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Royal KPN vows debt cut
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March 26, 2001: 7:49 a.m. ET
Dutch phone company KPN plans to cut debt by 5 billion euros, posts 2000 loss
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LONDON (CNN) - Royal KPN said on Monday it will sell assets to reduce debt, as it reported a loss after spending billions on 3G licenses and acquisitions.
The Netherlands' largest phone company said its loss, excluding one-time items, was  626 million ($534.5 million) compared with a profit of 771 million a year ago. Sales rose 30 percent to 11.2 billion.
KPN, like many of its European rivals, is under pressure to reduce its debt of about 22 billion ($21 billion). Its shares have plunged more than 85 percent to 11.05 at the close on Friday from a peak of 75.63 a year ago.
The Dutch company spent billions on buying third-generation, or high-speed, mobile phone permits, that give it the right to offer wireless Internet and video services. KPN also paid 9.1 billion for E-Plus Mobilfunk, Germany's No. 3 mobile phone company.
"KPN plans to float KPN Mobile on the stock market" later this year, the company said.
"KPN's financial policy now focuses on debt reduction. KPN will sell off interest and group entities that do not form part of its core business," it said. "The proceeds will be a major contributor to a decrease in KPN's debt position."
The Amsterdam-based company said it expects 2001 sales to rise by 10 percent-15 percent from 2000 levels, and would continue rising in 2002.
KPN, which is 34.7 percent owned by the Dutch government, also expects 2001 earnings before interest, tax, depreciation and amortisation (EBITDA) to increase by about 5 percent. In addition, the company predicts it will return to net profit in 2003.
The former state-monopoly, which has the lowest credit rating among for government-controlled telecom companies, said it plans to raise 5 billion from the sale of assets.
Chairman Paul Smits told a news conference the that he plans to return the company to an 'A' debt rating status within three years. "We do not wish to continue living with that B rating," he added.
KPN is rated "Baa2" by Moody's Investors Service and "BBB+" with a negative outlook by Standard & Poor's.
Smits also said Joop Drechsel, who focused on KPN Telecom's international strategy and struck several agreements with non-Dutch partners such as Japan's NTT DoCoMo and Hong Kong's Hutchison Whampoa, would leave the company's executive board on May 1.
KPN said net income including a one-time gain of 2.3 billion from the sale of a 15 percent stake in its KPN Mobile unit to Japan's NTT DoCoMo, the world's second-largest mobile phone operator, rose to 1.87 billion from 828 million in 1999.
Shares in KPN rose 6.2 percent to 11.74 in midday trade in Amsterdam. 
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