KPN curbs investment, says America Movil relations fine

Reuters

* Cuts spending on Dutch, Belgian networks by 500 mln euros

* Says relations with America Movil cooperative

* Q3 core profit 985 mln euros vs 962 mln expected

By Robert-Jan Bartunek

BRUSSELS, Oct 22 (Reuters) - Dutch telecoms group KPN will invest less in the coming years than previouslyindicated, having already spent heavily on fast fixed-lines andmobile broadband, it said on Tuesday.

The group also said relations with main shareholder AmericaMovil, controlled by billionaire Carlos Slim, remainedcooperative. This month America Movil dropped plans to launch afull takeover of KPN after the Dutch firm said its offer was toolow, although KPN later said talks could resume.

"They have two members on our board of directors which had ameeting ahead of today's results," KPN Chief Executive EelcoBlok told a conference call.

"In that regard we've had a good talk about the business,"he added, without commenting further.

KPN said it would spend less than 4.7 billion euros ($6.4billion) on its network until the end of 2015, compared withprevious guidance of below 7 billion euros.

The latter included German unit E-Plus, set to be sold toTelefonica, on which KPN would have spent about 600million euros a year, meaning an effective investment reductionof about 500 million euros for its remaining operations inBelgium and the Netherlands.

"KPN's investments in fixed and mobile networks in theNetherlands in recent years have been high, especially comparedto peers," the Dutch group said in a statement.

It said its next generation 4G mobile service would beavailable in the whole of the Netherlands in the first quarterof 2014 and its high-speed fixed line broadband was ahead ofEuropean peers.

"We believe capex cuts will (and should) create a debateover the investment needs of the business," Jefferies analystswrote in a note to clients.

KPN's shares were up 1.4 percent at 2.26 euros at 0800 GMT,making them the strongest performer on the STOXX 600 EuropeanTelecoms Index. That compares with the 2.4 euros a shareoffer from America Movil that KPN rejected.

KPN had increased capital spending to 17.3 percent ofrevenues in 2012 and, under the previous guidance, would havespent up to 20 percent of expected revenue this year.

The group reported a 13 percent fall in core profit in thethird quarter, excluding E-Plus, to 762 million euros as a risein earnings at its Dutch residential unit was not able to makeup for declines in its Belgian and Dutch mobile businesses.

Including E-Plus, earnings before interest, tax,depreciation and amortisation (EBITDA) was 985 million euros,just above the 962 million expected in a Reuters poll of sevenanalysts.

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