The Dutch incumbent operator is targeting significant growth as part of its new “Connect, Activate & Grow” strategy
At its Capital Markets day, Dutch telecom giant KPN has unveiled a new strategic direction dubbed “Connect, Activate & Grow”, which will see the company invest almost €5 billion over the next three years.
This new strategic framework will replace its “Accelerate to Grow” strategy, which was unveiled at the end of 2020. KPN CEO Joost Farwerck explained that the goals of this original strategy had been largely accomplished, returning the company to sustainable growth and leaving it ready for the next steps.
“We have delivered on the main ambitions of our Accelerate to Grow strategy launched end-2020. Our top line has returned to sustainable growth across all segments and the fibre roll out has progressed according to plan, further accelerated by our JV Glaspoort. I am proud of our people and grateful for their commitment to realise these ambitions. In the coming years, we will finish what we started and realise a fibre footprint of about 80% of the Netherlands by end-2026,” said Farwerck.
The company’s new strategy will focus on building a “sustainable future” and creating “long-term value” for all stakeholders. This includes the expansion of the company’s ESG ambitions (though exactly how was not detailed in Farwerck’s statement), as well as maintaining service revenue growth at a “healthy level”.
More specifically, this means investing around €1.2 billion in the company’s networks annually until 2026, lowering to below €1 billion in 2027 due passing their 80% fibre expansion goal.
Ultimately, KPN is aiming for a 3% compound annual growth rate (CAGR) for both service revenue and adjusted EBITDA after leases over the 2024–2027 period, and a free cash flow CAGR of 7%.
Alongside these investment and growth goals, shareholders will be pleased to hear that they can expect to be paid €3.8 billion over the same period, including €1 billion via share buybacks. This buyback process will begin next year, with the company planning to repurchase €200 million worth of shares in 2024.
“Our focus on creating value enables us to continue delivering attractive shareholder returns and we remain committed to our policy of returning all our Free Cash Flow to our shareholders. Effectively this means that we will distribute € 3.8bn to our shareholders over the next four years, with a higher portion of that coming from dividends,” explained Farwerck.
In related news, KPN is currently attempting to acquire the Netherlands’ third-largest mobile virtual network operator Youfone, having agreed a deal for €200 million back in June. However, the process has recently stalled due to concerns from the Dutch Authority for Consumers and Markets, which fears the move would greatly decrease competition in the market.
Can we expect to see European operators bounce back to growth in 2024? Join KPN and other European telcos in discussion at this year’s Total Telecom Congress live in Amsterdam