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KPN's Q4 profit up, plans 1 bn eur share buyback

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CIOL Bureau
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AMSTERDAM, THE NETHERLANDS: Dutch telecoms group KPN's core profit in the latest quarter rose 3.4 percent, in line with expectations, thanks to aggressive cost cuts that freed up enough cash for a new 1 billion euros ($1.4 billion) share buyback.

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KPN reported fourth quarter earnings before interest, taxes, depreciation and amortization (EBITDA) was 1.31 billion euros, compared with average analysts' expectations of 1.32 billion euros and up 3.4 percent from a year earlier, which includes profit from Getronics, bought in the past year.

"The results were in-line, nothing unexpected," Keijser Capital analyst Nico van Geest said, keeping the shares at "buy" with a 14 euro price target.

The 1 billion euros share buyback, which will take place in 2010, was expected by analysts, and was at the top end of their forecasts. Free cash flow in 2009 was 2.4 billion euros, helped by improved taxation and lower capital expenditures.

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"While revenues declined, our focus on EBITDA, free cash flow and market shares continued to pay off," KPN Chief Executive Ad Scheepbouwer said in a statement.

KPN shares were down 1 percent at 11.84 euros at 0900 GMT, compared with a 0.4 dip in the DJ Stoxx European telecoms index

Revenue dropped 9 percent to 3.4 billion euros, as KPN's iBasis and Getronics units were hurt by weaker economic conditions.

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That was offset by ongoing cost cutting, as KPN shed 3,554 jobs in 2009, bringing the total since 2005 to 10,000, including cuts at Getronics.

KPN kept its 2010 targets intact, expecting sales at the same level as 20009, and EBITDA of more than 5.5 billion euros and dividend of 0.80 euros per share.

The former Dutch telecoms monopoly proposed a 2009 dividend of 0.69 euros per share and targets to pay a dividend of 0.80 euros per share in 2010 and of at least 0.85 euros in 2011.

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Separately KPN announced that Stan Miller, CEO of KPN's international mobile business, will leave the company as of Feb.1. Miller will not be replaced, and his responsibilities will be divided among sitting management board member Eelco Blok and Baptiest Coopmans.

Scheepbouwer told analysts that Miller's departure will have no impact on any decision regarding his own succession. Scheepbouwer's contract will end mid-next year.

"Miller was one the crown princes," Keijser Capital's Van Geest said, adding that he still expects that Scheepbouwers successor will come from within KPN.

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