Following the recent Investor Day, UBS has adjusted its price target for Dutch telecommunications company KPN, bringing it down from €3.12 to €3.08 while maintaining a Neutral rating. The financial services firm cites increasing competitive pressures that may impede KPN's revenue growth as a reason for the slight downgrade. Despite this, KPN has announced targets for steady increases in service revenue and EBITDA of approximately 3% annually, with an ambitious nearly 7% rise in free cash flow (FCF) by 2027.
KPN has outlined a comprehensive financial strategy as it moves forward. The company projects that its annual capital expenditures (Capex) will remain around €1.2 billion through to 2026. This level of investment is expected to support the completion of its significant fiber optic infrastructure project. Once this project reaches completion in 2027, KPN anticipates that its Capex will drop below the €1 billion mark.
The revised price target and outlook from UBS come after KPN shared its financial goals during the Investor Day, which included an adjusted forecast of a 2% reduction in FCF. This adjustment reflects UBS's concerns over potential hurdles KPN may face due to a competitive market environment that could challenge the company's revenue streams.
Despite the slightly lowered expectations for free cash flow, KPN remains focused on its growth trajectory and long-term financial health, as evidenced by its strategic planning and investment in infrastructure development. The telecom giant's commitment to expanding its fiber optic network is a clear indication of its dedication to enhancing connectivity and services for its customers while also striving for financial growth and stability in the years to come.
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