KPN posts $9.1bn loss

KPN banks on DoCoMo's popular i-mode service to boost growth

AMSTERDAM, Netherlands (CNN) -- Dutch telecom group KPN posted a 9.3 billion euros ($9.1 billion) loss after almost wiping out the value of its international mobile phone assets.

Its second-quarter loss widened sharply from a loss of 499 million in the corresponding period of 2001.

"We have decided to take another critical look at the value of our mobile assets in the current economic environment and actively address the industry-wide issue of impairment," Chief Executive Ad Scheepbouwer said in a statement.

"Although we are the first operator to do this with respect to continuing mobile business we believe that this is the only sensible course of action."

The company, which has cut its workforce by about 6,500 this year, like its rivals Deutsche Telekom (FDTE), BT Group (BT-A) and France Telecom (PFTE) spent billions of dollars on acquisitions and high-speed mobile phone licences at the peak of the telecom boom.

Investors, who punished the companies for taking on huge amounts of debt to pay for the acquisitions, were more forgiving on Tuesday and cheered the company's writedown on assets that have not paid-off.

KPN's stock, which have fallen about 18 percent this year, soared 7.2 percent to 5.08 euros.

"KPN's courage to write-off its mobile phone assets once again makes future earnings growth much more likely,'' said SNS Securities analyst Bert Siebrand told Reuters.

The company took a total impairment charge of 6.6 billion euros for its E-Plus German operation, which breaks down as 2.7 billion euros for acquisition costs and 3.9 billion euros for the 3G licence. KPN said the writedown also included 1.2 billion euros for its 15 percent stake in Hutchison 3G in the UK, which it said was no longer considered a strategic participation.

Scheepbouwer, who took over the post on November 1 after his predecessor was ousted following two failed attempts to find a merger partner and reduce debts of about 23.2 billion euros, moved quickly to save the company from the brink of financial disaster by raising 5 billion euros from shareholders to make a dent in it debts.

KPN said it was reviewing it phone operations in Belgium, the country's second-biggest provider of telecom services, because its sees no possibility of making the business "independently profitable."

Earnings before interest, tax, depreciation and amortisation (EBITDA) -- a measure of a debt-laden company's profitability -- rose by 18 percent to 1.1 billion euros as it reaped the benefits of a cost cutting programme and improvements at its German mobile phone business E-Plus.

Analysts polled by Reuters had expected EBITDA of 995 million euros.

KPN, the Netherland's biggest telecom services provider, has said previously it expects its EBITDA to grow by at least 12 percent in 2002 and sees "low single-digit" revenue growth.

The company said net debt should be about 13.9 billion euros by the end of the year.