Koninklijke KPN (KPN) Q3 2024 earnings summary

Executive summary

• Group service revenues grew 3.7% year-over-year (3.4% organic), with all segments contributing and strong fiber and mobile performance.

• Fiber footprint expanded to 62% of Dutch households, with 137k new homes passed in Q3 2024 and a target of 64% by year-end.

• Consumer segment saw solid postpaid inflow and continued fiber revenue growth; business and wholesale segments also contributed to overall revenue gains.

• Full-year 2024 outlook and mid-term ambitions reiterated, including continued focus on ESG targets validated by the Science Based Targets initiative.

• Net Promoter Score remains a key focus, though recent adverse movements have been noted in both consumer and B2B segments.

Financial highlights

• Adjusted revenues for Q3 2024 were €1,420m, up 4.2% year-over-year; YTD adjusted revenues at €4,189m, up 4.0%.

• Adjusted EBITDA AL for Q3 2024 was €643m, up 2.3% year-over-year, with margin at 45.3%.

• Net profit for Q3 2024 was €231m, up 3.0% year-over-year; YTD net profit at €632m, down 0.6% due to one-off refinancing costs.

• Free Cash Flow for Q3 2024 was €178m, down 10% year-over-year; YTD FCF at €542m, down 1.7%.

• Capex for Q3 2024 was €281m, down 7.5% year-over-year; YTD Capex at €920m, up 1.7%.

Outlook and guidance

• FY 2024 guidance maintained: service revenue growth ~3%, adjusted EBITDA AL ~€2,500m, Capex ~€1.2bn, Free Cash Flow >€890m.

• Mid-term ambitions: service revenue and adjusted EBITDA AL CAGR ~3%, Free Cash Flow CAGR ~7% (2024-2027), ROCE to 15%.

• CapEx expected to drop below €1bn after reaching 80% fiber coverage.

• Q4 service revenue growth expected to decelerate due to less tailwind from price increases and tougher comps, but full-year objectives remain on track.

• Regular dividend per share of €17.0 cents for 2024, with €6.8 cents interim dividend already paid.