KPN’s Cost Discipline Is an Advantage in Inflationary Times; Stable Q3

Narrow-moat KPN's third-quarter results were aligned with company consensus. Sales grew by 1.9% organically while EBITDA after leases grew 1.8% year over year. We believe the company won’t struggle to reach its 2022 objective of EUR 2.4 billion in EBITDAaL, given the stability of the Dutch market and the company’s cost-conscious culture. Operating expenses only grew 1.9% year over year, which we consider a success in the current inflationary environment. Personnel expenses were down by 6.2%. On the energy front KPN was not very specific about its guidance, but indicated it still expects slight growth in EBITDAaL during 2023 even if high energy prices persist. The company will distribute a dividend of EUR 0.143 per share for fiscal 2022, which at current prices represents a 5.3% yield. We recommend KPN to dividend investors looking for an attractive, but maintainable dividend yield. We are maintaining our EUR 2.80 fair value estimate.