Dutch phone group KPN reported a better-than-expected first-quarter profit today as taxes and interest costs fell, but revenues slipped again due to competitive pressure on the firm's fixed-line business.
Net profit stood at €375 million which included hefty extraordinary gains, the company said. First-quarter operating revenues shed 0.4 per cent to €2.983 billion .
KPN shares fell 3 per cent to €5.86 in morning trade, in line with the DJ Stoxx telecoms index.
The stock is little changed this year but has underperformed its European peers by 20 per cent as investors fear the firm may be relegated to the status of a slow-growing utility mined for dividends unless it builds up its cellphone arm.
KPN tried to buy mmO2 in February, but the offer estimated at £9.3 billion sterling was rejected by the British cellphone operator.
KPN had eyed mmO2 mainly to bolster its German mobile operator E-Plus, which is struggling to compete with the two leaders in Europe's largest market - Deutsche Telekom's T-Mobile and Vodafone.
Like other European phone incumbents, KPN has seen competition take a bite out of its fixed-line business. It was also dealt a blow by an increase in fees that mobile operators can charge for connections from stationary phones.
KPN expects revenues at the fixed-line division to fall by 4.4 to 6.4 per cent this year, it said.
The operator has been able to offset some of that loss in revenues, however, with help from its mobile business, which had 15.1 million customers at the end of March, and growing demand for high-speed Internet services.