The company reported adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) of 585 million euros (516.6 million pounds), down from 592 million euros in the same period a year ago. Analysts polled by the company had put EBITDA at 586 million euros.

Revenues of 1.40 billion euros were down 1.6 percent, also in line with expectations.

"We are well on track to deliver on our full-year outlook," said CEO Maxima Ibarra in a statement. The company maintained most financial targets and said its full-year free cash flow, excluding dividends from its stake in Telefonica Deutschland, would increase to 800 million euros, from 745 million euros.

Net profit fell to 90 million euros from 99 million in the same period a year earlier.

KPN's shares are down 20 percent in the year to date, closing at 2.33 euros on Tuesday.

The company said sales to households and professional service revenue grew, while mobile and wholesale prices remained under pressure.

It said that without higher wage costs from a new labour agreement that went into effect in the first half of 2018, EBITDA would have been flat year on year.

"Lower revenues were offset by ongoing savings from simplification and digitalization of services," the company said.

(This version of the story corrects cash flow guidance in 4th paragraph.)

(Reporting by Toby Sterling; Editing by Richard Pullin and MarkPotter)

By Bart Meijer