KPN targets sustainable growth with AI-enabled automation

• Dutch operator announces new strategy, dubbed Connect, Activate & Grow, in its quest for sustainable growth
• The plan will see KPN relying on AI-powered automation across its operations
• Its goal is to simplify its business while bringing “significant” efficiencies and indirect opex savings

KPN is the latest telco to turn to AI for operational efficiencies. The Dutch national operator has unveiled a new strategy, underpinned by AI-enabled automation, to help it achieve sustainable revenue growth and reduce costs from 2027. Dubbed ‘Connect, Activate & Grow’, the telco’s new plan will see it invest more than €4.5bn in its networks and the digitalisation of the Netherlands over the next four years.

Delving into the specifics of KPN’s strategic priorities, it is worth noting that the operator will modernise and simplify its business in order to achieve this sustainable growth. It plans to do so by transforming its operating model with “AI-powered automation and developing a future-ready workforce”.

This pillar of KPN’s new strategy is a clear sign of the times: A number of global telcos are looking to use AI technology to help them achieve better operational efficiency, customer service improvements, network modernisation and reduced costs. Marked examples include Deutsche Telekom, e&, Singtel and SK Telecom (SKT), which jointly formed the Global Telco AI Alliance in July – see CSP giants form Global Telco AI Alliance. And the UK national operator BT highlighted the role of AI in its long-term plan to reduce its workforce by up to 42% by 2030 – see BT to cut up to 55,000 jobs in AI-enabled efficiency drive.

Another strategic priority for KPN will be the delivery of converged services and solutions that are “truly relevant” to its customers and their needs, as well as offering “the best digital experience” over the telco’s “world-leading, always-on networks”.

In fact, KPN has put fibre at the heart of its strategy, with plans to continue its large-scale rollout programme so that the technology covers around 80% of Dutch households by the end of 2026. This goal doesn’t seem far off, as KPN and its fibre joint venture with APG, called Glaspoort, had a combined fibre footprint of 55% of the Netherlands at the end of the third quarter of 2023.

“At this moment, KPN has a much larger homes-connected percentage compared to its main competitors and intends to maintain this competitive advantage through improvements to the end-to-end fibre value chain. This is important as KPN continues to see an attractive fibre business case, with market share gains in fibre areas and higher ARPU [average revenue per user] levels compared to copper,” the company stated.

Looking at other services in the consumer segment, the Dutch telco is aiming to be the market leader in terms of service revenue by offering “an unrivalled range of services, such as OTT packages, security and gaming, on top of the highest quality fibre and 5G connectivity”.

In terms of business services, KPN boasted that it is “the clear market leader” and said it plans to advance its digital ecosystem, driven by its ICT solutions unit, Tailored Solutions, and the delivery of wholesale broadband and mobile services. It also plans to launch “innovative services through new building blocks”.

The company also plans to digitise its customer-facing processes to improve the customer experience, and to modernise its operating model. “In the coming years, simplification and automation should drive significant quality improvements, efficiencies and indirect opex [operating expense] savings for the company,” KPN stated.

“We will take significant steps to further modernise our operating model, leveraging the power of automation and AI, realising exceptional service experience and driving substantial savings in indirect costs,” explained Joost Farwerck, CEO of KPN.

Such plans require investment, though: The company expects to maintain capital expenditure (capex) of €1.2bn for each year until 2026, and it believes its strategy will help it bring capex down to under €1bn in 2027, as the level of fibre capex is expected to come down materially at that time.

For the period between 2024 and 2027, KPN has set itself a target compound annual growth rate (CAGR) of around 3% both for its service revenues and adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) after leases.

Farwerck added that the strategy will see KPN go “all out to connect everyone in the Netherlands to a sustainable future and create long-term value for all stakeholders.”

- Yanitsa Boyadzhieva, Deputy Editor, TelecomTV