Dutch phone company KPN reported a 34 percent drop in first-quarter net profit, slightly missing the consensus forecast in a Reuters poll, as it revved up spending to combat growing competition. KPN, which is cutting another 8,000 jobs over the next five years, posted a net profit of 273 million euros ($350.4 million) on Tuesday, down from 414 million euros a year ago. Operating revenues fell 1 percent to 2.89 billion euros. According to the median forecast in a Reuters poll of 14 analysts, KPN had been expected to report a net profit of 279 million euros on revenues of 2.93 billion euros.

Chief Executive Ad Scheepbouwer told reporters on a conference call that the company was standing by its 2005 guidance of flat revenues and a high single-digit percentage drop in full-year core earnings.

In addition, KPN announced that Stan Miller, the head of its Belgian Mobile unit BASE, would also take charge of its German mobile activities.

Asked if the appointment was a reflection of disappointment by the performance of German unit E-Plus, Scheepbouwer said KPN now expected better growth in Europe's largest market.

The dominant operator in the Netherlands is suffering especially from competition to its shrinking fixed-line business, the main reason behind the drop in revenues along with lower charges for incoming calls to mobile phones.

Copyright Reuters, 2005