Dutch Telecom Operator Blames Internet Phone Apps for Lower Profit

By Ashok Bindra July 26, 2011

On Tuesday, The Dutch telecom operator KPN presented the financial status for the quarter. The operator reported an 11.0-percent drop in net profit to 414 million Euros (US $601.08) for the second quarter on, blaming the rise of Internet-based telephone applications, reported AFP news agency.

According to the AFP news report, analysts had predicted a figure of about 441 million Euros (US $640 million) as polled by Dow Jones newswires.

"The market and regulatory headwinds we have experienced in quarter one continued to affect our financial performance in the second quarter, notably in our domestic business," said KPN's chief executive Eelco Blok, in a statement.

Based on official comments, AFP wrote that KPN's fall in revenue was particularly due to a "change in consumer behavior," in the wireless Internet sector. Increasingly, the users are favoring Internet-based telephone applications such as Skype, instead of making traditional telephone calls or sending SMS messages, wrote AFP.

As per the AFP report, the group's turnover also fell by 1.9 percent compared to the same period last year from 3.35 billion Euros to 3.29 billion Euros. Consequently, In the Netherlands, which accounts for more than half of KPN's revenue, sales have dropped by 2.6 percent, according to AFP’s report.

In fact, as a measure to compensate for this loss, KPN previously suggested that it should charge its customers to use Internet-based applications such as Skype or WhatsApp. But, the Dutch parliament in June adopted a law guaranteeing "Internet neutrality," sinking proposed plans by KPN and other service providers, AFP wrote.

The company then opted for a rates increase to access the Internet via its mobile phones. That increase is set to kick in from September, reports AFP.

This dip in profit is impacting the Dutch operator’s growth. In April, as reported by AFP, KPN was planning to cut the 30,000 workforce by 4,000 to 5,000 jobs in the Netherlands between 2011 and 2015.

On a positive note, KPN did, however, show a 7.5-percent rise in growth in Germany through its mobile phone subsidiary E-plus and 7.8 percent increase in Belgium through another mobile phone subsidiary called BASE, wrote AFP.


Ashok Bindra is a veteran writer and editor with more than 25 years of editorial experience covering RF/wireless technologies, semiconductors and power electronics. To read more of his articles, please visit his columnist page.

Edited by Rich Steeves

TechZone360 Contributor

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