By Maaike Noordhuis
(Updates with analyst comment, shares starting in fourth paragraph.)
July 26 (Bloomberg) — Royal KPN NV Replica Watches, the largest Dutch phone company Replica Watches, said second-quarter profit dropped 11 percent on tariff cuts and as increasing use of mobile and social media applications such as Skype cut into voice revenue.
Net income decreased to 414 million euros ($600 million) from 464 million euros a year earlier, the company, based in The Hague, said today. Profit missed the 439 million-euro average estimate of five analysts compiled by Bloomberg. Sales dropped about 2 percent to 3.3 billion euros.
The company reiterated its forecast that earnings before interest, taxes, depreciation and amortization will be more than 5.3 billion euros in 2011. Chief Executive Officer Eelco Blok in April cut his forecast for the measure and announced as many as 5,000 job cuts in the Netherlands, where the former phone monopoly gets almost 70 percent of its revenue. Deutsche Telekom AG, Europe’s largest phone company, made about 40 percent of its 2010 sales from its German home market.
”With continued deterioration in the domestic market, cost cuts are very necessary” said Tom Muller, an Amsterdam-based analyst at Theodoor Gilissen Bankiers, who has a “buy” rating on KPN shares.
Shares Rise
KPN, which also sells services in Germany and Belgium, rose 20.3 cents, or 2.1 percent, to 10.04 euros as of 9:36 a.m. in Amsterdam, valuing the company at 15.3 billion euros. Before today, the stock had declined 9.9 percent this year.
In Germany, KPN’s E-Plus wireless unit added 558,000 customers in the second quarter for a total of 21.5 million users, the division said in a separate statement.
The unit’s market share in service revenue climbed to 15.8 percent last quarter from 15.7 percent a year earlier.
Blok, who took the helm in April, said in April he plans to eliminate 4,000 to 5,000 jobs in the Netherlands through 2015. Almost half of the reduction will take place at Getronics, the computer services provider KPN acquired in 2007, KPN said today.
“The market and regulatory headwinds that we have been experiencing” in the first quarter “continued to affect our financial performance in the second quarter, notably in our domestic business,” CEO Blok said in the statement.
–Editors: Kenneth Wong, Rob Valpuesta
To contact the reporter on this story: Maaike Noordhuis in Amsterdam at mnoordhuis@bloomberg.net
To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net
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