Koninklijke KPN N.V.

Q2 adjusted revenues fell 0.5% year over year, but excluding prior-year IP sales and IPR settlement benefits they rose 2.5%. Group service revenues increased 0.8% year over year in Q2, with consumer service revenue up 1.9%, business service revenue down 1.1%, and wholesale service revenue up 1%. Adjusted EBITDA after leases was down 0.3% reported, or up 3.4% on a comparable basis; the reported EBITDA margin improved to 45.6%, up 8 basis points. Net profit declined 1% year over year. Free cash flow increased 7% to EUR 329 million in H1, and cash margin was about 11% of adjusted revenues. Management now expects full-year FY 2026 group service revenue growth of approximately 1.5% year over year, with H2 service revenue growth expected to accelerate to about 2%-2.5%; full-year EBITDA and free cash flow guidance were reiterated.

Joost Farwerck framed the quarter as operationally solid, with improving consumer trends, strong SME performance, and continued fiber leadership in the Dutch market. He said the service revenue guide was moderated because Tailored Solutions and LCE are weaker than expected, but emphasized that these are lower-margin businesses and that KPN is focused on value, disciplined network investment, and simplifying the business. His tone was confident on execution and long-term strategy, while clearly disappointed by the ACM decision blocking the Glaspoort-Delta Fiber transaction.

Chris Figee highlighted that Q2 adjusted EBITDA after leases was up 3.4% on a comparable basis, with the EBITDA margin at 45.6%, and said indirect costs declined by EUR 50 million year over year while the workforce was reduced by more than 330 FTEs. He pointed to H1 free cash flow of EUR 329 million, a cash margin of about 11%, ending cash of EUR 365 million, leverage of 2.5x, interest coverage of 9.1x, and liquidity of EUR 1.4 billion. He reiterated structural net indirect OpEx savings of EUR 15 million-EUR 20 million by 2026 and EUR 100 million by 2030 versus 2025, and said full-year EBITDA and free cash flow guidance remain intact despite a temporary Q3 CLA headwind of EUR 4 million-EUR 5 million and a more back-end-loaded cash profile.

Analysts focused on why service revenue guidance was cut, whether the issue was more Tailored Solutions or LCE, and how much of the weakness is structural versus timing. Management said Tailored Solutions was slightly worse than planned, but the bigger issue is LCE softness in cloud/workspace, legacy connectivity, and IoT timing; they do not see AI players as the cause. Questions also covered broadband net adds, pricing power, the fiber overbuild issue, and 2027 service revenue/CAPEX planning. Management said Q2 broadband was tough despite some temporary uplift from the Odido breach, expects a more rational market in Q3, still sees the 2%-2.5% service revenue range as the right ballpark for next year, and said 2027 CapEx is already being planned now rather than suddenly stepped down next January.