KPN unveiled Q4 2011 and full year results on Wednesday that showed declining revenues and profits.

Group Q4 revenue fell 0.4 percent to €3.8 billion compared with the same period in 2010, but for the whole year decreased 1.8 percent to €13.2 billion.

In particular, operating profit took a battering; it fell 43 percent in Q4 to €436 million and 22 percent to €2.5 billion for 2011 as a whole.

CEO Eelco Blok said 2011 results were in line with expectations. However, he admitted that 2012 is a “year of transition” and the company lowered expectations for the 12 months ahead.

In common with other European operators – think Telefonica in Spain – KPN’s home market is the cause of most of its woes. Revenues there fell 2.6 percent year-on-year to €9.1 billion.

KPN said the decline in the Netherlands, where worryingly losses were registered across its consumer, enterprise and wholesale divisions, was mainly due to the effect of regulation and the economy.

The problems the company faces are perhaps most graphically illustrated in the consumer wireless segment, where outgoing SMS and voice minutes per customer decreased, blended ARPU fell eight percent to €23 and prepaid revenues continued to decline.

“Aspects in the performance of the Netherlands did not meet our expectations,” said Blok. “We aim to bottom-out our broadband market share and to stabilize our market share in consumer wireless.”

There are some bright spots, however. Its international business is showing growth – sales increased by 0.5 percent to €4.2 billion in 2011 – and in some surprising areas too.

While many operators focus on emerging markets, KPN has stayed much closer to home. Although admittedly from a low starting point, Belgium registered a 6.8 percent y-o-y growth in Q4. KPN said this was thanks to increasing its physical retail presence, a good performance in the B2B segment and a good take-up of flat fee data bundles.

There was also good growth seen in Germany and Blok said the company will keep investing in mobile network roll-out in both countries during the year ahead.

Increasingly, the Netherlands-based operator is focusing on the opportunities that broadband and associated services are creating.

The number of FTTH homes activated increased to 102,000 in Q4, up from 77,000 in the previous quarter; net IPTV additions rose by 84,000 in Q4, up from 73,000 in Q3; while TV market share increased two percent y-o-y to 17 percent.

Said Blok: “We have seen positive trends in IPTV and FTTH and our international businesses continued showing strong underlying profitable growth. I have full confidence that KPN will come out of this transition year a stronger company."

Is such optimism well founded?

KPN at least has a defined plan – it said it will defend its traditional business with improved mobile propositions to combat churn, grow internationally through continued investment and focus on exploiting the opportunities in broadband and related services.

The problem is that you feel it has further to fall before it can start to register real growth. As highlighted above, the areas that do provide optimism are starting from small bases and gaining a significant foothold in such markets will be difficult.

In the meantime, KPN will be reduced to more cost-cutting. Alongside its results announcement, the company revealed it has sold its Gentronics subsidiary for an undisclosed sum. The IT outsourcing company will be sold in two distinct parts.

As European Communications reported at the beginning of January, KPN also has internal problems following the departure of two senior board members.

Nevertheless, the market has taken a sanguine view of the situation, with KPN rising slightly on early trading. The company will hope this is a trend that continues, but it would take a brave man to bet on it.