Download - KPN – Surviving the crisis in the telecom
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KPN Surviving the crisis
in the telecom industry
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Industry Telecommunications
Founded 19th century (founded), 1989 (privatized)
Headquarters The Hague, Netherlands
Key peopleAd Scheepbouwer (CEO), Ton Risseeuw (Chairman of the
supervisory board)
Products Fixed line and mobile telephony, internet, digital television, ITservices, IPTV
Revenue 13.51 billion (2009)
Operating inc
ome
2.850 billion (2009) Profit 2.178 billion (2009)
Employees 33,150 (2009)
SubsidiariesGetronics, Internet
Website
www.kpn.com
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Company was quoted onAmsterdam stock
exchange in 1994
In June 1998 KPN was split into twocompanies
PTT telecom carried the name KPN
Mail and Courier activities named TP
G
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After the privatization, the environment
changed dramatically for a number of reasons
First Increasing deregulation in international market Second Deregulation had as an objective to
stimulate competition
Third Technological development that enables in the
rise in the use of the internet Fourth Surprising growth of mobile communication
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The company identified its core activities Fixed telecommunication
Basically a service for domestic market
Mobile telecommunication Business with many new entrants where branding and service
is the important factor
Data communication(IP/Data) and internet IP/Data is very international and requires fast global or at
least pan European infrastructure Call center
Based on outsourcing by large companies
Media services
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Unisource Alliance with Televerket fromSweden
It offered world wide network and advancedfax services for larger internationalcompanies
In 1992 Swiss PTT telecom announced it
would joinUnisource Within that year itself an agreement was
signed withUS based Sprint for distributionof worldwide network services
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In December 1994US basedAT&T and
Unisource decided to start a joint venture
namedUniworld. The company offered its services through its
own offices or through local providers
In EuropeUniworld also representedAT&T,
KDD from Japan and Singapore
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It was decided that owners ofUnisource
would each buy the business networks that
served their local market. KPN boughtBelgian network
In 1998AT&T decided to withdraw fromworld partners
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Formed in 1998 between KPN andQwest(U.S.A)
Quoted inU
.S.A
and Netherland SE Leading pan European provider of data-
centric services based on IP. Advanced 20,000 km fibre optic network
connecting 50 cities in Europe It wanted to become the highest quality and
lowest cost fibre-optic network in Europe. On 31st May 2002 filed for bankruptcy.
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country Servicesoffered Year ofentry Year ofexit
Czech republic GSM &Fixed 1990 2003
Ukraine GSM &Fixed 1992 2003
Hungary GSM &Fixed 1993 2002
Indonesia GSM 1994 1999
Ireland GSM &Fixed 1996 2001
UK 3-G 2000 2002
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Second half of1990s 3G came into picture
Selling license, source of revenue for govt.
KPN paid 8.7b for 3G license inGermany forits subsidiary E-plus.
It had already paid 10.6b for stake in E-plus
These investments more than 150% of KPNs
turnover in2000 and mostly borrowed.
More investments to roll out 3G
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On May 2000 announced agreement
It provided both financial and technological
resources. NTT-Docomo 15% shares in KPN mobile
KPN able to introduce i-mode in 2002.
3G already launched by Docomo in Japan
Docomo to build total global presence
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3G services increased KPNs debt
1st negotiations with Telefonica, Spain, in
2000 2nd negotiations with Belgacom in 2001.
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In 2000 total assets rose from 17.991bn to53.465bn.
Jan 2001 fell in credit rating fromA- to BBB. Stock prices dropped from 55.50 to 6.50.
11th Sep, 2001,Ad Scheepbouwer became theCEO.
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Two main directions
Disposal of assetsReducing cost
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2000 Minority equity participatins weresold.
Large number of non-core assets weredisposed. Divestments lowered net debt
2000 22bn
2001 15.5bn 2002 12.35bn
Increase in cash flow and productivity alsoreduced debt.
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Reduction of workforce.
Reduction of working capital.
Decrease in capital expenditures.
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Two main options
Remain as a regional player.
Become an International player.