KPN's Eelco Block may still be new to his job as company CEO, but he's got his work cut out for himself as the Netherland's largest service provider revealed that it could miss its 2011 financial targets and that it will have to make massive job cuts over the next four years.
For fiscal year 2011, the Dutch telco cut its financial forecasts of operating earnings before interest, tax, depreciation and amortization (EBITDA) from €5.48 billion ($7.95 billion) to less than €5.30 billion ($7.72 billion). This weak outlook is being coupled with plans to lay off 4,000 to 5,000 employees between 2011 and 2015.
What's driving down KPN's performance in the Netherlands are a couple of factors. Similar to many U.S.-based wireline service providers, KPN is seeing the ongoing consumer adoption of wireless and VoIP-based voice services eating into its traditional PSTN revenues. At the same time, it is seeing price competition erode its business customer margins.
Blok acknowledged in a Bloomberg article that they "face negative trends in the Netherlands," but "to make our Dutch businesses more robust I have decided to accelerate the investments related to the new strategy."
Among those changes are plans to invest an additional €100 million ($145.6 million) on various areas including its ongoing VDSL2 rollout and its IPTV services.
KPN names Eelco Blok new CEO
KPN to appoint CEO successor soon
KPN renews IPTV contract with Nokia Siemens Networks
KPN sets aggressive Fiber to the X timeline