KPN Earnings: Grows Revenue and EBITDAaL by More Than 3%; Dutch Market Remains Rational

Narrow-moat KPN has started 2024 on a strong note with revenue and adjusted EBITDA after leases growing 3.3% and 3.6%, respectively and management raised guidance slightly after the acquisition of Youfone. KPN now expects adjusted EBITDAaL of EUR 2.5 billion in 2024 compared with EUR 2.48 billion before. Growth from KPN is two-sided: first, the Dutch telecom market remains highly rational, with the overall market growing by 4.3% in fourth-quarter 2023, according to Telecompaper. This is an exception as many telecom markets across Europe tend to shrink and not grow. Second, KPN is outperforming its peers, especially in the broadband segment, where it is gaining market share from VodafoneZiggo as the company keeps rolling out fiber to the home in the Netherlands. We maintain our EUR 3.20 fair value estimate, with shares being slightly overvalued. KPN, together with Deutsche Telekom and Tele2, remains one of our favorite picks among European telecom companies. KPN aims to grow dividends at a 7% compounded annual growth rate until 2027, in addition to EUR 200 million of yearly buybacks, which we see as maintainable.