Koninklijke Kpn Nv

Good afternoon, ladies and gentlemen. Welcome to Capien's fourth quarter earnings webcast and conference call. Please note that this event is being recorded. At this time, all participants are in listen-only mode. We will be facilitating a question and answer session towards the end of today's prepared remarks. If you would like to ask a question, you may do so by pressing pound key five on your telephone keypad. I will now turn the call over to your host for today, Matthijs van Leeuwenhorst. Head of Investor Relations. You may now begin.

Yes, thank you, operator. Good afternoon, ladies and gentlemen. Thank you for joining us today. Welcome to KPN's fourth quarter and full year 2025 results webcast. With me today are Joost Vaarwerk, our CEO, and Kirstie Geij, our CFO. As usual, before we begin our presentation, I would like to remind you of the safe harbor on page two of the slides. which applies to any statements made during this presentation. In particular, today's presentation may include forward-looking statements, including KPM's expectations regarding its outlook and ambitions, which were also included in the press release published this morning. All such statements are subject to the safe harbor. Now, let me hand over to our CEO, Joost Farberg.

Thank you, Matthijs, and welcome, everyone. Let's start with some highlights of the fourth quarter and the full year. We delivered on our 2025 outlook and group service revenues increased by 2.7% with all segments contributing. Adjusted EBITDA and free cash flow exceeded guidance. We maintained strict cost control across the organization. Indirect costs were 10 million lower than last year, marking a clear turning point in indirect OPEX. In the fourth quarter, we saw consumer delivering another quarter of strong commercial momentum, especially in broadband with the record net additions for the full year. Business growth was mainly driven by SMIC and wholesale continued to grow, mainly driven by sponsored roaming. Last year, we expanded our footprint by adding 440,000 fiber homes and around 400,000 homes connected. And we strengthened our mobile network with the launch of our travel company, Alpio. And through ongoing investments in cybersecurity, we ensure a resilient network that protects all users. For 2026, we expect service revenue growth of 2 to 2.5%, EBITDA of approximately 2.7 billion, CapEx of about 1.25 billion, and free cash flow of more than 950 million. Our dividend per share is expected to grow by 10% and we intend a new share buyback of 250 million euros in 2026. All in all, we closed the year in a good way and we are well positioned to sustain healthy service revenue growth in the coming years supported by our leading positions in consumer and business markets and continued growth in wholesale. At the same time, we are accelerating our transformation to deliver around 100 million in annual net indirect OPIC savings by 2030. and reducing CapEx below 1 billion by 2027 next year will drive strong cash generation and deliver attractive shareholder returns. Later, Chris will give you more details on our financials and 2026 outlook. We delivered on our 2025 outlook. Service revenues grew by around 3%. EBITDA slightly exceeded guidance. Pre-cash flow was strong at 952 million ahead of the upgraded outlook we gave at the half-year results, despite slightly higher capex. We reiterate our dividend commitment, and we will pay a regular dividend per share of 18.2 cents over 2025, following AGM approval mid-April. At our strategy update in November, we reaffirmed that we are well on track to achieving our connect, activate, and grow strategy, which is supported by three key pillars. One, we continue to invest in the leading networks. Two, we continue to grow and protect our customer base. And three, we further modernize and simplify our operating model. And together, these priorities support our ambition to grow service revenues in EBITDA by approximately 3% on average, a free cash flow by approximately 7% over the entire strategic period. Let me now walk you through the operational performance in more detail. We hold a clear lead in the Dutch fiber market, both in homes fast and connected and in business parks through our joint venture in Glassport. And together with Glassport, we now cover nearly 6 million Dutch homes for around 70% of the country. And to maintain our network leadership, we further optimized our rollout process and shifted focus from passing homes to connecting and activating households. And this approach is paying off with a record number of homes connected in Q4 and continued growth in fiber broadband net ads. Consumer service revenues continue to grow, driven by consistent fiber and mobile service revenue growth. A commercial momentum remains strong across both fixed and mobile, with subscriber growth exceeding our fair share. Throughout the year, our net promoter score improved, supported by operational excellence, our Pompi 4DL offer, and initiatives launched to strengthen digital engagement. Now let's take a closer look at our fourth quarter KPIs. Thanks to strong execution and proactive base management, we delivered double-digit broadband net ads growth for the third quarter in a row, supported by a healthy inflow of new fiber customers. A fixed RPU helped firm despite continued investments in our base and the competitive markets. Together, these achievements drove service revenues growth of 0.4%. In mobile, we added 24,000 post-paid subscribers, and post-paid RPU increased year-on-year, supported by the price increase in October, partly offset by the ongoing promotional activity in the Northfield sector. Combined, these factors led to 2.9% growth in mobile service revenue. Now let's turn to B2B. Business service revenues increased by 2.3% year-on-year, mainly driven by SME. And also here, Net Promoter Score improved throughout the year, reflecting the continued trust from our B2B customers for stability, reliability, and the quality of our networks and services. SME remains B2B's main growth engine, driven by broadband, mobile, and cloud in Workspace. LCE service revenue growth trend remained relatively stable, supported by continued growth in unified communications, CPaaS, IoT, and a growing customer base, partially offset by continued price pressure in mobile. Finally, tailored solution service revenue decreased, reflecting a focus on value steering. Wholesale continued to grow, mainly driven by the strong performance in mobile, Broadband service revenues increased, driven by fiber, and the growth trend leveled off compared to previous quarters, driven by the decline in the wholesale copper base. Mobile remained strong, driven by continued growth in international sponsored roaming, and other service revenues increased, mainly due to an uptake in visitor roaming. ESG remains a core element of our strategy. And on this slide, we show you the progress on carbon reduction, circularity, and diversity. To further reduce our carbon footprint across the value chain, we increased our green energy sourcing at 2025, supported by a solar energy partnership with Eneco. And our scope two emissions have further decreased by 70% year-on-year, while scope three emissions slightly increased, but this was due to an expanded scope. Next to this, We, of course, remain committed to improving our diversity targets, although achieving gender balance and recruitment remains challenging, diversity and inclusion continue to be top priority for us. To summarize, we end 2025 in a strong position, and we carry that momentum into 2026. with strong commercial execution, a healthy base inflow, and improving output, we are well-positioned and confident in delivering on our 2026 outlook. Now, at the end, I'm pleased to give you more details on the financials.