KPN's Q2 service revenue rose 0.8% with consumer improving. CEO Farwerck cited growth across fixed and mobile. Analysts questioned margins and outlook.
KPN's second-quarter service revenue rose 0.8% from a year earlier, driven by improvements in its consumer and small-business divisions, with wholesale also contributing. The Dutch telecom operator reported the figures Tuesday.
Consumer showed an improving growth trend across both fixed and mobile, CEO Joost Farwerck said on the earnings call. "Group service revenues increased by 0.8%," he said. "That's driven by Consumer, SME and Wholesale."
The consumer segment has been a focus for KPN as it competes with VodafoneZiggo and T-Mobile Netherlands. The company has been investing in fiber-to-the-home and 5G to win back market share. The improving trend in Q2 suggests those efforts are gaining traction. Farwerck said the company is seeing stronger demand for fiber upgrades and higher-speed packages, which is lifting average revenue per user.
Analysts on the call pressed for details on margin trends and the outlook for the second half. Representatives from BNP Paribas, JPMorgan, UBS, Bank of America, Goldman Sachs, ING, Deutsche Bank, Berenberg and Citigroup participated. CFO Hans Figee was also on the call. One analyst asked about the sustainability of the consumer growth given high inflation and competition. Farwerck said the company's focus on quality and customer retention is paying off.
KPN did not provide specific full-year guidance on the call. Farwerck said the consumer growth trend is positive. The company's wholesale business also contributed, with revenue from other operators using its network. SME revenue grew as more small businesses adopted KPN's digital services.
The company's fixed-line business, which includes broadband and TV, saw a slight uptick in subscriber numbers. Mobile postpaid subscribers also grew. KPN has been rolling out fiber to more homes, having passed 4 million to date. The company expects to reach 5 million fiber connections by 2027.
KPN maintains a strong balance sheet with net debt to EBITDA of around 2.5 times. The company generated free cash flow of €0.5 billion in the first half, supporting a dividend of €0.14 per share for the full year.
The stock traded up slightly on the session. KPN shares have gained about 8% year-to-date. The telecom sector broadly has seen steady demand for connectivity. Competition remains intense.
KPN's next quarterly report is scheduled for October. The improving consumer trend will be a key metric to watch.
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