KPN trims service revenue outlook as B2B drag persists, but fiber leadership and cost discipline hold

Consumer resilience and wholesale growth are offset by Tailored Solutions and LCE weakness; ACM's fiber block adds regulatory uncertainty

KPN.AS · Earnings Call · 2026-07-22

A B2B speed bump

KPN's second quarter of 2026 delivered a classic mixed bag: solid underlying EBITDA growth and a reassuring free cash flow rebound, but also a downgrade to the full-year service revenue ambition and a regulatory blow to its fiber consolidation plans. The common thread is a B2B business that continues to underperform, particularly in the large-enterprise (LCE) segment, forcing management to lean more heavily on consumer and SME growth. Group service revenues rose only 0.8% in Q2, held back by a 1.1% decline in business service revenues. The pain is concentrated in Tailored Solution and LCE, which management had hoped would turn a corner by now. As CEO Joost Farwerck put it: “LCE, we tried to flip it around in the coming six months. We expect that to happen only next year.” — Joost Farwerck, CEO · 2026-07-22 That admission triggered a cut to the full-year service revenue forecast, now expected to land at roughly 1.5% for 2026, down from prior guidance of 2-2.5%. CFO Chris Figee explained the path back: “we expect group service revenue growth to accelerate to 2%-2.5% in the second half of the year” — Chris Figee, CFO · 2026-07-22 — but only after a weaker H1. This is a noticeable shift from the tone just six months ago. In January, management was confident that LCE would return to positive growth across the year. CFO (then) Chris Figee said: “I expect the LCE business to also show positive growth across the quarters.” — Hans Figee, CFO · 2026-01-28 Joost Farwerck added: “And on B2B service revenues, I mean, the Dutch economy is growing and also expected to grow in 2026.” — Joost Farwerck, CEO · 2026-01-28 That optimism has now been tempered, and the company is managing expectations for a slower turnaround.

Fiber and regulatory clouds

The bigger strategic setback came from the ACM, which prohibited the proposed Glaspoort Delta Fiber transaction. KPN has been building fiber aggressively and had hoped to acquire Delta Fiber's network to extend its lead. DELTA Fiber is a critical piece of the consolidation puzzle, and the ruling forces a rethink of its build-versus-buy strategy. Farwerck was blunt:

We have decided to appeal ACM's decision, but that will take time. If we cannot buy anything, we cannot do small M&A, we will move up to 80% probably, and let us see where we end up after we fight that ACM's decision.
Joost Farwerck, CEO · 2026-07-22

The appeal will be heard in the court of Rotterdam, and KPN is confident in its case, but the immediate implication is more overbuild and a slower path to consolidation. The company still aims to remain the Group service leader in the Dutch fiber market, but the path just got more complicated.

Bright spots and leadership

Even as B2B disappoints, KPN's consumer franchise remains sturdy. Fiber now accounts for 72% of the retail broadband base, and consumer service revenues grew 1.9% in Q2, the strongest in five quarters. Mobile is the primary growth engine, with postpaid net adds of 18,000 and ARPU growth. The company also sealed a partnership with Schwarz Digits to bring a European sovereign cloud solution to the Dutch market, a move that reinforces its push into high-margin digital services. This is a fresh initiative that could open up new enterprise opportunities, though it will take time to scale. Cost discipline remains intact—indirect costs are down EUR 50 million year-on-year, and the company reaffirmed its EUR 15-20 million savings target for the year. Free cash flow increased 7% to EUR 329 million in H1, with a strong cash conversion. All midterm ambitions, including cumulative share distributions, were reaffirmed. The company also announced that CFO Chris Figee will step down on November 1, adding leadership uncertainty to an already challenging quarter. Figee was instrumental in the cost discipline and cash flow story, and his replacement will inherit a company that is squarely focused on delivering its midterm ambitions despite near-term headwinds. In all, KPN is navigating a tougher B2B environment and a regulatory setback, but the consumer and wholesale engines are holding up, and the financial framework remains intact. The question is whether the ACM appeal succeeds and whether LCE can truly inflect next year—both are critical to the 2.5% service revenue CAGR that underpins the investment case.