Royal KPN NV · EURONEXT:KPN
Royal KPN NV — Koninklijke KPN — Q3 2007 Earnings Presentation
83 slides from Royal KPN NV's earnings presentation, Oct 30, 2007
Slide 1: Third Quarter Results 2007
Third Quarter Results 2007 30 October 2007
Slide 2: Safe harbor
Safe harbor Certain statements contained in this presentation constitute forward-looking statements. These statements may include, without limitation, statements concerning future results of operations, the impact of regulatory initiatives on our operations, our and our joint ventures' share of new
Slide 3: Disclaimer
Disclaimer We define EBITDA as operating profit before depreciation and impairments of PP&E and amortization and impairments of intangible assets. The measure is used by financial institutions and credit-rating agencies as one of the key indicators of borrowing potential. Many analysts use EBITDA as
Slide 4: Agenda
Agenda Chairman’s review Ad Scheepbouwer, Chairman and CEO Financial review Marcel Smits, CFO Operating review The Netherlands Ad Scheepbouwer, Chairman and CEO Operating review Mobile Int’l Ad Scheepbouwer, Chairman and CEO Concluding remarks Ad Scheepbouwer, Chairman and CEO 4
Slide 5: Highlights Q3
Highlights Q3 • Mobile International: foundations laid for further profitable growth – E-Plus Post Paid net adds accelerating, EBITDA margin well above 35% – New propositions and strengthened distribution through acquisitions by BASE • The Netherlands: resilient performance, increasing share of new
Slide 6: Financial highlights
Financial highlights • On track to meet full-year guidance following solid Q3 results – Revenues and other income flat (YTD -0.5%) – EBITDA up 1.8% (YTD 0.0%) – Capex of € 0.4 bn (YTD € 1.0 bn) – Free cash flow1 of € 0.6 bn (YTD € 1.8 bn) • Shareholder returns increased to € 2.5 bn for 2007 – Interi
Slide 7: Strategic focus The Netherlands
Strategic focus The Netherlands Significant progress on strategic priorities Strategic focus Recent key events • Sustained growth of market shares • Leveraging market shares Consumer • Portfolio rationalization initiated • Bringing focus by simplification • Focus on three key brands: KPN, Hi and Tel
Slide 8: Strategic focus Mobile international
Strategic focus Mobile international Significant progress on strategic priorities Strategic focus Recent key events • Profitable growth through Fixed- • Continued market outperformance E-Plus Mobile Substitution • Growth in new brands with high profitability • Operational excellence • Non-core activ
Slide 9: Agenda
Agenda Chairman’s review Ad Scheepbouwer, Chairman and CEO Financial review Marcel Smits, CFO Operating review The Netherlands Ad Scheepbouwer, Chairman and CEO Operating review Mobile Int’l Ad Scheepbouwer, Chairman and CEO Concluding remarks Ad Scheepbouwer, Chairman and CEO 9
Slide 10: Group results
Group results Flat revenues and EBITDA year to date, in line with guidance € mn Q3 ’07 Q3 ’06 % YTD ’07 YTD ’06 % Revenues and other income 3,037 3,037 0.0% 8,973 9,018 -0.5% – of which Revenues 3,007 3,028 -0.7% 8,882 8,919 -0.4% Operating expenses 2,357 2,463 -4.3% 7,107 7,162 -0.8% 1 – of which D
Slide 11: Group cash flow
Group cash flow Continued strong free cash flow and cash return to shareholders € mn Q3 ’07 Q3 ’06 % YTD ’07 YTD ’06 % Operating result 680 574 18.5% 1,866 1,856 0.5% Depreciation & amortization1 540 624 -13.5% 1,818 1,829 -0.6% Interest paid/received -95 -108 -12.0% -348 -251 38.6% Tax paid/receive
Slide 12: Performance versus Guidance
Performance versus Guidance On track to meet guidance Item Outlook FY ’07 as given 6 Feb Q1 ’07 Q2 ’07 Q3 ’07 YTD ’07 Revenues and other income1 Flat -2.6% 1.0% -0.6% -0.7% EBITDA1,2 Flat -1.4% -0.5% 1.5% -0.1% Capex € 1.6 - € 1.8 bn € 0.3 bn € 0.3 bn € 0.4 bn € 1.0 bn Free cash flow3 > € 2 bn € 0.6
Slide 13: Group financial profile
Group financial profile Leverage increased following shareholder returns, liquidity maintained € bn Debt Financing policy 11.0 10.7 2.5x 10.0 10.1 9.7 2.0x 10.0 2.1 1.9 1.9 1.9 9.4 9.2 9.3 1.8 8.8 Q3 ’06 Q4 ’06 Q1 ’07 Q2 ’07 Q3 ’07 Q3 ’06 Q4 ’06 Q1 ’07 Q2 ’07 Q3 ’07 Gross Debt Net Debt Net Debt / EB
Slide 14: Tax position Germany
Tax position Germany New fiscal legislation with lower tax rates as of 2008 • Lowering of effective tax rate from ~40% to ~29% as of 1 Jan ’08 – Corporate income tax rate from 26.4% to 15.8% – Trade income tax rate from 18.4% to 15.8% New fiscal legislation • Tax losses no longer transferable in cas
Slide 15: MTA
MTA Visibility on MTA regulation improving • New MTA regulation, estimated impact of ~4% on service revenues in 20081 € cents per minute Previous 15 Aug ’07 1 July ’08 1 April ’09 1 July ’09 KPN 11.0 10.0 9.0 8.0 7.0 The Netherlands Vodafone 11.0 10.0 9.0 9.0 7.0 T-Mobile 12.4 11.4 10.4 10.4 8.1 Avg
Slide 16: Financial highlights the Netherlands
Financial highlights the Netherlands Performance in line with previous quarters, headwind from MTA and roaming € mn Q3 ’07 Q3 ’06 YTD ’07 YTD ’06 Revenues and other income 2,116 2,128 6,303 6,368 % change -0.6% -1.0% – of which wireless Service revenues1 676 662 1,994 1,884 % change 2.1% 5.8% Operat
Slide 17: Financial review the Netherlands by segment
Financial review the Netherlands by segment € mn Revenues and other income € mn EBITDA (margin) Consumer 17.5% 19.0% 17.0% 1,070 1,057 1,037 1,032 1,053 17.2% 15.4% 184 163 181 196 179 Q3 '06 Q4 '06 Q1 '07 Q2 '07 Q3 '07 Q3 '06 Q4 '06 Q1 '07 Q2 '07 Q3 '07 Business 23.1% 22.5% 22.6% 847 849 846 832 21
Slide 18: Financial highlights Mobile International
Financial highlights Mobile International Continued profitable growth despite challenging markets and regulation € mn Q3 ’07 Q3 ’06 YTD ’07 YTD ’06 Revenues and other income 1,011 1,000 2,921 2,826 % change 1.1% 3.4% – of which wireless Service revenues1 971 951 2,798 2,675 % change 2.1% 4.6% Operat
Slide 19: Financial review Mobile International by segment
Financial review Mobile International by segment € mn Revenues and other income € mn EBITDA (margin) E-Plus 760 747 698 736 769 1 36.2% 39.8% 37.6% 32.6% 29.5% 714 692 700 735 660 248 220 253 293 289 Q3 '06 Q4 '06 Q1 '07 Q2 '07 Q3 '07 Q3 '06 Q4 '06 Q1 '07 Q2 '07 Q3 '07 BASE 160 43.8% 40.0% 41.9% 162
Slide 20: Pro forma disclosure Fixed
Pro forma disclosure Fixed Continued deceleration of revenue and EBITDA decline Fixed (incl. Other and Intercompany)1,2 Q3 ’07 Q2 ’07 Q1 ’07 Q4 ’06 Q3 ’06 Revenues and other income (excl. notable items3) 1,304 1,282 1,311 1,361 1,337 Y-on-Y decline -33 -79 -99 -67 -93 Y-on-Y % -2.5% -5.8% -7.0% -4.7
Slide 21: Pro forma disclosure KPN Mobile the Netherlands
Pro forma disclosure KPN Mobile the Netherlands Continued Post Paid subscriber growth, headwind from MTA and roaming mn Post Paid share up 2%-point € mn Service revenues up 1.6% 8.9 9.2 47.5% 47.2% 47.2% 47.0% 47.1% 8.5 8.7 8.8 3.9 4.0 4.1 4.2 3.7 44% 45% 45% 46% 46% 752 735 731 755 764 4.8 4.8 4.8
Slide 22: Agenda
Agenda Chairman’s review Ad Scheepbouwer, Chairman and CEO Financial review Marcel Smits, CFO Operating review The Netherlands Ad Scheepbouwer, Chairman and CEO Consumer Business Wholesale & Operations Operating review Mobile Int’l Ad Scheepbouwer, Chairman and CEO Concluding remarks Ad Scheepbouwer
Slide 23: Consumer wireless services
Consumer wireless services Continued Post Paid subscriber growth, service revenues up 2.3% despite MTA cut mn Post Paid share up 3%-point • Quality of base continuously improving 5.9 5.9 5.9 5.9 6.1 – Continued migration to Post Paid, 41% of base 2.5 – Declining churn from successful CLM 2.2 2.3 2.4
Slide 24: Consumer VoIP and broadband
Consumer VoIP and broadband Gradually scaling up VoIP and driving broadband growth further mn VoIP connections • Market leadership consolidated with 39% share 39% – 53k KPN VoIP net adds in Q3 36% 37% 38% 25% – Market growth slowing down to ~10k per week 1.9 2.0 1.8 0.26 – 38% of broadband market co
Slide 25: Line loss
Line loss Net line loss at 100k due to successful retention offers and VoIP x 1,000 PSTN / ISDN trends • Retention offers successful in driving down Q3 '06 Q4 '06 Q1 '07 Q2 '07 Q3 '07 PSTN/ISDN line loss 29% 21% – Discount on flat fee bundles in traditional voice 43% 38% – Broadband combined with tr
Slide 26: TV
TV Further acceleration in TV growth, driven by new strategy x 1,000 TV subscribers up 69% • New TV offerings highly successful +23% – Record net adds of 77k to 414k in Q3 +14% – ~60% share of gross adds in digital TV market +8% +12% – 4%-point market share increase to 17% • Improved business model
Slide 27: Agenda
Agenda Chairman’s review Ad Scheepbouwer, Chairman and CEO Financial review Marcel Smits, CFO Operating review The Netherlands Ad Scheepbouwer, Chairman and CEO Consumer Business Wholesale & Operations Operating review Mobile Int’l Ad Scheepbouwer, Chairman and CEO Concluding remarks Ad Scheepbouwer
Slide 28: Business market
Business market Continued migration from traditional to new services Traditional services IP data services Wireless services 71 78 232 235 235 231 54 62 227 38 36 45 35 34 34 14 13 13 11 11 7 1.2 1.2 1.3 1.3 6 1.1 1.8 1.8 1.8 1.8 1.7 5 4 3 Q3 '06 Q4 '06 Q1 '07 Q2 '07 Q3 '07 Q3 '06 Q4 '06 Q1 '07 Q2 '
Slide 29: Business contract wins in Q3
Business contract wins in Q3 Strengthening position, predominantly in (managed) data services Sector Services Scope • ICT outsourcing in partnership with Getronics Transportation 5 years • Housing, hosting and storage services • Hosting services for 500 servers Transportation 5 years • Servers trans
Slide 30: KPN ICT Services
KPN ICT Services Strong growth in online applications for SME and SoHo Online applications KPN ICT services • KPN ICT strategy launched two years ago – One-stop-shop for telecom and ICT services Back-up – Online applications for SME / SoHo since 2007 online • KPN as reliable partner for SME and SoHo
Slide 31: Global ICT service provider with focus on workspace management
Global ICT service provider with focus on workspace management Workspace management Getronics • Global ICT service provider – Top 5 player in workspace management worldwide among HP, IBM and EDS – Global footprint with direct presence in 20 E-mail countries and over 90 local service partners Telepho
Slide 32: Moving up the value chain into (managed) ICT services
Moving up the value chain into (managed) ICT services Convergence between Telecom and IT • Telecom operators and IT service providers increasingly converging through IP Business IT service – Customers requiring all Telco and IT services from providers processes a single end-to-end vendor – KPN and G
Slide 33: Integration focused on operational improvements and evaluation of core assets
Integration focused on operational improvements and evaluation of core assets Deal closed within 3 months Integration program • Acquisition announced on 30 July, officially • Focus on operational improvements settled on 22 October – Achieve short-term cost savings – Acceleration of profit improvemen
Slide 34: Service revenue growth from higher ICT demand, continued margin pressure
Service revenue growth from higher ICT demand, continued margin pressure Group financials1 • 5.5% organic service revenue growth3 in H1 ’07 € mn H1 ’07 H1 ’06 % – Strong momentum with (inter)national clients Revenues 1,280 1,308 -2.1% due to favorable economic conditions 1,135 1,130 – Organic servic
Slide 35: Agenda
Agenda Chairman’s review Ad Scheepbouwer, Chairman and CEO Financial review Marcel Smits, CFO Operating review The Netherlands Ad Scheepbouwer, Chairman and CEO Consumer Business Wholesale & Operations Operating review Mobile Int’l Ad Scheepbouwer, Chairman and CEO Concluding remarks Ad Scheepbouwer
Slide 36: Wholesale & Operations
Wholesale & Operations Continued focus on costs and network efficiency, FTE reductions on track € mn bn minutes Internal revenues • Lower internal revenues due to decline in access 5.3 lines and traditional voice traffic 5.1 5.1 4.5 4.2 • Good progress in network rollout – DVB-T coverage 67% by end
Slide 37: All-IP
All-IP Preparations for mass rollout at advanced stage, installation capacity committed • Preparations for VDSL mass rollout at advanced stage Status – Building capacity committed by 2008 VDSL – Launch pad for mass VDSL rollout in 2008 • Preparations rollout • Simplification in progress for network
Slide 38: Teleglobe
Top three international wholesale carrier with unique IP-based infrastructure International carrier market iBasis • International wholesale carriers connect • Focused international wholesale carrier foreign Telco A with foreign Telco B – Unique IP-based platform, more flexibility at lower cost • Mar
Slide 39: iBasis and KGCS merger creating platform for further growth
iBasis and KGCS1 merger creating platform for further growth Transaction closed Next steps • Merger rationale • Build premier international voice carrier – Access to state-of-the-art VoIP platform – Increased scale from KGCS traffic and lower – Increased scale in international wholesale costs – Comp
Slide 40: Sustained growth in international wholesale
Sustained growth in international wholesale Financials 2006 ($ mn)1,2 iBasis KGCS New • New iBasis showing profitable growth iBasis – Revenues up 33% Y-on-Y, driven by increased Revenues 511 786 1,297 scale, minutes up 28% Y-on-Y – EBITDA up 46% Y-on-Y, driven by increased Gross profit 63 70 133 sca
Slide 41: Acquisition track record
Acquisition track record Significant value created through in-market consolidation Position before turnaround Successful turnaround • Telfort acquired for € 980 mn net of tax • Telfort successfully integrated into KPN assets – Telfort brand and wholesale activities Telfort – Acquisition of 2.4 mn su
Slide 42: Agenda
Agenda Chairman’s review Ad Scheepbouwer, Chairman and CEO Financial review Marcel Smits, CFO Operating review The Netherlands Ad Scheepbouwer, Chairman and CEO Operating review Mobile Int’l Ad Scheepbouwer, Chairman and CEO Concluding remarks Ad Scheepbouwer, Chairman and CEO 42
Slide 43: Operating review E-Plus
Operating review E-Plus Outperformance on all key metrics, ahead of H2 guidance Customer growth accelerating Service revenue share up 0.8% 14.1 13.1 13.6 12.2 12.7 22 88 14.0% 13.7% 67 55 13.4% 13.5% 13.2% 111 467 459 372 367 252 Q3 ’06 Q4 ’06 Q1 ’07 Q2 ’07 Q3 ’07 Q3 '06 Q4 '06 Q1 '07 Q2 '07 Q3 '07
Slide 44: E-Plus
E-Plus Post Paid net adds accelerating, platform for continued service revenue growth • Value for money fastest growing segment, >10% of Mobile market – Competitors launching new brands, e.g. Congstar (T-Mobile) and FONIC (O2) Propositions – Continued growth E-Plus’ new brands to 6.7 mn subscribers,
Slide 45: Operating review BASE
Operating review BASE Solid performance despite challenging market conditions Net adds driven by wholesale partnerships Revenue share up 1%-point 2.6 2.7 2.4 2.5 ~16% ~16% ~16% 2.2 >15% 4 ~15% 17 3 23 6 122 137 112 94 100 Q3 ’06 Q4 ’06 Q1 ’07 Q2 ’07 Q3 ’07 Q3 '06 Q4 '06 Q1 '07 Q2 '07 Q3 '07 Customer
Slide 46: BASE
BASE Solid performance in challenging market, regaining the initiative Q3 performance Latest developments • Solid underlying performance • Step-up in commercial efforts – Market share up 1%-point – Launch BASE Platinum/Gold – Underlying service revenue growth – JIM Mobile targeting youth market ~2%,
Slide 47: Operating review Mobile Wholesale NL
Operating review Mobile Wholesale NL Continued profitable growth from wholesale partnerships X 1,000 Momentum Post Paid net adds mn Subscribers up 26% 1.8 1.7 18 1.6 39 1.5 1.4 15 36 111 33 90 82 32 45 Q3 ’06 Q4 ’06 Q1 ’07 Q2 ’07 Q3 ’07 Q3 ’06 Q4 ’06 Q1 ’07 Q2 ’07 Q3 ’07 Pre Paid net adds Post Paid
Slide 48: Agenda
Agenda Chairman’s review Ad Scheepbouwer, Chairman and CEO Financial review Marcel Smits, CFO Operating review The Netherlands Ad Scheepbouwer, Chairman and CEO Operating review Mobile Int’l Ad Scheepbouwer, Chairman and CEO Concluding remarks Ad Scheepbouwer, Chairman and CEO 48
Slide 49: Concluding remarks
Concluding remarks • On track to meet full-year guidance following Q3 results • Foundations laid for further profitable growth in Mobile International • Further market share gains in new services in the Netherlands • In former Fixed, deceleration of revenue and EBITDA decline • Preparations for All-
Slide 50: Q&A
Q&A
Slide 51: Annex
Annex For further information please contact KPN Investor Relations Tel: +31 70 44 61583 Fax: +31 70 44 60593 ir@kpn.com www.kpn.com/ir
Slide 52: Analysis of results
Analysis of results Key items worth mentioning in results interpretation € mn Q3 ’07 Q3 ’06 YTD ’07 YTD ’06 Revenue effect MTA tariff reduction Group -47 -72 -113 -195 EBITDA effect MTA tariff reduction Group -27 -30 -60 -69 Book gain on sale of subsidiaries Other 4 76 Book gain on sale of real esta
Slide 53: Guidance reconciliation
Guidance reconciliation Revenues and other income Q3 YTD € mn 2007 2006 2007 2006 Reported 3,037 3,037 8,973 9,018 Consolidation impact Tiscali acquisition -18 -20 Comparison with guidance 3,019 3,037 8,953 9,018 -0.6% -0.7% EBITDA1 Q3 YTD € mn 2007 2006 2007 2006 Reported 1,220 1,198 3,684 3,685 Co
Slide 54: Impact MTA reduction
Impact MTA reduction1 € mn Q3 ’07 YTD ’07 2 2 Revenues EBITDA Revenues EBITDA E-Plus -24 -13 -73 -36 BASE -12 -8 -29 -18 Mobile Wholesale NL -1 -1 -1 -1 Mobile International -37 -22 -103 -55 Consumer -6 -4 -6 -4 Business -3 -1 -3 -1 Wholesale & Operations -3 -3 The Netherlands -12 -5 -12 -5 Intercom
Slide 55: Restructuring charges
Restructuring charges € mn Q3 ’07 YTD ’07 E-Plus BASE Mobile Wholesale NL Mobile International - - Consumer -1 Business -1 -3 Wholesale & Operations -3 -9 The Netherlands -4 -13 Other -8 -13 KPN Group -12 -26 55
Slide 56: Operating expenses
Operating expenses € mn Q3 ’07 Q3 ’06 % Salaries and social security contributions 332 348 -4.6% Cost of materials 227 206 10.2% Work contracted out and other expenses 1,126 1,143 -1.5% Own work capitalized -30 -26 15.4% Other operating expenses 162 168 -3.6% Depreciation1 380 473 -19.7% Amortizatio
Slide 57: Analysis operating expenses Salaries & Cost of materials
Analysis operating expenses Salaries & Cost of materials € mn Salaries Y-on-Y decrease 12.5% • Continued headcount reduction, partly offset by 11.5% 11.7% 11.8% 11.0% acquisitions Q-on-Q decrease • € 15 mn release of salary related provision 348 355 364 349 332 Q3 ’06 Q4 ’06 Q1 ’07 Q2 ’07 Q3 ’07 Sal
Slide 58: Analysis operating expenses Work contracted out & other
Analysis operating expenses Work contracted out & other € mn Work contracted out Y-on-Y decrease 37.7% 35.7% 35.9% 36.2% 37.4% • Lower MTA tariffs, partly offset by increased MoU • Lower wholesale roaming costs • Lower traffic volumes Fixed, offset by Mobile 1,143 1,078 1,069 1,126 1,047 Q-on-Q incr
Slide 59: Analysis operating expenses Depreciation & Amortization
Analysis operating expenses Depreciation & Amortization € mn Depreciation1 Y-on-Y decrease 15.6% • Fixed depreciation trending down due to lower 14.5% 15.0% Capex 14.1% 12.6% Q-on-Q decrease • Additional depreciation from Telfort network integration in Q2 ’07 (€ 13 mn) 473 439 439 416 380 Q3 ’06 Q4
Slide 60: Personnel
Personnel Continuing decline, predominantly in the Netherlands • Personnel reduction Y-on-Y of 1,031 FTE -1,031 – 1,063 FTE reduction in the Netherlands – Excluding acquisitions reduction 25,921 25,976 24,799 24,881 24,890 of 1,543 FTE in the Netherlands 6,787 6,992 • FTEs flat compared to Q2 6,235
Slide 61: Tax
Tax P&L Cash flow Fiscal units (€ mn) Q3 ’07 Q3 ’06 Q3 ’07 Q3 ’06 Dutch activities -167 -110 -38 -1 German Mobile activities -6 - - - Belgian Mobile activities -9 1 - - Total -182 -109 -38 -1 • € 38 mn Dutch corporate tax paid as NOLs at KPN Mobile are exhausted • Higher P&L tax in the Netherlands d
Slide 62: Net cash flow from operating activities
Net cash flow from operating activities € mn Q3 ’07 Q3 ’06 YTD ’07 YTD ’06 Operating Result 680 574 1,866 1,856 Depreciation, amortization and impairments 540 624 1,818 1,829 Interest paid -95 -108 -348 -251 Income tax paid -38 -1 -80 213 Other income -31 -9 -91 -99 Share based compensation 2 2 7 7
Slide 63: Total cash flow
Total cash flow € mn Q3 ’07 Q3 ’06 YTD ’07 YTD ’06 Net cash flow from operating activities 962 1,153 2,678 3,256 1 Capex -378 -425 -981 -1,117 Acquisitions -300 -52 -533 -360 Disposals real estate 42 20 124 35 Disposals other 16 3 31 72 Other 1 -5 -7 9 Net cash flow from investing activities -619 -4
Slide 64: Capex
Capex1 € mn Q3 ’07 Q3 ’06 % YTD ’07 YTD ’06 % Mobile International 132 184 -28.3% 370 463 -20.1% % Revenues Mobile International 13.1% 18.4% 12.7% 16.4% E-Plus 95 151 -37.1% 286 367 -22.1% % Revenues E-Plus 12.4% 19.9% 13.0% 17.1% BASE 36 32 12.5% 81 94 -13.8% % Revenues BASE 23.8% 19.8% 17.7% 20.3%
Slide 65: Balance sheet
Balance sheet Assets Equity and liabilities € bn € bn 22.4 21.3 21.1 20.8 20.7 22.4 21.3 21.1 20.8 20.7 3.8 4.7 4.6 4.6 4.2 4.4 3.9 3.3 4.7 4.7 1.6 1.6 1.4 1.5 1.5 4.3 4.2 4.0 4.0 3.9 Goodwill Group equity 4 11.7 Licenses 1 Provisions 11.5 11.6 11.6 11.6 9.5 2 9.4 9.2 9.0 9.0 Other non- Non-current
Slide 66: Share repurchase progress
Share repurchase progress Date1 Value (€ mn) mn shares Avg. share price (€) Q1 ’07 136.8 11.9 11.46 Q2 ’07 313.5 25.4 12.34 July 87.3 7.2 12.06 August 462.4 40.5 11.41 September 120.2 10.1 11.86 Q3 ’07 669.9 57.8 11.57 October 117.1 9.3 12.54 Total 1,237.3 104.4 11.85 • Share repurchases increased t
Slide 67: Debt summary
Debt summary € bn Q3 ’07 Q2 ’07 Q3 ’06 Bonds 9.21 9.30 8.19 Eurobonds 7.29 7.32 6.02 Global bonds 1.92 1.98 2.17 Other debt 1.14 0.52 1.91 Other loans at Royal KPN1 1.06 0.44 1.86 Consolidated debt 0.08 0.08 0.05 Fair value financial instruments 0.31 0.24 0.86 Total debt 10.66 10.06 10.96 – of which
Slide 68: Debt portfolio
Debt portfolio Breakdown of € 10.7 bn gross debt1 10% Financial instrum ents 70% 20% Other 3% Eurobonds 11% 68% Global bonds EUR USD2 GBP2 18% 28% 72% Fixed Floating (incl. swapped) 1 Book value of interest bearing financial liabilities plus the fair value of financial instruments related to these f
Slide 69: Getronics financial profile
Getronics financial profile1 Key financials Revenue breakdown Group (€ mn) 2006 2005 % By business area Revenues 2,627 2,525 4% Consulting and Service revenues 2,280 2,121 7% Transformation Workspace services management Gross profit 525 532 -1% 15% Operating result 23 99 -77% 52% EBITAE2 117 143 -18
Slide 70: International carrier market
International carrier market Key financials new iBasis bn Traffic volume outgoing minutes1 2007 H1 ($ mn) iBasis KGCS New iBasis Verizo n 4.0% Revenues 301 373 674 A T&T 10.4% Gross profit 33 32 65 Teleglo be 4.1% New iB asis 33.1% Gross margin 11.0% 8.6% 9.6% IDT 10.9% Adjusted EBITDA 5 23 28 TI 6.
Slide 71: Unbundling tariffs
Unbundling tariffs SLU and colocation set by OPTA, backhaul and WBA based on deal pricing Unbundling in current network Category Monthly tariffs Line sharing (LLU) € 0.37 / line LLU MDF colocation MDF backhaul (regulated) (regulated) (fiber, not regulated) Fully unbundled (LLU) € 8.00 / line MDF Nod
Slide 72: E-Plus
E-Plus Continued growth in new propositions, driving service revenue growth X 1,000 Subscribers new propositions Service revenue growth 6,706 15.1% 14.7% 14.0% 5,880 4.2% 3.9% 5,149 4.0% 4,345 9.5% 2.4% 8.7% 3,586 0.9% 3.7% 3.4% 10.9% 10.0% 8.4% 2.4% 2.4% 2.5% 2.9% Q3 '06 Q4 '06 Q1 '07 Q2 '07 Q3 '07
Slide 73: BASE
BASE Strengthening distribution to create platform for further profitable growth • Strengthening retail presence with acquisition of 51 shops – Strong presence in Wallonia Allo – Active in SME and SoHo segments • Strengthened – Distribution doubled to over 100 points of sale Telecom distribution, •
Slide 74: Pro forma disclosure KPN Mobile the Netherlands
Pro forma disclosure KPN Mobile the Netherlands Financials and KPIs € mn Q3 ’07 Q3 ’06 % Revenues and other income 3,037 3,037 0.0% E-Plus & BASE 920 922 -0.2% KPN Mobile the Netherlands 783 778 0.6% Fixed (incl. Other and Intercompany eliminations) 1,334 1,337 -0.2% EBITDA 1,220 1,198 1.8% E-Plus &
Slide 75: Pro forma disclosure Fixed (incl. Other)
Pro forma disclosure Fixed (incl. Other) Reconciliation for noteworthy items Revenue & other income € mn Q3 ’07 Q2 ’07 Q1 ’07 FY ’06 Q4 ’06 Q3 ’06 Q2 ’06 Q1 ’06 Reported 1,334 1,337 1,315 5,561 1,367 1,337 1,364 1,493 Xantic -4 -92 -6 -3 -831 Book gain real estate -30 -55 Excluding notable items 1,3
Slide 76: Dutch Consumer voice market
Dutch Consumer voice market1 mn Q3 ’07 Q2 ’07 Q3 ’06 KPN PSTN / ISDN 3.04 3.28 4.29 Wholesale Line Rental (WLR) 0.28 0.18 - Total traditional voice 3.31 3.46 4.29 KPN VoIP 0.79 0.73 0.27 Cable VoIP 0.98 0.91 0.60 Alt DSL VoIP 0.26 0.25 0.16 Total VoIP 2.03 1.89 1.03 Cable voice analogue 0.11 0.11 0.
Slide 77: KPIs Consumer Voice
KPIs Consumer Voice Wireline Q3 ’07 Q2 ’07 Q3 ’06 VoIP penetration1 38% 36% 22% Market share – Voice2 ~60% >55% ~60% – VoIP 39% 38% 25% – Traditional voice3 >70% ~70% >65% Voice connections (x 1,000) 3,823 4,017 4,555 – PSTN 2,733 2,961 3,872 – ISDN 304 323 413 – VoIP packages (Voice / Broadband) 78
Slide 78: KPIs Consumer Internet & TV
KPIs Consumer Internet & TV Internet Q3 ’07 Q2 ’07 Q3 ’06 Broadband penetration 75% 73% 66% Broadband market share KPN (ISP) retail1 44.3% 44.6% 40.3% Broadband connections1 46.8% 46.0% 42.7% ADSL connections 2,518 2,427 2,023 Broadband ISP customers (x 1,000) 2,382 2,344 1,911 – Het Net 629 607 534
Slide 79: KPIs Business
KPIs Business Wireline Q3 ’07 Q2 ’07 Q3 ’06 Market share voice ~55% >55% >55% Access lines (x 1,000) 1,710 1,757 1,840 – PSTN 825 852 915 – ISDN 874 895 925 – VoIP 11 10 - Traditional originating minutes (bn) 1.66 1.80 1.91 Network services (x 1,000) – Leased lines 33.9 34.1 38.2 – E-VPN connections
Slide 80: KPIs Wholesale & Operations
KPIs Wholesale & Operations Q3 ’07 Q2 ’07 Q3 ’06 Minutes (bn) 9.21 9.44 9.69 – Terminating services 2.72 2.94 3.03 – Originating 1.56 1.72 2.23 – Transit services 2.40 2.45 2.07 – International wholesale services 2.53 2.33 2.36 Local loop (x 1,000) MDF access lines1 3,389 3,327 2,973 – of which line
Slide 81: KPIs E-Plus
KPIs E-Plus Q3 ’07 Q2 ’07 Q3 ’06 Market share1 Service revenue 14.0% 13.7% 13.2% Base 15.1% 15.1% 14.8% Customers (x 1,000) 14,112 13,565 12,215 – Post Paid 6,170 6,082 5,938 – Pre Paid 7,942 7,483 6,277 – of which new brands 6,706 5,880 3,586 Service revenues (€ mn) 735 700 714 ARPU (€) 18 17 20 –
Slide 82: KPIs BASE
KPIs BASE Q3 ’07 Q2 ’07 Q3 ’06 Market share1 Revenue ~16% ~16% ~15% Base ~23% >22% ~21% Customers (x 1,000) 2,722 2,581 2,219 – Post Paid 494 490 444 – Pre Paid 2,228 2,091 1,775 Service revenues (€ mn) 147 151 159 ARPU (€) 18 20 25 – Post Paid 52 52 64 – Pre Paid 11 12 15 Non-voice as % of ARPU 17%
Slide 83: KPIs Mobile wholesale NL
KPIs Mobile wholesale NL Q3 ’07 Q2 ’07 Q3 ’06 Customers (x 1,000) 1,791 1,710 1,419 – Post Paid 449 413 347 – Pre Paid 1,342 1,297 1,072 Service revenues (€ mn) 90 85 79 83