KPN has announced a EUR4 billion rights issue to combat rising debt and a heavy investment in the Dutch spectrum auction in December.

CEO Eelco Blok said: “In recent years, KPN’s financial position has been impacted by rising debt levels combined with increased commercial investments.”

The combination of the rights issue and a lower dividend outlook will support the operator’s financial position, he said.

KPN spent EUR1.35 billion on LTE spectrum in an auction which fell during the company’s fourth quarter.

The attitude of leading KPN investor Carlos Slim to the proposed share sale is unclear said Blok, according to Bloomberg.

The value of the rights issue represents nearly 90 percent of KPN’s current market capitalisation.  The company’s shares fell on the news of the rights issue. Analysts said the proposed issue was larger than expected.

It followed fourth-quarter results in which KPN announced a net loss of EUR160 million compared with a profit of EUR176 million in the same period in 2011. The figure was significantly worse than that forecast by analysts. Quarterly revenue and other income fell by three percent to EUR 3.27 billion.

KPN will not pay out a dividend for 2012 but will resume with a predicted EUR3 payment in 2013 and 2014, and growth thereafter.

Blok said the company’s 2012 results were hit by the poor macro-economic conditions which damaged consumer confidence and the investment plans of business customers. Meanwhile, competition got stronger in KPN’s mobile markets.

He said the financial performance in 2012 was “largely within the outlook ranges, although supported by asset disposals and somewhat below our expectations at the start of the year”.

The company has plans to cut as many as 5,000 jobs in the Netherlands by the end of 2013.

In KPN’s 2012 results, revenue and other income fell by 3.5 percent to EUR12.7 billion while profits more than halved to EUR693 million.