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KPN warns on 2000 profit
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August 30, 2000: 3:33 p.m. ET
Operating profit to fall short of goal as Dutch telecom pays to enter Germany
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LONDON (CNNfn) - Royal KPN Telecom NV on Wednesday warned that its operating profit will fall short of forecast for the rest of the year as the Dutch telecommunications company pays the price of entering Germany's hot mobile phone market.
The warning, which came the same day the Dutch phone company said earnings in the first half of the year fell sharply, also comes just days after the company won a costly next-generation Universal Mobile Telecommunications Standard license in Germany. The licenses allow phone companies to offer cutting-edge services such as Internet access and video via cell phones.
Shares of KPN tumbled 1.98 euros, or 6.4 percent, to close at 28.91 in Amsterdam Wednesday following the announcement.
E-Plus Hutchison, a venture backed by KPN and Hong Kong's Hutchison Whampoa, was one of the winners in the recent $46 billion German license auction. But Hutchison pulled out of the deal, citing its high cost, saddling its Dutch partner with the bulk of the $7.6 billion bill.
KPN's Chief Financial Officer Maarten Henderson said Wednesday full-year earnings before interest, tax, depreciation and amortization could be "several hundreds of millions of euros lower" than a March forecast of 3.6 billion euros ($3.2 billion).
The revised outlook is due chiefly to KPN's higher spending to win mobile subscribers in the fast-growing German mobile market and costs linked to the roll-out of Internet services.
KPN reported a first-half 2000 net loss of  19 million, down from a profit of 416 million profit in the first half of 1999. Analysts had been expecting a loss of 24 million, according to Reuters.
Sales, which rose in all of its divisions - fixed, mobile, data and Internet services and Internet call center and media services - climbed 29.5 percent to 5.2 billion.
The company said costs related to buying E-Plus, Germany's third largest mobile operator, which KPN bought in December with U.S. carrier BellSouth (BLS: Research, Estimates), were the main causes of the fall in performance.
KPN also said it was no longer interested in raising its stake in Cesky Telekom, the Czech Republic's largest telecom company, which will be privatized later this year or in 2001, but the company does plan to keep the 33.5-percent stake it owns, partly indirectly.
KPN is preparing an initial public offering of its KPN Mobile unit and is considering floating its Internet unit. 
-- from staff and wire reports
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Royal KPN Telecom
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