Credit Update 2011Presentation on KPNNovember 2011
DisclaimersThis presentation is not directed to, or intended for distribution to or use by, any person or entity that is a...
Safe harborNon-GAAP measures and management estimatesThis financial report contains a number of non-GAAP figures, such as ...
AgendaCompany ProfileHighlights Q3 2011Strategy updateAnnex                     4
KPN - company profile1Market leader in The Netherlands, mobile challenger abroad               The Netherlands            ...
KPN - company profile (cont‟d)Executing along clear operating principles              Group strategy                      ...
KPN - financing principlesStrong commitment to prudent financing and sustainable financial framework            Prudent fi...
Group financial profileMaintaining solid financial profile € bn                                          Debt             ...
KPN profile FY 2010Good financial performance across the Group                                                     Revenue...
Debt portfolioBreakdown of € 13.5bn gross debt1                                                                           ...
AgendaCompany ProfileHighlights Q3 2011Strategy updateAnnex                     11
Highlights Q3 ’11• Financial results in line to realize full year outlook• Continued strong performances in Germany and Be...
Group results Q3 ’11    €m                                                               Q3 ‟11             Q3 ‟10        ...
Group cash flow Q3 ’11    €m                                                 Q3 ‟11         Q3 ‟10                %       ...
AgendaCompany ProfileHighlights Q3 2011Strategy updateAnnex                     15
2015 strategic visionFocus on 3 core principles                       •   Market positions in The Netherlands             ...
2015 strategic objectivesStrengthen - Simplify - GrowConsumer                            Consumer                         ...
Consumer wireline and Consumer wireless             Strategic initiatives                           Key 2015 objectivesCon...
Business market and Getronics                   Strategic initiatives                               Key 2015 objectivesBus...
Germany, Belgium, Rest of World, iBasis                Strategic initiatives                              Key 2015 objecti...
FTE reduction programEntering a next phase in cost optimization                                                           ...
Finance optimizationFurther optimizations driving free cash flow                                                  Annual  ...
AgendaCompany ProfileHighlights Q3 2011Strategy updateAnnex                     23
Financial review - Mobile InternationalService revenues up and good profitability despite severe MTA impact            €m ...
Financial review - Mobile International by segmentContinued underlying growth in all segments, severe regulatory impact   ...
Financial review - Dutch Telco€m                  Revenues and other income                      • Revenues and other inco...
Financial review - Dutch Telco by segment           €m                         29,2%     28,1%    29,6%    29,1%     28,4%...
Contact informationFor further information please contactKPN Investor RelationsTel: +31 70 44 60986Fax: +31 70 44 60593ir@...
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KPN Credit Update 2011 Presentation on KPN, November 2011

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Credit Update 2011 Presentation on KPN, November 2011

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KPN Credit Update 2011 Presentation on KPN, November 2011

  1. 1. Credit Update 2011Presentation on KPNNovember 2011
  2. 2. DisclaimersThis presentation is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or residentof, or located in, any locality, state, country or other jurisdiction where such distribution or use would be contrary to law orregulation or which would require any registration or licensing within such jurisdiction.The information contained on this website and in this investor presentation does not constitute an offer of securities to thepublic for the purposes of any law or regulation implementing the Prospectus Directive (Directive 2003/71/EC). Theinformation contained on this website and in this investor presentation is intended for information purposes only.This presentation does not constitute or form part of, and should not be construed as, an offer or invitation to sell securitiesby Koninklijke KPN N.V. (the “Company”), or the solicitation of an offer to subscribe for or purchase securities of theCompany, and nothing contained herein shall form the basis of or be relied on in connection with any contract orcommitment whatsoever. Any decision to purchase any securities of the Company should be made solely on the basis ofthe final terms and conditions of the securities and the information to be contained in the prospectus or equivalentdisclosure document produced in connection with the offering of such securities. Prospective investors are required tomake their own independent investigations and appraisals of the business and financial condition of the Company and thenature of the securities before taking any investment decision with respect to securities of the Company. The prospectus(or equivalent disclosure document) may contain information different from the information contained herein.The information in this presentation has not been independently verified. No representation or warranty, express or implied,is made as to the accuracy, completeness or fairness of the presentation and the information contained herein and noreliance should be placed on such information. Neither the Company, its advisers, connected persons nor any otherperson accepts any liability for any loss howsoever arising, directly or indirectly, from this presentation or its contents. 2
  3. 3. Safe harborNon-GAAP measures and management estimatesThis financial report contains a number of non-GAAP figures, such as EBITDA and free cash flow. These non-GAAPfigures should not be viewed as a substitute for KPN‟s GAAP figures.KPN defines EBITDA as operating result before depreciation and impairments of PP&E and amortization and impairmentsof intangible assets. Note that KPN‟s definition of EBITDA deviates from the literal definition of earnings before interest,taxes, depreciation and amortization and should not be considered in isolation or as a substitute for analyses of theresults as reported under IFRS. In the net debt/EBITDA ratio, KPN defines EBITDA as a 12 month rolling figure excludingbook gains, release of pension provisions and restructuring costs, when over EUR 20m. Free cash flow is defined as cashflow from operating activities plus proceeds from real estate, minus capital expenditures (Capex), being expenditures onPP&E and software and excluding tax recapture regarding E-Plus.The term service revenues refers to wireless service revenues.All market share information in this financial report is based on management estimates based on externally availableinformation, unless indicated otherwise. For a full overview on KPN‟s non-financial information, reference is made toKPN‟s quarterly factsheets available on www.kpn.com/ir.Forward-looking statementsCertain statements contained in this financial report constitute forward-looking statements. These statements mayinclude, without limitation, statements concerning future results of operations, the impact of regulatory initiatives on KPN‟soperations, KPN‟s and its joint ventures share of new and existing markets, general industry and macro-economic trendsand KPN‟s performance relative thereto and statements preceded by, followed by or including the words “believes”,“expects”, “anticipates” or similar expressions.These forward-looking statements rely on a number of assumptions concerning future events and are subject touncertainties and other factors, many of which are outside KPN‟s control that could cause actual results to differ materiallyfrom such statements. A number of these factors are described (not exhaustively) in the Annual Report 2010. 3
  4. 4. AgendaCompany ProfileHighlights Q3 2011Strategy updateAnnex 4
  5. 5. KPN - company profile1Market leader in The Netherlands, mobile challenger abroad The Netherlands Germany Belgium Wireless Position 3 Position 3 Position 1 Market share 2 ~16% Market share 2 ~20% Customers 9.9m Customers 22.1m Customers 4.1m Market share2 45% • „Challenger‟ network operator • „Challenger‟ network operator Wireline • Own brands and partners • Own brands and partners Position 1 • Part of KPN as of 2000 • Part of KPN as of 1998 Customers 2.7m Spain / France Market share2 >45% Position n/a Broadband Market share2 Limited España Position 1 France Customers ~1.2m Customers 2.6m • MVNO on partner network Market share2 40% • Own brands and partners VoIP • Launched 2008 & 2009 respectively Position 1 Customers 1.4m Group financials FY 2010 Market share2 35% Revenues € 13.4bn TV EBITDA € 5.5bn Position 3 FTE 30,599 Customers 1.3m Market cap3 ~€ 14.3bn Market share2 17% Net Debt1 € 12.9bn• Integrated market leader in telecoms Mobile and Fixed Network Operator• Own brands and partners Mobile Network Operator• Leading business ICT service provider Mobile Virtual Network Operator (MVNO)1 Q3 ‟11 financials and KPIs2 Mobile market shares based on service revenues; wireline market shares based on subscribers 53 7 November 2011
  6. 6. KPN - company profile (cont‟d)Executing along clear operating principles Group strategy The Netherlands Mobile International ‘Strengthen - Simplify - Grow’• Strategies tailored to local markets • Integrated telecom & ICT market leader NL • Mobile Challenger in Germany and Belgium• Building on a strong platform and • Moving from voice to data centric portfolio • High speed mobile data for mass market management team • Focus on single access, TV is key • Value for money propositions, data centric• Competitive cost base via cost excellence • Leading business & ICT player in Benelux • Accelerate Ortel growth in RoW Customer centricity Network Multi-branding / distribution Price • Open access model & infrastructure sharing Value• Improve quality of service • Multiple supplier & wholesale partnerships • Multibranding / segment approach• Customer Lifecycle Management • Hybrid copper / fiber strategy in NL • Regional commercial and investment• Simplification and quality management • NL: High quality mobile network; speeds up approach; driven by market shares• Key objectives are „First time right‟, „Net to 14.4 Mb/s, LTE trials up to 100 Mb/s • Distribution optimization; focus on own Promoter Score‟ and „Reputation ranking‟ • Germany: speeds up to 21 Mb/s, LTE trials channels 6
  7. 7. KPN - financing principlesStrong commitment to prudent financing and sustainable financial framework Prudent financing policy Shareholder Remuneration Stable Free Cash Flow 0.95 € 0.90 ≥ 0.85 2.6 2.5x 2.4 2.4 2.3 2.4 2.5 2.0x 2.2 2.3 2.3 2.2 2.2 0.80 0.69 0.54 0.60 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 • Net debt / EBITDA ratio between 2.0x and • Increasing dividend per share • Track record of stable Cash Flow 2.5x1 generation • Total shareholder remuneration not to exceed net income Financing Credit rating Selective M&A 0.3 0.3 1.4 1.0 1.1 1.0 1.0 1.0 1.0 0.9 0.8 0.9 0.7 0.5 11 12 13 14 15 16 17 18 19 20 21 24 29 30 Eurobonds Eurobonds GBP Global Bonds USD • Redemptions financed well ahead, € 2.0bn • Current ratings BBB+/stable outlook and • Clear focus on value creation, right asset of credit lines Baa2 / stable outlook at right price as the key criterion • Optimizing interest profile • Committed to minimum credit rating of BBB and Baa2 respectively1 Based on 12 months rolling EBITDA excluding book gains/losses, release of pension provisions and restructuring costs, when over € 20m1 Based on 12 months rolling EBITDA excluding book gains/losses, release of pension provisions and restructuring costs, all over € 20m 7
  8. 8. Group financial profileMaintaining solid financial profile € bn Debt Financing policy 13.8 13.7 13.6 13.6 13.5 12.6 12.8 2.5x 2.4 2.5 2.0x 12.5 12.9 2.2 2.3 2.3 2.2 2.2 12.1 12.2 11.8 11.8 11.4 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Gross Debt Net Debt Net Debt / EBITDA1 Financial framework range € bn Bond redemption profile • Net debt / EBITDA of 2.5x at end of Q3 ‟11 – Increase due to payment of interim dividend, 1,4 1,3 acceleration of share repurchase program and 1,1 lower EBITDA 1,0 1,0 1,0 1,0 1,0 1,0 0,9 • Financing developments Q3 ‟11 0,7 0,5 – New 5-year € 2.0bn revolving credit facility in July, replacing previous € 1.5bn credit facility – Average maturity of 7.4 years as at Q3 ‟11 – Average interest rate of 5.0% as at Q3 ‟11 ’11 12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21 ’24 ’29 ’30 – € 500m 10-year Eurobond issued in September Debt maturity1 Based on 12 months rolling EBITDA excluding book gains/losses, release of pension provisions and restructuring costs, when over € 20m 8
  9. 9. KPN profile FY 2010Good financial performance across the Group Revenues € 13.4bn KPN EBITDA € 5.5bn Revenues € 9.3bn Revenues € 4.2bn The Netherlands1 International EBITDA € 3.9bn EBITDA € 1.6bn Revenues € 3.9bn Revenues € 3.2bn Consumer Germany EBITDA € 1.1bn EBITDA € 1.4bn Revenues € 2.4bn Revenues € 0.8bn Business Belgium EBITDA € 0.8bn EBITDA € 0.3bn Wholesale & Revenues € 2.8bn Revenues € 0.2bn Rest of World Operations EBITDA € 1.7bn EBITDA € 0.0bn Revenues € 2.0bn Getronics EBITDA € 0.2bn Revenues € 0.9bn iBasis EBITDA € 0.0bn1 Excluding intercompany revenues 9
  10. 10. Debt portfolioBreakdown of € 13.5bn gross debt1 12% Global 81% 7% Other bonds 12% 8% 2 2 EUR USD GBP 16% 84% Eurobonds 80% Fixed Floating (incl. swapped)1 Book value of interest bearing financial liabilities plus the fair value of financial instruments (excluding Reggefiber) related to these financial liabilities2 Foreign currency amounts hedged into EUR 10
  11. 11. AgendaCompany ProfileHighlights Q3 2011Strategy updateAnnex 11
  12. 12. Highlights Q3 ’11• Financial results in line to realize full year outlook• Continued strong performances in Germany and Belgium• Consumer wireless in transition period; accompanied by lower service revenues• Continued growing TV market share in Consumer wireline• Corporate Market (Getronics)1 restructuring program in progress; aligning cost base with lower revenue level1 As of 1 October 2011 the Getronics segment has been renamed Corporate Market 12
  13. 13. Group results Q3 ’11 €m Q3 ‟11 Q3 ‟10 % YTD ‟11 YTD ‟10 % Revenues and other income 3,263 3,378 -3.4% 9,788 10,009 -2.2% Operating expenses 2,606 2,531 3.0% 7,675 7,530 1.9% 1 – of which Depreciation 371 353 5.1% 1,070 1,052 1.7% 1 – of which Amortization 217 208 4.3% 639 586 9.0% Operating profit 657 847 -22% 2,113 2,479 -15% Financial income/expense -199 -310 -36% -534 -696 -23% Share of profit of associates -6 -17 -65% -17 -38 -55% Profit before taxes 452 520 -13% 1,562 1,745 -10% Taxes -84 -114 -26% -189 -425 -56% Profit after taxes 368 406 -9.4% 1,373 1,320 4.0% 2 Earnings per share 0.26 0.27 -3.7% 0.93 0.84 11% EBITDA3 (reported) 1,245 1,408 -12% 3,822 4,117 -7.2% − Restructuring costs 85 -1 n.m. 108 -2 n.m. EBITDA3 (excl. restructuring costs) 1,330 1,407 -5.5% 3,930 4,115 -4.5%• Revenues down 2.2% YTD, mainly at Consumer wireless and Corporate Market, regulatory impact (3.8%)• Profit after taxes up 4.0% YTD − Operating expenses up due to restructuring costs and investments in growth at Mobile International and Dutch Telco − Lower financing costs and lower taxes1 Including impairments, if any2 Defined as profit after taxes per ordinary share / ADS on a non-diluted basis (in €) 133 Defined as operating profit plus depreciation, amortization & impairments
  14. 14. Group cash flow Q3 ’11 €m Q3 ‟11 Q3 ‟10 % • Free cash flow of € 555m in Q3 Operating profit 657 847 -22% ‟11, down 19% y-on-y Depreciation and amortization1 588 561 4.8% − € 77m lower EBITDA excluding Interest paid/received -219 -238 -8.0% restructuring y-on-y Tax paid/received -127 -6 >100% − Capex € 67m higher y-on-y; Change in provisions2 29 -93 n.m. accelerated investments in network Change in working capital 20 23 -13% capacity and customer equipment Other movements - -33 -100% − Proceeds from real estate € 38m lower y-on-y Net cash flow from operating 948 1,061 -11% activities • Average coverage ratio of KPN pension funds at 96% end Q3 ‟11 Capex3 498 431 16% – No recovery payment in Q3 ‟11 or Proceeds from real estate 13 51 -75% Q4 ‟11 Tax recapture E-Plus 92 - n.m. – Additional recovery payment of € 21m in Q1 ‟12 as coverage ratio was below Free cash flow4 555 681 -19% 105% in Q3 ‟11 Dividend paid 405 419 -3.3% Share repurchases 333 116 >100% Cash return to shareholders 738 535 38%1 Including impairments, if any2 Excluding changes in deferred taxes3 Including Property, Plant & Equipment and software4 Defined as net cash flow from operating activities, plus proceeds from real estate, minus Capex and excluding tax recapture E-Plus 14
  15. 15. AgendaCompany ProfileHighlights Q3 2011Strategy updateAnnex 15
  16. 16. 2015 strategic visionFocus on 3 core principles • Market positions in The Netherlands • Cost leadership (synergies, outsourcing/off-shoring) Strengthen • Financial framework (tax, treasury) • Reputation & Quality • Portfolio of businesses & Innovation Simplify • Customer offerings and processes • Organizational structure • Mobile Challenger businesses (Germany, Belgium, Rest of World) Grow • Data opportunities on mobile and fixed • Dividend per share 16
  17. 17. 2015 strategic objectivesStrengthen - Simplify - GrowConsumer Consumer Business market - Costwireline wireless Getronics leadership• >45% broadband • Successful migration • Further step-by-step • Reduction of market share1 of voice to data integration of 4,000-5,000 FTE• RGUs2 per • Sustained mobile NL Business and • Capex efficiency & connection up from market share1 of Getronics procurement; 1.8 to ~2.4 >45% • Leading business & annual savings ICT player in Benelux ~€ 100m as of 2012 Belgium, RoW, Simplification FinancialGermany iBasis and quality framework • >20% market share1 • Belgium: 20%-25% • First time right end- • Dividend outlook • 35%-40% EBITDA market share1, to-end service chains – ‟11 - ≥€ 0.85 margin 35%-40% EBITDA to 85-95% – ‟12 - € 0.90 margin • Large step-up in – ‟13 - € 0.95 • RoW: Accelerate NPS3 • Sustainable prudent Ortel growth • Top 10 Dutch financial framework • iBasis: Continued reputation ranking value creation1 Broadband market share based on subscribers. Mobile NL, Germany and Belgium market share based on service revenue2 RGU = Revenue Generating Unit3 NPS = Net Promoter Score 17
  18. 18. Consumer wireline and Consumer wireless Strategic initiatives Key 2015 objectivesConsumer • Customer-centric value proposition • >45% broadbandwireline differentiated from competitors market share • Hybrid FttH-VDSL network strategy • RGUs per • Long-term fiber ambition (Reggefiber JV) connection up from • Line-loss at stable levels, focus on RGUs 1.8 to ~2.4 • Regionalized approachConsumer • Data centric propositions • Successful migrationwireless • Converged Fixed-Mobile offering voice to data • Distribution footprint expansion • Sustained mobile NL • Focus on underpenetrated areas market share of • Growth in value-added services (e.g. apps) >45% 18
  19. 19. Business market and Getronics Strategic initiatives Key 2015 objectivesBusiness market, • Getronics rebranding to KPN in 2011 • SME/SoHo challenger brand • Further step-by-stepGetronics • Focus on The Netherlands & Belgium integration of • Cloud services, video-conferencing Business and • Targeted verticals (health, financial services) Getronics • Fixed-Mobile convergence • Leading business & • Improved distribution management and quality ICT player in Benelux of service • Continued investments in fixed-, mobile-, and datacenter infrastructure 19
  20. 20. Germany, Belgium, Rest of World, iBasis Strategic initiatives Key 2015 objectivesGermany • Grow challenger model through data • Private label smartphone offering • >20% market share • HSPA+ network and LTE pilots with 35%-40% EBITDA • Sufficient spectrum for data margin • Further exploit regionalization approachBelgium, RoW, • Belgium: Growing challenger model through • Belgium: 20-25%iBasis data market share with • RoW: Accelerate Ortel growth and assess 35%-40% EBITDA options KPN France & Spain margin • iBasis: Scale in wholesale voice and build VAS • RoW: Accelerate Ortel capabilities; long-term value creation growth • iBasis: Continued value creation 20
  21. 21. FTE reduction programEntering a next phase in cost optimization • Scope for off-shoring & outsourcing FTE 800-1,100 4,000-5,000 – Dutch Telco: back 1,400-1,700 office, network and IT 1,800-2,200 – Getronics: back office Off-shoring Out- Efficiency Total • Cost advantage sourcing – ~20-30% for outsourcing Getronics datacenters off-shoring example – ~30-50% for off- Indexed, July 2010 = 100 shoring Cost level after first efficiency 100 Original cost level depending on 50 activity Cost 0 impact Jul Aug Sep Oct Nov Dec Jan • Reorganization 2010 2011 costs; EBITDA and %, SLA performance FCF impact of ~€ 250- Not-off-shored 100 Quality Off-shored 300m spread over the 80 impact years 60 Jul Aug Sep Oct Nov Dec Jan 2010 2011 21
  22. 22. Finance optimizationFurther optimizations driving free cash flow Annual savings as of 2012 Capex efficiency & procurement savings Capex & • Savings from network equipment Procurement • Further optimization of Group purchasing ~€ 100m • Capex efficiency by integrated technology roadmap Tax benefits1 • Strong improvement of Dutch tax position Tax position • Cash contribution resulting from innovation tax facilities ~€ 100m • Reinvest proceeds in the Dutch business Treasury optimization • Optimizing fixed/floating interest portfolio Treasury ~€ 50m • Extend credit facility to reduce required excess cash • Widen debt investor base1 As announced at Q1 ‟11 results 22
  23. 23. AgendaCompany ProfileHighlights Q3 2011Strategy updateAnnex 23
  24. 24. Financial review - Mobile InternationalService revenues up and good profitability despite severe MTA impact €m 0.8% • Q3 service revenues up 0.8% y-on-yrevenuesWireless service – Severe regulatory impact of € 77m (7.5%) 987 1.025 999 989 1.033 − High underlying growth in Germany 927 946 − Strong underlying growth in Belgium and RoW Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 €m 40,7% 41,6% • EBITDA down 4.9% y-on-y, margin at 38,4% 38,0% 39,6% 34,7% 35,3% 39.6% (margin) EBITDA – Severe regulatory impact of € 39m (8.6%) 384 422 452 397 430 – High underlying growth in Germany and 368 353 strong underlying growth in Belgium Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 – Investing in growth via commercial data EBITDA EBITDA margin roll-out €m 6.5% • Capex of € 179m in Q3, up 6.5% y-on-y Capex 287 • Accelerated network roll-out in Germany 168 163 179 88 102 114 and Belgium ongoing Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 24
  25. 25. Financial review - Mobile International by segmentContinued underlying growth in all segments, severe regulatory impact €m 45.4% 41.8% 43.0% 41.8% 42.2% • Q3 service revenues flat y-on-y (-0.6%) 39.3% 38.9% Germany • Severe regulatory impact of € 65m on service revenues (8.0%), € 34m on EBITDA (8.8%) 803 850 820 802 838 • Release of provision of € 8m in Q3 ‟10 768 773 • Strong EBITDA margin due to targeted Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 marketing and cost efficiencies €m 40.3% 35.4% 36.9% • Q3 wireless service revenues up 3.5% 33.2% 33.0% Belgium¹ 28.9% 30.6% • Regulatory impact of € 12m on service 34.8%2 revenues (7.1%), € 5m on EBITDA (7.4%) • Positive impact of € 5m incidental on EBITDA 202 201 192 190 194 198 186 • EBITDA margin increasing due to improved cost consciousness Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Rest of World3 €m • External revenues up 13% y-on-y in Q3 with 72 78 76 81 increased focus on Ortel Mobile 59 69 52 • Ortel launched in Switzerland on 5 October -2 3 • EBITDA positive and increasing due to value -4 -4 -2 -5 -9 focus KPN Spain and KPN France Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Revenues and other income EBITDA margin EBITDA1 Including fixed Belgian B2B and Carrier business, including the fiber network; divested per 31 March 20102 Normalized EBITDA margin, excluding one-off release of € 11m3 External revenues 25
  26. 26. Financial review - Dutch Telco€m Revenues and other income • Revenues and other income down 5.5% y-on-y -5.5% – Regulatory impact of € 39m (2.2%) – € 24m net negative impact from incidentals – € 16m net positive impact from acquisitions – Lower revenues in Consumer, mainly in 1.758 1.759 1.747 1.740 1.704 1.705 Consumer wireless 1.651 • EBITDA down 5.0% y-on-y Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 – Regulatory impact of € 10m (1.1%) – € 24m net negative impact from incidentals€m EBITDA and EBITDA margin 52,2% 52,2% 53,0% 53,9% 52,6% 52,4% 53,3% • EBITDA margin relatively stable – Lower revenues and increased costs to -5.0% strengthen the Dutch businesses (e.g. IPTV and FttH sales) – Partly offset by continued declining fixed costs and lower traffic costs 917 919 926 938 897 894 880 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 26
  27. 27. Financial review - Dutch Telco by segment €m 29,2% 28,1% 29,6% 29,1% 28,4% 26,9% 27,6%Consumer • Revenues decline of 6.5% y-on-y − Regulatory impact of € 19m (1.9%) 969 990 991 990 941 953 927 − Lower wireless revenues and stable performance at wireline Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 €m 35,2% 34,5% 33,8% 35,3% • Revenues up 1.6% y-on-yBusiness 32,6% 32,8% 32,3% − Regulatory impact of € 13m (2.3%); net positive impact incidentals € 8m; 634 604 577 609 600 600 586 net positive impact acquisitions € 18m − Price pressure in both wireline and wireless offset by increased wireless data revenues Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 €m 63,0% 62,8% 63,0% 61,8% 62,3% 60,7% 60,2% • Revenues decline 9.8% y-on-yW&O 704 704 711 – Ongoing decline in traditional business 680 676 659 641 – Regulatory impact of € 9m (1.3%); net negative impact incidentals € 32m Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Revenues and other income EBITDA margin 27
  28. 28. Contact informationFor further information please contactKPN Investor RelationsTel: +31 70 44 60986Fax: +31 70 44 60593ir@kpn.comwww.kpn.com/ir 28

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