3.07 billion.
The company said service revenues fell at its fixed line division, which is being hit by net subscriber losses owing to competition from cable companies. That decline was partly offset by a rise in service revenues at the company's mobile unit.
Analysts had expected KPN to report net profit of EUR342 million on sales of EUR3.10 billion.
They said that KPN figures overall contain few surprises, adding that the company's net income was slightly higher than expected due to unforeseen tax gains of about EUR200 million.
Frank Claassen of Rabo Securities said KPN's guidance for free cash flow in 2007 of more than EUR2 billion and the EUR2 billion it plans to return to shareholders "is a positive sign."
Claassen, who rates shares at hold, calls the free cash flow guidance for 2008 and 2009 "also a sign of confidence."
At 1140 GMT, KPN shares were up EUR0.01, or 0.1%, at EUR10.90 in Amsterdam, where the benchmark AEX was 0.5% higher.
KPN said it will return around EUR2 billion to its shareholders in 2007 in the form of dividends and a share buyback program of EUR1 billion which will start as of Wednesday.
The company also said it sees free cash flow in 2008 and 2009 also above EUR2 billion a year. KPN also noted that, after several years of paying no corporate income tax, it expects to pay around EUR300 million in Dutch corporate tax in 2007, increasing to EUR700 million to EUR800 million in the medium term.
In recent years, KPN hasn't paid income tax in The Netherlands owing to losses at its German unit E-Plus.
KPN operates fixed lines and mobile telecom services in The Netherlands and mobile telecom services in both Germany as Belgium.
Chief Executive Ad Scheepbouwer reiterated, during a press conference, that the company is on the lookout for acquisitions in both Austria as Switzerland.
The company may enter other countries as a mobile virtual network operator - by renting capacity on the networks of local operators in order to offer its mobile services.
KPN said it expects both sales and earnings before interest, tax, depreciation and amortization to be flat in 2007, compared with 2006, when it booked sales of EUR12.06 billion and EBITDA of EUR4.84 billion.
Company Website: http://www.kpn.com
-By Mathijs Schiffers and Stefan Simons; Dow Jones Newswires; +31-20-5890270; mathijs.schiffers@dowjones.com
(END) Dow Jones Newswires"
Tags: [kpn] [mobile virtual network operator]
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