Results First Quarter 2004 10 May 2004 Safe harbor Certain - PowerPoint PPT Presentation

Results First Quarter 2004 10 May 2004

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 KPN’s operations, KPN’s and its joint ventures’ share of new and existing markets, general industry and macro-economic trends and KPN’s performance relative thereto, and statements preceded by, followed by or including the words ’believes’, ’expects’, ’anticipates’ or similar expressions. These forward-looking statements rely on a number of assumptions concerning future events and are subject to uncertainties, and other factors, many of which are outside KPN’s control, that could cause actual results to differ materially from such statements. A number of these factors are described (not exhaustively) in KPN’s Annual Report and Form 20-F for the year ended December 31, 2003. All figures shown throughout this presentation are unaudited. Certain figures may be subject to rounding differences. 2

Changes in reporting To more strictly align external reporting with tightened international requirements on financial reporting, we will focus on •Analysis of reported results, no correction for exceptional items •Analysis based on Result after taxes and Operating result (formerly EBIT) instead of EBITDA •Analysis based on Operating margin instead of EBITDA margin 3

Highlights Q1 Financial • Net of book gains, Profit after taxes more than tripled year-on-year • Net sales (€ 2,903 mn) at same level as last year, despite negative impact of reduced MTA tariffs • Further decrease in group Operating expenses of 3.1% (€ 75 mn) • Decrease in Financial expenses (€ 95 mn) as a result of redemptions and early redemptions totaling € 4.9 bn in 2003 • Earnings per share of € 0.15 (2003: € 0.31) • Improvement in Cash Flow from operations (+ € 180 mn, or 23.1%) Operational • Now over 15 mn mobile customers and increased market share in our international markets • ADSL customers more than doubled year-on-year to 913,000 4

Developments in Operating result € mn 1,235 -672 661 36 34 41 -57 44 Q1 ’03 Q1 ’04 1 Impact reduction MTA Remaining impact Impact reduction MTA Remaining impact Book gain on Book gains Q1 ’03 revenues on expenses expenses Sale Eutelsat on revenues 1 On sale Directory Services, termination agreement MobilCom and sale UMC; all reported as exceptionals in Q1 ‘03 5

Headlines P&L € mn € mn Operating revenues Operating result 1 3,668 Operating revenues 1,235 1 Net sales 3,114 3,082 681 661 2 3,043 3,019 2 603 589 3,009 2,998 2,960 2,903 2,903 Q1 '03 Q2 '03 Q3 '03 Q4 '03 Q1 '04 Q1 '03 Q2 '03 Q3 '03 Q4 '03 Q1 '04 € mn € mn Profit before taxes Profit after taxes 1,003 1 1,639 770 1 524 2 458 398 387 375 2 183 139 Q1 '03 Q2 '03 Q3 '03 Q4 '03 Q1 '04 Q1 '03 Q2 '03 Q3 '03 Q4 '03 Q1 '04 1 Including € 672 mn book gains 2 Including € 36 mn book gains For further information about book gains & other exceptional items in intermediate quarters, please refer to KPN’s ’03 result publications 6

Fixed Market shares 1 • Balancing pricing and market share Access lines National traffic • Exploiting full potential of packages Local traffic International traffic • Integrated and coordinated ± 90% > 85% > 80% regulatory management ± 75% > 65% > 60% > 50% > 45% Q1 '03 Q2 '03 Q3 '03 Q4 '03 Q1 '04 2 Number of Dutch broadband connections • Market share consumer broadband 2 X 1,000 increased from 33% to 41% Y-o-Y 2,500 2,000 • 500,000 unique visitors on 913 1,500 broadband portal in Q1 746 609 513 418 1,000 • Migration from traditional data to 500 IP-VPN 0 Q1 '03 Q2 '03 Q3 '03 Q4 '03 Q1 '04 3 ADSL KPN Other ADSL Cable 1 Traffic in minutes; access in number of lines 2 Of which currently approximately 80% consumers and 20% (small) businesses 3 Including bit stream 7

Breakdown operating result development Fixed 464 -67 60 457 2 -2 Q1 ’03 Net sales Own work Other Operating Q1 ’04 capitalized operating expenses revenues 8

Mobile mn Customers • Steady progress customer base 13.5 13.8 14.2 14.7 15.1 – Germany: stimulate increased use with 1.4 1.3 1.2 challenging tariffs 1.1 1.1 5.3 5.2 5.0 – The Netherlands: stimulate value added 4.9 4.9 services – Belgium: continue accelerated growth 8.2 8.4 8.0 7.7 7.5 with tailored propositions for specific target groups Q1 '03 Q2 '03 Q3 '03 Q4 '03 Q1 '04 • Current revenue from non-voice services E-Plus KPN Mobile (NL) BASE largely from messaging • Objective to take data ‘beyond i-mode customers X 1,000 messaging’ 1,190 • Expansion of video services on the way • Mobile data solutions enhanced with 868 UMTS as of this summer 1 541 – June: Business customers Germany 353 285 – July: Business customers The Netherlands – Summer: Consumers Germany & The Netherlands Q1 '03 Q2 '03 Q3 '03 Q4 '03 Q1 '04 Prepaid Postpaid 1 Availability of quality handsets necessary for successful introduction in consumer market 9

Breakdown operating result development Mobile 1 79 0 -245 388 -59 163 Q1 ’03 Net sales Own work Other Operating Q1 ’04 capitalized operating expenses revenues 1 Of which € 222 mn relates to termination agreement MobilCom and € 15 mn to book gain sale UMC (both in Q1 ’03) 10

Margin development KPN Group Fixed Mobile 50% 50% 50% 41.9% 40.9% 41.1% 39.5% 39.5% 39.4% 38.7% 39.5% 38.4% 37.7% 40% 40% 40% 30.3% 31.9% 31.3% 30.3% 30.5% 30% 30% 30% 24.3% 23.8% 22.2% 22.8%20.2% 18.8% 18.8% 1 18.3% 17.6% 17.1% 20% 20% 20% 16.2% 11.5% 9.2% 8.2% 10% 10% 10% 7.0% 0% 0% 0% Q1 '03 Q2 '03 Q3 '03 Q4 '03 Q1 '04 Q1 '03 Q2 '03 Q3 '03 Q4 '03 Q1 '04 Q1 '03 Q2 '03 Q3 '03 Q4 '03 Q1 '04 (Net sales – Operating expenses + Depreciation, amortization and impairments)/Net sales (Net sales – Operating expenses)/Net sales 1 Includes € 103 mn reversal of impairment GSM license BASE 11

Continued focus on cash € mn Cash flow from operating activities minus Capex 839 711 1 646 582 534 Q1 ’03 Q2 ’03 Q3 ’03 Q4 ’03 Q1 ’04 € mn € bn Capex Debt Gross Debt 607 14.9 Net Debt 11.8 11.1 10.2 10.1 349 314 267 11.2 10.2 198 9.4 8.3 7.9 Q1 '03 Q2 '03 Q3 '03 Q4 '03 Q1 '04 Q1 '03 Q2 '03 Q3 '03 Q4 '03 Q1 '04 1 Including € 52 mn additional pension payment (charged in Q4 ’02) 12

Use of Cash € mn Q1 ’04 Shareholders € 289 mn – Dividend 2003 - – Interim dividend 2004 1 - – Share repurchases 2 € 289 mn 3 • On January 29, 2004 KPN’s credit rating has been upgraded by S&P to Single A- (with stable outlook) from BBB+ (with positive outlook). Moody’s credit rating for KPN remained at Baa1 with stable outlook • Dividend of € 611 mn in Q2 1 Interim dividend to be established upon announcement of Q2 figures 2 Initial program of € 500 mn 3 Of which € 40 mn has been settled early April 13

Conclusion Good performance of our businesses • Increased market share in international markets • Net sales of mobile up by 6.9% • Net sales of E-Plus up 12.5% • Net sales of BASE up 38.8% • Although net sales of fixed down by 4.5%, largely due to MTA, operating expenses also down by 4.1% Achieved goals of growing cash flow from operations and profit 14

Q & A

For more information please contact KPN Press Office Tel: +31 70 44 66300 www.kpn.com

Outlook 2004 Technical reconciliation following restatement as published on April 6, 2004 Old segmentation New segmentation Revenue growth Fixed 1,2 -5% to -7% -4.4% to -6.4% Operating EBITDA margin Fixed 3 43% to 45% 41.4% to 43.4% 1 Compared to ’03 excluding exceptional items 2 Including effects of lowering MTA tariffs (approx. - € 300 mn), lower project revenues (approx. - € 70 mn) and deconsolidation SNT assets (approx. - € 50 mn ) totaling approx. - 5.5% 3 For explanation see sheet Operating EBITDA 17

Reconciliation Operating result Operating result € mn Q1 ’03 Q1 ’04 Operating result 1,235 661 Book gains Sale Directory Services -435 Termination agreement MobilCom -222 Sale UMC -15 Sale Eutelsat -36 Operating result pre book gains 563 625 Reconciliation of operating results pre book gains Operating result pre book gains Q1 ’03 563 Revenues Impact reduction MTA on revenues -57 Other increases of revenues 44 Expenses Impact reduction MTA on expenses 41 Other decreases of expenses 34 Operating result pre book gains Q1 2004 625 18