UPDATE 1-KPN Q3 sales drop, sees full-year core earnings about flat

(Updates with quotes, details)

AMSTERDAM, Oct 28 (Reuters) - KPN NV, the largest Dutch telecommunications company, on Wednesday reported lower third-quarter sales and flat core earnings owing to the COVID-19 pandemic and forecast only fractional annual earnings growth.

CEO Joost Farwerck said there had been a rise in pre-paid mobile subscribers but the company still faced “headwinds” among business customers because of the pandemic.

KPN said its full year EBITDAL would be around 2.32 billion euros, a touch above a revised 2.29 billion euro figure for 2019, a more tangible forecast than the “stable to growing” forecast it had issued in July.

Third quarter adjusted earnings before interest, taxes, depreciation and amortization, and after leasing costs (EBITDAL), for the three months ended Sept. 30, were 598 million euros ($708 million), compared with 599 million euros a year earlier. Revenues fell 5.4% to 1.30 billion euros.

That was slightly better than analyst forecasts in a company published poll that predicted EBITDAL of 581 million euros on revenue of 1.30 billion euros.

KPN, which competes with VodafoneZiggo and T-Mobile on the highly concentrated Dutch market, has suffered a decade-long decline in sales and Farwerck has said he does not expect a quick revival.

Instead the company will seek to grow operating profit slowly as it cuts costs and invests in its fibreoptic and 5G networks.

KPN shares are down 10% so far this year after receiving a boost on Oct. 12 on a media report private equity firm EQT was considering a potential bid for the company.

KPN and EQT did not comment on the report. The Dutch government has power to block telecom sector takeovers it deems a threat to national security, and in 2013 KPN used poison pill mechanisms to reject a takeover bid from Mexican billionaire Carlos Slim.

$1 = 0.8461 euros Reporting by Toby Sterling; Editing by Rashmi Aich and Tomasz Janowski