LONDON (ShareCast) - Dutch telecomunications company KPN has announced that it will increase capital by 4.0bn euros in order to cut debt that ballooned to 12.0bn euros after it made a large investment to acquire a high-speed mobile spectrum.

The group posted a fourth-quarter loss of €160m as a result of high financing costs and a €314m impairment charge. A year earlier, the group had reported a €176m profit.

Revenue fell by 3.0% to €3.27bn due to the poor macro-economic conditions and greater competition in the Dutch market. EBITDA (earnings before income tax and depreciation) fell by 15% to €1.12bn.

"KPN's financial position has been impacted by rising debt levels combined with increased commercial investments. The €4.0bnn rights issue announced today and our earlier announcements of a lower dividend outlook will support our financial position in the coming years," said Chief Executive Eelco Blok.

RBS analysts' view

Analysts at Royal Bank of Scotland reported that a capital raising of the magnitude outlined by KPN would be positive for credit.

"[It] would improve metrics enough for Moody's and S&P to take the ratings off review for downgrade or negative watch given their targets in their latest reports, although with such negative operating trends, this isn't guaranteed and we would expect the ratings to remain at least on negative outlook."

KPN's share price was down 20.63% to 3.25 euros at 13:39 on Tuesday.

SC

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