November 7th 2023
KPN announces Connect, Activate & Grow strategy
Delivered sustainable Group service revenue growth, achieved key ambition of Accelerate to Grow strategy
- Staying frontrunner in ESG: fully embedded in Connect, Activate & Grow strategy
- Targeting continued service revenue growth, supported by leading converged portfolios in B2C and B2B
- Modernizing operating model to deliver quality improvements and indirect cost savings
- Completing fiber roll out and delivering ~80% fiber footprint end-2026, Capex remains at ~€ 1.2bn annually until 2026
- Capex coming down below € 1.0bn as of 2027 driven by finalization of fiber project
- Leading to 3-3-7 financial ambitions: ~3% service revenues CAGR, ~3% EBITDA CAGR and ~7% FCF CAGR until 2027
- Continuing policy of returning full Free Cash Flow to shareholders, ~€ 3.8bn cumulative distributions by 2027
Revenues have been declining...
Benjamin Graham analysis
SECTOR: [PASS] KPN is neither a technology nor a financial Company, and therefore this methodology is applicable.
CURRENT RATIO: [FAIL] Current assets €1 392 divided by short-term debt €1 682 = 0.8 which is under Graham's limit of 2.
LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL] Long term debt is €6 629 and Net Current Assets are minus €290.
LONG-TERM EPS GROWTH: [FAIL] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. EPS for KPN have decreased since 2003 and therefore the company fails this criterion.
Earnings Yield: [FAIL] Graham likes to see 7% or higher. 5,6% based on 2022 earnings fails this test.
Graham Number value: [FAIL] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. KPN has a Graham number of √(15 x €0,2 EPS x €0,75 Book Value) = €1,9
Dividend: € 0,14/€3,2 = 3,6%
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