KPN (wholesale)

Date: June 23, 2010
Pages: 27
US$ 895.00
Publisher: Ovum
Report type: Strategic Report
Delivery: E-mail Delivery (PDF)
ID: K868C246612EN

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KPN (wholesale)
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.
Executive summary
In a nutshell
Ovum view
About this analysis
SWOT analysis
External conditions
Competitive environment
Regulatory environment
Strategic objectives
KPN International
Strategy implementation
KPN’s Wholesale and Operations business unit
KPN International
Customer segmentation
Target customers
Network strategy
Customer-service strategy
When performance fails
Products and services
Product strategy
Pricing strategy
Promotional strategy
Network reach
Domestic network
International network
Company information
Business focus
KPN and iBasis
Company size
The Netherlands
Mobile International
Real-estate sell-off
Mobile wholesale
Financial highlights
Growth and profitability
Fixed wholesale
Mobile domestic wholesale
Total wholesale revenues
Qualitative indicators
First quarter results


Table 1: KPN’s fixed wholesale key financial data: 2007–2009
Table 2: Operational wholesale KPIs
Table 3: KPN’s mobile domestic wholesale revenues: 2007–2009
Table 4: KPN’s total wholesale revenues: 2007–2009
Table 5: KPN’s total wholesale revenues: 1Q08–1Q10


Figure 1: KPN International customer segmentation proposition
Figure 2: KPN's domestic wholesale service offerings
Figure 3: KPN International's wholesale service offerings
Figure 4: KPN's organizational structure
Figure 5: KPN International’s organizational structure
Figure 6: KPN’s key financial data 2007-2009 (€ million)
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