October 18, 2010 / 8:48 AM / 10 years ago

UPDATE 3-Cost cutter with a history to lead KPN

* Board member Eelco Blok to be CEO from April

* Blok made name as cost cutter in 27 years at KPN

* Resigned as board member in 2004 following investigation

* Defendant in case related to KPNQwest bankruptcy

* KPN shares rise 2.2 pct, outperform European telecom index

(Adds KPN comment, Blok background, updates shares)

By Gilbert Kreijger

AMSTERDAM, Oct 18 (Reuters) - Dutch telecoms group KPN (KPN.AS) has named a cost cutter who is central to past and present company controversies to lead it through its battle with a sluggish home market.

Eelco Blok, who has worked at KPN since 1983 and most recently as its executive responsible for KPN’s international operations, will replace 66-year old Ad Scheepbouwer in April. Scheepbouwer was expected to step down.

“He is not seen as a big transformer but as strong in operational excellence for which KPN is known. To focus on cost controls and cut inefficiencies, that’s where Blok has earned his marks,” Rabobank analyst Frank Claassen said on Monday.

KPN shares were up 2.2 percent at 11.61 euros by 1435 GMT, outperforming a 0.5 percent rise of the STOXX 600 Europe telecoms index .SXKP.

The 53-year old Blok, who studied business administration in Rotterdam, is seen by some as a predictable candidate to succeed Scheepbouwer.

A good ice hockey player in his youth and a competitive sailor, Blok’s challenge now will be to bring back growth at KPN by offering fibre glass and mobile data services, and operations from U.S.-based voice traffic carrier iBasis, which KPN took over fully last year by buying out minority shareholders.

“Three words: Boring is good. In the equity markets there were some worries of a change in strategy. People will now be pleased by this decision,” ING analyst John Davies said.

RESIGNED IN 2004

Blok’s reputation took a hit in 2004, when he resigned from the KPN executive board following an investigation of illegal discounts in the fixed line business market by Dutch telecoms regulator OPTA. OPTA fined the company 17 million euros.

Blok stayed with the company and rejoined the board in 2006 after leading new compliance measures.

Blok is also one of the defendants in a court case related to the 2002 bankruptcy of part-owned joint venture KPNQwest, for which curators are seeking 4.2 billion euros of unpaid debt. [ID:nLDE68S2HM]

A KPN spokesman said the court case was not a hurdle in naming him CEO because at the time Blok was not a supervisory board member at KPNQwest, which was a fibre glass joint venture of KPN and U.S.-based Qwest Q.N.

Dutch daily Het Financieele Dagblad over the summer speculated Belgium’s Telenet Group (TNET.BR) CEO Duco Sickinghe or Deutsche Telekom board member Niek Jan van Damme were possible CEO candidates from outside the company. [ID:nLDE68M1RI]

Blok will in the meantime serve as chief operating officer. He will receive a fixed salary of 800,000 euros per year plus target-dependent bonuses up to 135 percent of the annual wage.

Scheepbouwer last year indicated he preferred an internal candidate to replace him, and shares Blok’s result-focused, hard-working mentality.

The former state telecoms monopolist has been struggling with declining sales on fixed line services, which Blok has lead in the past, due to mobile phone competition from rivals such as Vodafone (VOD.L) and Deutsche Telekom (DTEGn.DE) and cable operators offering phone services.

Blok confirmed his cost-control focus when KPN took over Dutch IT-firm Getronics in 2007 and quickly started selling businesses and cutting staff. (Additional reporting by Eva Hagendoorn; Editing by Erica Billingham and Andrew Callus)

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