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KPN reports quarterly decline but consumer business looks strong

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Dutch telco KPN has reported a 2.7% year-on-year decline to €1.6 billion for the second quarter of 2017, but the prospects are looking promising in the consumer business.

The challenge seems to be with the business and wholesale divisions, where tough market conditions effected the overall performance, the team has said. Revenues in the business unit were impacted by migrations and rationalization, as well as price pressure in mobile, while the whole sale business saw revenues decline on weaker demand from MVNOs and international traffic.

And while this does not sound all that positive, there was some better news on the consumer side of things.

“We are firmly on track delivering the key priorities of our strategy,” said CEO, Eelco Blok. “In the competitive consumer market we are differentiating with a targeted household approach.”

While this does sound like the usual and repetitive PR fluff, the numbers do also back it up as the convergence strategy seems to be paying dividends. Broadband saw 8,000 net adds, with another 25,000 in IPTV and 9,000 in postpaid mobile subscribers. More than 60% of KPN branded postpaid subscribers are now part of a bundle proposition.

In terms of ARPU, for postpaid contracts this has remained stable at €26, while ARPU per household has increased 5% year-on-year to €42. The Net Promoter Score, a measure of customer satisfaction, has now increased to +13, up four points from the same period last year. These are the largest numbers you’ll come across in the industry, but it is a solid performance and certainly sets a solid foundation for the future.

Another very promising development for the business is a partnership with WeChat, which was announced a couple of weeks ago. As part of the agreement, WeChat and KPN will a launch a roaming SIM Card in July 2017 for Chinese tourists travel to Europe, known as ‘WeChat Go SIM card’.

Estimates from Statista put the number of Monthly Active Users for WeChat at 938 million, while 120 million Chinese tourists visit Europe every year. This is a huge potential customer base to tap into, and leaning on the reputation of one of China’s most popular and respected brands is hardly going to do any damage either.

So the business and wholesale units might be going through a bit of a tough time at the moment, but peaks and troughs are fully expected. Considering the pressure which many consumer business units are facing in the telco world currently, KPN is not in a bad position right now.

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