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KPN Telecom<br />
Netherlands/Telecommunications Analyser<br />
KPN Telecom (Accumulate)<br />
Accumulate<br />
from Reduce<br />
Share price: EUR<br />
closing price as of 07/05/2012<br />
Target price: EUR<br />
Target Price unchanged<br />
Reuters/Bloomberg<br />
6.48<br />
7.50<br />
KPN.AS/KPN NA<br />
Market capitalisation (EURm) 9,319<br />
Current N° of shares (m) 1,438<br />
Free float 95%<br />
Daily avg. no. trad. sh. 12 mth 7,691,553<br />
Daily avg. trad. vol. 12 mth (m) 70<br />
Price high 12 mth (EUR) 10.72<br />
Price low 12 mth (EUR) 6.37<br />
Abs. perf. 1 mth -17.76%<br />
Abs. perf. 3 mth -21.10%<br />
Abs. perf. 12 mth -39.33%<br />
Key financials (EUR) 12/11 12/12e 12/13e<br />
Sales (m) 13,163 12,681 12,549<br />
EBITDA (m) 5,138 4,739 4,850<br />
EBITDA margin 39.0% 37.4% 38.7%<br />
EBIT (m) 2,550 2,348 2,404<br />
EBIT margin 19.4% 18.5% 19.2%<br />
Net Profit (adj.)(m) 1,549 1,259 1,332<br />
ROCE 13.3% 12.0% 12.6%<br />
Net debt/(cash) (m) 12,109 12,674 12,350<br />
Net Debt/Equity 4.1 4.3 3.9<br />
Debt/EBITDA 2.4 2.7 2.5<br />
Int. cover(EBITDA/Fin. int) 6.8 6.4 6.7<br />
EV/Sales 2.0 1.7 1.7<br />
EV/EBITDA 5.0 4.6 4.5<br />
EV/EBITDA (adj.) 5.0 4.6 4.5<br />
EV/EBIT 10.1 9.4 9.0<br />
P/E (adj.) 8.8 7.4 7.0<br />
P/BV 4.7 3.2 3.0<br />
OpFCF yield 19.4% 22.5% 22.9%<br />
Dividend yield 13.1% 13.9% 9.3%<br />
EPS (adj.) 1.05 0.88 0.92<br />
BVPS 1.98 2.05 2.17<br />
DPS 0.85 0.90 0.60<br />
10.5 vvdsvdvsdy<br />
10.0<br />
9.5<br />
9.0<br />
8.5<br />
8.0<br />
7.5<br />
7.0<br />
6.5<br />
6.0<br />
Apr 11 May 11 Jun 11 Jul 11 Aug 11 Sep 11 Oct 11 Nov 11 Dec 11 Jan 12 Feb 12 Mar 12 Apr 12 May 12<br />
Source: Factset<br />
Shareholders: BlackRock 5%;<br />
Analyst(s):<br />
KPN TELECOM Stoxx Telecommunications (Rebased)<br />
Victor Bareño, CFA, SNS Securities<br />
victor.bareno@snssecurities.nl<br />
+312 0 5508822<br />
America Movil bids for 28% of KPN<br />
The facts: America Movil has announced that it will offer EUR 8 per share in cash<br />
to raise its stake in KPN to 28% up from 4.8% currently.<br />
Our analysis: America Movil states that the stake would give it a relevant position<br />
in European markets, adding that it hopes to build and develop a lasting<br />
relationship with KPN. In recent years, America Movil has looked from time to time<br />
to European assets that were up for sale. From a financial point of view, an<br />
acquisition of KPN should not be problem. Buying the whole of KPN for EUR 8 per<br />
share would increase the net debt/EBITDA ratio for 2012 from America Movil from<br />
about 1x to 2x. We believe the 28% stake could be a first step to try to gain full<br />
control of KPN. Buying an incumbent operator is politically not without risk, which<br />
may explain the cautious approach of first acquiring a 28% stake. Compared to<br />
other European incumbents we believe KPN is a less difficult target to acquire: the<br />
State has no stake and political resistance is probably not as substantial. On a<br />
stand alone basis, the valuation of KPN is not particularly attractive in our view.<br />
Synergies are not significant for America Movil, but the acquisition of KPN as a<br />
bridgehead for further European expansion may of course justify a premium.<br />
Conclusion & Action: In view of the chance of a full bid we raise our<br />
recommendation from Reduce to Accumulate. Price target under review.<br />
Page 27 of 80 European Securities Network<br />
Please refer to important disclaimer on the last page
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