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KPN (wholesale) Market Research Report

Press Release   •   Oct 04, 2010 12:37 IST

Dutch incumbent KPN is investing in its “All-IP” next-generation network. It owns a high-capacity fiber network that stretches across 22 countries. The company uses partnerships to reach other regions outside Europe. Additionally, KPN also owns mobile networks in the Netherlands, Germany, and Belgium.

KPN is expanding its national wholesale revenue stream with a new wholesale portfolio based on the current rollout of broadband access via fiber to the home (FTTH) and fiber to the curb (FTTC). The company has sold some of its real-estate holdings and will use part of the proceeds to fund these fiber developments. However, the rollout of FTTH is based on shared investments/revenues with third parties (e.g. Reggefiber) for the construction of the passive fiber network. Through investment in these fiber projects, KPN’s national wholesale business is in a better position to gain additional revenue in the medium term than the international wholesale business.

KPN International focuses on both the corporate and wholesale segments since it believes the combined volume will drive costs down and generate higher margins. We believe the company is well positioned to take advantage of new opportunities in the communications, information, and entertainment markets. However, the company is struggling to defend its traditional service revenues.

KPN International – complemented by wholly owned iBasis for international wholesale voice services –– offers a good range of services to its international wholesale customers. KPN International also aims at second- and third-tier operators in emerging markets in the Middle East and Africa.

KPN’s fixed wholesale revenues decreased by 11.1% year on year in 2009. Its domestic mobile wholesale revenues decreased by 38.5% year on year. Total wholesale revenues (fixed and domestic mobile) made up 26.7% of KPN’s total revenues in 2009. International wholesale voice revenues represented 20% of KPN’s total wholesale revenues in 2009.

KPN’s continued reliance on wholesale revenues from voice traffic needs to change as the business is buffeted by the combination of falling traffic volumes and declining voice margins. KPN’s wholesale businesses must increase their revenues from non-voice services if the company is to reverse the continuing decline in its wholesale revenues.

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