Proximus : Consolidated annual accounts 2025 (1 MB) (04 consolidated annual accounts proximus 2025 en)

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CONSO 1 CONSOLIDATED ACCOUNTS IN IFRS AND OTHER DOCUMENTS TO BE DEPOSITED IN ACCORDANCE WITH THE COMPANIES CODE IDENTIFICATION DETAILS (on the date of deposition) NAME: Proximus........................................................................................................................................................................................ Legal form: Société anonyme de droit public/Naamloze vennootschap van publiek recht......................................................................... Address: Boulevard du Roi Albert II - Koning Albert II laan................................................................. N°.: 27................... Box: ............. Postal Code: 1030 .................... City: Brussels........................................................................................................................................ Country: Belgium ................ . ...................... Register of Legal Persons (RLP) - Office of the Business Court at Brussels ............................................................................................ Internet address1: http://www.proximus.com.............................................................................................................................. . BE 0202.239.951 Business number CONSOLIDATED ACCOUNTS O IN MILL N O E F EUSR 15/04/2026 Approved by the General Meeting of Concerning the financial year covering the period from 01/01/2025 tO 31/12/2025 Previous period from 01 01/2024 to 31 12/2024 The amounts of the previous financial year are / are not 3 identical to those which have been previously published. Documents attached to these consolidated financial statements: - the consolidated management report - the audit report on the consolidated accounts TO BE COMPLETED IF THE CONSOLIDATED ACCOUNTS ARE FILED BY A BELGIAN SUBSIDIARY Name of the filing Belgian subsidiary (article 3 26, §2 4°, a) of the Companies and Associations Code). Company Number of the filing Belgian subsidiary Total number of pages filed................. Numbers of the sections of the standardized document filed because "thout Object..................................................................................................................... ................. . .. . . .. ................ Signature C O anging Director (name and position) BIJNENS Stijn Signature (name and position) DE CLERCK Stefaan Chairma irectors Optional statement If necessary, change to currency in which the amounts are expressed. Delete what does not apply Mention optional If necessary, adapt the currency and the unit in which the amounts are expressed Nr. CONSO 2 LIST OF DIRECTOR S, MANAG ERS AND AUDITORS AND DECLARATION R EG ARDING A COM PLIMENTAR Y REVIEW OR CORRECTION ASSIGNMENT LIST OF DIRECTORS, MANAGERS AND AUDITORS BIJNENS Stijn, CEO & Managing Director Kerkkantstraat 87, 3512 Hasselt, BELGIUM Mandate :Managing Director, DE CLERCK Stefaan, Chairman of the Board of Directors Damkaai 7, 8500 Kortrijk, BELGIUM Mandate :Chairman of the Board of Directors de MAHIEU Béatrice, CEO BeCode Pierre Marchandstraat 51, 1970 Wezembeek-Oppem, BELGIUM Mandate :Director GEORGIN Franck-Philippe, Secretary General Groupe Lucien Barriére 3 Rue Emile Allez (BAT A, 2^"° étage), 75017 Paris, FRANCE Mandate : Director HANARD Audrey, Partner at Dalbert Clapham Common South Side, Ground Flat 94, SW49DN London, UNITED KINGDOM Mandate :Director KENNIS Koen, Vice Mayor of the City of Antwerp Bosduifstraat 19, 2018 Antwerpen, BELGIUM Mandate : Director TILLEKAERTS Claire, Director of companies Ter Ramenlaan 11, 9070 Destelbergen, BELGIUM Mandate :Director BASTYN Caroline, Chief Digital & Information and Global Business Services Officer Adecco Group Chemin des Vernes 16, 1936 Verbier, SWITZERLAND Mandate : Director, COUNE Cécile, Director of Companies Rue du Duc 68, 1150 WoIuwe-Saint-Pierre, BELGIUM Mandate :Director DE PRYCKER Martin, Director of Companies De Cauwerstraat 41, 9100 Sint-Niklaas, BELGIUM Mandate :Director RUTTEN Catherine, VP International, Government Aflairs & Public Policy Vertex Pharmaceuticals Emile Van Becelaerelaan 107, 1170 Watermael-Boitsfort, BELGIUM Mandate : Director SONNE Joachim, Finance Advisor Perrymead Street 29, SW6 3SN,London, UNITED KINGDOM Mandate : Director Nr. CONSO 3 LIST OF DIRECTORS, MANAG ERS AND AUDITORS AND DECLARATION REGARDING A COMPLIMENTARY REVIEW OR CORRECTION ASSIGNMENT LIST OF DIRECTORS, MANAGERS AND AUDITORS VANDENBORRE Catherine, Chief Financial Officer & Corporate Lead IBA Clos du Champ de Bourgeois 11, 1330 Rixensart, BELGIUM Mandate : Director VAN DEN HOVE Luc, President & CEO imec Jachthuislaan 29, 3210 Lubbeek, BELGIUM Mandate : Director DELOITTE, Bedrijfsrevisoren SRL Gateway Building, Luchthaven Brussel Nationaal 1, box J, 1930 Zaventem, BELGIUM Company number: BE 0429.053.863 Auditor, Membership number: B00025 Mandat: Chairman of the Board of Auditors Represented by Declercq Fabio Gateway Building, Luchthaven Brussel Nationaal 1, box J, 1930 Zaventem, BELGIUM Auditor, Membership number: A01556 Luc CALLAERT SRL Zwaluwstraat 117, 1840 Londerzeel, BELGIUM Company number: BE 0463.716.022 Membership number: B00342 Mandat: Auditor Represented by Luc Callaert Zwaluwstraat 117, 1840 Londerzeel, BELGIUM Auditor, Membership number: A01123 Consolidated financial statements Prepared under International Financial Reporting Standards for each of the two years ended 31 December 2025 and 2024. Consolidated Balance Sheet 236 Consolidated Income Statement 238 Consolidated Statement of Comprehensive Income 239 Consolidated Cash Flow Statement 240 Consolidated Statement of Changes in Equity 242 Notes to the consolidated financial statements 243 Note 1. Corporate information 243 Note 2. Material accounting policy information 244 Note 3. Goodwill 264 Note 4. Intangible assets with finite useful life 271 Note 5. Property, Plant and Equipment 273 Note 6. Leases 275 Note 7. Contract costs 277 Note 8. Investments in subsidiaries, joint operations, joint ventures and associates 278 Note 9. Equity investments measured at fair value 300 Note 10. Income taxes 301 Note 11. Assets and liabilities for pensions, other post-employment benefits and termination benefits 305 Note 12. Other non-current assets 313 Note 13. Inventories 313 Note 14. Trade receivables and contract assets 314 Note 15. Other current assets 317 Note 16. Non-current assets held for sale 318 Note 17. Investments and Cash and cash equivalents 319 Note 18. Equity 319 Note 19. Interest-bearing liabilities 322 Note 20. Provisions 330 Note 21. Other non-current payables 331 Note 22. Other current payables 332 Note 23. Net revenue 333 Note 24. Other operating income 336 Note 25. Costs of materials and services related to revenue 336 Note 26. Workforce expenses 337 Note 27. Non-Workforce expenses 337 Note 28. Depreciation, amortization and goodwill impairment 338 Note 29. Net finance cost 339 Note 30. Earnings per share 340 Note 31. Dividends paid and proposed 341 Note 32. Additional disclosures on financial instruments 342 Note 33. Related party disclosures 358 Note 34. Rights, commitments and contingent liabilities 361 Note 35. Share-based Payment 365 Note 36. Relationship with the auditors 369 Note 37. Segment reporting 369 Note 38. Recent IFRS pronouncements 372 Note 39. Post balance sheet events 373 ‌Consolidated Balance Sheet (EUR million) As at 31 December ASSETS Note 2024 2025 NON-CURRENT ASSETS 10,969 10,710 Goodwill 3 3,275 2,899 Intangible assets with finite useful life 4 2,076 1,824 Property, plant and equipment 5 4,745 4,967 Right-of-use assets 6 307 323 Lease receivable 9 7 Contract costs 7 103 108 Investments in associates and joint ventures 8 23 25 Deferred income tax assets 10 17 4 Equity investments measured at fair value 9 2 2 Pension assets 11 296 352 Other non-current assets 12 117 198 CURRENT ASSETS 2,358 2,257 Inventories 13 147 118 Trade receivables 14 1,046 1,028 Contract assets 14 198 191 Current tax assets 5 10 Other current assets 15 329 240 Investments 17 41 105 Cash and cash equivalents 17 497 565 Non-current assets held for sale 16 94 0 TOTAL ASSETS 13,327 12,967 LIABILITIES AND EQUITY Note EQUITY 18 4,535 4,666 Shareholders' equity attributable to the parent 18 4,310 4,505 Non-Controlling interests 18 225 162 NON-CURRENT LIABILITIES 5,606 5,818 Interest-bearing liabilities 19 3,981 4,222 Lease liabilities 6 197 261 Liability for pensions, other post-employment benefits and termination benefits 11 324 287 Provisions 20 233 191 Deferred income tax liabilities 10 313 292 Other non-current payables non-interest-bearing 21 36 80 Other non-current payables interest-bearing 21 (*) 522 484 CURRENT LIABILITIES 3,186 2,482 Interest-bearing liabilities 19 525 22 Lease liabilities 6 97 104 Liability for pensions, other post-employment benefits and termination benefits 11 34 32 Provisions other than for pensions, other post-employment benefits and termination benefits 6 3 Trade payables (*) 1,503 1,430 Contract liabilities 22 121 115 Tax payables 28 43 Other current payables non-interest-bearing 22 824 696 Other current payables interest-bearing 22 (*) 37 37 Liabilities associated with assets classified as held for sale 16 10 0 TOTAL LIABILITIES AND EQUITY 13,327 12,967 (*) "Other current payables Interest-bearing" include interest-bearing payables "Trade payables" ‌Consolidated Income Statement (EUR million) Note 2024 2025 Net revenue 23 6,376 6,248 Other operating income 24 163 372 Total income 6,539 6,620 Costs of materials and services related to revenue 25 -2,364 -2,224 Workforce expenses 26 -1,435 -1,415 Non-workforce expenses 27 -790 -729 Total operating expenses before depreciation, amortization and goodwill impairment -4,589 -4,369 Operating income before depreciation, amortization and goodwill impairment 1,950 2,251 Depreciation and amortization 28 -1,259 -1,326 Impairment on goodwill 28 0 -275 Operating income 691 650 Finance income 29 26 28 Finance costs 29 -185 -174 Net finance costs 29 -159 -146 Share of loss on associates 8.3 -18 -17 Income before taxes 513 487 Tax expense 10 -57 -82 Net income 456 405 Attributable to: Equity holders of the parent (Group share) 447 398 Non-controlling interests 9 7 Basic earnings per share (in EUR) 30 1.39 1.23 Diluted earnings per share (in EUR) 30 1.39 1.23 Weighted average nb of outstanding ordinary shares 30 322,573,717 322,837,609 Weighted average nb of outstanding ordinary shares for diluted earnings per share 30 322,573,717 322,837,609 ‌Consolidated Statement of Comprehensive Income (EUR million) Note 2024 2025 Net income 456 405 Other comprehensive income: Items that may be reclassified to profit and loss Exchange differences on translation of foreign operations 20 -163 Cash flow hedges: Gain/(Loss) taken to equity 32.2 -3 10 Transfer to profit or loss for the period 32.2 -14 -19 Other -1 2 Total before related tax effects 1 -170 Cash flow hedges: Gain/(Loss) taken to equity 32.2 1 -3 Transfer to profit or loss for the period 32.2 3 5 Income tax relating to items that may be reclassified 4 2 Total of items that may be reclassified to profit and loss - net of related tax effects 6 -168 Items that will not be reclassified to profit and loss Remeasurement of net defined benefit obligations 11 110 92 Total of items that will not be reclassified to profit and loss 110 92 Total before related tax effects 110 92 Related tax effects Remeasurement of net defined benefit obligations -29 -23 Income tax relating to items that will not be reclassified -29 -23 Total of items that will not be reclassified to profit and loss, net of related tax effects 81 69 Total comprehensive income 543 306 Attributable to: Equity holders of the parent 529 346 Non-controlling interests 14 -41 ‌Consolidated Cash Flow Statement -62 -104 and/or derivatives) As at 31 December (EUR million) Note 2024 2025 Cash flow from operating activities: Net income 456 405 Depreciation, amortization and goodwill impairment 4/5/6 1,259 1,601 Net finance costs 159 147 Tax expense 57 82 Share of loss on associates and JV 8.3 18 17 Ebitda (Reported) (1) 1,950 2,251 Adjustments for non-cash items in Ebitda: -51 -303 Impairment on intangible assets and property, plant and equipment 16 38 1 Impairment on other amounts receivable 3 Increase/(decrease) of provisions 20 -9 -19 Unrealized exchange gains/losses on loans 10 Remeasurement to FV of Previously held interest 8.4 -78 0 (Gain)/loss on disposal of consolidated companies 8.4 0 -285 (Gain) /loss on disposal of property, plant and equipment 24 -3 -14 (Decrease)/increase in working capital (net of interests, income tax, acquisitions/disposals of subsidiaries): Decrease/(increase) in inventories 12 23 Decrease/(increase) in trade receivables -24 -44 (Decrease)/increase in trade payables -5 5 Decrease/(increase) in other assets -30 -78 (Decrease)/increase in other liabilities 14 -8 (Decrease)/increase in net liability for pensions, other post-employment benefits 11 -29 -2 and termination benefits Interests Paid/Received & Other financial cash outflows -127 -138 Interests Received 20 18 Interests Paid -146 -152 Other financial cash outflows -1 -4 Income Tax Paid -108 -92 A. Net cash flow from operating activities 1,602 1,615 Cash flow from /(to) investing activities: Cash paid for acquisitions of intangible assets and property, plant and equipment 4/5 -1,474 -1,316 Cash (paid to)/received from other participating interests (acquisition/sale, loans 8.4 -17 -18 Cash paid for acquisition of consolidated companies, net of cash acquired 8.4 -737 -60 Cash received from sales of consolidated companies, net of cash disposed of 0 384 Cash received from sales of intangible assets, property, plant and equipment 0 66 Cash paid for other non-current assets 0 -73 B. Net cash flow from / (to) investing activities -2,228 -1,017 Cash flow before financing activities (A. + B.) -626 598 C.1 Lease payments 6 -101 -118 Free cash flow (A. + B. + C.1) (2) -727 480 Cash flow from / (to) financing activities other than lease payments: Dividends paid to shareholders 31 -360 -156 Dividends to and transactions with non-controlling interests 18.2 -2 -11 Interests paid on Perpetual subordinated borrowing -33 Net sale of treasury shares 0 4 Net sale of investments 0 1 Impact of transactions with equity holders 8.4 83 0 Issuance / (repayment) of Perpetual subordinated borrowing 18.1 700 0 Cash received from /(paid to) cash flow hedge instrument related to long term debt -1 59 Issuance / (repayment) of Asset financing arrangements 19.3 -10 -9 Issuance of long-term debt 714 738 Repayment of long-term debt 19.3 -614 -997 Repayment of short-term debt 19.3 -4 4 C.2 Net cash flow from / (to) financing activities (other than lease payments) 506 -400 D. Exchange rate impact 2 -11 Net increase/(decrease) of cash and cash equivalents (A + B + C.1 + C.2 + D) -219 68 Cash and cash equivalents at 1 January 716 497 Cash and cash equivalents at the end of the period 497 565 Ebitda: Earnings Before Interest, Taxes, Depreciation and Amortization; corresponds to revenue minus cost of sales, workforce and non-workforce expenses. Free Cash Flow: this is cash flow before financing activities and after lease payments. ‌Consolidated Statement of Changes in Equity (EUR million) Issued capital Treasury shares Restricted reserve Equity instruments and hedge reserve Other remeasurement reserve Foreign currency translation Retained Earnings Hybrid Instruments Shareholder's Equity interests Non-control. Total Equity Balance as at 1 January 2024 1,000 -419 100 134 42 11 2,432 0 3,300 0 3,300 Total comprehensive income and expense 0 0 0 -14 81 15 447 0 529 14 543 Dividends to shareholders (relating to 2023) 0 0 0 0 0 0 -226 0 -226 0 -226 Interim dividends to shareholders (relating to 2024) 0 0 0 0 0 0 -161 0 -161 0 -161 Dividends of subsidiaries to non-controlling interests 0 0 0 0 0 0 -2 0 -2 0 -2 Business combination 0 0 0 0 0 0 165 0 165 138 303 Partial disposal of a subsidiary without loss of control 0 0 0 0 0 0 47 0 47 43 90 Business combination under common control 0 0 0 0 0 0 -32 0 -32 32 0 Perpetual subordinate borrowings 0 0 0 0 0 0 -12 700 688 0 688 Treasury shares Sale of treasury shares 0 2 0 0 0 0 -3 0 -1 0 -1 Stock options Exercise of stock options 0 0 0 0 0 0 2 0 2 -1 1 Total transactions with equity holders 0 2 0 0 0 0 -222 700 481 212 692 Balance as at 31 December 2024 1,000 -417 100 120 124 26 2,657 700 4,310 225 4,535 Total comprehensive income 0 0 0 -5 69 -115 398 0 346 -41 306 Dividends to shareholders (relating to 2024) 0 0 0 0 0 0 -32 0 -32 0 -32 Interim dividends to shareholders (relating to 2025) 0 0 0 0 0 0 -97 0 -97 0 -97 Dividends of subsidiaries to non-controlling interests 0 0 0 0 0 0 0 0 0 -11 -11 Business combination 0 0 0 0 0 0 7 0 7 -12 -5 Perpetual subordinate borrowings 0 0 0 0 0 0 -33 0 -33 0 -33 Treasury shares Sale of treasury shares 0 3 0 0 0 0 1 0 4 0 4 Stock options Total transactions with equity holders 0 3 0 0 0 0 -155 0 -151 -23 -175 Balance as at 31 December 2025 1,000 -413 100 115 192 -89 2,900 700 4,505 162 4,666 ‌Notes to the consolidated financial statements ‌Note 1. Corporate information The consolidated financial statements at December 31 st , 2025, were authorized for issue by the Board of Directors on February 26 th , 2026. They comprise the financial statements of Proximus SA, its subsidiaries, as well as the Group's interest in associates and joint ventures accounted for under the equity method and joint operations (hereafter "the Group"). Proximus SA is a "Limited Liability Company of Public Law" registered in Belgium. The transformation of Proximus SA from "Autonomous State Company" into a "Limited Liability Company of Public Law" was implemented by the Royal Decree of 16 December 1994. Proximus SA headquarters are located at Boulevard du Roi Albert II, 27 1030 Brussels, Belgium. Proximus' shares are listed on Euronext Brussels. Proximus Group (Euronext Brussels: PROX), is a provider of future-proof connectivity, IT and digital services, headquartered in Brussels. The Group is actively engaged in building a connected world that people trust, so society blooms. The Domestic segment is focused on providing state-of-the art telecommunications and IT services in the Benelux. In Belgium, core products and services are offered under the Proximus, Mobile Vikings and Scarlet brands for the residential market and Proximus NXT for the Enterprise market. The Group is also active in the Netherlands (Proximus NXT) and in Luxembourg (Tango and Proximus NXT). Proximus Global overarches the international activities of the Group, gathering the strengths of BICS, Telesign and Route Mobile. Encompassing the entire value chain from P2P Voice & Messaging and Mobility services to CPaaS and Digital Identity, Proximus Global is in a unique position to become a global digital communications leader. The Group has the ambition to build the #1 gigabit network for Belgium and plays a central role in creating inspiring digital ecosystems, while fostering an engaging culture and empowering ways of working. Building upon these strengths, Proximus aims to contribute to an inclusive and sustainable digital society, delight customers with an unrivalled experience and achieve profitable growth both locally and internationally to deliver long-term value for stakeholders. The number of employees of the Group (in full time equivalents) amounted to 12,560 on December 31 st , 2025, and 13,131 on December 31 st , 2024. For the year 2025, the average headcount of the Group was 156 management personnel and 12,630 employees; for the year 2024, the average headcount of the Group was 159 management personnel and 12,470 employees. ‌Note 2. Material accounting policy information Note 2.1. Basis of preparation The accompanying consolidated financial statements as of 31 December 2025 and for the year then ended have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted for use in the European Union. The Group did not early adopt any IASB standards or interpretations. Note 2.2. Changes in accounting policies The accounting policies have been applied consistently with those of previous financial year. The Group applies changes to standards or new standards as adopted by the European Union and as they become mandatory. The new or revised IFRS standards and interpretations that became effective on 1 January 2025 are as follows: Amendments to IAS 21 - Lack of exchangeability The adoption of these new and amended standards has limited impact on the financial statements of the Group. Note 2.3. Operating segments The Group's operating segments are components whose results are regularly reviewed by the Leadership Squad, the Group's Chief Operating Decision Makers (CODM), to make resource allocation decisions and assess performance. Following the acquisition of control over Route Mobile in 2024 (see note 8.4), a global CPaaS services provider listed on NSE and BSE in India, the Group revamped its internal decision-making, governance, and management reporting processes to optimize resource allocation and performance assessment of its operating segments. Consequently, the Group implemented a two-pillar governance structure by establishing a new executive committee, the 'International Management Committee,' alongside the 'Domestic Management Committee.' This international committee was created to facilitate key decisions and ensure alignment among international affiliates, including BICS, Telesign, and Route Mobile. This new executive committee enhances accountability, coordination, and provides a stronger voice in group decision-making for international business. Segmental information used for internal decision-making and performance assessment by the CODM is now provided at the Domestic and International components, identified as operating segments: International Segment: this segment combines the following entities: International Carrier Services (BICS): manages international carrier activities in the global communications market. TeleSign: specializes in international delivery authentication and digital identity services for major internet brands, digital champions, and cloud-native businesses. Route Mobile: offers omnichannel communication solutions, including automated SMS or WhatsApp notifications for order updates, appointment reminders, and promotions, as well as voice-based and email solutions. Route Mobile also provides AI-based firewall analytics solutions to mobile network operators worldwide. Domestic Segment : remains unchanged from the previous year, providing communication and ICT services to residential, business, and telecom wholesale markets in Belgium/Benelux. Note 2.4. Alternative Performance Measures The Group uses so called "Alternative Performance Measures" ("APM") in the financial statements and notes. An APM is a financial measure of historical or future financial performance, financial position, or cash flows, other than a financial measure defined in the applicable financial reporting framework (IFRS). A glossary describing these is included in the section "Management Discussion" of the Consolidated Management Report. They are consistently used over time and when a change is needed, comparable information is restated. Note 2.5. Basis of consolidation Subsidiaries are those entities controlled by the Group. Control exists when the Group has the power over the investee, is exposed or has rights to variable returns from its involvement with the investee and can use its power to affect its returns. Note 8 lists the Group's subsidiaries, joint operations, joint ventures and associates. Consolidation of a subsidiary begins from the date on which the Group obtains control over the subsidiary and ceases when the Group loses control over the subsidiary. Intercompany balances and transactions and resulting unrealized profits or losses between Group companies are eliminated in full in consolidation. When subsidiaries accounting policies are not aligned with the Group ones, the Group performs the necessary adjustments to ensure that the consolidated financial statements are prepared using uniform accounting policies. Changes in Group's ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transaction. In the event of a change in the percentage of ownership, the non-controlling interests (NCI) will be adjusted based on the increase or decrease in their percentage of ownership in the net assets of the subsidiary involved in the transaction, after consolidation adjustments and including goodwill. Any difference between the amount by which non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to owners of the Company. Transaction costs associated with the purchase or sale of a non- controlling interest in a subsidiary, when control is maintained, is recognized as a deduction from equity only if they are incremental costs directly attributable to the equity transaction. A joint arrangement is an arrangement in which two or more parties share joint control, established by contractual agreement. Joint control exists only when decisions about relevant activities require the unanimous consent of the parties sharing control. Joint arrangements are classified as either a joint venture or a joint operation: Joint ventures: the parties with joint control have rights to the net assets of the arrangement. Joint ventures are accounted for in the consolidated financial statements using the equity method. Joint operations: the parties with joint control have rights to the assets and obligations for the liabilities relating to the arrangement. Arrangements designed so that the parties are substantially the only source of cash flows ensuring the continuity of operations of the arrangement are recognized as joint operations. When the Group undertakes its activities under joint operations, the Group recognizes based on its ownership interest, net off intercompany eliminations, its share in the assets and liabilities and its share in the costs and revenue. Revenue is only recognized when the joint operation sells its output to third parties. Associated companies are companies in which the Group has a significant influence, defined as an investee in which the group has the power to participate in its financial and operating policy decisions, but not to control the investee. These investments are also accounted for using the equity method. Under the equity method, the investments held in associates or joint ventures are initially recognized at cost and the carrying amount is subsequently adjusted to recognize the Group's share in the profit or losses or other comprehensive income of the associate or joint venture as from the date of acquisition. These investments and the equity share of results for the period are shown in the balance sheet and income statement as respectively, investments in associates and joint ventures, and share in the result of the associates and joint ventures. Unrealised profits and losses are eliminated to the extent of Proximus interest in the entity. Note 2.6. Business Combinations Acquisitions of businesses are accounted using the acquisition method. The consideration transferred is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree, if any, and the equity interests issued, if any. Acquisition related costs are accounted for as expenses in the periods in which the costs are incurred. At acquisition date, the identifiable assets acquired, and the liabilities assumed are recognized at their fair value at that date. This also includes fair valuing the unrecognized assets and liabilities in the balance sheet of the acquiree, which concerns mainly customer bases and trade names. Non-controlling interests are initially measured at the proportionate share of the recognized amounts of the acquiree' s identifiable net assets at acquisition date. Note 2.7. Judgments and estimates In preparing the consolidated financial statements, management is required to make judgments and estimates that affect amounts included in the financial statements. Judgments and estimates that are made at each reporting date reflect conditions that existed at those dates (e.g. market prices, interest rates and foreign exchange rates, as well as existing accounting rules and guidance in domains where there is limited authoritative literature). Although these estimates are based on management's best knowledge of current events and actions that the Group may undertake, actual results may differ from those estimates. The potential risks and opportunities associated with climate change to which the Group is exposed, as well as broader sustainability considerations, are presented in the Group's non-financial statements. Based on the information currently available to it, management has exercised its judgment in concluding that the main areas potentially affected by climate change, i.e. the useful life of the Group's assets and provisions, are currently and in the short term not significantly affected. These judgments are monitored on an ongoing basis as part of the Group's risk management process, given that the future impacts of climate change depend on environmental, regulatory, and other factors beyond the Group's control, not all of which are currently known. The Group's risk management framework aims to identify, assess and manage risks that could affect the achievement of its strategic, operational and financial objectives. The framework is embedded in the Group's governance and decision-making processes and is supported by internal controls and regular reporting to management and the Audit & Compliance Committee. The current geopolitical and macroeconomic environment continues to be characterised by heightened uncertainty, including geopolitical tensions, energy price volatility, higher interest rates and disruptions in global supply chains. These risks are consistent with those described in the Group's Risk Management Report and are reflected, where relevant, in the judgments and estimates applied in the preparation of the consolidated financial statements. Note 2.7.1. Critical judgments in applying the Group accounting policies The following are the critical judgments, apart from those involving estimations (which are presented separately below), that the directors have made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognized in financial statements. Assessment of control on entities incorporated in the context of fiber network deployment In the context of its ultimate objective of connecting Belgium through an open, future-proof network that brings high or very high-speed connectivity to every home and business, including those in less densely populated areas, Proximus co-created three separate companies, Fiberklaar, Unifiber and Glasfaser Ostbelgien, to help it accelerating the fiber roll-out in respectively Flanders, Wallonia and in the German-speaking Community. These three companies have for business to engineer, design, build, maintain, upgrade, own, deploy, run and market a passive wholesale Point-to-Point Fiber-To-The-Home network in the Footprint (the "FTTH Network"), with a minimum rollout speed, a coverage ambition for the defined footprint, certain technical qualities (speed, capacity…). The networks to be built will be open and neutral, i.e. available to all Service Providers under non-exclusive and non-discriminatory terms to allow Service Providers (Proximus for instance) to compete on downstream markets. On July 26, 2024, Proximus Group acquired control of Fiberklaar (see note 8.4) by reaching an agreement with EQT Infrastructure, the other co-founder of Fiberklaar, for the acquisition of its majority stake (50.33%) in Fiberklaar Group (hereinafter 'Fiberklaar'). In its assessment of the type of control its exercises on Unifiber and Glasfaser Ostbelgien (control alone, joint control or significant influence), Proximus identified what the companies' relevant activities were, how the decisions about these activities were taken and whether it obtained variable return from its interaction with them, via, among others, the exercise of its voting rights. Other facts and circumstances were also considered in the assessment, such as the companies' social purposes, the nature of the companies' other shareholders, the existence of pre-agreed and negotiated contexts and the companies' dependency to their shareholders as sources of cash flows contributing to the continuity of their operations. Proximus concluded when these two entities were co-created, that it was not controlling them alone as the decisions about the activities identified as relevant within the context of the arrangements signed with the co-investors are not taken alone by Proximus. These decisions were about essentially the approval of the budget, the appointment and dismissal of senior management, the commercialization of the offer, the building of the network. Furthermore, Proximus expected, based on the information available at that moment, that it would not substantially be the only source of cash flows contributing to the continuity of the operations of the arrangements by these entities. On that basis, the Group concluded that the investments in Unifiber and Glasfaser Ostbelgien, qualified as joint venture and associate, respectively. These conclusions are periodically reviewed considering the criteria, underlying facts, governance, and existing agreements between shareholders or with the companies. The monitoring of these elements did not reveal any factors that would call into question the current classifications of these arrangements. Note 2.7.2. Key sources of estimation uncertainty Claims and contingent liabilities and assets (see note 34) Related to claims and contingencies, judgment is necessary in assessing the existence of an obligation resulting from a past event, in assessing the probability of an economic outflow, and in quantifying the probable outflow of economic resources. This judgment is reviewed when new information becomes available and with support of outside experts advises. Recoverable amount of cash generating units including goodwill In the context of the impairment test, the key assumptions that are used for estimating the recoverable amounts of cash generating units to which goodwill is allocated are discussed in note 3 (Goodwill). Actuarial assumptions related to the measurement of employee benefit obligations and plan assets The Group holds several employee benefit plans such as pension plans, other post-employment plans and termination plans. In the context of the determination of the obligation, the plan assets and the net periodic cost, the key assumptions that are used are discussed in note 11 (Assets and liabilities for pensions, other post-employment benefits and termination benefits). Note 2.8. Foreign currency translation The individual financial statements of each subsidiary are prepared in the currency of the primary economic environment in which the entity operates. When the factors set out by IAS 21 to determine the functional currency are mixed and the functional currency is not obvious, management judgment is used to determine which functional currency most faithfully represents the economic effects of its underlying transactions, events and conditions. Foreign currency transactions are recognized in functional currency on initial recognition, at the foreign exchange rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency of the entity at the balance sheet date using the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies are not remeasured. Net exchange differences on the translation of monetary assets and liabilities are classified in "non-workforce expenses" in the income statement in the period in which they arise. Note 2.9. Foreign operations Results and financial position of entities with a functional currency other than Euro are included in the Proximus Group accounts as follows: Assets and liabilities (including comparatives) are translated at the closing rate at the reporting date. Income and expenses are translated at exchange rates at the date of the transaction. Non-controlling interests are translated at exchange rates at the date of the transaction. All resulting exchange differences are recognized in other comprehensive income. On disposal of such entity, the deferred cumulative amount recognized in other comprehensive income relating to that foreign operation is recognized in profit or loss. The same principle applies for partial disposals without loss of control and implies the recycling to profit and loss (P&L) only pro rata to the proportion disposed of. Note 2.10. Goodwill Goodwill represents the excess of the sum of the consideration transferred, the amount of non-controlling interests, if any, and the fair value of the previously held interest, if any, over the net fair value of identifiable assets, liabilities and contingent liabilities acquired in business combination. When the Group obtains control, the previously held interest in the acquiree, if any, is re-measured to fair value through profit or loss. Goodwill is stated at cost and not amortized but subject to an annual impairment test at the level of the cash generating unit to which it is allocated and whenever there is an indicator that the cash generating unit to which the goodwill has been allocated may be impaired. The Group monitors the goodwill at the level of the operating segments as this reflects the way the Group manages its operations. Changes in a contingent consideration included in the consideration transferred are adjusted against goodwill when they arise during the provisional purchase price allocation period and when they relate to facts and circumstances existing at acquisition date. In other cases, depending on whether the contingent consideration is classified as equity or not, changes are taken into equity or in profit or loss. Acquisition costs are expensed, and non-controlling interests are measured at acquisition date at their proportionate interest in the fair value of the identifiable assets and assumed liabilities of the acquiree, on a transaction-by-transaction basis. Note 2.11. Intangible assets with finite useful life Intangible assets consist primarily of the Global System for Mobile communication ("GSM") license, the Universal Mobile Telecommunication System ("UMTS") license, 4G and 5G spectrum licenses, customer bases, patents and trade names acquired in business combinations, internally and externally developed software and other intangible assets such as football rights and broadcasting rights. Intangible assets with finite life acquired separately are measured on initial recognition at cost and subsequently stated at cost less accumulated amortization and impairment losses. Only the fixed portion of the consideration is capitalized. Contractual minimum guaranteed fees are treated as fixed amounts, while judgment is applied to determine whether any portion beyond that minimum should be recognized. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. The residual value of such intangible assets is assumed to be zero. The Group capitalizes: The football broadcasting rights, and all other multi-seasonal sport broadcasting rights, for the full contract duration together with the recognition of the corresponding liability (for the full contract duration) For contracts with other TV channels, the costs for the total contract duration, as the content is deemed to be sufficiently identifiable (a major part of the content is already produced) for the non-cancellable duration of the contract (generally 18 months-3 years). Certain costs incurred in connection with developing or purchasing software for internal use and certain media production costs when they are identifiable, when the Group controls the asset and when future economic benefits from the asset are probable. The unique licence fee (fixed amount) due in connection with the spectrum licences granted to Proximus. The Group considers the annual fees due in connection with the spectrum licences granted to Proximus to be variable (contingent) payments and therefore expenses them as incurred. The net present value of these annual fees is disclosed in note 34. The Group enters SaaS arrangement and pays a fee in exchange for a right to receive access to the supplier's application software for a specified term. The Group recognizes a software asset in a cloud-computing arrangement at the contract commencement date if it obtains control of that software at that date. This is when, at the inception of the arrangement: The Group has the contractual right to take possession of the software during the hosting period without significant penalty, and It is feasible for the Group to run the software on its own hardware or contract with another party unrelated to the supplier to host the software. The company continues to monitor the related accounting rules and guidance in this domain where there is limited authoritative literature. Customer bases and trade names acquired in business combinations are straight-line amortized over their estimated useful life (3 to 20 years). Except if the useful life is based on the contractual limits or reflecting management intention, it is set consistently with the expected cash flows used in the valuation model for such an asset. It is defined in such a way that the expected cumulated discounted cash flows generated by the concerned asset over its useful life represent approximately 90% of the total cumulated discounted cash flows expected from the asset. GSM, UMTS, 4 G and 5G spectrum licenses, other intangible assets and internally generated assets with finite useful life are amortized on a straight-line basis over their estimated useful life. Amortization commences when the intangible asset is ready for its intended use. The licenses' useful lives are fixed by Royal Decree, and they range from 5 to 20 years. The useful lives are assigned as follows: Useful life (years) GSM, UMTS, 4G and other network licenses Over the license period SPECTRUM 2600 MHZ 15 SPECTRUM 800 MHZ 20 SPECTRUM 1800 MHZ 2G 20 SPECTRUM 2100 MHZ 3G 20 SPECTRUM 900 MHZ 20 SPECTRUM 1400 MHZ 20 SPECTRUM 700 MHZ 20 SPECTRUM 3600 MHZ 17 years 8 months Customer bases, trade names, patents and software acquired in a business combination 3 to 20 Software 5 Broadcasting rights for sport seasons Over the contract period Rights to use, and other broadcasting rights Over the contract period (usually from 2 to 5) The amortization period and the amortization method for an intangible asset with finite useful life are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortization period or method, as appropriate, and treated as changes in accounting estimates. Note 2.12. Property, plant and equipment Property, plant and equipment including assets rented to third parties through operating leases, are presented according to their nature and are stated at cost less accumulated depreciation and accumulated impairment losses. The cost of additions and substantial improvements to property, plant and equipment is capitalized. The cost of maintenance and repairs of property, plant and equipment is charged to operating expenses when it does not extend the life of the asset or does not significantly increase its capacity to generate revenue. The cost of an item of property, plant and equipment includes the estimated costs of its dismantling, removing or restoring, when the Group has the obligation to incur such costs as a result of installing the asset. An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognized. Depreciation of an asset begins when the asset is ready for its intended use. Depreciation is calculated using the straight-line method over the estimated useful life of the asset. The useful lives are assigned as follows: Useful life (years) Land and buildings Land Indefinite Buildings and building equipment 22 to 33 Facilities in buildings 3 to 10 Leasehold improvement and advertising equipment 3 to 10 Technical and network equipment Cables and ducts 15 to 20 Switches 8 to 10 Transmission 6 to 8 Radio Access Network 6 to 7 Mobile sites and site facility equipment 5 to 10 Equipment installed at client premises 2 to 8 Data and other network equipment 2 to 15 Furniture and vehicles Furniture and office equipment 3 to 10 Vehicles and smart cables 3 to 10 The asset's residual values, useful life and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. Costs of material, workforce and non-workforce expenses are shown net of work performed by the enterprise that is capitalized in respect of the construction of property, plant and equipment. Note 2.13. Contract costs Contract costs eligible for capitalization as incremental costs of obtaining a contract comprise commissions paid to dealers relating to postpaid contracts. Contract costs are recognized as non-current assets as the economic benefits from these assets are expected to be received in the period longer than twelve months. Contract costs relating to postpaid contracts are deferred on a systematic basis that is consistent with the transfer to the customer of the services, being the time, at which related revenue is recognized. The group adopted a portfolio approach for the contract costs. Contract costs related to the residential market, acquired before 2024, are deferred over three years. For contracts acquired from 2024 onwards, costs are deferred over four years, reflecting the observed increase in customer lifetime. This change is primarily attributed to fixed-mobile convergence. All other commissions are expensed when incurred. Note 2.14. Impairment of non-financial assets The Group reviews the carrying value of its non-financial assets at each balance sheet date for any indication of impairment. The Group compares at least once a year the carrying value with the estimated recoverable amount of intangible assets under construction and cash generating units including goodwill. The Group performs this annual impairment test during the fourth quarter of each year, on basis of the Group long-term plan approved by the Group's board. An impairment loss is recognized when the carrying value of the asset or cash generating unit exceeds the estimated recoverable amount, being the higher of the assets or cash generating unit's fair value less costs to sell and its value in use for the Group. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash generating unit. Note 2.15. Deferred taxation Deferred taxation is provided for all temporary differences between the carrying amount of assets and liabilities in the consolidated balance sheet and their respective taxation bases. Deferred tax assets associated to deductible temporary differences and unused tax losses carried forward are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary difference or the unused tax losses can be utilized. The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Unrecognized deferred income tax assets are reassessed at each balance sheet date and are recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset will be realized, or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Changes in deferred tax assets and liabilities are recognized in profit or loss except to the extent that they relate to items recognized directly in equity, in which case the tax effect is also recognized directly in equity. Note 2.16. Pensions, other post-employment benefits and termination benefits The Group operates several defined benefit pension plans to which the contributions are made through separately managed funds. The Group also agreed to provide additional post-employment benefits to certain employees. The cost of providing benefits under the plans is determined separately for each plan using the projected credit unit actuarial valuation method. Actuarial gains and losses, the return on plan assets, excluding amounts included in net interest on the net defined benefit liability (asset) and any change in the effect of asset ceiling- if applicable, are recognized through Other Comprehensive Income. Any past service cost and gain or loss on settlement is recognized in profit and loss when they occur. The Group classifies the periodic cost in operating and financing activities for their respective components. The Group also operates several defined contribution plans. For plans with guaranteed minimum return management applied the 'Projected Unit Credit 'method. The discount rate used to calculate the present value of the defined benefit obligation of the plans is determined by reference to the yield on high-quality corporate bonds (at the end of the reporting period) of currency and term consistent with the liabilities. The net defined benefit liability is defined as the present value of the defined benefit obligation less the fair value of the plan assets (if any). The Group operates several restructuring programs that involve termination benefits or other forms of additional compensation. Voluntary termination benefits to encourage employees to leave service are recognized when employees accept the offer of those benefits. Involuntary termination benefits are recognized when the Group has communicated its plan of termination to the affected employees, and the plan meets specified criteria. Related provisions are recognized when valid expectations are raised in those affected by the plans and implementation is started i.e. an agreement is reached with the unions on the features of the plans and those features are communicated to those affected. Benefits conditional on future service being provided do not qualify as termination benefits but as long-term employee benefits. The liability for those benefits is recognized over the period of the future service. For certain participants of the restructuring plans, benefits are paid until the earliest retirement date. Assumptions used to make a reliable estimate of the ultimate cost to the Group are pension age, the discount rate and future price inflation. Assumptions are reviewed at the end of the reporting period. The actuarial gains and losses on the liabilities for restructuring programs are recognized in profit or loss when incurred. Note 2.17. Short-term and long-term employee benefits The cost of all short-term and long-term employee benefits, such as salaries, employee entitlements to leave pay, bonuses, medical aid and other contributions, are recognized during the period in which the employee renders the related service. The Group recognizes those costs only when it has a present legal or constructive obligation to make such payment and a reliable estimate of the liability can be made. Note 2.18. Financial instruments Note 2.18.1. Classification The Group classifies its financial assets in the following categories: At fair value through profit and loss ("FVTPL"); or At fair value through other comprehensive income ("FVTOCI"); or At amortized cost. The Group classifies its financial liabilities in the following categories: At fair value through profit and loss ("FVTPL"); or At amortized cost. Financial assets The Group determines the classification of the financial assets at initial recognition. The classification is driven by the Group's business model for managing the financial assets ('hold to collect', 'hold to collect and sell' and 'other') and their contractual cash flow characteristics (Solely Payments of Principal and Interest "SPPI" test i.e. whether contractual cash flows are solely payments of principal and interest on the principal amount outstanding). If a non-equity financial asset fails the SPPI test, the Group classifies it at Fair Value Through Profit or Loss (FVTPL). If it passes the SPPI test, it will either be classified at amortized cost if the 'hold to collect' business model test is met, or at Fair Value Through Other Comprehensive Income (FVTOCI) if the 'hold to collect and sell' business model test is met. For equity financial assets other than interests in subsidiaries, associates and joint ventures, the Group makes at initial recognition an irrevocable election (on an instrument-by-instrument basis) to designate them as at FVTOCI or FVTPL. The equity investments held for trading are always designated at FVTPL. Financial liabilities Financial liabilities are measured at amortized cost, unless they are required to be measured at FVTPL (such as instruments held for trading or derivatives). Long-term non-interest-bearing liabilities are recognized at their discounted amount. Hybrid perpetual bonds Hybrid perpetual bonds are classified as equity instruments. Consequently, the interests to be paid on these securities and the directly attributable transaction costs are recognized directly in equity and presented together with the principal amount as a separate line item within equity. Repayment of the principal amount and interest is disclosed as part of the financing activities in the cash flow statement. Note 2.18.2. Measurement Financial assets at FVTOCI Investments in equity instruments designated at FVTOCI are initially recognized at fair value plus directly attributable transaction costs. Subsequently they are measured at fair value, with gains and losses arising from changes in fair value recognized in other comprehensive income, with no subsequent recycling to profit or loss. Accumulated remeasurements of equity instruments carried at FVOCI are reclassified from OCI to retained earnings on disposal or settlements. The Group holds no other investment measured at FVTOCI. Dividend income is recognized in profit or loss. Financial assets and liabilities at amortized cost Financial assets, other than trade receivables, and liabilities at amortized cost are initially recognized at fair value plus or minus directly attributable transaction costs. Trade receivables are measured at their transaction price if the trade receivables do not contain a significant financing component. These financial instruments are subsequently carried at amortized cost using the effective interest rate method less any impairment, if applicable. Financial assets and liabilities at FVTPL Financial assets and liabilities carried at FVTPL are initially recorded at fair value and transaction costs are expensed. Realized and unrealized gains and losses arising from changes in the fair value of the financial assets and liabilities are included in the consolidated net (loss) income in the period in which they arise. The Group has not designated financial liabilities at FVTPL (FV option). Derivatives are measured at FVTPL, except for those to which hedge accounting is applied. Note 2.18.3 Expected credit losses The Group applies the forward-looking expected credit loss (ECL) model. The ECL model considers all losses that result from all possible default events over the expected life of the financial instrument (lifetime expected credit losses) or that result from possible default events over the next 12 months (12-month expected credit losses), depending on whether the credit risk of the financial asset has increased significantly since initial recognition or not (the general ECL model). The Group recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized costs. Same treatment is applied to contract assets resulting from the application of IFRS 15 and lease receivables, even though these are not classified as financial assets. At each reporting date, the Group measures the loss allowance for these assets. The Group has limited trade receivables with financing component. The Group applies a simplified method and measures the loss allowance at an amount equal to the lifetime expected credit losses, for all trade receivables, whether assessed on an individual or collective basis, considering all reasonable and supportable information, including information that is forward-looking. Domestic : for receivables on residential and professional market, the payment delays compared to the contractual due dates and the status of the legal actions taken to recover the receivables due are the main information considered to assess whether credit risk has increased significantly since initial recognition. A provision matrix is used. The same methodology is applied for contract assets. TeleSign calculates the expected credit losses for trade receivables based on a combination of factors considering historical losses adjusted for current market conditions, customer's financial condition, disputes, the current aging and incorporating relevant forward-looking data. BICS considers experience and reasonable and supportable information about future expectations to define provision rates on an individual case basis. Following indicators are used by BICS: An actual or expected significant deterioration of the customer's external (if available) or internal credit rating Significant deterioration of the country risk in which the customer is active Existing or forecasted adverse changes in business, financial or economic conditions that are expected to cause a significant decrease in the debtor's ability to meet its debt obligations An actual or expected significant deterioration in the operating results of the debtor An actual or expected significant adverse change in the regulatory, economic, or technological environment of the debtor that results in a significant decrease in the debtor's ability to meet its debt obligations Route Mobile applies the simplified approach which requires measurement of loss allowance at an amount equal to lifetime expected credit losses. Estimated irrecoverable amounts are based on the ageing of the receivable balance, historical experience and are adjusted for forward looking information. For financial assets at amortized costs, contract assets and lease receivables, allowances and impairment are recognized in profit or loss. The Group writes off a financial asset when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation or has entered into bankruptcy proceedings, or in the case of trade receivables, when the amounts are assumed not recoverable by external recovery agency, whichever occurs sooner. Financial assets written off may still be subject to enforcement activities under the Group's recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognized in profit or loss. Note 2.18.4. Criteria for initial recognition and for de-recognition of financial assets and liabilities Financial assets and liabilities are initially recognized when the Group becomes party to the contractual terms of the instruments. "Regular way" ("spot") purchases and sales of financial assets are accounted for at their settlement dates. Financial assets (or a portion thereof) are derecognized only when the contractual rights to cash flows from the financial assets expire. For equity investments, the accumulated remeasurements to fair value in other comprehensive income are reclassified to retained earnings on de-recognition. Financial liabilities (or a portion thereof) are de-recognized when the obligation specified in the contract is discharged, cancelled or expires. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss. Note 2.18.5. Fair value of financial instruments The following methods and assumptions are used to estimate the fair value of financial instruments: For long-term debts carrying a floating interest rate, the amortized cost is assumed to approximate fair value. For long-term debts carrying a fixed interest rate, the fair value is determined based on the market value when available or otherwise based on the discounted future cash flows calculated using the market interest rates at the reporting date. For derivatives, fair values are estimated by either considering their quoted price on an active market, and if not available by using different valuation techniques, particularly the discounting of future cash flows. Note 2.18.6. Criteria for offsetting financial assets and liabilities Where a legally enforceable right of offset currently exists for recognized financial assets and liabilities, and the Group has the intention to settle the liability and realize the asset simultaneously, or to settle on a net basis, all amounts in the statement of financial position are offset. Note 2.19. Trade receivables Trade receivables are measured in the balance sheet at amortized costs (SPPI model applies) less any allowance for expected credit losses. Note 2.20. Cash and cash equivalents Cash and cash equivalents include cash, current bank accounts and term accounts with a maturity on acquisition of less than three months. These assets are highly liquid, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. Cash and cash equivalents are carried at amortized cost. Note 2.21. Non-current assets or disposal group classified as held for sale The Group classifies assets or disposal group (group of assets with some directly associated liabilities) as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through a continuing use. This condition is met when the assets or disposal group are available for immediate sale in their present condition, the sale is highly probable and expected to occur within one year. Assets or disposal group classified as held for sale are recorded at the lower of their carrying value or fair value less costs to sell and are classified as current assets and current liabilities. The Group no longer amortizes non-current assets classified as held for sale. Note 2.22. Interest-bearing liabilities All loans and borrowings are initially recognized at their cost which generally corresponds to the fair value of the consideration received (net of issuance costs associated with the borrowings). After initial recognition, debts are measured at amortized cost using the effective interest rate method, with amortization of discounts or premiums through profit or loss. Proximus checks regularly whether it has the ability to defer settlement of a loan liability for at least twelve months after the reporting period and if that ability to defer settlement is subject to meeting certain covenants. Note 2.23. Derivatives The Group does not hold or issue derivative financial instruments for trading purposes but some of its derivative contracts do not meet the criteria set by IFRS 9 to be subject to hedge accounting and are therefore treated as derivatives held for trading, with changes in fair value recorded in profit or loss. The Group makes use of derivatives such as IRS, IRCS, forward foreign exchange contracts and options to reduce its risks associated with interest rates fluctuations related to future bonds emissions and with foreign currency fluctuations on underlying assets, liabilities and anticipated transactions. The derivatives are carried at fair value under the caption's other assets (non-current and current), non-interest-bearing liabilities (non-current and current) and other payables (non-current and current). The group used: An IRCS to reduce the Group exposure to interest rate and foreign currency fluctuations on a long-term debt denominated in JPY Interest rate swaps to mitigate the risk of Interest rate variations between the hedges inception dates and the issuance dates of highly probable fixed rate long-term debts A zero-cost collar swaption to protect the value of its existing pre-hedging interest rate swap against interest rates fluctuations When these hedging instruments are designated in a cash flow hedge relationship, the effective portion of changes in their fair value is recognized in other comprehensive income and gradually reclassified to profit or loss through financial result, in the same period during which the hedged item hits the Group profit or loss through the interests paid. The derivatives to which the Group does not apply hedge accounting are consequently carried at fair value, with changes in fair value recognized in profit or loss through financial result. The long-term debt expressed in JPY includes an embedded derivative. Such derivative is separated from its host contract and carried at fair value with changes in fair value recognized in profit or loss. The mark-to-market effects on this derivative are offset by those on the IRCS. The Group used contingent foreign exchange forward transaction to limit its exposure to the variability in cash flows that is attributable to the currency risk related to a highly probable future transaction, that has actually taken place (Route Mobile acquisition, see note 8.4), and was settled in foreign currency. The Group applied hedge accounting to this hedging transaction. The changes in intrinsic value were recognized in the cash flow hedge reserve (OCI), while the changes in time value and forward element were recognised in the cost of hedging reserve (OCI). The Group contracted derivatives (forward foreign exchange contracts) to hedge its exposure to currency fluctuations for highly probable forecasted transactions. The Group applied cash flow hedge accounting for part of these hedging transactions. For hedging transactions to which the Group does not apply hedge accounting, the derivatives are consequently carried at fair value, with changes in fair value recognized in profit or loss through financial result. When the underlying is recognized in the balance sheet and relates to costs recorded in operating income or to capitalized expenditures, the changes in fair value recognized in profit or loss are reclassified to the operating income when the hedging instrument matures. For hedging transactions to which hedge accounting is applied, the effective portion of the gains and losses on the hedging instrument is recognized via other comprehensive income until the hedged transaction occurs. If the hedged transaction leads to the recognition of an asset, the carrying amount of the asset at the time of initial recognition is adjusted with the amount previously recognized via other comprehensive income. If the hedge transaction relates to costs recorded in operating income, the amount previously recognized via other comprehensive income are reclassified in operating income when the costs related to the underlying service are recognized in profit and loss. The ineffective portion of a cash flow hedge is always recognized in profit or loss. The Group applied IAS 32 to option contracts that are share-based payments not granted in exchange for goods or services nor granted to employees in their capacity as employees. Option contracts, such as written put options to non-controlling interests on a Group subsidiary, that qualify as derivatives and financial liabilities are classified as financial liabilities at fair value through profit and loss (financial result). The Group entered in 2023 into a Virtual Power Purchase Agreement where it pays a fixed price and receives the spot price for a contractually specified part of the electricity produced by a specific offshore wind farm. The purchase of the electricity is virtual meaning that there is no physical delivery of the power being purchased (net settlement in cash). The objective of the transaction is to reduce the Group's exposure to the volatility of the electricity price and at the same time to receive several Energy Attribute Certificates (EACs) corresponding to the agreed upon green electricity volume. Derivatives embedded in non-derivative host contracts that are not financial assets are treated as separate derivatives when they meet the definition of a derivative, their risks and characteristics are not closely related to those of the host contract, and the host contract is not measured at fair value through profit or loss. The Group considers the VPPA as a hybrid instrument with a non-financial host contract for the purchase of the EACs and an embedded derivative related to power. As the power component of the hybrid contract is not closely related to the host contract, it is measured separately and at Fair Value through P&L. The purchase of EACs qualify for own use exemption and the related costs are expensed as the EACs are received. Note 2.24. Net gains and losses on financial instruments Dividends, interest income and interest charges arising from financial instruments are posted to the finance income (costs). Note 2.25. Contract assets A contract asset is the Group's right to consideration in exchange for goods or services that it has already transferred to a customer and arise essentially in the context of contracts containing mobile and fix joint offer with a subsidized handset delivered at contract inception and which revenue is recognized at a point in time and services to be delivered over the duration of the contract, generally 24 months and up to 36 months, the revenue of which being recognized over the duration of the contract. The contract asset corresponds to the excess of revenue allocated to the devices over the cash received. The "contract asset" is transferred to "trade receivable" over the contract term. The assets are classified as current as they are expected to be realized as part of the Group normal operating cycle. In case of early termination, the customer has to pay a penalty which corresponds to the prorata of the discount offered in the joint offer for the remaining contract duration. This penalty is always higher than the remaining balance of the contract asset. The difference between the reversal of the contract asset and the penalty is recognized as device revenue. Contract assets is a conditional right recognized on the balance sheet at cost less loss allowance, as defined on the lifetime expected credit loss model. Note 2.26. Inventories Inventories are stated at the lower of cost and net realizable value. Cost is determined based on the weighted average cost method except for IT equipment (FIFO method) and goods purchased for resale as part of specific contracts containing a performance obligation involving the construction of an asset (individual purchase price). For inventory intended to be sold in joint offers, calculation of net realizable value considers the future margin expected from the telecommunications services in the joint offer, with which the item of inventory is offered. For contracts including performance obligation involving the construction of an asset, the revenue for that performance is recognized over time based on an input method. That method measures the progress towards complete satisfaction of the related performance obligation by reference to the amount of contract costs incurred for work performed at balance sheet date in proportion to the estimated total costs for the contract. Contract cost includes all expenditures directly related to the specific contract and an allocation of fixed and variable overheads incurred in connection with contract activities based on normal operating capacity. Note 2.27. Lease agreements The Group assesses whether a contract is or contains a lease, at inception of the contract. Under IFRS 16 a contract is, or contains, a lease if it conveys the right to control the use of an identified asset (the underlying asset) for a period of time in exchange for consideration. For some contracts, judgment is required to assess whether a contract conveys the right to control the use of an asset or is instead a contract for a service that is provided using that asset. When a contract does not qualify as a lease under IFRS 16, any amounts prepaid under such contracts are treated as prepaid expense (service), which is the case for certain fibre-related capacity acquired by the Group. Note 2.27.1. Group as a lessee (receives a right to use an asset from a supplier) When the Group is lessee, it applies a single recognition and measurement approach for all leases. The Group recognizes a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, The Group does not apply the short-term lease recognition exemption nor the low-value recognition exemption. The lease term consists of the non-cancellable period of a lease, together with periods covered by options to extend the lease if the Group is reasonably certain to exercise these options, and periods covered by options to terminate the lease if the Group is reasonably certain not to exercise these options. Judgment is required in assessing whether these options will be exercised or not, considering all facts and circumstances that create an economic incentive to exercise an extension or termination option. The assessment is reviewed if a significant event or a significant change in circumstances occurs which affects this assessment. The Group has defined four major categories of leases: Buildings: mainly concern commercial (point of sale) or service activity (office and head office) leases, as well as leases of technical buildings not owned by the Group Mobile sites: only includes site rentals for mobile antennas and leases of R-layers (i.e. well identified area of a pylon) on pylons of another operator Fleet: contains the lease of vehicles (management, sales, and utility cars) and bikes Other: primarily consists of ICT equipment and cloud infrastructure from partnership with HCL Lease liabilities The Group recognizes a liability (i.e. a lease liability) at the date the underlying asset is made available. The lease liability is equal to the present value of the lease payments not paid at that date, plus any amounts that the Group is reasonably certain to pay at the end of the lease such as the exercise price of a purchase option (where it is reasonably certain to be exercised) or penalties payable to the lessor for terminating the lease (where such termination option is reasonably certain to be exercised). The Group systematically determines the lease term as the period during which leases cannot be cancelled, plus periods covered by any extension options that the lessee is reasonably certain to exercise and by any termination options that the lessee is reasonably certain not to exercise. The lease liability is measured using the interest rate implicit in the contract. If the rate cannot be readily determined, the Group uses its Incremental Borrowing Rate (IBR) which it assumes to be the theoretical interest rate the Group would need to pay when issuing funding over a similar term as in the lease. The applicable rate per contract is primarily dependent on the total expected term of a lease at its commencement date (new leases) or the total expected remaining lease term in case of a remeasurement of a lease. The lease liability is remeasured after the lease commencement date to reflect changes arising in the following situations: Change in Lease Term This includes modifications to the contract or a revised assessment of whether it is reasonably certain that: a renewal option will be exercised, or a termination option will not be exercised. Change in Lease Payments For example, adjustments due to the application of a new index or rate affecting variable lease payments. Change in Purchase Option Assessment A revised evaluation of whether a purchase option is expected to be exercised. Other Contractual Changes Such as modifications to the scope of the lease or changes to the underlying asset. Advance Payments Any advances paid in addition to scheduled reimbursements are deducted from the long-term lease liability.

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