Telecompetitor Arches

KPN Customers Keep Substituting Social Networks for Voice and Texting

Some observers believe Royal KPN NV (KPN), the largest Dutch telecom company, is the proverbial “canary in the coal mine,” providing early and advanced warning of trends that could surface in other markets.

In particular, observers are worried about the now-clear trend of KPN customers substituting non-revenue or low revenue product substitutes for KPN’s voice and text messaging services.

KPN experienced a 63 percent drop in fourth-quarter 2011 net income, driven in large part by the sale of its consulting business, but also reflecting product substitution by its customers.

“2012 will be a year of transition in the Netherlands, as we aim to bottom out our broadband market share and to stabilize our market share in consumer wireless,” Chief Executive Officer Eelco Blok said.

“The forecasts for 2012 are worse than the most bearish expectations in the market,” said Jos Versteeg, an analyst at Theodoor Gilissen Bankiers.

KPN Chief Executive Eelco Blok says falling domestic revenues are responsible for the shortfall. Dutch smart phone subscribers are using Facebook, Twitter and instant messaging rather than traditional voice calls, which obviously means less demand for messaging and calling services.

Of course, the level of competition in the Netherlands telecom market also is a factor. KPN predicts tough year

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