{0}------------------------------------------------

REPORT BY THE BOARD OF DIRECTORS TO THE ANNUAL GENERAL MEETING OF SHAREHOLDERS ON 16 APRIL 2014 ON THE ANNUAL ACCOUNTS OF BELGACOM S.A. UNDER PUBLIC LAW AS AT 31 DECEMBER 2013

Dear Shareholders,

We have the pleasure of reporting on the operations in the 2013 financial year and of submitting, for your approval, the annual accounts closed as of 31 December 2013.

1. THE DEVELOPMENT, THE RESULTS AND THE RISKS OF BELGACOM IN 2013

1.1. Comments on the annual accounts

Balance sheet

The intangible assets were mainly influenced by the amortization of the goodwill which resulted from the 2010 merger by absorption. Given the long term nature of the expected profitability of the totality of the merged companies, this goodwill is amortized over 15 years. Furthermore, the intangible assets were influenced by the acquisition of the 800 Mhz license for an amount of $[mathbb{E}$ 120 million.

The financial fixed assets were mainly influenced by, on the one hand, the capital increase in Tango S.A. by contribution in kind of shares of Belgacom Group International Services S.A., the capital increase in Telindus ISIT S.A. and on the other hand by the write off on some affiliated enterprises and on shares.

The amounts paid out in 2013 for the social agreement 2005 in respect of the work organization (tutorship) decreased the provisions for liabilities and charges.

The total financial debts increase since the cash flow from operations (net interest expenses included) are not sufficient to cover for acquisitions of non-current assets and for the payment of dividends.

The long term suppliers' debt increases as a consequence of the spread payment of the 800 Mhz license.

Income statement

The increased competition from fixed-line and mobile operators in traditional telephony and the new mobile termination rates and roaming tariffs negatively impacted the turnover. The turnover for digital television further increased. The sale of smartphones and tablets also shows an increase. These elements made the turnover to decrease by 4.9 % compared to 2012.

The operating charges were mainly influenced by the indexation of remuneration in January 2013 and the increase in depreciation due to the growth in investment. These increases were almost totally compensated by a strict cost control policy and the decrease of the mobile termination rates and roaming tariffs. The total operating charges increased by 0.2 % compared to 2012.

{1}------------------------------------------------

As a result, the operating profit decreased by 27.2 % from € 723.1 million in 2012 to € 526.6 million in 2013.

In 2013, the financial results have been influenced by a dividend of $\leqslant$ 51.3 million ( $\leqslant$ 42.7 millions in 2012) distributed by Belgacom International Carrier Services S.A. to Belgacom. Furthermore, a supplementary write-off on own shares of $\leqslant$ 7.6 million ( $\leqslant$ 31.7 million in 2012) has been taken.

The extraordinary result primarily originates from the gain on the contribution in kind of shares of Belgacom Group International Services S.A. in the capital of Tango S.A.. Moreover, the extraordinary result was influenced by the actualisation of the provisions for personnel restructuring plans, a write-back of amounts previously written down on Belgacom Skynet S.A. and the write-off on Scarlet N.V., Group Telindus France S.A., Belgacom Bridging ICT S.A. and Awingu S.A..

The profit for the 2013 financial year amounts to € 709.5 million, compared to € 745.7 million in 2012.

Appropriation account

After the processing of untaxed reserves, the profit available for distribution amounts to € 710,058 thousand. We propose the following appropriation (in € thousands):

Profit of the period available for appropriation	710,058
Net transfers from the reserves	32,759
Profit to be distributed	742,817
Return on capital (dividends) Other allocations (personnel)	702,204 40,613

On 6 December 2013 an interim dividend of € 159,6 million has been paid.

Right and commitments not accrued in the balance sheet

Belgacom has the right to issue Commercial Paper for a total of € 1,000.0 million, of which € 313.7 million has been issued end 2013, and Euro Medium Term Notes for a total of € 2,500.0 million, of which € 1,700.0 million has been issued end 2013.

1.2. Most important risks and uncertainties

Taking risks is inherent in doing business and successfully managing risks delivers return to Belgacom's stakeholders. Belgacom believes that risk management is fundamental to corporate governance and the development of sustainable business. The Group has adopted a risk philosophy that is aimed at maximizing business success and shareholder value by effectively balancing risk and reward. The objective of risk management is not only to safeguard the Group's assets and financial strength but also to protect Belgacom's reputation. Financial risk management objectives and policies are reported in note 33 of the consolidated financial statements, published on the Belgacom website. Risks related to important ongoing claims and judicial procedures are reported in note 35 of these statements. The enterprise (point 1.2.1) and financial reporting (point 1.2.2) risks are detailed below, together with the related mitigating factors and control measures. Note that this is not intended to be an exhaustive analysis of all potential risks Belgacom might be facing.

{2}------------------------------------------------

1.2.1. Enterprise risks

The Group's Enterprise Risk Management (ERM) covers the spectrum of risks ("potential adverse events") and uncertainties that Belgacom could encounter. Belgacom ERM is a structured and consistent framework for assessing, responding to and reporting on risks that could affect the achievement of Belgacom's strategic development objectives. It seeks to maximize value for shareholders by aligning risk management with the corporate strategy, assessing the emerging risk from regulation, new technologies or the market, and developing risk tolerance and mitigating strategies. Belgacom ERM has been reviewed and updated every year since 2006. This risk assessment and evaluation takes place as an integral part of Belgacom's annual strategic planning cycle. The resulting report on major risks and uncertainties is then reviewed by the management committee, the CEO and the Audit and Compliance Committee. Among the risks identified in the ERM exercise of 2013, the following risk categories were prioritized: human resources flexibility, competitive market dynamics, regulatory pressure and dependence on equipment and technology.

Principal risks	Description	Mitigation actions
-
Human resources (HR) flexibility	Through a burdened HR framework, strict HR rules and unionization of personnel, Belgacom might miss the much needed flexibility to significantly reduce its workforce costs in order to preserve the company's EBITDA.	Belgacom's human resources department is in negotiations with unions to obtain more flexibility on the company's workforce. In the meantime, Belgacom has established a simplification program aiming for increased company agility and flexibility, a lower structural need for headcount and an improved customer service.
Competitive market dynamics	A new market entrant or radical price competition could further pressure Belgacom's market share and force Belgacom into revising its pricing downwards, negatively impacting revenue and profit. Competitive behaviour could prevent Belgacom to monetize investments in new technologies.	Belgacom applies a disciplined pricing strategy, being careful not to trigger further market value destruction. It employs a multi-brand strategy to address the price-sensitive segment separately. Belgacom has other levers than price thanks to its convergence strategy and investments in a superior mobile network, providing a competitive advantage.
Regulatory pressure	Belgacom's results could be materially negatively impacted by regulatory policy changes or actions from European or national regulatory entities. Belgacom still faces a much different regulatory playing field than cable operators in Belgium.	Belgacom communicates and negotiates with the Belgian and EU regulators to try to convince them (i) not to impose unfavourable terms and conditions and (ii) to put in place a fair and balanced regulatory framework.

{3}------------------------------------------------

Principal risks	Description	Mitigation actions
Dependency on equipment and technology	Network systems could be impacted by damage, computer viruses, natural disasters and unauthorized access which could lead to loss of business and liability claims. Part of Belgacom's nation-wide fixed access network has been in place for a long time. Ageing copper cables could increase fault rates and decrease network performance.	A multi-year cyber security plan is being implemented and a dedicated Cyber Defense Unit is being created. To address the ageing copper cables, Belgacom's fixed access renewal strategy is brought in line with the future target destination of its network. Legacy systems are being replaced by integrated systems. Service and license agreements with suppliers and vendors are strictly monitored.

1.2.1.1. Human resources flexibility

With Belgacom's revenue under pressure for the past few years, the costs of the company need to be significantly reduced in order to preserve the EBITDA. A significant part of Belgacom's expenses is driven by the costs of the workforce, whether internal or outsourced, for which the company faces a global increase that is not sustainable for the future.

Through a burdened HR framework, strict HR rules and unionization of personnel, Belgacom may lack the much needed flexibility. All this at a time when business complexity is increasing, creating a need for upgraded skills and up-staffing in customer-facing functions. Moreover, Belgium applies automatic inflation-based salary increases, leading to higher costs, not only of Belgacom's own employees but also of the outsourced workforce, with the outsourcing companies being subject to the indexation as well.

On Belgacom Group level, about one in three employees are statutory, benefitting from substantially higher protection against dismissal than that applicable to private sector employees. This may restrict Belgacom's ability to improve efficiency and increase flexibility to levels comparable to those of its competitors.

To address the much needed structural measures, Belgacom's human resources department is in negotiations with the unions. The aim of these negotiations is to obtain more flexibility to move employees within the organization, adapt the workforce faster in line with the actual workload and align remuneration items with common market practices. Belgacom has established a comprehensive simplification program aiming for increased agility and flexibility, a lower structural need for headcount, and improved customer service. The simplification project will prepare the company for the coming wave of retiring employees (over the 2018-2023 timeframe), minimizing the need for replacement by developing strategic workforce planning, fluent mobility and drastically simplifying and/or automating Belgacom's product and services, processes, systems and organization.

1.2.1.2. Competitive market dynamics

Belgacom's business is mainly focused on Belgium, a small country with only a few large telecom players, among which Belgacom is the incumbent. Belgacom is operating in maturing, and, according to some, even saturating markets. In such circumstances, market value is vulnerable to disruptive behaviour among competitors. Moreover, Belgacom's main competitors Mobistar, BASE and Telenet, are subsidiaries of France Telecom, KPN, and Liberty Global respectively, all large international operators. Regarding TV services, Belgacom plays a challenger role, facing strong cable competition.

{4}------------------------------------------------

A new market entrant or radical price competition could cost Belgacom market share and negatively impact revenue and profit. For instance, Belgium's new Telecom Law, applicable since 1 October 2012 and indicated as one of the primary risks in the Risk Management chapter of the 2012 annual report, resulted in a significant increase in Mobile customer churn. This, combined with aggressive competitor mobile pricing (in both retail and wholesale), forced Belgacom to revise its mobile pricing offer at the end of 2012 and in April 2013, greatly increasing the value for customers for similar monthly price commitments. With churn levels normalizing in 2013 and mobile customer net additions back to positive, Belgacom applies a disciplined customer pricing strategy, being careful not to trigger further market value destruction. In case of market share loss due to a significant further reduction of competitor prices, however, Belgacom could be forced to revise its mobile pricing plans accordingly, which might result in additional pressure on mobile revenue. Nevertheless, as a result of its long-term strategy and continued network investments, Belgacom build itself an advantageous competitive position providing the company with other levers than just price. Belgacom offers mobile services on a superior mobile network, and its convergence strategy provides the company with a solid ground to compete, offering attractive multi-play solutions to its customers while reducing churn.

Another differentiator for Belgacom is to take the lead in mobile innovation. In this regard, it was the first operator to launch 4G in Belgium, ending 2013 with 258 cities and municipalities covered, or 50% of Belgium's population. Belgacom intends to get a decent return on its investments by introducing speed-tiering of its mobile price plans. This translates in making the full speed capabilities of the 4G technology accessible only via its high-end mobile price packages. Subscribers to the mid- and low-end mobile offers and having a 4G-enabled device will also enjoy higher speeds; though will be capped at 20Mbps. The monetization of 4G, however, could become challenging should competitors decide to offer full 4G-capabilities free of charge to all customers. Belgacom would then risk not being able to profit from the expensive investments made.

In the fixed market, Belgacom faces strong competition from the cable operators. Potential consolidation among cable operators or between cable and mobile network operators could further strengthen competitors' positions and open the cable network for new players. Substitution of fixed line services (e.g. by apps and social media like Skype, Facebook, etc.), TV content (such as Bhaalu, Stievie and Netflix in the future) could put further pressure on revenues and margins. Belgacom is responding to these threats through a convergent and bundled approach and by offering new services (e.g. TV Replay, Belgacom Cloud, Smart and Safe Living).

To preserve its fixed and mobile premium brands, Belgacom is applying a multi-brand strategy, addressing the price-sensitive segment via its subsidiary Scarlet. The latter offers attractively priced mobile and triple-play products.

In the SME market, besides the competitors also active in the Consumer market, we also face competition from niche players in the different product markets. Belgacom remains a reference in this market through its convergent offers, mixing fixed and mobile, as well as telecom and IT. In the large-company market, Belgacom faces competition from internationally oriented operators like Orange Business Services, Colt, Verizon Business and BT Belgium and from integrators such as Dimension Data, Getronics, Cegeka and RealDolmen. The scattered competitive landscape drives price competition, and might further impact revenue and margins.

In the international carrier services market, voice margins per minute have been under significant pressure over the past few years as a result of price competition, consolidation of competitors and the ease with which customers are able to change providers. If pressure on voice margins should continue and/or if the Group does not offset price decreases with increased volume, Belgacom's ICS growth rate, operating revenue and net profit could come under pressure. In addition, the pressure on the mobile data market might increase and therefore affect the growth profile of the International Carrier Services.

{5}------------------------------------------------

1.2.1.3. Regulatory pressure

Belgacom operates in highly regulated markets, limiting the flexibility to manage its business. Belgacom's results could be materially negatively impacted by regulatory policy changes or actions from European or national regulatory entities.

Among other things, the Group's revenue and profit could be affected by increased taxation, additional roaming regulation, additional consumer regulation and wholesale regulation. Current wholesale prices do not reflect the economic value of the underlying network assets. This could negatively affect the profitability of asset renewal (re-investments) and investments in next-generation networks. Belgacom still faces a much different regulatory playing field than its main competitors for fixed services, i.e. the regional cable operators. This provides them with a competitive advantage that distorts fair competition and that may negatively affect Belgacom's ability to compete for market share.

Belgacom communicates and negotiates with the Belgian and EU regulators, either personally or through trade associations such as ETNO and GSMA, to try to convince these authorities (i) not to impose unfavourable terms and conditions and (ii) to put in place a fair and balanced regulatory framework promoting investments and establishing a level playing field with the cable operators. Belgacom also develops sound regulatory cost models to defend its pricing vis-à-vis the regulators. Ultimately, Belgacom challenges unfavourable and unfair decisions before the courts.

1.2.1.4. Dependence on equipment and technology

Belgacom's business is highly dependent on technical infrastructure such as telecommunication equipment and IT platforms. Belgacom is able to deliver services only insofar as it can protect its network systems against damage from telecommunication failures, computer viruses, natural disasters and unauthorized access. Any system failure, incident, or security breach that causes interruptions to all or some of Belgacom's operations could impair its ability to provide services to its customers and could potentially have financial consequences and a reputation impact.

To mitigate the risks related to incidents (e.g. fire) affecting technical buildings, Belgacom has spread its technology across different locations and buildings (e.g. 3 data centers, splitting corporate ICT services and customer ICT services), 10 network services nodes and hundreds of local exchanges.

To ensure the security of its IT and telecom systems, a new multi-year cyber security plan is being implemented to allow more effective detection and remediation of cyber-attacks. This new cyber security plan entails a wide range of actions consisting of:

best-in-class security of IT platforms and networks for improved prevention;
the creation of a Cyber Defense Unit exclusively devoted to detecting and solving cyber incidents;
organizational measures and governance and the development of a more cyber-securityoriented culture and awareness towards the internal organization as well as towards partners, vendors and suppliers.

Belgacom's service portfolio becomes increasingly dependent on numerous IT platforms. To preserve the quality of service delivered to its customers, Belgacom needs to guarantee stability, processing time and agility. Any disruption or security breach resulting in loss or damage to customers' data or applications, or leading to inappropriate disclosure of confidential information, may lead to Belgacom incurring liability. In addition, the Group may incur additional costs to remedy the damage caused by these disruptions or security breaches. Belgacom possesses errors and omissions insurance, business interruption insurance and insurance specifically aimed to protect against certain losses resulting from, for instance, computer viruses and security breaches.

{6}------------------------------------------------

For critical IT applications, an extensive resilience plan has been put in place in 2013 which allows complete segregation and substantially better disaster recovery capabilities in case of failures. Furthermore, to prevent problems in the supply chain, Belgacom monitors strictly its service and license agreements with suppliers and vendors.

Belgacom has a nation-wide fixed access network, part of which has been in place for a long time, the so-called legacy copper network. Ageing copper cables could increase fault rates and decrease performance, which could require additional copper replacement. To remedy this, Belgacom is bringing its renewal strategy in line with the target destination of its network. The mobile network might be subject to technical failures, affecting the quality of service or causing temporary service interruptions, leading to customer dissatisfaction. Elaborate network resilience programs have been put in place to further boost the ability to keep the network in operation in the event of failures.

Belgacom continues to invest in stability improvements for both its fixed and mobile network by putting new technologies and architectures in place that enable higher redundancy (e.g. 4G, Vectoring, etc.). Belgacom also focuses on simplifying its legacy network through an elaborate network transformation program, although this could be subject to delayed implementation and consequently delayed savings from the outphasing of technical buildings.

Nonetheless, in the event of network or IT interruptions, Belgacom has multiple measures in place to remedy problems as quickly as possible. Firstly, Belgacom has an extensive monitoring center in place allowing very fast detection and identification of any problem that could jeopardize the proper functioning of operations. Secondly, Belgacom has elaborate, well-prepared procedures in place to deal with and remedy high-impact incidents as quickly as possible through Emergency Response Teams which operate 24/7 and include the best experts in their fields.

1.2.2. Financial reporting risks

In the area of financial reporting, in addition to the general enterprise risks also impacting the financial reporting (e.g. personnel), the major risks identified include: new transactions and evolving accounting standards, changes in tax law and regulations and the financial statement closing process.

1.2.2.1. New transactions and evolving accounting standards

New transactions could have a significant impact on the financial statements, either directly in the income statement or in the notes. An inappropriate accounting treatment could result in financial statements which do not provide a true and fair view any more. Changes in legislation (e.g. pension age, customer protection) could also significantly impact the reported financials. New accounting standards can require the gathering of new information and the adaption of complex (billing) systems. If not timely and adequately foreseen, the timeliness and reliability of the financial reporting could be put at risk.

It is the responsibility of the Corporate Accounting department to follow the evolution in the area of evolving standards (both local GAAP and IFRS). Changes are identified and the impact on the Belgacom financial reporting is proactively analysed.

For every new type of transaction (e.g. new product, new employee benefit, business combination), an in depth analysis from a financial reporting, risk management, treasury and tax point of view is performed. In addition, the development requirements for the financial systems are timely defined and compliance with internal and external standards is systematically analysed. Emphasis is on the development of preventive controls and setting up reporting tools that enable posteriori controls.

{7}------------------------------------------------

On a regular base, the Audit & Compliance Comitte (A&CC) and the Management Committee are informed about new upcoming financial reporting standards and their potential impact on the Belgacom Group financials.

1.2.2.2. Changes in tax law and regulations

Changes in tax laws and regulations (corporate income tax, VAT,...) or in their application by the tax authorities could significantly impact the financial statements. To ensure compliance, it is often required to set up, in a short timeframe, additional administrative processes to collect relevant information or to implement updates to existing IT systems (e.g. billing systems).

The tax department continuously follows potential changes in tax law and regulations as well as interpretations of existing tax laws by the tax authorities. Based on laws, doctrine, case law and political statements as well as draft laws available etc., an impact analysis is made from a financial perspective and from an operational point of view.

1.2.2.3. Financial statement closing process

The delivery of timely and reliable financial statements remains dependent on an adequate financial statement closing process.

Clear roles and responsibilities in the closing process of the Group financial statements have been defined. During the monthly, quarterly, half-yearly and annual financial statement closing processes, there is a continuous monitoring on the different steps. In addition, different controls are performed to ensure quality and compliance with internal and external requirements and guidelines.

For Belgacom and its major affiliates, a very detailed closing calendar is established, which includes in detail cross-divisional preparatory meetings, deadlines for ending of specific processes, exact dates and hours when IT sub-systems are locked, validation meetings and reporting deliverables.

For every process and sub-process, different controls are performed, including preventive controls, where information is tested before being processed, as well as detective controls, where the outcome of the processing is being analysed and confirmed. Specific attention is given to reasonableness tests, where financial information is being analysed against more underlying operational drivers and coherence tests, where financial information from different areas is brought together to confirm results or trends, etc.. Tests on individual accounting entries are performed for material or non-recurrent transactions and on a sample basis for others. The combination of all these tests provides sufficient assurance on the reliability of the financials.

2. IMPORTANT EVENTS THAT HAVE OCCURRED AFTER THE END OF THE PERIOD

Belgacom has entered into exclusive negotiations with Vivendi with respect to the sale of its fully owned subsidiary Groupe Telindus France S.A.. Completion of the transaction is subject to the satisfaction of certain conditions precedent among which approval by the French Competition Authorities.

3. CIRCUMSTANCES THAT CAN SIGNIFICANTLY INFLUENCE THE DEVELOPMENT OF BELGACOM

Circumstances that can significantly influence the development of Belgacom are listed in 1.2..

{8}------------------------------------------------

4. EVOLUTION IN RESEARCH AND DEVELOPMENT ACTIVITIES

In general, the research and development activities cover 4 key steps in the adoption cycle of a technology or of a service based on technology:

Study of the technology's potential: determination of the technological and commercial opportunities and its positioning in the technology portfolio;
Introduction of the technology: as the technology is selected, an engineered solution is necessary for deployment, exploitation and day-to-day management;
Evolution of the technology: once deployed, the technology will continue to evolve in accordance with its potential and market demand;
The preparation of the introduction of new services.

In 2013, the research and development activities covered the following:

Study of the potential of new technologies:
Further detailed studies on solutions to phase out traditional technologies and to migrate to a fully IP based network. More specifically the solutions for replacing PSTN and ISDN (Access Gateway, ISDN Access Devices and alternatives) were further investigated on their technical, economical and operational feasibility.
Study to define future target transport network architectures and supporting technologies, aiming to cope with disruptive traffic growth, higher resiliency, as well as backbone network simplification.
Further studies for the introduction of IPv6 in the data networks.
o Fibre to the Home (FTTH): technical-economic studies have been further conducted and preparations continued to deploy FTTH in green-field zonings. A first pilot for fibre-based connections in a new zoning was realized in the town of Brecht.
A study has been started to investigate the potential of deploying fibre closer to the homes, by re-using the last meters of the existing copper pair for connecting the home (solution based on G.Fast standards).
o Investigation on viable solutions to optimize the data traffic handling on fixed and mobile networks, in order to ensure the optimal Quality of Service.
Belgacom started to investigate the capabilities of the newest video coding solutions (HEVC / H265 video coding).
o Belgacom started also to investigate the potential of the integration of Wi-Fi technology with the mobile data network to always deliver best data experience.
Belgacom has a continuous focus on the "Green" aspect. With "green ICT" and "ICT for green", Belgacom actively participates in reducing our own environmental impact, as well as the impact of others. Several areas are being investigated (e-prescription, smart grids...).
· Introduction of new technologies:
Belgacom introduced in its mobile network the latest evolution in the 3G technology (HSPA+ or "3G+") which doubles the average download speed and increases significantly the upload speed for devices supporting this evolution.
o Belgacom and Alcatel-Lucent have been further developing in a partnership a next step in VDSL2 technology ('Vectoring'). This solution allows for cancelling out interference in a copper cable and will allow increasing substantially the data speed that can be offered. A new modem ("Bbox3") that supports this Vectoring solution has been developed and introduced.
Evolution of the technology in terms of improvement and existing services extension:
o Belgacom further improved and extended its portfolio on Cloud-based Services with a residential cloud solution (storage and sharing).

{9}------------------------------------------------

o Belgacom extended its "internet-of-things" services with the introduction of Home Control/View (multi-device view, alert and interaction with home devices).
Belgacom TV services have been further enriched. A new decoder has been developed and a faster application for TV Everywhere has been made available. TV Replay, a totally new service, has been introduced, allowing customers to watch TV programs at the moment which is most convenient for them.
The download speed on VDSL2 has been further increased (up to 50 Mbps) by further improving DLM ('Dynamic Line Management'), a technology which was developed inhouse.
The preparation of the introduction of new services:
Belgacom was one of the main participants in the fiber-based pilot network in Kortrijk, in which test users are provided with high-speed access. This "Living Lab" enables application developers to test new applications and services in a real-life environment with a representative number of test users. Belgacom has also been testing some advanced services.

Belgacom collaborates with universities, industrial partners and several other bodies, such as iMinds (independent research institute founded by the Flemish government), and I.W.T. (Agentschap voor Innovatie door Wetenschap en Technologie). In this way, Belgacom has been participating to several R&D programs in various domains. Belgacom takes also part in several User Committees for Strategic Research projects.

5. BRANCHES

The branch in the Grand Duchy of Luxemburg was established in 2002 and is responsible for the management of Luxemburg financial assets. For this purpose, Belgacom has allocated its shares in Belgacom Finance S.A. to this branch.

6. USE OF FINANCIAL INSTRUMENTS

Belgacom is exposed to market risks, including interest rate risks and foreign exchange rate risks, associated with underlying assets, liabilities and anticipated transactions. Based on analysis of these exposures, Belgacom selectively enters into derivatives to manage the related risk exposures.

Belgacom manages its exposure to changes in interest rates and its overall cost of financing by using amongst other interest rate swaps (IRS) as well as interest rate and currency swaps (IRCS). These financial instruments are used to transform the interest rate exposure from a fixed to a floating interest rate or vice versa.

Belgacom's currency exposure relates to financial debts in foreign currency and to operational activities in foreign currencies that are not "naturally" hedged. In order to hedge such exposures, Belgacom uses derivatives, mainly forward foreign exchange contracts and occasionally currency options.

Belgacom is therefore exposed to counterparty risks relative to potential failure by counterparty on derivatives. In general, Belgacom does not require collateral or other security from counterparties as these are highly rated financial institutions.

{10}------------------------------------------------

7. INDEPENDENCE AND EXPERTISE IN THE ACCOUNTING AND AUDIT DOMAIN OF AT LEAST ONE MEMBER OF THE AUDIT AND COMPLIANCE COMMITTEE

In accordance with the bylaws, Belgacom has an A&CC which consists of three to maximum five non-executive Directors, the majority of whom must be independent. In line with its charter, it is chaired by an independent Director.

The members of the A&CC have sufficient expertise in financial matters to discharge their functions. Its Chairman, Mr. Pierre-Alain De Smedt, is competent in accounting and auditing. He is a "licentiate" in commercial and financial sciences. He occupied during his career several functions as CFO, CEO and COO. Amongst his non-executive functions he is also member of the Audit Committee of Avis Europe.

8. CORPORATE GOVERNANCE STATEMENT

Belgacom governance model

At Belgacom, the Articles of Association are strongly influenced by the specific legal status of the company. As a limited liability company under public law, Belgacom is in the first instance governed by the Law of 21 March 1991 on autonomous public sector enterprises ("the 1991 Law"). For matters not explicitly regulated by the 1991 Law, Belgacom is governed by Belgian corporate law. The key features of Belgacom's governance model are:

A Board of Directors, which defines Belgacom's general policy and strategy and supervises operational management;
The creation by the Board of Directors within its structure of an Audit and Compliance Committee, a Nomination and Remuneration Committee and a Strategic and Business Development Committee;
A President & Chief Executive Officer, who takes primary responsibility and ownership for operational management (including, but not limited to, day-to-day management);
A Management Committee, which assists the President & Chief Executive Officer in the exercise of his duties.

8.1. Designation applicable Code on Corporate Governance

Belgacom designates the 2009 Belgian Code on Corporate Governance as the applicable Code (www.corporategovernancecommittee.be).

8.2. Departure from the 2009 Belgian Corporate Governance Code

Belgacom complies with the principles and provisions of the 2009 Belgian Corporate Governance Code, except provisions 4.6 and 4.7. Although provision 4.6 stipulates that mandates of Directors should not exceed four years, the mandates of Belgacom Directors are for six years as prescribed by article 18 of the 1991 Law. Where provision 4.7 states that the Board appoints its Chairman, article 18 § 5 of the 1991 Law foresees that the Chairman is appointed by the King.

8.3. Most important characteristics of the internal control and risk-management systems

The Belgacom Board of Directors is responsible for the assessment of the effectiveness of the internal control and of the risk-management systems.

{11}------------------------------------------------

Belgacom has set up an internal control system based on the COSO model of 1992, i.e. the integrated internal control and enterprise risk management framework published by the Committee of Sponsoring Organisation of the Treadway Commission ("COSO") in 1992. This COSO methodology is based on five areas: the control environment, risk analysis, control activities, information & communication and monitoring.

Belgacom's internal control system is characterized by an organization with a clear definition of responsibilities, next to sufficient resources and expertise and also appropriate information systems, procedures and practices. Obviously, Belgacom cannot guarantee that this internal control will be sufficient in all circumstances as risks of misuse of assets or misstatements can never be totally eliminated. However, Belgacom organizes a continuous review and follow-up of all the components of its internal controls and risk management systems to ensure they remain adequate.

Belgacom considers the timely delivery to all its internal and external stakeholders of complete, reliable and relevant financial information in conformity with International Financial Reporting Standards (IFRS) and with other additional Belgian disclosure requirements as an essential element of management and governance. Therefore, Belgacom has organized its internal control and risk management systems over its financial reporting in order to ensure this objective is met.

8.3.1. Control environment

8.3.1.1. Organization of internal control

The A&CC's role is to assist and advise the Board of Directors in its oversight on (i) the financial reporting process, (ii) the efficiency of the systems for internal control and risk management of Belgacom, (iii) the Belgacom's internal audit function and its efficiency, (iv) the quality, integrity and legal control of the statutory and the consolidated financial statements of Belgacom, including the follow up of questions and recommendations made by the auditors, (v) the relationship with the Group's auditors and the assessment and monitoring of the independence of the auditors, (vi) Belgacom's compliance with legal and regulatory requirements, (vii) the compliance within the organization with the Belgacom's Code of Conduct and the Dealing Code. The A&CC meets at least once every quarter.

8.3.1.2. Ethics

The Board of Directors has approved a Corporate Governance Charter and a Code of Conduct "The way we do responsible business". All employees must perform their daily activities and their business objectives according to the strictest ethical standards and principles, using the Group values (Respect, Can do and Passion) as guiding principle.

The Code "The way we do responsible business", which is available on www.belgacom.com, sets out the above-mentioned principles and aims to inspire each employee in his or her daily behaviour and attitudes. The ethical behaviour is not limited to the text of the Code. The Code is a summary of the main principles and is thus not exhaustive.

In addition, Belgacom in general and the Finance department in particular have a tradition of a high importance to compliance and a strict adherence to a timely and qualitatively reporting.

8.3.1.3. Policies and procedures

The principles and the rules in the Code "The way we do responsible business" are further elaborated in the different internal policies and procedures. These Group policies and procedures are available on the Belgacom intranet-sites. Every policy has an owner, who regularly reviews and updates if necessary. Periodically and at moment of an update, an appropriate communication is organized.

{12}------------------------------------------------

In the financial reporting domain, general and more detailed accounting principles, guidelines and instructions are summarized in the accounting manuals and other reference material available on the Belgacom intranet-sites. In addition, the Corporate Accounting department regularly organizes internal accounting seminars to update finance and non-finance staff on accounting policies and procedures.

8.3.1.4. Roles & responsibilities

Belgacom's internal control system benefits from the fact that throughout the whole organization, roles and responsibilities are clearly defined. Every business unit, division and department has its vision, mission and responsibilities, while on individual level; everybody has a clear job description and objectives.

The main role of the Finance Division is to support the divisions and affiliates by providing accurate, reliable and timely financial information for decision making, to monitor the business profitability and to manage effectively corporate financial services. The establishment of the external financial reporting falls under the responsibility of the Corporate Accounting department.

The team of the Corporate Accounting department assumes this accounting responsibility for the mother company Belgacom and the major Belgian companies. They also provide the support to the other affiliates. For this centralized support, the organization is structured according to the major (financial) processes. These major processes include capital expenditures and assets, inventories, contracts in progress & revenue recognition, financial accounting, operational expenditures, provisions & litigations, payroll, post-employment benefits and taxes. This centralized support organized around specific processes and IFRS standards allows for in depth accounting expertise and ensures compliance with group guidelines.

The consolidation of all different legal entities into the Consolidated Financial Statements of the Belgacom Group is realized centrally. The Consolidation department defines and distributes information relating to the implementation of accounting standards, procedures, principles and rules. It also monitors changes in regulations to ensure that the financial statements continue to be prepared in accordance with IFRS, as adopted by the European Union. The monthly instructions for consolidation set forth not only the schedules for preparing accounting information for reporting purposes, but also includes detailed deadlines and items requiring particular attention, such as complex issues or new internal guidelines.

8.3.1.5. Skills & expertise

Adequate staffing is a matter to which Belgacom pays careful attention. This requires not only sufficient headcount, but also the adequate skills and expertise. These requirements are taken into account in the hiring process and subsequently in the coaching and formation activities, facilitated and organized by the Belgacom Corporate University.

For financial reporting purposes, a specific formation cycle was put in place, whereby junior as well as senior staff have to participate mandatory. These internally and externally organized accounting seminars cover not only IFRS but local accounting rules & regulations, Tax and Company law & regulations as well. In addition, the knowledge and expertise is also kept up to date and extended for more specific domains for which staff is responsible (revenue assurance, pension administration, financial products, etc.) through attendance to seminars and self-study. Furthermore, employees also attend general formations session on Belgacom new business products & services.

8.3.2. Risk analysis

The risk analysis has been commented extensively in point 1.2..

{13}------------------------------------------------

8.3.3. Risk mitigating factors and control measures

The risk mitigating factors and control measures have been commented extensively in point 1.2..

8.3.4. Information and communication

8.3.4.1. Financial reporting IT systems:

The accounting records of Belgacom and most of its affiliates are kept on large integrated IT systems. Operational processes are often integrated in the same system (e.g. supply chain management, payroll). For the billing systems, which are not integrated, adequate interfaces and a monitoring system have been developed. For the consolidation purposes, a specific consolidation tool is used.

The organizational set-up and access management are designed to support an adequate segregation of duties, prevent unauthorized access to the sensitive information and prevent unauthorized changes. The set-up of the system is regularly subject to the review by the internal audit department or external auditors.

8.3.4.2. Effective Internal communication

Most of the accounting records today are kept under IFRS as well as local GAAP. In general, financial information delivered to management and used for budgeting, forecasting and controlling activities is established under IFRS. A common financial language used throughout the organization positively contributes to an effective and efficient communication.

8.3.4.3. Reporting and validation of the financial results

The financial results are internally reported and validated on different levels. On the level of processes, there are validation meetings with the business process owners. On the level of the major affiliates, a validation meeting is organized with the accounting and controlling responsible. On Belgacom group level, the consolidated results are split per segments. For every segment, the analysis and validation usually includes comparison with historical figures, as well as budget-actual and forecast-actual analysis. Validation requires (absences of) variances to be analysed and satisfactorily explained.

Afterwards, the financial information is reported and explained to the Belgacom Management Committee (monthly) and presented to the A&CC (quarterly).

8.3.5. Supervision and assessment of internal control

The effectiveness and efficiency of the internal control are regularly assessed in different ways and by different parties:

Each owner is responsible for reviewing and improving its business activities on a regular basis: this includes a.o. the process documentation, reporting on indicators and monitoring of those.
In order to have an objective review and evaluation of the activities of each organization department, Belgacom's Internal Audit department conducts regular audits across the Group's operations. The independence of Internal Audit is ensured via its direct reporting line to the Chairman of the A&CC. Audit assignments performed may have a specific financial processes scope but will also assess the effectiveness and efficiency of the operations and the compliance towards the applicable laws or rules.

{14}------------------------------------------------

The A&CC reviews the quarterly interim reporting and the specific accounting methods. The
main disputes and risks facing the Group are considered; the recommendations of internal
audit are followed-up; the compliance within the Group with the Code of Conduct and Dealing
Code is regularly discussed.
Except for some very small foreign affiliates, all legal entities of the Belgacom Group are subject to an external audit. In general, this audit includes an assessment of the internal control and leads to an opinion on the statutory financials and on the (half-yearly and annual) financials reported to Belgacom for consolidation. In case the external audit reveals a weakness or identifies opportunities to further improve the internal control, recommendations are made to management. These recommendations, the related action plan and implementation status are at least annually reported to the A&CC.

8.4. Composition and functioning of the governing bodies and their committees

Board of Directors:

As provided for in the 1991 Law, the Board of Directors is composed of:

Directors appointed by the Belgian State in proportion to its percentage of ownership;
Directors appointed by a separate vote among the other shareholders, for the remaining seats.

At least 3 of these Directors must be independent according to the criteria of article 526ter of the Belgian Code of Companies and the criteria of the Belgian Corporate Governance Code. The Board of Directors is composed of maximum 16 members, including the person appointed as President & Chief Executive Officer. Today the Board is composed of 14 members.

Changes in the composition of the Board of Directors

The mandates of Ms Mimi Lamote, Ms Michèle Sioen, Ms Martine Durez, Mr. Michel Moll and Mr. Paul van de Perre came to an end on 23 December 2012. According to the by-laws of the company, it is up to the Belgian State to renew these mandates or to replace the members. In the meantime, based on the principle of continuity, the mandates were tacitly extended. On 20 September 2013, the mandate of Mr. Michel Moll as Chairman a.i. came to an end and on 27 September 2013, the mandates of Ms Michèle Sioen, Ms Mimi Lamote and Mr. Michel Moll as directors came to an end. Ms Martine Durez and Mr. Paul Van de Perre were reappointed for a new term of 6 years.

Mr. Stefaan De Clerck was appointed as director and Chairman of the Board on 20 September 2013.

On 27 September 2013, Ms Isabelle Santens and Mr. Laurent Levaux were appointed as directors.

On 15 November 2013 the Belgian State put an end to the mandate of Mr. Didier Bellens as President & Chief Executive Officer.

On 13 January 2014, Ms Dominique Leroy was appointed by the Belgian State as President & Chief Executive Officer for a renewable term of six years.

{15}------------------------------------------------

Members of the Board of D	Directors appointed by	v the Belgian State:
---------------------------	------------------------	----------------------

Name	Age	Position	Term
Stefaan De Clerck (1)	62	Chairman	2013 - 2019
Didier Bellens ⁽²⁾	58	Former President & CEO	2003 - 2013
Dominique Leroy (6)	49	President & CEO	2014 - 2020
Theo Dilissen	60	Director	2004 - 2015
Martine Durez	63	Director	1994 - 2019
Laurent Levaux (4)	58	Director	2013 - 2019
Isabelle Santens (4)	54	Director	2013 - 2019
Paul Van de Perre	61	Director	1994 - 2019
Mimi Lamote (5)	49	Director	2006 - 2013
Michèle Sioen (5)	48	Director	2006 – 2013
Michel Moll (3/5)	66	Director	1994 - 2013

(1) Mandate as of 20 September 2013
(2) Mandate till 15 November 2013.
(3) Mandate as Chairman a.i. till 20 September 2013.
(4) Mandate as of 27 September 2013
(5) Mandate till 27 September 2013.
(6) Appointed on 13 January 2014.

Members of the Board of Directors appointed by the General Shareholders' meeting:

Name	Age	Position	Term
Jozef Cornu	69	Independent director	2009 - 2015
Pierre Demuelenaere	55	Independent director	2011 - 2017
Guido J.M. Demuynck	63	Independent director	2007 - 2019
Pierre-Alain De Smedt	70	Independent director	2004 - 2016
Carine Doutrelepont	53	Independent director	2004 - 2016
Oren G. Shaffer	71	Independent director	2004 - 2014
Lutgart Van den Berghe	62	Independent director	2004 - 2016

Functioning of the Board of Directors

The Board of Directors meets whenever the interests of the company so require or at the request of at least two Directors. In principle, the Board of Directors meets every year in five regularly scheduled meetings. The Board of Directors must also evaluate the strategic long-term plan in an extra meeting each year. In general, the Board's decisions are made by simple majority of the Directors present or represented, although for certain issues a qualified majority is required. The Board of Directors has adopted a Board Charter which, together with the charters of the Board Committees, reflects the principles by which the Board of Directors and its Committees operate. The Board Charter provides, among other things, that important decisions should have broad support, understood as a qualitative concept indicating effective decision-making within the Board of Directors following a constructive dialogue between Directors. They should be prepared by standing or ad hoc Board Committees with significant representation of non-executive, independent Directors within the meaning of Article 526ter of the Belgian Company Code. All charters were reviewed a last time in September 2012.

The Corporate Governance Charter and the Charter of the Board of Directors have been updated in February 2014 whereby the notion "conflict of interest" received a broader interpretation.

Committees of the Board of Directors

In accordance with the bylaws, Belgacom has an Audit and Compliance Committee, a Nomination and Remuneration Committee and a Strategic and Business Development Committee.

{16}------------------------------------------------

Mr. Pierre-Alain De Smedt (Chairman), Messrs. Guido J.M. Demuynck, Michel Moll (till 27 September 2013), Oren G. Shaffer and Paul Van de Perre are the members of the Audit and Compliance Committee.

Mr. Stefaan De Clerck (Chairman as of 20 September 2013), Mr. Michel Moll (Chairman a.i. and member till 20 September 2013), Messrs. Jozef Cornu, Pierre-Alain de Smedt, Ms. Martine Durez and Ms. Lutgart Van den Berghe are the members of the Nomination and Remuneration Committee.

Mr. Stefaan De Clerck (Chairman as of 20 September 2013), Mr. Michel Moll (as Chairman a.i. and member till 20 September 2013), Mr. Didier Bellens (till 15 November 2013), Ms Dominique Leroy (as of 13 January 2014), Messrs. Jozef Cornu, Guido J.M. Demuynck, Theo Dilissen and Ms. Carine Doutrelepont are the members of the Strategic and Business Development Committee.

Activity report

In its meeting of 24 February 2011, the Board adopted a "related party transactions policy" which governs all transactions or other contractual relationships between the company and its board members. Belgacom has contractual relationships and is also a vendor for telephony, Internet and/or ICT services for many of the companies in which Board members have an executive or non-executive mandate. Belgacom is also a Partner of Guberna, the Belgian Institute for Directors (affiliated with Ms. Lutgart Van den Berghe who is Executive Director of Guberna), for which it has paid a fee of 30,250 € in 2013.

Evaluation of the Board

The Board performed a self-evaluation in December 2012 in order to assess its size, composition, performance as well as the interaction with management. This exercise was conducted with the help of Spencer Stuart as external expert. Members were invited to answer an extensive questionnaire, followed by an interview between the external expert and every individual member. Starting from the conclusions and the action plan that was agreed upon after the previous evaluation, members were asked their opinion on corporate governance at Belgacom, the functioning of the Board, the Board relationships with other stakeholders and the functioning of the committees.

As an outcome, the Board decided at its meeting of 28 February 2013 to implement the following short term actions:

Having each year a yearly draft agenda for the committee's;
Organize a tutorial on the role of the committees and on risk management;
Have a yearly presentation on succession planning to the Board;
Develop a reporting system, allowing the Board to follow the key business drivers of the company;
Add one meeting a year for the strategic committee.

Management

The members of the Belgacom Management Committee, other than Ms Dominique Leroy, the President & CEO, are Mr. Ray Stewart, Michel Georgis, Bart Van den Meersche, Geert Standaert, Dirk Lybaert and Phillip Vandervoort (as from 1 April 2014).

Bruno Chauvat left the company on 24 January 2014.

Belgacom has, on its own initiative, appointed members of the BMC and of its staff to mandates in companies, groups and organisms in which it has holdings and is involved. Such mandates are unpaid. A list of the persons concerned is given in point 10.1 of this report.

{17}------------------------------------------------

8.5. Remuneration report

Belgacom considers transparency on executive remuneration very important. Therefore, in conformity with the corporate governance law of April 6, 2010 and Principle 7 of the corporate governance Code 2009, the company provides the following information towards its shareholders and all other stakeholders: the description of the Director's remuneration and a high level explanation of the Group remuneration policy. Furthermore, it includes an analysis of our executive remuneration and provides an overview of the main provisions of the contractual relationships.

Didier Bellens was the President & CEO of Belgacom until November 2013. In January 2014, a new CEO, Dominique Leroy, has been appointed. With this nomination, a new ceiling has been defined in the executive remuneration policy of Belgacom. Belgacom's executive remuneration policy will further take into account this new ceiling for every new member in the Management Committee. In line with the demand at the Annual Shareholders Meeting of 2013, the Board has also reviewed the remuneration of Board members and has compared this with different benchmarks. These benchmarks show that the remuneration at Belgacom is in line with the market. The Board has however assessed that in this period, where efforts are asked from management and from the employees, it is important to give a clear signal that Board members want to share these efforts. For that reason the Board has decided that on the remuneration of 2014 it will apply a deduction of 10 % which is in line with the proposal of the management committee to voluntary limit the envelope for the individual part of the short term incentive (bonus) for the top 200 of the company to 90 %.

8.5.1. Director's remuneration

Policy of Director's remuneration

The remuneration and compensation of the Directors was decided by the General Shareholders' Meeting of 2004. The principles of this compensation did not change in 2013: it foresees an annual fixed compensation of € 50.000 for the Chairman of the Board of Directors and of € 25.000 for the other members of the Board of Directors, with the exception of the President & CEO. All members of the Board of Directors, with the exception of the President & CEO, have the right to an attendance fee of € 5.000 per attended meeting of the Board of Directors. This fee is doubled for the Chairman.

Attendance fees of $\in$ 2.500 are foreseen for each member of an advisory committee of the Board of Directors, with the exception of the President & CEO. For the Chairman of the respective advisory committee these attendance fees are doubled. The members also receive $\in$ 2.000 per year for communication costs. For the Chairman of the Board of Directors the communication costs are also doubled.

The Chairman of the Board of Directors is also Chairman of the Joint Committee and of the Pension Fund. Mrs. Martine Durez and Mr. Theo Dilissen are members of the Board of the Pension Fund. They do not receive any fees for these participations.

For the execution of their Board mandates, the Directors do not receive performance-based remuneration such as bonuses or long-term incentive programs, nor do they receive benefits linked to pension plans.

Overview of Directors' remuneration

The individual Director remuneration for the fiscal year 2013, based on their activities and attendance at Board and Committee meetings is presented in the table below.

{18}------------------------------------------------

Activities report and attendance at Board and Committee meetings

Name	Board	A&CC	NRC	SBDC	Total
在公司,但是由1995年,1995年	(total 8)	(total 8)	(total 6)	(total 3)	remuneration
Stefaan DE CLERCK (1)	4/4		3/3	1/1	75.750 €
Didier BELLENS (2)	6/6			3/3	0 €
Jozef CORNU	8/8		6/6	3/3	89.500 €
Pierre DE MUELENAERE	8/8				67.000 €
Guido DEMUYNCK	8/8	8/8		3/3	94.500 €
Pierre-Alain DE SMEDT	7/8	7/8	6/6		112.000 €
Theo DILISSEN	6/8			3/3	64.500 €
Carine DOUTRELEPONT	8/8			2/3	72.000 €
Martine DUREZ	8/8		6/6		82.000€
Laurent LEVAUX (4)	2/4				16.750 €
Isabelle SANTENS (4)	3/4				21.750 €
Oren G. SHAFFER	7/8	8/8			82.000 €
Lutgart VAN DEN BERGHE	8/8		6/6		82.000 €
Paul VAN DE PERRE	8/8	8/8			87.000 €
Mimi LAMOTE (5)	4/4				40.250 €
Michel MOLL (3/5)	4/4	3/3	3/3	2/2	113.000 €
Michèle SIOEN (5)	4/4				40.250 €

Total remuneration: telecom advantage included

A&CC: Audit and Compliance Committee; NRC: Nomination and Remuneration Committee;

SBDC: Strategic-and Business Development Committee

(1) Mandate as of 20 September 2013
(2) Mandate till 15 November 2013.
(3) Mandate as Chairman a.i. till 20 September 2013.
(4) Mandate as of 27 September 2013
(5) Mandate till 27 September 2013.

Remuneration Policy

Belgacom has an innovative remuneration policy which is regularly assessed and updated through close cooperation with external Human Resources for aand universities. The remuneration policies of Belgacom's employees are defined in a process of dialogue with the Board of Directors and the social partners.

Because of Belgacom's history as a public-service company, there are some differences in its dynamics and structure, compared to the private sector. This has a considerable influence on how its remuneration policy has evolved. Belgacom Human Resources developed creative and adaptable programs to deal with its obligations related to the statutory employment status of some of its workforce, and introduced new elements that harmonised policies between civil servants and contractual employees.

Belgacom's global reward principles

To accomplish our company goals within a highly and fast changing competitive global telecom market, we need qualified, talented and engaged employees working in a high performance culture. To foster this culture, it is critical to have a competitive Global Rewards Program.

{19}------------------------------------------------

The objectives of the Belgacom Global Rewards Program are:

To drive performance that generates long-term profitable growth;
To stimulate empowerment that reinforces the business strategy and desired culture;
To offer fair and equitable remuneration both to civil servants and to the group's contractual employees, according to market practices;
· To recognize and reward high performance;
To link pay to both individual and the overall success of Belgacom;
To enable Belgacom to attract and retain market's talents at all levels;
To combine the needs and responsibilities of employees and their families with those of the company and society as a whole.

Belgacom also maintains -and modernises- powerful public sector instruments, such as work-life benefits (e.g. sick child care, hospitalisation,...) and social assistance. It is the responsibility of the Belgacom work-life department to combine the needs and responsibilities of employees and their families with those of the company and society as a whole. Over the years, Belgacom has won several awards for the continuous efforts of the company to create a balanced working environment for its staff.

The Global rewards Program keeps up and supports this goal and mission.

8.5.2. Executive remuneration

Objectives and principles of Belgacom's executive pay policy

Belgacom has a balanced executive remuneration policy which rewards executives competitively and at rates which are attractive in the market, aligning the interests of management and shareholders. The company wants to attract and retain high performing top executives for its Management Committee and for its senior management. It wants to reward clear role models, who have a commitment to high performance and the company values.

The top executives are covered by dedicated reward programmes which focus on the principles of Belgacom's strategy to consistently reward high performance by individuals and by the company. To distinguish itself from other employers, Belgacom seeks to excel in the total package it offers, by providing not only cash but also numerous other benefits. A fundamental principle of its remuneration policy is a degree of freedom for executives in choosing how they are to be rewarded.

Remuneration element	Description	Strategic role
Base Salary	Involves fixed cash compensation Aims for the median of the labour market peer group	Attraction Rewards for performance of day to day activities
Short–term variable pay	Is based on achievements of annual measures of which 30% is driven by Belgacom Group Performance; 40% by Business Unit Performance and 30% to individual leadership measures	Drives and rewards annual Belgacom's performance Drives and rewards sound strategic and business decisions for the long- term of Belgacom Aligns interests of management and shareholders
Long-term Incentives	Performance Value Plan is based on Belgacom's Total Shareholder Return versus a predefined basket of European telecom operators.	Aligns & drives senior managements' long-term performance with shareholders' expectation Ensures right decision for the success of Belgacom Attracts and retains talents

{20}------------------------------------------------

Definition of the level of compensation

The Nomination & Remuneration Committee sets the remuneration policy for top executives and decides on the individual packages for the President & CEO and the members of the Management Committee. These are regularly verified by benchmarking executive pay against both the BEL 20 companies (Financial sector excluded) and a set of peer companies in the European Telecommunications and ICT sector.

The current remuneration policy does not provide for a specific contractual claw back stipulation in favour of the company for the variable remuneration of executive managers accorded on the basis of incorrect financial information, this without deterioration of the various legal provisions applicable between the concerned individuals and the company (e.g. Acts of July 7, 1978, April 12, 1965 and February 10, 2003 concerning the claw back possibilities from employees in case of fraud, serious fault and usual minor fault, civil liability, etc.).

Policy of executive remuneration

The relationship between the distinct remuneration components of the Belgacom Management Committee members and the President & CEO is illustrated in the figures below. The figures show the effective and relative importance of the various components of remuneration paid in 2013.

*Former President & CEO Long-term Variable remuneration forfeit due to termination of employment contract in 2013.

Overview of executive remuneration

The executive remuneration policy is built upon fixed components, being the basic remuneration, the retirement and post-employment benefits and other benefits, and variable performance based components, being the short term variable remuneration and the long term share-based variable remuneration.

Annual variable pay is calculated in relation to performance against Key Performance Indicators set by the Board of Directors upon advice of the Nomination & Remuneration Committee. For 2013, these performance indicators included financial indicators as well as non-financial indicators, at both Group and Business Unit level. The achievement of these KPI's are followed-up and communicated regularly. The results are based on audited financial figures and non-financial indicators measured by internal and external agencies specialised in market and customer intelligence, of which the processes are audited on a regular basis.

{21}------------------------------------------------

Key performance indicators at Group level:

The key financial indicator used is the operational cash flow.
Important non-financial indicators included are Simplicity and Customer Experience measuring the progress made in the simplification and optimisation of processes and the customer's user experience and Cost transformation measuring efficiency improvement in cost management.
* Another operational indicator is the "employee engagement index", which each year measures employees' organisational commitment, job engagement, strategic alignment and agility amongst Belgacom's employees.

Key performance indicators at Business Unit level:

* The key performance indicators concern and relate to amongst others convergence, value management, solution centricity, the transformation of the fix and mobile network and the number of new customers in voice, fix, internet and TV business.

Basic remuneration

The basic remuneration of the Management Committee is annually reviewed by the Nomination & Remuneration Committee, based on an extensive review of performance and assessment of potential provided by the President & CEO, as well as on external benchmarking data. The company wants to position top executive pay towards the median of the market.

The basic remuneration comprises the base salary earned in the position of the President & CEO and the members of the Management Committee for the reported year. The former President & CEO, Didier Bellens, was also a non-remunerated member of the Board of Directors. During 2013, the members of the Management Committee haven't received any merit increase. Changes in the figures are mainly the result of legal indexation in January 2013 and changes within the Management Committee composition.

^* The variance 2012/13 is explained by the index and the payout on 11 months i.o. 12 but vacation pay for 2014 had to be paid upon departure

^** The variance 2012/13 is explained by changes within Belgacom Management Committee.

{22}------------------------------------------------

Short term variable remuneration

The company wants to position top executive short-term variable remuneration for the achievement of targets at 100%. In case of sustained excellent performance at company, business unit and individual level, the short-term variable remuneration can go above the 100% with a cap at 200%.

The Belgacom Group variable pay system reflects the group values, emphasizes the strengths of the Business Units, and creates incentives for individual performance.

Figure: The Belgacom Management Committee policy takes into account Group, Business Unit and Individual performance.

The short term variable remuneration includes the actual bonus paid in the reported year 2013, for performance year 2012. A linear pay out curve with an upper and lower limit is adopted for each component of the short term variable remuneration.

This curve determines the short-term variable remuneration that is granted to the members of the Management Committee, based on the effective result of each KPI. For the former President & CEO in 2013 this is capped at 150 %.

The result is indeed calculated based on a predefined formula which takes into account the different KPI's levels at predefined weights. For the short-term variable remuneration 2013, the following Group KPIs were defined:

* Free Cash Flow
* Cost Transformation
* Simplicity & Customer Experience
Employee Engagement Index

{23}------------------------------------------------

On top of the business and company results, the individual performance weights for 30% of the overall short-term pay-out level. Individual performance is evaluated versus pre-defined measurable objectives.

As from performance year 2013, although the parameters taken into consideration in the formula defining the short term variable remuneration granted to the President & CEO and to the members of the Management Committee remain unchanged, their weight has been reviewed so that the impact of the Group KPI prevails the individual and Business Unit KPI's.

The short-term variable remuneration is paid through one of the options of the "Short-Term Incentive Plan". The President & CEO and the members of the Management Committee can choose to receive their short term variable remuneration in cash bonus or under the "Discounted Share Purchase Plan".

The Discounted Share Purchase Plan provides the right to buy allocated shares at a 16.66% discount. The value of this 16.66% discount is equal to the gross value of the short-term incentives result. The executive himself finances 83.34% of the full share purchase price, requiring a significant personal investment. The shares are treasury shares and are blocked for a period of two years.

The former President & CEO chose to receive his short-term variable remuneration through the Discounted Share Purchase Plan. The majority of the Management Committee has opted for a cash bonus.

The short-term variable remuneration of the former President & CEO increased in line with his performance in 2012 while for the members of the Management Committee it decreased in comparison with last year. The decrease for the members of the Management Committee is mainly due to changes in the composition of the Management Committee.

Long term Share-based variable remuneration

In 2013, Belgacom launched a new long-term incentive plan for its Executives, the "Long-Term Performance Value Plan" replacing the "Stock Options Plan". This new plan has been developed to keep our executive remuneration policy balanced and attractive, as well as compliant with the shareholders' expectations.

Belgacom's Performance Value Plan aims to be fully performance driven and transparent, aligned on market best practices and is inspired from Long-Term Incentive Plans used by other European Telecommunications companies.

{24}------------------------------------------------

Therefore, Total Shareholder Return has been selected as performance criteria to drive expected Long-Term Performance of our executives and to align it with the interests of the shareholders.

Belgacom's Total Shareholder Return will be measured against the respective Total Shareholder Return of a basket of 12 other European telecom operators for the first time at the end of a 3 years performance cycle.

Under this Long-Term Performance Value Plan, the granted awards are blocked period of 3 years after which the Performance Values vests. After this period, the possible exercising rights depend on the performance of Belgacom's Total Shareholder Return compared to a group of peer companies.

Companies included in the basket are:

Deutsche Telekom	Vodafone
Telekom Austria Group	BT
Telefonica	Telecom Italia
KPN	TDC
Portugal Telecom	Swisscom
TeliaSonera	France Telecom

Pay-out Level

The pay-out level has been designed in line with the "pay for performance" principle and depends on the short-term variable remuneration and Belgacom's performance. The design of the Long-Term Performance Value Plan ensures that executives are rewarded for "above median" returns while there will be limited or no reward for "below median" returns.

Pay-out Options

The members of the Management Committee can choose between 3 different pay-out options being cash, Discounted Shares Purchase Plan, and Belgacom's shares. These options cannot be combined and the preferred pay-out option has to be made at the date of grant and is irreversible. In 2013, all members of the Management Committee have chosen for cash as pay-out option. This implies employer social contributions to be taken into account.

A year over year overview of the evolution on Long-Term Performance Value Plan cannot be provided due to the change in Long-Term Incentive Plan design.

^*Rights are forfeited due to ending of CEO's employment contract

{25}------------------------------------------------

From 2004 until 2012, stock options have been granted to the former President & CEO and to the members of the Management Committee. Hereafter, an overview of the remaining stock option plan for the former President & CEO and other members of the Management Committee is available.

Overview of former long-term variable remuneration:

		Didier BELLENS	Bruno CHAUVAT	Michel GEORGIS	Dominique LEROY	Geert STANDAERT	Ray STEWART	Bart VAN DEN MEERSCHE
on January 1 ^s options remai previous year	ning from	585,774	0	258,503	12,665	33,443	297,278	70,000
Stock options exercised	Number	107.686	-	47,486	0	4,148	51,453	0
during reported year	Year of grant of options exercised	2009	-	2006 & 2009	-	2009	2009	-
Stock options	Number
lapsed during reported year	Year of grant of options lapsed
Stock options	Number	478,088
forfeited during reported year	Year of grant of options forfeited	2007-8, 2010-11- 12
1	TOTAL	0	0	211,017	12,665	29,295	245,825	70,000

Retirement and post-employment benefits

The former President & CEO participates in a complementary pension scheme which foresaw an annual contribution of € 73,495.42, yearly indexed. The current members of the Management Committee have a "Defined Benefit Plan".

Other benefits

Belgacom Group wants to stimulate its executives by offering a portfolio of benefits and advantages that are competitive in the market place. The President & CEO and the other members of the Management Committee receive benefits on top of their remuneration, including medical insurance, car and other benefits in kind.

Overview

The table below reflects the remuneration and other benefits granted directly or indirectly to the members of the Belgacom Management Committee in 2013 by Belgacom or any other undertaking belonging to the Belgacom Group (benefit based on gross or net remuneration, depending on the type of benefit).

The year-on-year evolution of the figures is mainly the consequence of:

the changes in the composition of the management team;
the legal indexation of salaries (January 2013);
the limited acceptance rate of the stock option plan 2012;
the new Long-Term Performance Value plan design.

{26}------------------------------------------------

Overview of the basic and variable remuneration of the former President & CEO and other members of the Management Committee.

Remuneration	Former President & CEO		Other members of the Management Committee
	2012	2013	2012	2013
Basic remuneration	963.096	1.026.727	2.760.207	2.751.044
Short-term variable remuneration	513.715	581.115	1.393.093	1.190.971
Long-term share-based variable remuneration	534.614	0	692.913	0
Long-Term Performance Value based variable remuneration	0	0	0	1.188.272
Retirement and post-employment benefits	113.032	97.804	538.377	755.028
Other benefits	14.773	11.607	154.819	120.204
TOTAL (excl. employer's social contribution)	2.139.230	1.717.253	5.539.409	6.005.519
Employer's social contribution	344.906	365.967	1.349.802	1.673.311
TOTAL (incl. employer's social contribution)	2.484.136	2.083.220	6.889.211	7.678.830

8.5.3. Main provisions of the contractual relationships

Contractual arrangement of former President & CEO

In March 2009 Didier Bellens started the first year of his new six-year mandate as President & CEO. He had a contract as a self-employed executive. Nevertheless he is subject to employee social security charges, in line with Article 11 § 1 of the Royal Decree of November 28, 1969.

This article states that "the application of the law on the social security system for employees is expanded/extended to those institutions of public utility and autonomous public enterprises as well as such individuals who, in their capacity of agent and against remuneration, devote their principal activity to the day-to-day management or direction of these institutions and enterprises, to the extent no statutory pension regime is applicable to these individuals". The former President & CEO's contract ended in November 2013. There was no pay-out of any severance pay.

Clauses

The former President & CEO was bound by a non-competition clause, prohibiting him for 12 months after leaving the group from working for a competitor of Belgacom Group in Belgium and in those countries where Belgacom Group generates at least 5% of its consolidated revenues. If activated by Belgacom, he would have received an amount equal to one year's salary as compensation. This clause has not been activated upon departure of the former President & CEO.

The members of the Management Committee, who are bound by a non-competition clause prohibiting them for 12 months after leaving the group from working for any other mobile or fixed licensed operator active on the Belgian market, will receive an amount equal to six months' salary as compensation.

Dominique Leroy, Bruno Chauvat, Geert Standaert, Ray Stewart and Bart Van Den Meersche have a contractual termination clause with an indemnity of one year's remuneration.

Michel Georgis has a contractual termination clause with an indemnity of one year's remuneration plus one month pay per year of seniority acquired, with a maximum of two years' remuneration after 12 years of service.

{27}------------------------------------------------

9. POSITION OF CONFLICTING INTEREST

In accordance with article 523 of the Belgian Companies Code, Mr. Didier Bellens, acting President & CEO at that time, declared, during the Board of Directors of 28 February 2013, to have a conflict of interest in connection with the "Employee incentive plans", item of the agenda of this Board meeting. He is in fact a beneficiary of the Senior Management Short- & Long-term Incentive Plan 2009.

In accordance with article 523 of the Belgian Companies Code, Ms. L. Van den Berghe and Ms. C. Doutrelepont declared, during the Board of Directors of 2 May 2013, to have a conflict of interest in connection with the "Project Idar", item of the agenda of this Board meeting.

In accordance with article 523 of the Belgian Companies Code, Mr. Didier Bellens, acting President & CEO at that time, declared, during the Board of Directors of 25 July 2013, to have a conflict of interest in connection with the "Employee incentive plans", item of the agenda of this Board meeting.

In accordance with article 523 of the Belgian Companies Code, Ms. M. Durez, Ms. M. Lamote, Ms. M. Sioen, Mr. M. Moll and Mr. Paul Van de Perre declared during the Board of Directors of 25 September 2013, to have a conflict of interest in connection with the "Appointment new directors of the Board of Directors", item of the agenda of this Board meeting.

In accordance with article 523 of the Belgian Companies Code, the minutes of these meetings are included below.

Minutes of the meeting of the Board of Directors of 28 February 2013

President & CEO

Mr. D. Bellens makes the following conflict of interest statement, which is recorded in the minutes, upon which he leaves the room for this item.

In accordance with article 523 of the Belgian Companies Code, the President & CEO, Mr. Didier Bellens, declares to have a conflict of interest in connection with the Employee Incentive Plans item of the agenda of the present Board meeting and more especially on the determination of the Short & Long Term Incentives granted to him under the Plan 2011.

Mr. D. Bellens requests the Board to take note of his statement in this respect and to include the necessary statements in the management report of Belgacom relating to accounting year 2013.
Mr. D. Bellens shall also inform the auditor of Belgacom of this conflict of interest.
Mr. D. Bellens voluntarily decides not to participate in the deliberation and voting on such items on the agenda and leaves the meeting for the agenda items impacted by this conflict of interest statement and situation.

Upon the Committee's recommendation, the Board unanimously decides to allocate an amount of gross 581,113 EUR for the Short Term Incentives for the CEO and President, before employer social taxes and application of the Short Term Incentives Plan.

Upon recommendation of the Committee, the Board unanimously decides to allocate an amount of 545,283 € or 100 % for the Long Term Incentives for the President & CEO.

Minutes of the meeting of the Board of Directors of 2 May 2013

Project Idar

In accordance with article 523 of the Belgian Companies Code, Ms. L. Van Den Berghe and Ms. C. Doutrelepont declare to have a conflict of interest in connection with the Project Idar item.

Ms. L. Van Den Berghe and Ms. C. Doutrelepont request the Board to take note of their statement in this respect and to include the necessary statements in the management report of Belgacom relating to the accounting year 2013.

{28}------------------------------------------------

Ms. L. Van Den Berghe and Ms. C. Doutrelepont will also inform the auditor of Belgacom of this conflict of interest. Ms. L. Van Den Berghe and Ms. C. Doutrelepont voluntarily decide not to participate in the deliberation and voting on this item and leave the meeting for the agenda item impacted by this conflict of interest statement and situation.

The Board unanimously decides:

to delegate the authority to the President & CEO, with authorization to sub-delegate, to participate as strategic sub-contracting of DTS (acquired by IBM) and conclude an agreement with DTS/IBM for amongst other network and telecom towers in the name of Belgacom and Telindus SA (Luxembourg)
to authorize the President & CEO, with power of sub-delegation, to perform all actions and sign all documents, including powers of attorney, required in connection with the above decision in the best interest of the company.

Minutes of the meeting of the Board of Directors of 25 July 2013

Long Term & Short Term Incentives Plans

Mr. D. Bellens requests the Board to take note of his statement in this respect and to include the necessary statements in the management report of Belgacom relating to accounting year 2013.
Mr. D. Bellens shall also inform the auditor of Belgacom of this conflict of interest.
Mr. D. Bellens voluntarily decides not to participate in the deliberation and voting on such items on the agenda and has left the meeting for the agenda items impacted by this conflict of interest statement and situation.

The Board takes the following resolutions:

Resolution A:

Based upon the recommendation of the Remuneration Committee and having listened to the proposal of the Management Committee, the Board approves, as from performance year 2012, for the Long Term Incentives, the replacement of the Option Plan by a Performance Value Plan. The pay-out options require a separate decision.

Resolution B:

The Board decides that for the performance year 2012 the Performance Value at the date of exercise will be executed via one of the following pay-out options, at the choice at grant date of the participant: cash, Belgacom shares or DSPP.

Resolution C:

The Board approves the booklet of the Senior Management Long Term Incentive Plan 2012 as set out in enclosure 2 to these minutes, with the exception of the pay-out options that need to be adapted in line with resolution B.

Resolution D:

The Board approves the letter to the President & CEO on his Long Term Incentives, including the determination of the Performance Value for performance year 2012.

In line with the Board's decision of 28 February 2013, the Board decides to approve the Long Term Incentive percentage for BMC members as proposed by the President & CEO for a total amount of 1.34 Mio $\in$ (excluding social security) and to deploy tranche 2013 of the Long Term Incentive Plan 2012.

In line with the Board's decision of 28 February 2013, the Board unanimously decides to approve the Long Term Incentive envelope of 4.03 Mio € (excluding social security) for TGR's and a

{29}------------------------------------------------

limited group of Non-TGR's (excluding BMC) and to deploy tranche 2013 of the Long Term Incentive Plan 2012.

Resolution E:

The Board mandates the Chairman of the Board to determine the date of the offer of the Long Term Incentive Plan and to approve all offers and acceptance documents and the list of all eligible participants.

New Short Term Incentives plan for TGR & BMC

The project aims at the inclusion of new alternative benefits in the Short Term Incentive Plan (STIP): warrants and fund options i.e.

Besides these new alternative benefits, in the idea of a "cafetaria approach" the introduction of additional perquisites is also foreseen.

Based upon the recommendation of the Remuneration Committee, the Board decides to include a set of perquisites such as ambulatory plan and international fuel card in the Short Term Incentives plan

Minutes of the meeting of the Board of Directors of 25 September 2013

Appointment new directors of the Board of Directors

In accordance with article 523 of the Belgian Companies Code, Ms. M. Durez, Ms. M. Lamote, Ms. M. Sioen, Mr. M. Moll and Mr. P. Van de Perre declare to have a conflict of interest in connection with the item of the agenda of the present Board meeting being the appointment of new directors of the Board of Directors.

Ms. M. Durez, Ms. M. Lamote, Ms. M. Sioen, Mr. M. Moll and Mr. P. Van de Perre request the Board to take note of their statement in this respect and to include the necessary statements in the management report of Belgacom relating to accounting year 2013.

They shall also inform the auditor of Belgacom of this conflict of interest.

Ms. M. Durez, Ms. M. Lamote, Ms. M. Sioen, Mr. M. Moll and Mr. P. Van de Perre voluntarily decide not to participate in the deliberation and voting on the item on the agenda.

Taking into account the demand of the government, in accordance with article 18 § 2 of the bylaws of Belgacom, to communicate the recommendation of the Board of Directors of Belgacom for the appointment of Ms. Martine Durez, Ms. Isabelle Santens, Mr. Paul Van de Perre and Mr. Laurent Levaux;

Considering that with these nominations, the government proposes two Dutch speaking and two French speaking persons, so that in accordance with article 16 § 4 of the articles of association, the Board will be composed of the same number of French-speaking members as Dutch-speaking members, with the exception of the Chairman of the Board;

Considering that with the nomination of 4 members, appointed by the State, the State has, in accordance with article 18, § 2, of the articles of association, appointed the right proportion of the total number of members pro rata its voting rights;

Considering that with the appointment of two female members, the State respects the proportion of women as prescribed by the law of 28 July 2011;

Considering that Ms. Martine Durez and Mr. Paul Van de Perre have executed their mandate in an exemplary manner and that the Board supports the opportunity to continue to take advantage of their knowledge and experience;

After having studied the curriculum vitae of Ms. Isabelle Santens and Mr. Laurent Levaux;

Considering the fact that the curriculum vitae of Ms. Isabelle Santens and Mr. Laurent Levaux confirm their competence and experience in legal, economic, social and financial matters, as required by article 18 § 2 of the articles of association;

That their curriculum vitae does not mention any conflicts of interest as enumerated in article 17 § 1 and § 3;

{30}------------------------------------------------

Upon the advice of the Nomination and Remuneration Committee, the Board of Directors decides to issue a positive recommendation to the Belgian State for the appointment of Ms. Martine Durez, Ms. Isabelle Santens, Mr. Paul Van de Perre and Mr. Laurent Levaux.

10.OBLIGATION OF THE LAW OF 21 MARCH 1991 ON THE REFORM OF SOME AUTONOMOUS PUBLIC SECTOR ENTERPRISES

10.1. Mandates exercised in companies in which Belgacom participates

The mandates exercised by members of the management of Belgacom within companies, groups and organisations in which Belgacom participates or to which she contributes to the functioning are not remunerated.

PARTICIPATIONS	MEMBERS ON 31/12/2013
BELGACOM GROUP INTERNATIONAL SERVICES S.A.	R. Stewart G. Geerkens G. Kerremans
BELGACOM OPAL S.A.	J. Robeyns O. Moumal D. Lybaert
BELGACOM INTERNATIONAL CARRIER SERVICES S.A.	R. Stewart D. Lybaert M. Gatta M. Georgis
CONNECTIMMO S.A.	J. Joos O. Moumal R. Stewart J. Luystermans
BELGACOM SKYNET S.A.	J-C. De Keyser M. Boddez E. Van Landeghem
SKYNET IMOTION ACTIVITIES S.A.	P. Verdingh E. Provoost
MOBILE-FOR S.A.	G. Geerkens A. Lorette B. Dierickx
BELGACOM BRIDGING ICT S.A.	B. Van Den Meersche B. Watteeuw P. Wauters K. Verheye

{31}------------------------------------------------

PARTICIPATIONS	MEMBERS ON 31/12/2013
BELGACOM ICT-EXPERT COMMUNITY (B.I.C.) S.C.R.L.	Belgacom represented by W. Van Uytven Belgacom Bridging ICT represented by K. De Man
TANGO S.A.	B. Chauvat M. Georgis L. Kervyn de Meerendré D. Leroy O. Moumal G. Hoffmann
BELGIAN MOBILE WALLET S.A.	G. Standaert B. Van Den Meersche
BELGACOM RE S.A.	O. Moumal L. Kervyn de Meerendré G. Kerremans
BELGACOM FINANCE S.A.	L. Kervyn de Meerendré O. Moumal G. Kerremans M. Vikrant
WIRELESS TECHNOLOGIES S.A.	L. Claus D. Bossuyt M. Georgis
SCARLET N.V. (Nederland) In liquidation	R. Stewart M. Georgis D. Rouma M. Gatta
SCARLET BELGIUM S.A.	B. Delhaise C. Dujardin N. Pinkhof
SCARLET BUSINESS S.A.	B. Delhaise C. Dujardin N. Pinkhof
MBS TELECOM S.A.	B. Delhaise C. Dujardin N. Pinkhof
SOFTKINETICS SYSTEMS S.A.	L. Claus
AWINGU S.A.	O. Cognet

{32}------------------------------------------------

11.MISCELLANEOUS

Members of the Joint Auditors

The mandate of Deloitte Statutory Auditors SC sfd SCRL, Berkenlaan 8b, 1831 Diegem, represented by Mr. Geert Verstraeten and of Luc Callaert SC sfd SPRLU, Zwaluwstraat 117, 1840 Londerzeel, represented by Luc Callaert, for the statutory audit mandate of Belgacom S.A. will expire at the Annual General Meeting of 2016.

The mandate of Mr. Rion will expire on the date of the 2016 annual general meeting.

The mandate of Mr. Lesage will expire on 30 June, 2014.

Auditor responsible for certification of the consolidated accounts of Belgacom Group

The mandate of Deloitte Statutory Auditors SC sfd SCRL represented by Mr. G. Verstraeten and Mr. N. Houthaeve for the consolidated audit mandate of Belgacom S.A. will expire at the annual general meeting of 2016.

In conclusion

We would like to propose that you approve the annual accounts as they are presented herein and respectfully request that you grant discharges to the directors and auditors of the annual accounts for the execution of their mandate during the past financial year.

On recommendation of the Nomination & Remuneration Committee, we nominate in accordance with article 18 of the bylaws, Ms. Agnès Touraine (mandate till annual general meeting of 2018), and Ms. Catherine Vandenborre (mandate till annual general meeting of 2018) as candidates for members of the Board of Directors.

Yours truly,

On behalf of the Board of Directors,

Brussels, 27 February 2014.

Dominique Léroy

President & CEO

Stefaan De Clerck

Chairman of the Board of Directors

AI assistant

Proximus SA — AGM Information 2014

3989_rns_2014-03-14_229612ef-bbc5-4bf0-975a-ec17b3a4b560.pdf

REPORT BY THE BOARD OF DIRECTORS TO THE ANNUAL GENERAL MEETING OF SHAREHOLDERS ON 16 APRIL 2014 ON THE ANNUAL ACCOUNTS OF BELGACOM S.A. UNDER PUBLIC LAW AS AT 31 DECEMBER 2013

1. THE DEVELOPMENT, THE RESULTS AND THE RISKS OF BELGACOM IN 2013

1.1. Comments on the annual accounts

Balance sheet

Income statement

Appropriation account

Right and commitments not accrued in the balance sheet

1.2. Most important risks and uncertainties

1.2.1. Enterprise risks

1.2.1.1. Human resources flexibility

1.2.1.2. Competitive market dynamics

1.2.1.3. Regulatory pressure

1.2.1.4. Dependence on equipment and technology

1.2.2. Financial reporting risks

1.2.2.1. New transactions and evolving accounting standards

1.2.2.2. Changes in tax law and regulations

1.2.2.3. Financial statement closing process

2. IMPORTANT EVENTS THAT HAVE OCCURRED AFTER THE END OF THE PERIOD

3. CIRCUMSTANCES THAT CAN SIGNIFICANTLY INFLUENCE THE DEVELOPMENT OF BELGACOM

4. EVOLUTION IN RESEARCH AND DEVELOPMENT ACTIVITIES

5. BRANCHES

6. USE OF FINANCIAL INSTRUMENTS

7. INDEPENDENCE AND EXPERTISE IN THE ACCOUNTING AND AUDIT DOMAIN OF AT LEAST ONE MEMBER OF THE AUDIT AND COMPLIANCE COMMITTEE

8. CORPORATE GOVERNANCE STATEMENT

Belgacom governance model

8.1. Designation applicable Code on Corporate Governance

8.2. Departure from the 2009 Belgian Corporate Governance Code

8.3. Most important characteristics of the internal control and risk-management systems

8.3.1. Control environment

8.3.1.1. Organization of internal control

8.3.1.2. Ethics

8.3.1.3. Policies and procedures

8.3.1.4. Roles & responsibilities

8.3.1.5. Skills & expertise

8.3.2. Risk analysis

8.3.3. Risk mitigating factors and control measures

8.3.4. Information and communication

8.3.4.1. Financial reporting IT systems:

8.3.4.2. Effective Internal communication

8.3.4.3. Reporting and validation of the financial results

8.3.5. Supervision and assessment of internal control

8.4. Composition and functioning of the governing bodies and their committees

Board of Directors:

Members of the Board of Directors appointed by the General Shareholders' meeting:

Functioning of the Board of Directors

Committees of the Board of Directors

Activity report

Evaluation of the Board

Management

8.5. Remuneration report

8.5.1. Director's remuneration

Policy of Director's remuneration

Overview of Directors' remuneration

Activities report and attendance at Board and Committee meetings

Remuneration Policy

Belgacom's global reward principles

8.5.2. Executive remuneration

Objectives and principles of Belgacom's executive pay policy

Definition of the level of compensation

Policy of executive remuneration

Overview of executive remuneration

Basic remuneration

Short term variable remuneration

Long term Share-based variable remuneration

Companies included in the basket are:

Pay-out Level

Pay-out Options

Retirement and post-employment benefits

Other benefits

Overview

8.5.3. Main provisions of the contractual relationships

Contractual arrangement of former President & CEO

Clauses

9. POSITION OF CONFLICTING INTEREST

Minutes of the meeting of the Board of Directors of 28 February 2013

President & CEO

Minutes of the meeting of the Board of Directors of 2 May 2013

Proximus SA AGM Information 2014