Royal KPN NV · EURONEXT:KPN
Royal KPN NV — FY2008 Earnings Presentation
90 slides from Royal KPN NV's earnings presentation, Jan 27, 2009
Slide 1: Annual Results 2008
Annual Results 2008 27 January 2009
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 KPN’s operations, its and its joint ventures' share of ne
Slide 3: Disclaimer
Disclaimer We define EBITDA as operating result before depreciation and impairments of PP&E and amortization and impairments of intangible assets. Note that our definition of EBITDA deviates from the literal definition of earnings before interest, taxes, depreciation and amortization and should not
Slide 4: Agenda
Agenda Chairman’s review Ad Scheepbouwer, Chairman and CEO Financial review Marcel Smits, CFO Operating review The Netherlands Baptiest Coopmans, MD Consumer Eelco Blok, MD Business / W&O Operating review Mobile Int’l Stan Miller, MD Mobile International Concluding remarks Ad Scheepbouwer, Chairman
Slide 5: Highlights 2008
Highlights 2008 • Solid FY 2008 results, guidance met on all metrics, dividend up 11% • EBITDA inflection in the Netherlands • Continued profitable growth at Mobile International • Getronics on track, iBasis goodwill impaired • 2010 outlook confirmed 5
Slide 6: Financial highlights 2008
Financial highlights 2008 • Guidance for 2008 met on all metrics – EBITDA of € 5.06 bn – Capex of € 1.93 bn – Free cash flow of € 2.60 bn1 – EBITDA inflection reached in the Netherlands2 • Working capital improvement of € 418 mn ahead of plan • Solid financial profile following € 1.8 bn bond issues
Slide 7: Impact of economic downturn
Impact of economic downturn • Limited impact from economic downturn in 2008 – No significant impact on FY ’08 results, except for real estate disposals – Small increase in average interest paid on bonds during 2008 – Early warning indicators being tracked continuously, no material issues yet • Pre-e
Slide 8: Outlook
Outlook Confirming outlook for 2010, as announced with ‘Back to Growth’ strategy Reported Outlook Outlook 2009 2008 2010 Revenues and • Meaningful progress towards € 14.60 bn > € 15 bn EBITDA target for 2010 other income • Free cash flow of EBITDA € 5.06 bn > € 5.5 bn ~€ 2.4 bn in 2009 – Despite exp
Slide 9: Agenda
Agenda Chairman’s review Ad Scheepbouwer, Chairman and CEO Financial review Marcel Smits, CFO Operating review The Netherlands Baptiest Coopmans, MD Consumer Eelco Blok, MD Business / W&O Operating review Mobile Int’l Stan Miller, MD Mobile International Concluding remarks Ad Scheepbouwer, Chairman
Slide 10: Group results
Group results Solid full-year results € mn Q4 ’08 Q4 ’07 % FY ’08 FY ’07 % Revenues and other income 3,718 3,659 1.6% 14,602 12,632 16% – of which Revenues 3,615 3,579 1.0% 14,427 12,461 16% Operating expenses 3,126 3,025 3.3% 12,005 10,132 19% 1 – of which Depreciation 397 405 -2.0% 1,614 1,640 -1.
Slide 11: Group cash flow FY '08
Group cash flow FY ’08 Free cash flow of € 2.6 bn ahead of full-year guidance € mn FY ’08 FY ’07 % • Free cash flow of € 2.6 bn for FY ’08 Operating result 2,597 2,500 3.9% ahead of full-year guidance Depreciation and amortization1 2,461 2,400 2.5% – € 180 mn proceeds from real estate – Improvement
Slide 12: Group cash flow Q4 '08
Group cash flow Q4 ’08 Free cash flow of € 1.0 bn, driven by working capital and real estate € mn Q4 ’08 Q4 ’07 % • Free cash flow of € 1.0 bn in Q4 ’08 Operating result 592 634 -6.6% – Working capital improvement of € 603 mn, as a result of improvement Depreciation and amortization1 689 582 18% pro
Slide 13: Group financial profile
Group financial profile Solid liquidity position and net debt / EBITDA ratio improved to 2.2x € bn Debt Financing policy 13.0 12.1 11.9 12.1 12.1 10.7 2.5x 9.7 10.1 11.7 2.4 11.0 10.9 11.3 10.9 2.1 2.3 2.3 2.3 2.2 2.0x 10.0 1.8 1.9 9.3 8.8 Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08 Q2 '08 Q3 '08 Q4 '08 Q1 '
Slide 14: Pension plans
Pension plans Pension plans impacted by deterioration of financial markets IFRS impact from pensions plans1 • Pension plans impacted by declining interest rates and deterioration of financial markets • Average coverage ratio of KPN pension funds (€ bn) FY ’07 FY ’08 FY ’09 at 94% per YE ’08 (vs. 105
Slide 15: EBITDA trend in the Netherlands
EBITDA1 trend in the Netherlands Inflection point reached by exceeding ‘flat’ guidance for 2008 € mn Underlying EBITDA the Netherlands1 • Exceeding upgraded EBITDA1 5 4 2 11 guidance for 2008 4 21 – EBITDA up 1.0% for FY ’08, compared to ‘flat’ guidance 849 842 801 782 829 853 858 789 – Relative to
Slide 16: Performance vs. guidance
Performance vs. guidance Guidance for 2008 met on all metrics Guidance Reported Comments 2008 2008 • High single-digit growth at Mobile International • EBITDA growth in the Netherlands EBITDA € 5.0 bn € 5.06 bn excluding acquisitions and book gains on real estate • € 132 mn book gains on real estate
Slide 17: Financial review the Netherlands by segment
Financial review the Netherlands by segment Revenue decline in Consumer stopped, solid trends in Business • Wireline revenues supported by limited and stabilizing net line loss 17.5% 19.0% 17.0% 19.8% 20.1% 19.0% 16.0% 14.9% • Wireless services back to growth in Consumer 1,037 1,032 1,053 1,011 1,00
Slide 18: Financial review the Netherlands by segment (cont'd)
Financial review the Netherlands by segment (cont’d) Getronics results impacted by restructuring costs, W&O resilient • Solid underlying trend in revenues 6.7% from core operations Getronics1 4.7% 4.7% • Lower overall revenues as a result of 3.9% 488 515 504 divestments during 2008 465 449 • Low EBI
Slide 19: Financial review Mobile International: E-Plus and BASE
Financial review Mobile International by segment Profitable growth at both E-Plus and BASE • Service revenue growth of 5.5% in Q4 ’08 39.8% 37.6% 40.0% 38.9% 36.2% 36.6% 37.6% 38.1% 840 • Revenue growth of 7.2% in Q4 ’08, 808 815 E-Plus 698 736 769 760 755 partly driven by acquisitions • ‘Challenger
Slide 20: Mobile Wholesale NL and Other
Financial review Mobile International by segment (cont’d) Solid performance in mobile wholesale, acquisitions and recent initiatives • Solid revenue trends in gradually Mobile Wholesale NL 41.2% 42.4% 40.2% 40.4% 43.7% stabilizing market segment 36.4% 38.6% 33.7% • MTA impact of € 2 mn in Q4 ’08 83
Slide 21: Regulation
Regulation Increased regulatory clarity, especially in the Netherlands Status Impact Market • Final decisions published in December 2008 analyses • Deregulation fixed telephony in retail markets, • Overall limited impact OPTA additional regulation for Business market • MTA framework successfully app
Slide 22: Spectrum
Spectrum Sufficient in the Netherlands and Belgium, disadvantage in 900 MHz in Germany MHz The Netherlands MHz Germany MHz Belgium 68 144 144 33 44 55 33 60 60 14% 19% 29% 26% 35% 39% 36% 34% 44% 14% 27% 34% 24% 36% 37% 7% 33% 32% 39% 27% 49% 37% 41% 37% 36% 11% 32% 33% 27% 11% 900 MHz 1800 MHz 2.1
Slide 23: Agenda
Agenda Chairman’s review Ad Scheepbouwer, Chairman and CEO Financial review Marcel Smits, CFO Operating review The Netherlands Baptiest Coopmans, MD Consumer Eelco Blok, MD Business / W&O Operating review Mobile Int’l Stan Miller, MD Mobile International Concluding remarks Ad Scheepbouwer, Chairman
Slide 24: Strategic progress Consumer
Strategic progress Consumer Strong improvement in Consumer segment, strategy delivering results ‘Back to Growth’ strategy Achievements 2008 Strengthen position as • Consumer strategy delivering results leading consumer − Revenue decline stopped per Q4 ’08 service provider − Shift to customer value −
Slide 25: Simplification
Simplification Strong progress during 2008 • Number of brands halved from ten to five Brand • Planet brand migrated to KPN brand in June 2008 rationalization • Shops and distribution aligned with brands • Portfolio with three broadband and VoIP packages Simplified • Number of price bundles in wirele
Slide 26: Customer value
Customer value Managing customer base for value in all segments Service ARPU trend (€) Comments 26 25 25 25 26 Traditional • Retention of customers • Reporting solid telephony with highest value Q4 '07 Q1 '08 Q2 '08 Q3 '08 Q4 '08 ARPU trends in competitve Dutch 30 29 29 30 30 • Upselling broadband t
Slide 27: Wireline voice
Wireline voice Maximizing value with low net line loss X 1,000 Net line loss1 • Limited and stabilizing net line Q1 '06 Q2 '06 Q3 '06 Q4 '06 Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08 Q2 '08 Q3 '08 Q4 '08 loss -5 – Reported line loss 5k in Q4 ’08 -30 -20 -70 -40 – Including one-off base correction -90 -127
Slide 28: Broadband
Broadband Improving broadband net adds mn Broadband subscribers1 • Solid number of net adds and of high 41% 45% 44% 44% 44% 44% 44% 44% quality – Capturing ~45% of market growth in Q4 ’08 5.6 5.7 5.8 6.0 5.2 5.3 5.4 5.5 – KPN and Telfort fastest growing brands 0.77 0.83 0.85 0.87 0.90 0.75 0.71 0.90
Slide 29: TV
TV Reaching critical mass x 1,000 TV subscribers • KPN reaching critical mass in Dutch TV market that is dominated by cable – Customer base up 56% y-on-y, driven by Digitenne (DVB-T) 700 775 – ~40k customers in IPTV 636 497 553 337 414 296 • Market share KPN TV more than doubled Q1 '07 Q2 '07 Q3 '07
Slide 30: Fiber
Fiber Focus on 5 cities with FttC and 5 cities with FttH, using new delivery process Propositions Delivery process • Simple product portfolio with three • Local marketing approach for fiber distinct propositions – Demonstrating fiber possibilities in • Focus on superior triple play offers ‘House of
Slide 31: FttH approach
FttH approach Committed to selected FttH rollout following approval of Reggefiber JV Fiber-to-the-Home • Joint venture with Reggefiber for FttH In-home closed in December Analog / – Following approval from Dutch competition digital TV authority (NMa) – One-off payment of € 100 mn to JV in Q4 ’08 Fix
Slide 32: Wireless
Wireless Growth accelerating in net adds, service revenues back to growth in Q4 ’08 € mn • Service revenues up 3.9% in Q4 ’08 – Result of strong net adds and ARPU Service 416 432 445 407 394 429 441 423 – Contribution from data bundles revenues • Acquisition of Debitel in Q4 ’08 – 300k Post Paid, 23
Slide 33: Agenda
Agenda Chairman’s review Ad Scheepbouwer, Chairman and CEO Financial review Marcel Smits, CFO Operating review The Netherlands Baptiest Coopmans, MD Consumer Eelco Blok, MD Business / W&O Operating review Mobile Int’l Stan Miller, MD Mobile International Concluding remarks Ad Scheepbouwer, Chairman
Slide 34: Strategic progress Business
Strategic progress Business Leading managed ICT service provider, upside from Getronics integration ‘Back to Growth’ strategy Achievements 2008 Leading managed ICT service provider • Solid revenue and profitability trends • Stable market shares in most segments Preferred supplier for • Tapping growt
Slide 35: Infrastructure services – wireline
Infrastructure services – wireline Share of new services continues to increase € mn 437 424 408 412 409 409 414 428 • Revenues up 3.9% in Q4 ’08 Revenues – Decline in traditional services offset by (excl. new services wireless) • Solid profitability as a result of focus on costs Q1 '07 Q2 '07 Q3 '07
Slide 36: Infrastructure services – wireless
Infrastructure services – wireless Wireless services improving, but voice still lagging behind € mn 235 235 231 229 226 233 228 234 • Service revenues up 2.2% y-on-y – Contribution from data bundles Service – Annualization of roaming impact revenues • Revenues from roaming slightly Q1 '07 Q2 '07 Q3
Slide 37: ICT Services
ICT Services Continued weakness in PABX business, steady growth in housing & hosting € mn Revenues ICT Services • Revenues down 3.7% for FY ’08 − Traditional peak in order intake in Enterprise Communication Services (ECS) not occurring in Q4 ’08 − Partly offset by growth in online applications 150 1
Slide 38: Corporate Solutions
Corporate Solutions Continued growth in managed ICT and outsourcing for large enterprises € mn Revenues Corporate Solutions • Strong revenue growth in Corporate Solutions – Growth of 14% for FY ’08 and 20% in Q4 ’08 y-on-y – Major contracts starting to generate 171 124 124 142 128 135 137 revenues 1
Slide 39: Strategic progress Getronics
Strategic progress Getronics Restructuring on track, overall solid profitability for ongoing business ‘Back to Growth’ strategy Achievements 2008 • Successful transition during 2008 Benelux market leader • Timely disposals at good prices − Focus on workspace management − Total consideration of dispo
Slide 40: Priorities Getronics 2009
Priorities Getronics 2009 Integration with Business and performance core businesses • Part of Business segment integrated into Getronics as from Jan ’09 Manage – Transfer of Corporate Solutions, part of ICT Services and Corporate Sales integration – Representing € 800-900 mn in annual revenues for 2
Slide 41: iBasis
iBasis Revenues down 5% in Q4 ’08, goodwill impairment charge of € 67 mn € mn iBasis results • Revenues down 5.3% y-on-y in Q4 ’08 2.9% 3.0% 3.1% 3.0% 2.7% 245 234 232 • Goodwill impairment charge of € 67 mn in 219 227 Q4 ’08 – Recognizing KPN’s 56% share of the $ 176 mn goodwill impairment at iBasi
Slide 42: Real estate
Real estate € 180 mn proceeds from sale of real estate in 2008 • Guided for proceeds of ~€ 150 mn in 2008 from real estate disposals – Guidance lowered from ~€ 300 mn to ~€ 150 mn due to market conditions Disposal – Sales process changed from block sale to individual disposals strategy 2008 • Focus
Slide 43: Agenda
Agenda Chairman’s review Ad Scheepbouwer, Chairman and CEO Financial review Marcel Smits, CFO Operating review The Netherlands Baptiest Coopmans, MD Consumer Eelco Blok, MD Business / W&O Operating review Mobile Int’l Stan Miller, MD Mobile International Concluding remarks Ad Scheepbouwer, Chairman
Slide 44: Strategic progress Mobile International
Strategic progress Mobile International Sustained market outperformance through challenger strategy 2006 – 2007 2008 Establishing the business model Refining the business model • Strong top-line growth through focus • Sustained customer growth, driven by new on voice / SIM-only with multi-brands bra
Slide 45: Market outperformance
Market outperformance Service revenue growth consistently higher than overall market growth E-Plus service revenue growth (y-on-y) 10.9% 9.8% 10.0% 7.6% 8.4% 8.1% • E-Plus ~8% ahead of 6.8% 6.4% 4.2% 5.5% market growth in past years 2.5% 2.9% 1% • Market contraction in 2007 1% 0% -1% -1% -1% mainly
Slide 46: Wireless data
Wireless data E-Plus deploying smart follower strategy in wireless data Technology Approach Smart follower strategy • Smart follower in wireless data, based on GPRS • National coverage in place E-Plus’ market approach – E-Plus targeting consumer and SME/SoHo segments with value offers – Combination
Slide 47: Operating review E-Plus
Operating review E-Plus Continued profitable growth and solid net adds Solid net adds • Solid net adds of 750k in Q4 ’08 17.0 17.8 14.8 15.4 16.2 – Increasing share of Post Paid 13.6 14.1 13.1 105 – Lower net adds than in previous quarters, 92 127 134 due to higher one-off churn in Pre Paid 88 48 22
Slide 48: Operating review BASE
Operating review BASE Continuing to show solid revenue growth Net adds • Solid net adds of 204k in Q4 ’08 3.2 3.4 2.9 3.0 3.1 – 21k Post Paid net adds 2.5 2.6 2.7 – 183k Pre Paid net adds, mainly driven by 21 4 6 15 wholesale partners 23 6 18 15 183 94 100 137 115 131 87 132 • Third consecutive quar
Slide 49: Operating review Mobile Wholesale NL
Operating review Mobile Wholesale NL Further growth in wholesale, transfer to Consumer segment per Q1 ’09 Net adds 1.9 2.0 • Further growth in maturing MVNO 1.8 1.8 1.9 1.6 1.6 1.7 market – Solid net adds of 102k in Q4 ’08 15 21 – Strengthening market leading position in 52 36 49 Dutch wholesale seg
Slide 50: International MVNO strategy
International MVNO strategy Proving success in Spain and France before entering other markets Footprint Mobile International Strategy • Exporting successful challenger business model to other countries – Leveraging own successful low-cost / no-frills brands to other countries – Targeting attractive
Slide 51: MVNO Spain
MVNO Spain Firmly established within one year with own brands and partners Status after Brands Going forward first year • Launched Simyo, • Drive volume, No Frills Own Blau expand offer brands • High awareness, • Exploit economic especially for Simyo environment Cultural • Launched ~10 • Target new
Slide 52: MVNO France
MVNO France Launched in January, tapping French market with low-cost business model • Low-cost business model expanded to France – MVNO on Bouygues Telecom network – Leveraging expertise of executing MVNOs and multi-brand strategies – Leveraging existing technology platforms • Significant untapped m
Slide 53: Agenda
Agenda Chairman’s review Ad Scheepbouwer, Chairman and CEO Financial review Marcel Smits, CFO Operating review The Netherlands Baptiest Coopmans, MD Consumer Eelco Blok, MD Business / W&O Operating review Mobile Int’l Stan Miller, MD Mobile International Concluding remarks Ad Scheepbouwer, Chairman
Slide 54: Concluding remarks
Concluding remarks • Solid FY 2008 results, guidance met on all metrics, dividend up 11% • EBITDA inflection in the Netherlands • Continued profitable growth at Mobile International • Getronics on track, iBasis goodwill impaired • 2010 outlook confirmed 54
Slide 55: Q&A
Q&A
Slide 56: Annex
Annex For further information please contact KPN Investor Relations Tel: +31 70 44 60986 Fax: +31 70 44 60593 [email protected] www.kpn.com/ir
Slide 57: Analysis of results
Analysis of results Key items worth mentioning in results interpretation € mn Q4 ’08 Q4 ’07 FY ’08 FY ’07 Revenue effect MTA tariff reduction Group -35 -50 -159 -174 EBITDA effect MTA tariff reduction Group -16 -26 -81 -95 Book gain on sale of subsidiaries Other/W&O - 66 8 70 Book gain on sale of re
Slide 58: MTA regulation
MTA regulation 15 Aug ’07 € cents per minute 1 July ’08 1 April ’09 1 July ’09 KPN 10.0 9.0 8.0 7.0 The Netherlands Vodafone 10.0 9.0 9.0 7.0 T-Mobile 11.4 10.4 10.4 8.1 Avg. asymmetry 1.4 1.4 2.4 1.1 • MTA tariffs valid from 1 December 2007 until 31 March 2009 Germany – T-Mobile / Vodafone lowered
Slide 59: Impact MTA reduction
Impact MTA reduction € mn Q4 ’08 FY ’08 1 1 Revenues EBITDA Revenues EBITDA E-Plus -9 -5 -44 -25 BASE -7 -5 -27 -19 Mobile Wholesale NL -2 -1 -10 -7 Mobile International -18 -11 -81 -51 Consumer -9 -4 -50 -25 Business -6 -1 -26 -5 Wholesale & Operations -5 - -21 0 The Netherlands -20 -5 -97 -30 Inte
Slide 60: Restructuring charges
Restructuring charges € mn Q4 ’08 FY ’08 E-Plus - - BASE -1 -1 Mobile Wholesale NL - - Other Mobile International - -3 Mobile International -1 -4 Consumer - -9 Business - -1 Getronics -11 -16 Wholesale & Operations -10 -22 The Netherlands -21 -48 Other -9 -230 KPN Group -31 -282 60
Slide 61: Development P&L pension charge under IFRS
Development P&L pension charge under IFRS P&L pension charge of around € 165 mn in ’09 compared to € 140 mn in ’08 Impact € mn FY ’07 FY ’08 YE ’09 2008 Pension obligations 6,697 5,852 Pension plan assets 6,205 5,239 Deficit 492 613 Corridor gains/(losses) 449 40 Pension provisions on balance sheet
Slide 62: Revenues in the Netherlands
Revenues in the Netherlands Per guidance definition1 Revenues and other income Y-on-Y growth FY ’08 Q4 ’08 Q3 ’08 Q2 ’08 Q1 ’08 FY ’08 Q4 ’08 Q3 ’08 Q2 ’08 Q1 ’08 Reported 10,500 2,672 2,597 2,637 2,594 17% -1.0% 23% 25% 26% Getronics 1,933 449 465 504 515 iBasis / KGCS 912 232 227 234 219 Other gai
Slide 63: EBITDA in the Netherlands
EBITDA in the Netherlands Per guidance definition1 EBITDA Y-on-Y growth FY ’08 Q4 ’08 Q3 ’08 Q2 ’08 Q1 ’08 FY ’08 Q4 ’08 Q3 ’08 Q2 ’08 Q1 ’08 Reported 3,555 888 890 900 877 1.8% 0.2% 6.0% -0.7% 2.1% Getronics 79 3 18 34 24 iBasis / KGCS 27 7 7 7 6 Restructuring costs -13 - - -11 -2 Other gains and l
Slide 64: Operating expenses
Operating expenses € mn Q4 ’08 Q4 ’07 % FY ’08 FY ’07 % Salaries and social security contributions 562 587 -4.3% 2,222 1,632 36.2% Cost of materials 293 280 4.6% 1,037 914 13.5% Work contracted out and other expenses 1,338 1,327 0.8% 5,265 4,569 15.2% Own work capitalized -25 -40 -37.5% -102 -143 -2
Slide 65: Analysis operating expenses: Salaries & Cost of materials
Analysis operating expenses Salaries & Cost of materials € mn Salaries 18.0% Y-on-Y decrease 16.4% 16.1% 15.1% • Continued headcount reductions, supported by 11.8% 12.5% 12.0% Getronics divestments 11.6% 11.5% 5.9% 222 260 219 187 Q-on-Q decrease • Divestment of Getronics North America in Q3 ’08 252
Slide 66: Analysis operating expenses: Work contracted out & Other
Analysis operating expenses Work contracted out & Other € mn Work contracted out Y-on-Y decrease 39.6% 38.0% 38.4% 38.5% 37.3% • Lower MTA tariffs, partly offset by increased MoU 37.1% 35.7% 36.5% 36.7% 36.0% 103 126 115 118 Q-on-Q increase 115 • Higher handset sales due to increase in (Post 1,224 1
Slide 67: Analysis operating expenses: Depreciation & Amortization
Analysis operating expenses Depreciation & Amortization € mn Depreciation1 Y-on-Y decrease • Lower asset base due to less Capex spending in 11.3% 11.6% 11.1% 10.9% 10.7% prior years Q-on-Q decrease • Accelerated depreciation of € 16 mn on copper 405 409 407 401 397 network in Q4 ’08 (Q3 ’08: € 17 mn
Slide 68: Personnel
Personnel • Personnel decrease y-on-y of 6,829 FTEs – 1,010 FTEs reduction in the Netherlands (excl. Getronics) 43,531 43,409 42,976 – Reduction of 1,247 FTEs in the 38,919 Netherlands excluding acquisitions 8,838 8,377 8,243 36,702 4,839 4,782 • FTE decrease of 2,217 9,193 9,107 9,004 8,757 compare
Slide 69: Tax
Tax P&L Cash flow Fiscal units (€ mn) Q4 ’08 Q4 ’07 Q4 ’08 Q4 ’07 Dutch activities -87 -51 -189 -171 Getronics 5 - -2 - German Mobile activities -10 1,160 -2 - Belgian Mobile activities -12 -8 - - Other -3 - - - Total -107 1,101 -193 -171 • € 193 mn net corporate tax paid in Q4 ’08 – Tax recapture o
Slide 70: Net cash flow from operating activities
Net cash flow from operating activities € mn Q4 ’08 Q4 ’07 FY ’08 FY ’07 Operating Result 592 634 2,597 2,500 Depreciation, amortization and impairments 689 582 2,461 2,400 Interest paid -217 -123 -597 -471 Income tax paid -193 -171 -522 -251 Other income -94 -80 -141 -171 Share based compensation 7
Slide 71: Total cash flow
Total cash flow € mn Q4 ’08 Q4 ’07 FY ’08 FY ’07 Net cash flow from operating activities 1,329 1,212 4,030 3,890 1 Capex -613 -707 -1,925 -1,688 Acquisitions -125 -1,157 -296 -1,690 Disposals real estate 140 19 180 143 Disposals other 248 58 363 89 Other -3 -1 -21 -8 Net cash flow from investing act
Slide 72: Capex
Capex1 € mn Q4 ’08 Q4 ’07 % FY ’08 FY ’07 % Mobile International 244 207 17.9% 656 577 13.7% % Revenues Mobile International 21.7% 19.9% 14.9% 14.5% E-Plus 182 149 22.1% 514 435 18.2% % Revenues E-Plus 22.4% 19.6% 16.0% 14.7% BASE 51 50 2.0% 109 131 -16.8% % Revenues BASE 30.9% 32.3% 16.8% 21.4% Mob
Slide 73: Balance sheet
Balance sheet Assets Equity & liabilities € bn € bn 24.8 24.5 24.2 24.4 23.9 24.8 24.5 24.2 24.4 23.9 4.5 4.6 4.0 3.5 5.8 5.8 5.7 3.8 5.7 5.7 1.4 1.6 1.5 1.4 1.3 4.2 4.2 4.1 4.0 3.8 Goodwill Group equity 3 12.1 13.0 Licenses 1 Provisions 12.0 12.8 13.0 10.7 10.4 10.6 2 10.7 10.7 Other non- Non-curre
Slide 74: Share repurchase progress
Share repurchase progress Date1 Value (€ mn) mn shares Avg. share price (€) Q1 ’08 213 18.1 11.75 Q2 ’08 424 37.5 11.28 Q3 ’08 364 32.9 11.06 October - - - November 17 1.6 10.60 December 85 8.1 10.53 Q4 ’08 103 9.7 10.54 Total 1,103 98.2 11.22 • € 1.1 bn of share repurchases in 2008 – € 1 bn share r
Slide 75: Debt summary
Debt summary € bn Q4 ’08 Q3 ’08 Q4 ’07 Bonds 11.44 11.99 10.37 Eurobonds 9.12 9.99 8.48 Global bonds 2.32 2.00 1.89 Other debt 0.60 0.79 1.38 Other loans at Royal KPN1 0.14 0.12 1.29 Consolidated debt 0.46 0.67 0.09 Fair value financial instruments 0.06 0.26 0.35 Total debt 12.10 13.04 12.10 – of wh
Slide 76: Debt portfolio
Debt portfolio Breakdown of € 12.1 bn gross debt1 6% Financial 18% 76% Other instrum ents 5% 0% Global bonds 19% EUR USD2 GBP2 8% 92% Eurobonds Fixed Floating (incl. swapped) 76% 1 Book value of interest bearing financial liabilities plus the fair value of financial instruments related to these fina
Slide 77: Consumer voice market
Consumer voice market1 mn Q4 ’08 Q3 ’08 Q4 ’07 KPN PSTN / ISDN 2.36 2.46 2.85 Wholesale Line Rental (WLR) 0.39 0.38 0.32 Total traditional voice 2.75 2.84 3.17 KPN VoIP 1.09 1.03 0.85 Cable VoIP 1.26 1.21 1.05 Alternative DSL VoIP 0.35 0.34 0.28 Total VoIP 2.70 2.58 2.18 Cable voice analogue 0.04 0.
Slide 78: Unbundling tariffs
Unbundling tariffs SLU, ODF, colocation set by OPTA; backhaul and WBA based on deal pricing Unbundling in current network Category Monthly tariff Line sharing (LLU) € 0.19 / line MDF Node Fully unbundled (LLU) € 7.83 / line SDF colocation KPN / Telco MDF colocation € 473 / footprint / year ~28,000 1
Slide 79: Pricing: Triple-play packages FttH and FttC
Pricing Triple-play packages FttH and FttC Gold Silver Bronze Price per month € 100 € 80 € 65 Up to 100 Mb download 50 Mb download 30 Mb download Broadband 6 Mb upload 5 Mb upload 3 Mb upload >100 channels >70 channels >50 channels FttH TV (incl. football package) IPTV IPTV IPTV Unlimited calls to n
Slide 80: Service revenue growth Mobile International
Service revenue growth Mobile International Strong underlying growth outperforming the market Service revenue growth E-Plus Service revenue growth BASE 12.2% 9.5% 8.6% 7.3% 7.4% 5.4% 5.4% 9.9% 9.1% 8.5% 8.1% 8.0% 6.8% 6.8% 1.3% 6.4% 5.5% 4.2% -2.7% -5.7% Q4 '07 Q1 '08 Q2 '08 Q3 '08 Q4 '08 Q4 '07 Q1
Slide 81: Dutch wireless services disclosure
Dutch wireless services disclosure Q4 ’08 Q3 ’08 Q4 ’07 Service revenues (€ mn) 754 764 725 − Consumer 423 441 407 − Business 234 228 229 − Other Dutch activities1 97 95 89 SAC / SRC (€) − Consumer 150 159 130 − Business 380 411 315 1 Indicates amongst others Mobile Wholesale NL, Simyo and visitor r
Slide 82: KPIs Consumer: Voice
KPIs Consumer Voice Voice Q4 ’08 Q3 ’08 Q4 ’07 Market penetration1 – Broadband 80% 79% 76% – VoIP penetration 46% 45% 40% Market share – Voice2 >55% >55% >55% – Traditional voice3 >75% >75% ~75% – VoIP 41% 40% 39% – Broadband4 44% 44% 44% – TV 11% 10% 7% Access lines (x 1,000) 3,444 3,491 3,694 – PS
Slide 83: KPIs Consumer: Broadband, TV & Wireless
KPIs Consumer Broadband, TV & Wireless Broadband Q4 ’08 Q3 ’08 Q4 ’07 Broadband ISP customers (x 1,000) 2,536 2,500 2,402 – KPN (Direct & Planet) 1,129 1,111 1,107 – Het Net 680 680 643 – XS4ALL 291 288 288 – Other 436 421 364 Broadband ARPU (€) 30 30 30 TV Q4 ’08 Q3 ’08 Q4 ’07 – Subscribers (x 1,00
Slide 84: KPIs Business: Infrastructure Services
KPIs Business Infrastructure Services Wireline Q4 ’08 Q3 ’08 Q4 ’07 Market share voice1 ~50% >50% ~55% Access lines (x 1,000) 1,581 1,605 1,695 – PSTN 745 761 815 – ISDN 812 821 867 – VoIP 24 23 13 Traditional voice ARPU (€) 52 49 46 − Access 27 26 25 − Traffic 25 23 21 Network services (x 1,000) –
Slide 85: KPIs Business: ICT Services & Corporate Solutions
KPIs Business ICT Services & Corporate Solutions ICT Services Q4 ’08 Q3 ’08 Q4 ’07 Applications online (x 1,000) − Customers 104 89 18 Housing & Hosting (x 1,000) − Housing services (# m2) 16.0 16.0 9.9 − Hosting services (# servers) 2.21 2.16 1.66 Corporate Solutions Q4 ’08 Q3 ’08 Q4 ’07 Managed wo
Slide 86: KPIs Getronics
KPIs Getronics1 Getronics Q4 ’08 Q3 ’08 Q4 ’07 Revenue and other income (€ mn) 449 465 488 Service revenues (€ mn) 400 416 433 Margin – Gross profit2 23% 21% 21% – Service profit3 25% 22% 22% Number of FTEs 11,629 13,596 18,031 1 Consolidated as of 23 October 2007 2 Defined as total gross profit div
Slide 87: KPIs Wholesale & Operations
KPIs Wholesale & Operations Wholesale & Operations Q4 ’08 Q3 ’08 Q4 ’07 Retail voice (without ADSL) 3,915 4,043 4,529 Local loop (x 1,000) MDF access lines1 3,702 3,632 3,445 – of which line sharing2 1,612 1,670 1,895 Unbundling3 (mn) 1.1 1.0 0.9 – Shared unbundled lines 0.3 0.3 0.3 – Fully unbundle
Slide 88: KPIs E-Plus
KPIs E-Plus Q4 ’08 Q3 ’08 Q4 ’07 Market share1 – Service revenue 15.4% 15.3% 14.4% – Base 16.4% 16.0% 15.3% Customers (x 1,000) 17,777 17,027 14,807 – Of which new brands 11,340 10,451 7,575 – Post Paid 6,676 6,542 6,297 – Pre Paid 11,101 10,485 8,510 Service revenues (€ mn) 761 782 721 ARPU (€) 15
Slide 89: KPIs BASE
KPIs BASE Q4 ’08 Q3 ’08 Q4 ’07 Market share1 – Revenue >16% >16% ~16% – Base >24% >24% >23% Customers (x 1,000) 3,445 3,241 2,855 – Post Paid 569 548 512 – Pre Paid 2,876 2,693 2,343 Service revenues (€ mn) 159 155 148 ARPU (€) 16 16 18 – Post Paid 50 51 49 – Pre Paid 9 9 11 Non-voice as % of ARPU 1
Slide 90: KPIs Mobile Wholesale NL
KPIs Mobile Wholesale NL Q4 ’08 Q3 ’08 Q4 ’07 Customers (x 1,000) 2,039 1,937 1,791 – Post Paid 660 608 470 – Pre Paid 1,379 1,329 1,321 Service revenues (€ mn) 91 87 87 90