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October 18, 2010, 4:56 AM EDT
By Maud van Gaal and Chiara Remondini
(Updates with analyst comment in third paragraph.)
Oct. 18 (Bloomberg) -- Royal KPN NV, the biggest Dutch phone company, appointed Eelco Blok to succeed Chief Executive Officer Ad Scheepbouwer, who is retiring.
Blok, 53, who has been on KPN?s board since 2004 and is currently responsible for international activities including iBasis, will take the helm on April 6, The Hague-based KPN said in a statement today.
?He looks a sensible, fairly low-risk appointment,? said Steve Malcolm, an analyst at Evolution Securities in London. ?He will probably bring a very similar philosophy to the job as Mr. Scheepbouwer. He did a good job in Dutch wire-line, particularly on costs. He is probably more of an execution than an ideas-driven CEO.?
Blok will take over as KPN, like other European operators, seeks to boost revenue from services such as television and Web calls to make up for a drop in sales from traditional phone operations and regulatory tariff cuts. KPN is building a fiber- optic network to support these services in the Netherlands.
?The biggest challenges for KPN is whether they can continue to cut costs in the face of continued revenue declines,? said Mark James, an analyst at Liberum Capital in London.
KPN shares rose as much as 1.5 percent to 11.54 euros. Before today, they had fallen 4.1 percent this year, giving the company a market value of 17.9 billion euros. That compares to a 4.9 percent gain in the Stoxx 600 Telecommunications Index.
Elbowed Aside
Blok?s rise to CEO marks a reversal after he was ousted from his position as the head of the fixed-line unit in December, 2004, after an investigation by KPN into discounts given to corporate clients resulted in the tightening of internal compliance.
His fortunes improved as head of KPN?s international operations. On Blok?s watch, sales in Germany, where KPN is the third-largest wireless operator, rose 0.8 percent to 803 million euros in the second quarter. Service revenue in the country increased 2 percent after two quarters of decline.
Blok ?has played an integral role in establishing KPN?s reputation for generating shareholder value and his skills fit with our board?s ambition to continue with its strategy,? Chairman Jos Streppel said in the statement.
KPN?s E-Plus Mobilfunk GmbH unit was the only one of Germany?s four mobile phone operators that didn?t secure spectrum in the coveted 800-megahertz band in May. E-Plus spent 283.6 million euros on other frequency bands, saying it preferred to use its current infrastructure to expand its network?s capacities rather than overpay.
Scheepbouwer?s Record
?KPN faces major strategic questions over its commitment to fibre-based access in the Netherlands and E-Plus?s position in an increasingly data-driven mobile world,? said Malcolm. ?It remains to be seen if Mr. Block has the correct answers to these strategic questions.?
The new CEO will receive an annual fixed compensation of 800,000 euros ($1.1 million) and will be entitled to a performance-related short-term bonus in cash of as much as 90 percent of base salary and a long-term incentive in conditional shares of as much as 135 percent. Scheepbouwer was paid 3.2 million euros in 2009, including a 2.2 million-euro bonus.
Blok will take over from Scheepbouwer, 66, who became CEO in 2001 as the operator struggled with 22.8 billion euros in debt after buying E-Plus and taking on the 8.7 billion-euro cost of licenses for faster wireless access to the Internet.
Scheepbouwer set out to slash spending and reduce costs, while at the same time investing in new services such as calls over the Internet, digital television and computer services for corporate customers. KPN in July repeated it is on track to eliminate 10,000 jobs by the end of 2010 to boost profit.
Before taking over KPN, Scheepbouwer headed TPG NV, Europe?s second-largest express delivery company, as it went from being a state mail monopoly to an independent business.
--Editors: Vidya Root, Jerrold Colten
To contact the reporter on this story: Maud van Gaal in Amsterdam at mvangaal@bloomberg.net
To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net
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(Updates with analyst comment in third paragraph.)
Oct. 18 (Bloomberg) -- Royal KPN NV, the biggest Dutch phone company, appointed Eelco Blok to succeed Chief Executive Officer Ad Scheepbouwer, who is retiring.
Blok, 53, who has been on KPN?s board since 2004 and is currently responsible for international activities including iBasis, will take the helm on April 6, The Hague-based KPN said in a statement today.
?He looks a sensible, fairly low-risk appointment,? said Steve Malcolm, an analyst at Evolution Securities in London. ?He will probably bring a very similar philosophy to the job as Mr. Scheepbouwer. He did a good job in Dutch wire-line, particularly on costs. He is probably more of an execution than an ideas-driven CEO.?
Blok will take over as KPN, like other European operators, seeks to boost revenue from services such as television and Web calls to make up for a drop in sales from traditional phone operations and regulatory tariff cuts. KPN is building a fiber- optic network to support these services in the Netherlands.
?The biggest challenges for KPN is whether they can continue to cut costs in the face of continued revenue declines,? said Mark James, an analyst at Liberum Capital in London.
KPN shares rose as much as 1.5 percent to 11.54 euros. Before today, they had fallen 4.1 percent this year, giving the company a market value of 17.9 billion euros. That compares to a 4.9 percent gain in the Stoxx 600 Telecommunications Index.
Elbowed Aside
Blok?s rise to CEO marks a reversal after he was ousted from his position as the head of the fixed-line unit in December, 2004, after an investigation by KPN into discounts given to corporate clients resulted in the tightening of internal compliance.
His fortunes improved as head of KPN?s international operations. On Blok?s watch, sales in Germany, where KPN is the third-largest wireless operator, rose 0.8 percent to 803 million euros in the second quarter. Service revenue in the country increased 2 percent after two quarters of decline.
Blok ?has played an integral role in establishing KPN?s reputation for generating shareholder value and his skills fit with our board?s ambition to continue with its strategy,? Chairman Jos Streppel said in the statement.
KPN?s E-Plus Mobilfunk GmbH unit was the only one of Germany?s four mobile phone operators that didn?t secure spectrum in the coveted 800-megahertz band in May. E-Plus spent 283.6 million euros on other frequency bands, saying it preferred to use its current infrastructure to expand its network?s capacities rather than overpay.
Scheepbouwer?s Record
?KPN faces major strategic questions over its commitment to fibre-based access in the Netherlands and E-Plus?s position in an increasingly data-driven mobile world,? said Malcolm. ?It remains to be seen if Mr. Block has the correct answers to these strategic questions.?
The new CEO will receive an annual fixed compensation of 800,000 euros ($1.1 million) and will be entitled to a performance-related short-term bonus in cash of as much as 90 percent of base salary and a long-term incentive in conditional shares of as much as 135 percent. Scheepbouwer was paid 3.2 million euros in 2009, including a 2.2 million-euro bonus.
Blok will take over from Scheepbouwer, 66, who became CEO in 2001 as the operator struggled with 22.8 billion euros in debt after buying E-Plus and taking on the 8.7 billion-euro cost of licenses for faster wireless access to the Internet.
Scheepbouwer set out to slash spending and reduce costs, while at the same time investing in new services such as calls over the Internet, digital television and computer services for corporate customers. KPN in July repeated it is on track to eliminate 10,000 jobs by the end of 2010 to boost profit.
Before taking over KPN, Scheepbouwer headed TPG NV, Europe?s second-largest express delivery company, as it went from being a state mail monopoly to an independent business.
--Editors: Vidya Root, Jerrold Colten
To contact the reporter on this story: Maud van Gaal in Amsterdam at mvangaal@bloomberg.net
To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net
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