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KPN To Grow Free Cash Flow With Cost Savings, Unchanged Capex Budget

KPN wants to accelerate the execution of its strategy. This is the core message the company gave in a statement ahead of its Capital Markets Day. The goal is to achieve sustainable organic growth for 2019-2021. The Dutch operator has set three strategic priorities: building the best smart converged infrastructure; putting its focus on segments with profitable growth; and accelerating the company’s simplification and digitisation.

The priorities should have an effect on the company’s financials in the medium term. First, the aim is to grow the adjusted EBITDA with a sustainable cost savings programme of EUR 350 million, through profitable growth at select segments and by stabilising sales. Second, capex will be at EUR 1.1 billion per year, with a shift towards investments in access networks. Third, sustainable growth in free cash flow, driven by the EBITDA increase. This will provide the base for a ‘progressive’ dividend and for a reduction in leverage (net debt to EBITDA ratio).

Leader in quality 

Maximo Ibarra, appointed CEO in April 2018, added that KPN has made good progress in both service quality and costs over the past years. KPN has therefore become a stronger company.

The changing landscape of today requires more flexibility, a shorter time-to-market and faster innovation. This is the impetus behind the accelerated implementation of KPN’s existing strategy. KPN must become a future-proof and ‘lean’ telco, paying attention to the premium segments, both on the consumer and business markets. The ambition is to become the ‘trusted companion’ of the customer and of his or her ‘connected life’. This implies that KPN will strive to be the provider with the best infrastructure, the best customer service and the best customer experience. In short, KPN wants to become the undisputed market leader when it comes to quality. This in turn should form the basis for value maximization for all stakeholders, with a solid financial profile. – Telecom Paper

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