KPN has sold off parts of the business

The business was close to collapse in 2001 after an acquisition frenzy at the height of the telecoms boom left it with debts of 22bn euros (�15.8bn; $25.5bn).

But in the first three months of this year it made a net profit of 770m euros, compared with a 348m euro loss this time last year.

"KPN's efforts to drive down costs, improve efficiencies and simplify the business are now clearly visible in bottom-line profits," said KPN chief executive Ad Scheepbouwer.

"Restoring real growth at KPN is a key objective of the management."

Turnaround

The company has cut its debt to 11.2bn euros, and it said the figure would fall to 10bn euros by the end of the year.

KPN's profits were boosted by 657m euros from exceptional items. These were mainly gains from the sale of its directories unit and a penalty payment from the German mobile operator Mobilcom.

Before tax, the profit figure was 1bn euros, compared with 70m euros last time.

Frank Claassen, an analyst at Rabo Securities, described it as another solid quarter.