Annual Report

2018

Table of content

i P l t r o x m u s a a g a n c e	2
Fo d fro C E O & C ha irm rew or m ou r an	4
W ho & ha do t w w e a re w e	8
Ke f ina ia l h ig h l ig h ts y nc	1 0
Ke h iev ts y ac em en	1 3
#s h i f d ig i l, 3- t to ta tra te ou r n ew y ea r s g y	1 7

Creating an inclusive, safe, sustainable and prosperous digital Belgium 20

L iv ing d w k ing in fa ha ing ie t c ty an or an ev er s ng so c
Co i bu ing ie h i le ing lue fo ke ho l de tr t to ty t ta n so c cre a va r o ur s rs w	2 5
En b l ing be d ig i l l i fe t te ta a a r	2 8
Ca ing fo ke ho l de ta r r o ur s rs	4 0
Co i bu ing ie tr t to ty n so c	5 2
Re ing lan t t sp ec o ur p e	6 0

Governance and compliance, safeguarding long-term value 66

Co Go te ta te t rp or a ve rn an ce s m en	6 8
Re la fra k to g u ry m ew or	8 5
R is k m t r t an ag em en ep or	9 1
Pr im ha ox us s re	1 0 0
Re ion t t m un er a re p or	1 0 6
i A d p p e n x	6 1 1
Ov iew f n -f ina ia l in fo ion t er v o on nc rm a	1 1 8
Tra ns p ar en cy	1 2 2
So ia l f ig c ur es	1 3 4
En iro l f ig ta v nm en ur es	1 3 8
G R I Co in de te t n n x	1 4 2
Ma ia l ics te to r p	1 5 7
K P I de ip ion t sc r	1 5 8

Non-financial reporting approach 2018

For the Non-Financial information included in this Annual Report, we followed the indications of the Global Reporting Initiative (GRI) guide (core option). We have detailed our reporting approach in the Transparency section. Proximus answers several questionnaires on Sustainable and Responsible investments such as Sustainalytics, Vigeo Eiris, MSCI, etc. Our ambition is to keep improving our performance by comparing it with that of peers. In 2018, we were listed as follows on the different indices: CDP Supplier Engagement leader board and a constituent company in the FTSE4Good Index Series.

For this 2018 report, we have created a structure around how we create value for our stakeholders and society: Enabling a better digital life, Caring for our stakeholders, Contributing to society and Respecting our planet. We covered our most material topics, defined through an internal and external process, explained in the Transparency section. In the Governance section, we describe our governance framework, risk management, remuneration structure and the Proximus share. Throughout the report we provide detailed performance data.

Proximus at a glance

F d f C E O & C h i o r e w o r r o m o u r a r m a n
W h & h d t o w e a r e w a w e o	8
F i i l f i i l h i h l i h t n a n c a n a n c a g g s	1 0
K h i t e y a c e v e m e n s	1 3
# h i f d i i l, 3- t t t t t s o g a o u r n e w y e a r s r a e g y	1 7

2018

Proximus wants to play a positive role

in the digitalization of all aspects of life, work and public services, for a more prosperous digital Belgium

Dear reader,

Proximus is at the very heart of the digital economy and society, and through the digital solutions and services we offer, we make a positive and meaningful difference in all aspects of life. The guiding purpose of our five-year Fit for Growth strategy (2014- 2018) has been to connect everyone and everything so people live better and work smarter. To fulfil this mission, we've saved costs and grew our core business so that we could invest, fuelling new growth. We continued our transformation from a Telco company to being a Digital Service Provider delivering superior customer experience and helping customers reap the benefits of digital transformation. Today we're enabling a better digital life by means of a future-proof infrastructure with high-quality networks and digital platforms, as well as through innovative solutions and services that address societal challenges. Proximus wants to play a positive role in the digitalization of all aspects of life, work and public services, for a more prosperous digital Belgium.

The market context for telecom operators becomes increasingly challenging. We operate in a mature market with intense local competition and an increasing disruption of voice, SMS and linear TV by new over-the-top players in both the residential (WhatsApp, Netflix,…) and enterprise (Microsoft Teams, cloud, API, SDWAN,…) market. At the same time regulation focusses on lowering consumer prices with the end of roaming, the opening of fiber, Easy Switch and a potential 4th mobile operator.

Solid position in a highly competitive market

We maintained a solid position despite a highly competitive market and delivered upon our 2018 outlook. We kept a stable domestic underlying revenue and grew our Group underlying EBITDA for the fourth consecutive

year, closing 2018 with a 2.4% increase. We also maintained our high investments pace with € 1,019 million invested with a clear focus on digitalization, networks and overall customer experience. The deployment of our future-proof network in the context of the Fiber for Belgium project kicked off early 2017, with the roll-out ongoing in 9 cities in 2018. We also invested extensively in IT systems and digital platforms and in further enhancing our mobile network.

More customer oriented, agile and efficient organization

By moving to a single mass market IT chain and phasing out our old switching network, we have simplified and modernized our infrastructure. This large-scale transition of customers from legacy networks such as PSTN and ATM, to IP-based technology

has allowed us to phase out 1,119 switches and migrate 3.4 million voice lines and as a consequence, we have vacated a total of 16 buildings over the past five years. At the same time we are modernising our core network with the roll out of our Simplified Backbone Optical network (SIMBA).

The redesign of the IT architecture has been accompanied by a redesign of our processes so we are First-Time Right. We've simplified the selling & ordering process, and migrated all the billing of our massmarket customers to a single platform. Our customers can now consult all their invoice details in the MyProximus app as well as activate or deactivate options, switch to a Pack and keep track of their usage in real time. At the same time 'Invoice Insights' now allows business customers to more easily manage their mobile invoices through an easy-to-use app interface. In 2018 we also launched our Chatbots "Titus" (on the web) and "Sam" (on Facebook) to answer the easy questions from consumers, which in turn has given our customer service employees more time to handle more complex problems and questions.

Each year has seen us move towards a more simplified portfolio of products and solutions.

Dominique Leroy CEO

"With our new strategy, '#shifttodigital', we want to remain relevant to our customers and support enterprises in their digital transformation, while becoming more efficient and agile."

We have slimmed down our legacy catalogue and proactively offered pack migrations to future-proof, easy-to-use solutions that are more advantageous for our customers. Today nearly all customers enjoying our convergent offers are on one of the most recent generations of packs.

Solutions tailored to our customer needs

In the consumer market, we grew our total market share thanks to our dual brand

strategy, Proximus and Scarlet, and thanks to the continuous success of our all-in offers Tuttimus and Bizz All-in, reaching 508,000 customers end of 2018. We developed a new range of Mobilus offers, as well as our first mobile subscription with unlimited calls, texts and mobile data. And millennials got a new, dedicated offer: Epic. Epic beats and Epic stories offer unlimited music and data for the most popular apps. For self-employed persons and small businesses we also created Bizz Online to encourage more small businesses and entrepreneurs in Belgium to have a stronger online presence. Scarlet, our no-frills brand continues to perform strongly and is further growing its customer base. And in Luxembourg, Tango, with fixed, mobile, TV and convergent services, also continues to be the dominant force.

Year after year, we've focused on improving our Proximus TV content offer. We integrated Netflix on our set-up boxes and we further enlarged our offer for families and children with the exclusive deal signed with Studio 100 and access to the premium channels of BeTV. Customers addicted to pop culture and lifestyle programs have access to the Viceland channel and with "Radioline" they can listen to over 60.000 radio and podcast broadcasts. Our range of live European football continues to grow, and in 2018 we added the national basketball championships, a new eSports league for fans of video game competitions.

For our enterprise customers we have been bundling our services into customer-oriented and competitive integrated solutions. The launch of Call Connect, essentially a telephone exchange in the cloud, is an inspiring example of how we've been able to combine over-thetop offers with our unique telco capabilities (fixed-mobile, Quality of Service). A strategy that clearly works: in 2018, we increased our volume share in mobile for the enterprise segment and reached more than 1 million cards, while also protecting value share.

Building the best network infrastructure of the future

Our networks have been transformed over the last five years, and will no doubt change again in the five years to come. Not only have we proactively migrated customers from ADSL to VDSL where possible, a move that has substantially improved the customer experience (on both TV and the Internet), but our roll-out of fiber in Belgium also continues rapidly. In 2018, the deployment of fiber in Belgium reached cruising speed, connecting a vast majority of businesses and centers of cities and municipalities. To date, 9 Belgian cities are in full deployment: Antwerpen, Luik, Brussel, Leuven, Charleroi, Namen, Roeselare, Gent, Hasselt.

With download speeds 2 to 3 times faster than 4G, Proximus was the first to launch 4.5G mobile technology in Belgium and we continued to extend the coverage of our 4G network, reaching 99,9% outdoor and 99,5% indoor at the end of 2018. We're equally excited about the opportunities that 5G will deliver and are preparing its roll-out. This year we had a successful 5G field trial in Haasrode (Leuven) and we want to have the first 5G city in 2020.

Furthermore, we started a long-term investment program to develop our "backbone" network. This work, part of a multi-year project called TITAN (Terabit IP Transport & Aggregation Network), will increase our capacity significantly and will also raise our network reliability.

We are the market leader in IoT (Internet of Things). Our new Narrow Band-IoT network will be used to connect the 1.3 million digital meters, for both gas and electricity that Fluvius intends to roll out in Flanders by the end of 2022. In our in-house innovation center, we transform technologies such as IoT, Cloud or Big Data into impactful solutions for smart homes and buildings, smart retail, smart logistics, smart energy, smart mobility, smart industries, smart cities…

In a world that is changing at the speed of light, we are bringing all our talents together and we are expanding our ICT ecosystem to really make a difference to society. The acquisition of Davinsi Labs strengthened our abilities in cybersecurity, while Unbrace added to our web development expertise. Last year, ION IP in the field of security, Umbrio, a company specialized in managing IT operations and Codit, a market leader in business application integration joined the company. Through our subsidiary Be-Mobile, we are also paving the way for better mobility and trialing Road User Charging. While Bics, our leading international communications enabler and its recently acquired subsidiary Telesign, offering Communication Platforms as a Service, continue to connect the world by creating reliable and secure mobile experiences anytime, anywhere.

Stefaan De Clerck

Chairman

"We are proud that we have both the ambition and the strategy to make our contribution to a sustainable future."

Transforming into an agile and flexible organization with digital savvy, engaged and empowered employees.

We are committed to making Proximus a safe, inspiring and inclusive workplace that offers equal opportunities for everyone and training to build the skills of the future.

The Proximus corporate culture is based on five overarching values: Collaboration, Agility, Accountability, Customer orientation, Digital mindset. These values are a connecting thread in all things we do and how we do it. In order to be successful, it's essential we cultivate the right culture, as well as the right skills and attitudes.

Since 2014 we have been investing in a new culture, Good to Gold, shaping a growth mindset among our employees. We also focus on on-the-job training and we have strengthened our existing training offer by launching several new courses.

In the scope of our Good to Gold culture, we have been working for several years on giving teams more empowerment. In 2018, we increased the speed of this initiative, as autonomy will empower employees to create more value for our customers. We are working more and more in transversal and multidisciplinary teams, also upscaling capabilities of employees in methodologies like Agile and Design Thinking. All this leads to increased accountability and faster delivery of the right products & services.

We give people ownership of their ongoing development. A "Digital First" mindset has been nurtured amongst employees through training and coaching, and each has been

given the appropriate tools they need to fully embrace the digital workplace at Proximus.

Sustainability and society matters

Over the past years, our CSR activities revolved around three main pillars: education, communities and the environment, and we are deeply committed to each one. We are a founding partner of 19, the first entirely free Belgian Coding School, and Digitalent, an initiative set up in collaboration with employment agencies and cities that encourages young people to become more familiar with modern technologies. Furthermore, a number of our employees are involved in an outreach program that aims to create a safer Internet for all. And we continue to support Bednet & Take Off, 2 initiatives that bring school to long-term sick children.

As a company strongly rooted in Belgium, we are a proud sponsor of major culture and sports organizations, as well as various events. We are particularly focussed on football (Red Devils) and cycling, all the Flanders classics are sponsored by Proximus, as well as various festivals (Rock Werchter etc.) and high-cultural events at the Bozar (Queen Elisabeth competition, KlaraFestival).

We also take our impact on the environment very seriously as is clearly demonstrated by our efforts to reduce energy consumption, promote green mobility and reduce waste. We are one of the few CO2 neutral telecom players in the world and proud to have a place in the CDP Supplier Engagement leader board.

As CEO and Chairman of the Board, we are proud that we have both the ambition and the strategy to make our contribution to a sustainable future. In 2018, we dedicated time & resources to review our CSR strategy and develop a more extensive sustainability strategy with the ambition to contribute to an inclusive, safe, sustainable & prosperous digital Belgium.

We believe Proximus can act in 4 strategic areas. First and foremost, as a digital company and provider of digital services, we want to enable a better digital life. This goes through deploying the digital infrastructure of the future, being a motor of innovation by supporting the right ecosystems and creating a trusted digital environment to encourage digital adoption by citizens and companies. Next to this, we want to be Caring for our stakeholders, especially our customers and employees, while also doing business right (ethics, compliance, GDPR, privacy…) By making digital accessible to all and driving education, as well as investing in local culture and societal causes, we want to contribute to a better society. Facing the impact of climate change, we want to focus even more on

Respecting our planet continuing our efforts to being CO2 neutral, becoming truly circular and through a sustainable supply chain.

Preparing for a digital future

To further drive growth in the challenging environment we work in, we are launching a new 3-year strategy in 2019 under the name #shifttodigital to become a truly digitalcentric organization. We believe that by fully embracing the shift to digital we can stay relevant and create a more personalized service offering, while increasing our efficiency and reducing internal costs. This reflects our new sense of purpose: "we open up a world of digital opportunities, so people live better and work smarter."

Over the coming years Proximus will accelerate its transformation, and further reduce its cost structure in order to continue to stay relevant in the market and maintain the needed investments in networks (fiber, 5G), innovation and content. As such we are targeting an additional gross saving of €240 million by 2022. Proximus will continue to grasp cost-saving opportunities through the rationalisation of its networks, product portfolio, platforms, buildings and IT systems and through further simplification, automation and digitalization. Proximus will also consider the possibility of reducing further the number of employees by approximately 1,900 people in the next 3 years in line with the planned

workload reduction. Proximus has a tradition of realizing transformation in a responsible and respectful way and commits to continue doing this. Recently we started the consultation and information phase with our social partners to investigate how the ambitions can be reached in the most socially acceptable way. At the same time we will continue investing in the future of our company amongst others with an important investment in the training and upskilling of our employees to increase our competences in the digital domains

We are at the heart of both the digital and the country's economy and we take this responsibility seriously. We will continue to build the company for the future by embracing the opportunities that digital brings.

Dominique Leroy CEO

Stefaan De Clerck Chairman

Who we are & what we do

Proximus1 is a telecommunications company and a digital service provider operating in Belgium and abroad. We provide services to residential, enterprise and public customers under various brands. From telephony, internet, television or network-based ICT services to digital services like smart mobility and security.

Our advanced interconnected fixed and mobile networks offer access anywhere and anytime to digital services and data, as well as to a broad offering of multimedia content. We are investing in future-proof networks and innovative solutions, creating the foundations for sustainable growth and becoming a truly customer-centric digital company.

1 Proximus Public Limited Company under Belgian Public law

Proximus is "opening up a world of digital opportunities, so people live better and work smarter," and ensures that everyone can enjoy the benefits the digital world has to offer.

Belgium

We are a telecommunication & ICT company serving the Belgian market through our Proximus and Scarlet brands. Proximus: Through its best-quality integrated fixed and mobile networks, Proximus provides access anywhere and anytime to digital services and easy-to-use solutions, as well as to a broad offering of multimedia content. As a pioneer in innovation, Proximus transforms technologies like the Internet of Things (IoT), Big Data, the Cloud and Security into solutions with positive impact on people and society.

Scarlet: The no-frills offering for customers looking for the best prices.

Luxembourg

Proximus Luxembourg is active through its commercial brands Tango and Telindus, matching all telecom needs for residential and business customers in Luxembourg.

Tango: Fixed and mobile telephony, TV and Internet services for residential customers, self-employed and small businesses. Telindus: Converged ICT and telecom services for large companies and public administrations.

Netherlands

Telindus is a leading provider of smart and secure IT-infrastructure services.

Global

BICS is a leading international communications enabler, one of the key global voice carriers and the leading provider of mobile data services worldwide.

Their solutions range from global mobile connectivity, seamless roaming experiences, fraud prevention and authentication, to global messaging and the Internet of Things.

Proximus Group Annual Report 2018

We grew our ecosystem of digital transformation experts in all areas

In the growing digital economy, a company's success is increasingly founded on partnerships and innovation. In 2018, Proximus further grew its ecosystem of experts to reinforce its objective of enabling the digital transformation of its customers.

Proximus acquired ION-IP, a Dutch based security company to strengthen its position in the cybersecurity market.

Proximus also acquired Umbrio, a Dutch company specialized in IT & network operations, monitoring and analytics to reinforce its position in the growing IT & network operations and analytics market.

In July 2018 Proximus made the acquisition of Codit, a Belgium-headquartered IT services company and a market leader in business application integration, API Management,

Microsoft Azure and Internet of Things. This acquisition fuels its ambition to become the partner of choice to guide enterprises in their digital transformation. ernet bition e their

Proximus subsidiary, Be-Mobile, specialized in smart mobility, expanded its smart mobility services in Europe by acquiring the French company Mediamobile. Mobile, ed

Sustainability

Key Financial Highlights

We maintained a solid position on the market and delivered on our 2018 outlook, with stable Domestic revenue and our Group EBITDA growing by 2.4%.

Operating in a highly competitive environment, we achieved in the last quarter of 2018 further growth in our Consumer base for Internet, TV and Mobile Postpaid, driven by our ongoing customer centricity efforts, dualbrand strategy and market segmentation approach. In the family segment, our successful year-end campaign attracted many more customers to our convergent all-in offers Tuttimus/Bizz All-in, with the base now reaching 508,000. The revamped mobile portfolio launched 1 November 2018, and the Epic offer designed for millennials drove a sound mobile customer growth. In the price-seekers segment, our no-frills brand Scarlet continued to grow its base, benefitting from a strong increase in brand awareness over the past year and occupying a competitive position on the low-end of the market.

Our Enterprise segment sustained its solid position in the fourth quarter, growing its

mobile customer base and benefitting from the enlarged ICT portfolio. Over the past year we have grown our ecosystem of ICT experts, allowing us to offer new meaningful solutions for our Enterprise customers, while supporting the retention of Telecom services.

Our Fit for Growth Strategy, launched in 2014, has proven to be successful, with our underlying EBITDA growing since 2015. We operate in a highly competitive environment within a fast-evolving landscape, and our industry is now reaching a tipping point when it comes to digital. That's why we have adopted a new strategy, "#shifttodigital", as we want to remain relevant to our customers and support enterprises in their digital transformation, while becoming more efficient and agile.

We continue to invest extensively in our infrastructure by expanding our Fiber-tothe-Home footprint, now initiated in 9 cities, upgrading our backbone network, ensuring

When it comes to our announced transformation plan, we have started the information and consultation phase with our social partners, with the intention to review our HR rules and to negotiate the potential leave of 1,900 employees over the next 3 years.

In our continuous endeavor to bring new solutions to our customers, we are happy to announce the further enhancement of our millennials offer with Epic combo, available on April 2. This includes fixed and mobile internet access, music and social apps and free viewing of many video platforms, including the Proximus TV app and this on all screens.

Regarding the spectrum auction, we fear for a further delay, potentially putting Belgium at the tail of European 5G deployment, while we would like to support enterprises testing 5G use cases in the context of their digital transformation.

Dominique

"We maintained a

solid position on the

market and delivered

on our 2018 outlook,

with stable Domestic

revenue and Group

EBITDA growing by

Leroy

CEO

2.4%"

With regards to our expectations for 2019, we anticipate our underlying Domestic revenue to remain nearly stable compared to the prior year. The 2019 underlying Group EBITDA is expected to remain stable with a slight EBITDA growth of our Domestic operations compensating the EBITDA decline of BICS. The Group Capex for 2019 is expected to be stable compared to the 2018 level of around EUR 1 billion. In line with the announced 3-year commitment in 2016, we reconfirm our intention to return to our shareholders a stable dividend of EUR 1.50 per share over the results of 2018 and 2019.

Group underlying revenue +0.5%

Revenue by segment waterfall

Revenue

The Proximus Group ended the year 2018 with total underlying revenue of EUR 5,804 million, 0.5% above that of the prior year. The Group underlying revenue is the aggregate of a stable Domestic revenue and a higher revenue for BICS, Proximus' International

Carrier business unit, including the revenue from TeleSign.

For its Domestic operations, Proximus posted stable revenue of EUR 4,458 million revenue. The revenue was primarily supported by the ongoing expansion of the TV, Internet and Mobile Postpaid customer base, in spite of The Proximus Group posted an underlying EBITDA of EUR 1,866 million for 2018, an increase of 2.4% compared to 2017. The Domestic operations of Proximus grew the EBITDA by 1.9% to a total of EUR 1,713 million. This was driven by Direct margin generated by Proximus' growing customer base, more than offsetting the EUR -30 million net decline in roaming margin, while

a competitive landscape. Moreover, the

revenue from ICT showed good progress,

benefitting from a strengthened ICT portfolio,

including the acquisition of several small,

specialized ICT companies. Furthermore,

2018 benefitted from a continued positive

revenue evolution in Advanced Business

Services and a revenue increase posted for

These favorable evolutions were able to offset

the continued revenue erosion from Fixed

Voice and Mobile prepaid; and from a lower

Underlying EBITDA

Tango.

Wholesale revenue.

at the same time keeping its Operational costs nearly stable in spite of its expanding ICT business.

BICS closed 2018 with its Segment Result totaling EUR 154 million, 7.7% above that of 2017, including TeleSign. BICS' segment margin as percent of revenue for 2018 was 11.4%, up 0.6pp from the previous year.

EBITDA (underlying, M€)

CAPEX

€1,019 M

2018

from 2017, including an increasing share of capex for Proximus' Fiber for Belgium project. The deployment of this future-proof network kicked off early 2017, with the rollout ongoing in 9 cities in 2018. Proximus

Proximus' 2018 FCF totaled EUR 451 million, or EUR 501 million when excluding the 2018 cash-out related to the acquisition of subsidiaries in the ICT domain. This compares to a EUR 517 million FCF for 2017, excluding the cash-out related to the acquisition of Davinsi Labs (May), Unbrace (October) and TeleSign (November).

Free Cash Flow

On a like-for-like basis, the EUR 16 million decrease compared to 2017 was the net result of higher cash paid for Capex, higher payments for income tax and the beneficiaries of the early leave plan ahead of retirement, for a large part offset by a growth in underlying EBITDA and less cash needed for business working capital.

1,092 1,019

2018

Capex (M€)

also invested extensively in its IT systems

and digital platforms and in simplification

and transformation. In addition, it ensured

attractive content for its TV customers.

€501 M Normalized Free Cash Flow

Proximus Group Annual Report 2018

Key achievements 2018 Digital

New improved MyProximus app

Sustainability

Proximus at a glance

Single best intervention

Data analytics enhancing customer experience

Launch of 3 chatbots, drastically improving customer experience

A unique experience with the Proximus TV app

Aggregated dashboard giving our frontline employees an integrated view of all customer interactions

Launch of a new decoder enabling 4K TV

TITAN project increasing backbone network capacity: data x 10

Fiber

14 agreements

with other operators on access to Proximus Fiber network

Sustainable digital society

Fiber roll-out in Brussels, Antwerp, Gent, Roeselare, Namur, Charleroi, Liège, Hasselt, Leuven

48%

of companies in industrial zonings with Fiber

Partnership with brand new 19 Coding School:

a top-level coding school based on peerto-peer learning with 157 students in 2018

145,000 old mobile phones collected in schools since 2013

Delighting our customers

Enriched content offer

Mobile leadership

in Enterprise market > 1,000,000 mobile cards

We further strengthened our leadership in IoT

M2M Market leadership

1,273,000 cards

IoT ecosystem with more than 250 partners

We continued conquering the heart of our customers

Redtogether supporting the Red Devils during the World Cup by giving free data during their matches

Festivals strong presence during 25 festival days

supporting esports with the creation of 3 official leagues and incorporation of content on its platforms

Governance and Compliance

Proximus at a glance

Sustainability

Strategic acquisitions

Growing digital ecosystem

Launch of

Bizz Online

to have a website

allowing entrepreneurs

tailored to their needs

Launch of our NB-IoT network to connect Fluvius' digital meters

Key deals

Innovation projects together with partners

Launch of

a new offer to win

over Millennials

Epic,

Appendix

Simplification & efficiency

Launch of a unified receivables platform

improving invoices collection

New simplified bill

for mobile customers

Introduction of IoT for better stock

management

employees

Our

Digital workforce

Intensive re-skilling of our employees for the skills of the future, such as cybersecurity, data engineering

resulting in faster products delivery, leading to faster complaints resolution and

An agile way of working

prevention

Proximus at a glance

270,000 training hours

725 internal moves

548 external recruitments Sustainability

#shifttodigital our new 3-year strategy

The world is changing faster than ever

Our Fit for Growth Strategy, launched in 2014, has proven to be successful: we are the only European incumbent that consistently grew both revenues and EBITDA from 2015 to date. But in an ever-faster changing environment, what worked in the past is no guarantee for the future.

Our industry is reaching a tipping point when it comes to digital. There is mass adoption of digital in respect of customer interactions, particularly as consumers have become more accustomed to digital interfaces, convenient end-to-end journeys, self-service and real customer-centricity, as delivered by the best digital native companies. Markets conditions are profoundly changing too: what was once an evolutive market is now disruptive. We are faced with a flat market outlook and increasing competition, as well as new regulatory headwinds with the end of international call prices for residential customers in Europe, the opening of fiber and cable and a potential 4th mobile operator on the horizon. Moreover, there is a strong

pressure on prices, just as we have growing investment needs to cope with the rising demand for data (fiber, 5G) and increasing customer expectations.

That's why we have adopted a new strategy, "#shifttodigital", as we believe it's only by fully embracing this shift to digital that we can remain relevant to our customers, become more efficient, and reduce our costs to continue investing in our future.

We have to act now and need to transform much more quickly from a Telco company to a truly digital and customer-centric organization.

Our renewed Sense of Purpose

Driven by the belief that "we open up a world of digital opportunities, so people live better and work smarter", we can already see that our investments in high-quality digital infrastructure are impacting the country's economy for the better. And that Proximus plays a somewhat hidden but positive role for society.

Appendix

By 2021 Proximus made a real shift to a truly customercentric digital company

Exciting ambitions for the next 3 years

We don't want to continue to just make incremental changes; by 2021 Proximus made a real shift to being a truly customercentric digital company. This will enable us to remain relevant and attractive to customers and will make our employees digitally savvy, engaged and empowered.

Being relevant and attractive to customers

We want to be the leader in all mass market segments: families, millennial/GenZ, nofrills, and small enterprises. In the premium consumer segments, we want to make the difference versus competition with the rollout of fiber and mainly on content services by proposing new forms of increasingly popular content such as e-gaming, e-sports and music streaming. We want to be on the first screen of Belgians' smartphones with an application giving access to entertainment, a gateway to people's content and passions. Our goal is to aggregate this preferred content, from whichever platform to whatever screen, while adding the extra "local touch". In the no-frills segment we will continue to boost Scarlet's brand awareness – both in fixed and mobile.

For small enterprises, we will deliver premium services to protect the value and boost tailored ICT products (such as website design and maintenance) so that they too can keep up and take advantage of the digital changes.

For the larger companies and enterprises, Proximus wants to be the preferred partner when it comes to digital transformation by providing the precise assistance they require. As a top digital integrator, we are already pioneering in ICT innovation, with integrated solutions based on Internet of Things and data analytics. And we will tailor our end-to-end solutions more specifically towards different industry segments to become even more relevant in the future. There is no limit to what we can achieve in cloudification, security, Internet of Things and Data Analytics.

Shifting customer experience to digital-first customer journeys

Our goal is to embed digital in everything we do. We will mainly rely on digital interactions to create effortless, personalized and proactive customer journeys in the residential market.

For our professional customers, we will build a coherent and easy-to-use digital selfservicing environment, while of course still providing human support for more complex situations.

We will also use digital to increase internal efficiency in customer operations. We will bring more value to our customers and make our operations more efficient by leveraging the abundant data that we gather thanks to our capabilities in data governance, automation, advanced analytics and AI.

Our Good to Gold values: collaboration, accountability, agility, customer centricity and digital mindset

Leading in convergent network experience: building our fiber network and providing best video experience in mobile

Proximus will also meet its ambitions by delivering the best network infrastructure in the country. We are reaching cruising speed in the roll-out of Fiber and started the preparatory groundwork for 5G in mobile.

We are rolling out fiber to connect a vast majority of businesses and centers of cities and municipalities in order to achieve fixed network leadership in the long term. We also continue to invest in zones where we don't have fiber to deliver the rising enjoyment speeds of households (100 Mbps by 2025). In mobile we maintain quality leadership by focusing on video streaming quality and coverage on train lines. And we will prepare our country for 5G with a first city covered by 2020.

Reducing our costs by radical simplification and decommissioning of legacy products, networks and IT

While we will reach our cost saving ambition of €150 million by 2019, we will maintain our focus on reducing our operational costs in the next years supported by new digital technologies.

At the same time, we'll prepare the next wave of efficiency gains through simplification and the decommissioning of legacy products, networks and IT. Furthermore, we'll save on network costs by renewing the backbone, phasing out copper, reducing the number of buildings and streamlining product portfolios. In January 2019, Proximus announced an additional gross cost saving ambition of €240 million by 2021, that will be realized through different types of measures, including a potential reduction of employees by approximately 1,900 people.

Transforming into an agile and flexible organization with digital-savvy, engaged and empowered employees

Interacting with customers earlier in the development process, leveraging data, hiring and coaching top digital talent, etc.: all these things come naturally to digital native companies but they will require careful attention and active change management at Proximus. In the end the shift to digital will come through ourselves. With more digitalsavvy employees, future-proof skills and a life-long learning mindset, our DNA will be digital by design. Our transformation will be supported by our continued commitment to our Good to Gold values: collaboration, accountability, agility, customer centricity and digital mindset. Also, we plan 1,250 recruitments in the next three years (500 in new digital domains and 750 in IT at our affiliates).

A shift to digital with sustainability at its heart

On our journey towards becoming a truly digital company, besides delivering strong financial and operational performance, we want to contribute to create an inclusive, safe, sustainable and prosperous digital Belgium, thereby bringing to life our new Sense of

Purpose. We want to make a positive and meaningful difference and have an impact on society as a whole; our networks and platforms are the digital highway of our country's economy and our solutions address societal challenges such as mobility, energy, climate, etc. We contribute around four strategic areas: Digital for all, Caring for our stakeholders, Contributing to society and Respecting our planet.

Digital creates a world of opportunities, but also comes with new challenges and responsibilities. We therefore put a special focus on cybersecurity, resilience of our networks and systems, and compliance.

While we appreciate that there will be challenges ahead as we #shifttodigital, we also know that this is where we need to be and where we want to be: at the very heart of a better digital society.

Proximus Group Annual Report 2018

Creating an inclusive, safe, sustainable and prosperous digital Belgium

Creating an inclusive, safe, sustainable and prosperous digital Belgium

L i i d k i i f h i i t t v n g a n w o r n g n a n e v e r a s c a n g n g s o c e y
C i b i i h i l i l f k h l d t t t t t t o n r u n g o s o c e y w e c r e a n g v a u e o r o u r s a e o e r s	2 5
E b l i b d i i l l i f t t t n a n g a e e r g a e	2 8
C i f k h l d t a r n g o r o u r s a e o e r s	4 0
C i b i i t t t t o n r u n g o s o c e y	5 2
R i l t t e s p e c n g o u r p a n e	6 0

Appendix

Living and working in an ever fast changing society

Fast changing society Digital technologies can help develop

Greener future

Climate change is a major concern for us all. While ways to tackle this are debated at global level through initiatives such as the Paris Climate Agreement (2015), there is an urgent need for each of us to reduce our environmental impact and carbon emissions.

As a provider of digital services, we keep a finger on the pulse of societal trends, opportunities and challenges. Digital innovations not only delight customers, they also bring new ways to tackle societal, economic and environmental challenges.

smart ways to manage waste, energy and buildings. Pollution in cities can be reduced through smarter mobility and smarter energy choices. Through digital, we can build a more sustainable society and help preserving our planet's future.

Smarter mobility

Belgium's traffic jams are some of the worst in Europe. They impact the mobility of citizens and air quality, especially in large cities, and have huge economic impacts. Many European countries are making great strides in tackling the mobility crisis and Belgium needs to get up to speed, fast. Because of the unique challenges we face, Belgium is the perfect incubator for innovative solutions. Within 10 years, our mobility can be drastically changed if the right investments are made in infrastructure and technologies supporting smarter mobility and smarter logistics.

This would not only benefit the environment, but also make traffic faster and safer thanks to mobility monitoring, smart parking, route planning and an intelligent and accessible mobility mix.

Appendix

Digital human capital

Our country is lagging behind in terms of digital skills for the new economy. On the 2018 DESI (Digital Economy and Society Index), Belgium currently occupies the 12th place for digital human capital and the 23rd place for STEM (Science, Technology, Engineering and Mathematics) graduates. There is an urgent need to reimagine our education system so our children acquire the essential digital skills they need for tomorrow.

At present, 39% of the Belgian population have little to no digital skills. Belgian enterprises state the lack of digital human capital as their biggest challenge in the years to come.

The stakes are high. Accelerated digitization and emerging technologies such as Artificial Intelligence across all industries are transforming the labor market as we know it. Without the necessary digital skills, unemployment and social tensions will increase. But for every job lost, new jobs will appear. In fact, the total labor demand is expected to rise by 629,000 jobs by 2030, meaning 310,000 workers and unemployed Belgians will require massive re-skilling and upskilling 1.

A changing society

With Belgium becoming one big city environment, challenges in terms of mobility and quality of living are becoming citizens' major preoccupations, with smart cities projects and homeworking solutions on the rise.

Also our population is aging, and digitalization, smart living and health solutions will bring new ways of addressing this enormous societal challenge.

Grasping economic growth

Traditional industries are being disrupted by new entrants bringing new business models such as the platform and sharing economy.

Data is the new currency and managing the vast quantities we produce requires continuous investment in mobile and fixed connectivity, as the digital highways of our economy. Currently, Belgium holds the 5th place on the DESI for connectivity, and to stay in the top, rolling out the Gigabit networks of the future like Fiber and 5G will be crucial.

While Artificial Intelligence, the Internet of Things (IoT), augmented/virtual reality and Blockchain are factors of disruption, they are also drivers of innovation and economic growth for our Belgian companies while at the same time offering an array of possible solutions to societal and environmental challenges.

A digital consumer

In parallel, consumer needs are shifting extremely fast. Today, the digital consumer expects a personalized and smooth experience in every interaction, from entertainment and shopping to banking and government services.

Connectivity is seen as a basic right, like clean water and electricity. Consumers expect a seamless experience and are

1 Agoria, 2018

exponentially consuming data driven by video consumption and gaming. Investments in digital infrastructure to cope with these rising demands while the willingness to pay decreases, is creating a huge challenge for operators.

The digital society should offer opportunities to all, the young and old, the rich and poor. The digital future needs to be made inclusive, through education and community initiatives.

Digital trust

The other side of the data coin is trust. As data grow exponentially, so do the risks of breaches and cyber-attacks. While communication networks need to become more flexible and customized, they also need to be reliable and secure.

Trust is one of the most important success factors for becoming a truly digital economy. While GDPR formalizes the protection of data privacy as well as the reputational and financial consequences of failure to do so, consumers, companies and governments

also need to understand how to behave responsibly and safely in the digital world.

While consumers become increasingly aware of security and privacy, we should put specific attention on the non-digital natives and children. Those are the new responsibilities the digital world brings.

A fast-changing market environment for Proximus

Declining legacy revenues, low pricing power, limited differentiation and product innovation, and lack of silver bullets in adjacencies have kept growth below inflation in European telco markets (0.3% in 2017 according to ETNO).

In a low growth environment, increasing operational efficiency is key to answer high investment needs in domains that will determine future competitive advantage: fiber/5G, TV/content offers, digitalization of customer interactions, diversifying B2B business through acquisition of ICT and integration skills and capabilities.

Low growth and low pricing power in telco markets

The telco market is featuring increasing saturation. Growth in Internet and TV services is slowing down to population growth. Also increases in smartphone penetration are limited to the oldest and youngest age segments. In this flat market incumbents and new low cost challengers compete for market share, resulting in increasing pressure on price.

How to remain relevant to customers

The disintermediation of voice and messaging services by OTT applications like WhatsApp is still a major driver of the slow growth in telco, through its impact on fixed voice and metered mobile voice revenues. In coming years other disintermediation risks will increase.

Content is an important lever to remain relevant to customers. Viewing behaviors continue to change rapidly and the fragmentation of content offers increases with local broadcasters going OTT (VTM.be, Auvio, VRT.NU, Stievie, etc.), with big OTT players like Netflix and Amazon producing more and more original content, in new domains such as live sports or local content, and new forms of entertainment such as e-sports are emerging.

New and improved communication and collaboration tools for enterprises such as Microsoft Teams and new technologies such as cloud, API, SDWAN are just a few examples of substitution of traditional telco and ICT services in the enterprise market.

Regulatory headwinds

While the impact of roaming-like-at-home has fully materialized, new regulatory headwinds will put pressure on revenue growth in coming years: regulation of international call tariffs, more favorable regulation of cable wholesale access, regulated FttH access and the risk of a potential 4th entrant on the Belgian market.

Contributing to society while creating value for our stakeholders

Our strategy

In 2018, we dedicated time and resources to review our CSR strategy and develop a more holistic sustainability strategy, around 4 strategic areas. We started through an extensive reputation survey amongst our stakeholder groups and developed a new framework based on these outcomes. The details of our approach, also leading to our material topics and our governance, can be found in the appendix.

What emerged as our overriding goal is "contributing to create an inclusive, safe, sustainable and prosperous digital Belgium".

We believe Proximus can act in 4 strategic areas to serve this goal, each translated into actionable pillars. Driven by our sense of purpose, and as a provider of digital services, we want to enable a better digital life. This entails deploying the digital infrastructure of the future, being a motor of innovation by supporting the right ecosystems and creating a trusted digital environment to encourage digital adoption. We want to care for our stakeholders, by ensuring we have a solid governance alongside all initiatives towards our customers and employees. Contributing to society, by making digital accessible to all and driving education, as well as investing in local culture and societal causes. Last but not least, respecting our planet by being CO2 neutral, becoming circular and through a sustainable supply chain. With concrete objectives, we want to increase our contribution to a better Belgium.

Appendix

Integrating the UN's Sustainable Development Goals

We have integrated the realization of the United Nations' Sustainable Development Goals (SDGs) in our new sustainability strategy, linking them to our four strategic area's: Enabling a better digital life, Caring for our stakeholders, Contributing to society and Respecting our planet.

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Appendix

Our materiality matrix

The areas in which we contribute to sustainability are broad. To bring focus we consulted our stakeholders to define and act upon the most material topics, represented in our materiality matrix.

In 2018, we went through an in-depth assessment process, gaining a structured understanding of where we have a social, environmental and economic impact and what matters to our stakeholders most. We address and report on the most material topics in our annual report and plan an indepth review of the matrix in three years' time. More information about our methodology and the design of the materiality matrix can be found in the Transparency section in the Appendix.

The audited KPI's are highlighted in the GRI Content Index in the Appendix.

We focus on the topics in the upper quadrant of the matrix. These link with the strategic areas of our sustainability framework:

Enabling a better digital life

innovation and digital infrastructure
digital competitiveness of institutions and companies
privacy and data security

Caring for our stakeholders

business conduct and ethics
pricing and billing transparency
quality products and services
responsible marketing
customer relationship
health and safety
human capital and employee development

Contribution to society

connectivity and digital inclusion

Respecting our environment

sustainable supply chain - energy and greenhouse gases
circular economy

Significance of economic, environmental & social impacts

Innovation and sustainable infrastructure Connectivity and digital inclusion Energy and greenhouse gases Circular economy: Electronic waste and Business conduct & Ethics Sustainable supply chainHuman capital & employee development

equipment recycling

Privacy & data security

Social engagement and development

Digital competitiveness of institutions and

Health and safety

companies

Responsible sourcing and resource effi ciency Quality products and services 13 14
Responsible taxes and state contribution 15
Law suits/ claims 16

Remuneration

Responsible marketing17
Sponsoring 18 19
Redundancies Human rights 20
Pricing and billing transparency 21
Customer relationship22
- Proximus Group Annual Report 2018

Enabling a better digital life

We enable a better digital life by building a future-proof infrastructure with high-quality networks and digital platforms, as well as through innovative solutions and services that address societal challenges. We believe in open innovation and co-create in digital ecosystems with the academic world, start-ups and scaleups.

We pay particular attention to developing a safer digital society. We provide cybersecurity solutions and services to our residential, enterprise and public customers and build trust in digital through data protection/privacy and awareness initiatives. We are also a proud founding partner of the Cybersecurity Coalition.

Connected, no matter where you live or where you go

Future-proof digital infrastructure

Material Topic*: 1

The success of Belgium's digital future depends on future-proof connectivity. Being connected is part of every person's and every company's daily life. At home, at work and on the go. That's why we massively deploy future-proof infrastructure.

Since 2014, Proximus has been investing around €1 billion annually in its telecom infrastructure and fixed and mobile networks. This makes us the biggest investor in digital infrastructure in Belgium. We are investing €3 billion over 10 years to accelerate the roll-out of Fiber, connecting a majority of businesses and bringing Fiber to all centers of cities and municipalities. And with the further deployment of 4.5G we are preparing the road to 5G in 2020.

Our networks enable people and companies to access the opportunities of the digital world. As the main national player in telecom, our engagement is to ensure that every citizen has access to high-quality fixed and mobile connectivity, no matter where they live or where they go.

Appendix

Proximus at a glance

Governance and Compliance

KP I	Re lt 2 0 1 8 su	Re lt 2 0 17 su
4 G ind 1 oo r co ve rag e	9 9. 5 % 2	9 8. 1 %
4 G o do 3 ut or cov era ge	9 9. 9 % 2	9 9. 8 %
F ixe d Int 3 0 Mb 4 et: ern ps cov era ge	9 2 %	8 6 %
Co mb ine d Av VD S L & AD S L s d era ge pe e	7 2. 6 Mb ps	6 8 Mb ps
Ve ing in B lg ium cto r co ve rag e e	8 8. 6 %	8 3 %

1 The indoor coverage refers to the coverage of 4G inside of buildings.

2 The 2018 fi gure is based on a Q4 measurement campaign performed by an external agency Commsquare (from 07/11 to 28/11/2018 in the main cities and on the main roads).

3 The outdoor coverage refers to the coverage of 4G outside of buildings

4 This includes copper & fi ber homes passed

Fixed network

Fiber enables low-latency and stable highspeed connectivity, today reaching up to 1 Gbps up- and download speeds, and tomorrow even up to 10 Gbps, making its rollout one of our key investments for a digital economy and society. Today we commercially offer a download speed of up to 220 Mbps, which can be boosted to 400 Mbps.

In 2018, we were rolling out fiber in nine Belgian cities – Antwerpen, Luik, Brussel, Leuven, Charleroi, Namen, Roeselare, Gent, Hasselt (an increase of two compared with the

end of 2017) – bringing our fiber roll out to cruising speed thanks to our industrialization efforts.

For business customers, we proactively rollout fiber in zones with high business densities, like industrial zones and business parks and offer on-demand fiber connectivity to any business customer who requests it. Our coverage within the business and corporate market segments also saw a strong increase. By the end of 2018, 48% of companies (compared to 17% in 2017) located in industrial zones could benefit from fiber.

In 2019, we have planned to double our fiber footprint and start deployment in seven new cities. And we will finalize the deployment in industrial zonings as we reach our targeted coverage. In parallel to the deployment, we will especially focus on digitizing our activities and optimizing the experience we deliver our customers, from the first contact they have with fiber up to the after-sales service. Our ambition is to increase the level of proactivity in our servicing approach in order to further delight our customers.

While we believe fiber to be the network of the future, Proximus continues to maintain and upgrade the copper infrastructure to ensure a high-quality customer experience for all.

In 2018, we further increased the speed with the continued roll-out of vectoring technology reaching 88.6% coverage and by migrating customers from ADSL to VDSL (+30,000 customers in 2018) offering higher speed and improved stability.

In 2019, we will continue to expand VDSL coverage by installing new VDSL remote optical cabinets and continuing migration to VDSL. In addition, we will optimize Wi-Fi performance thanks to new tooling and continue testing and developing the next generation of copper technologies – Ultra Vectoring – enabling us to significantly increase the network speed for customers.

Mobile network

To meet growing demand for connectivity on the go, Proximus continued to extend the coverage of its 4G network, reaching 99.9% outdoor and 99.5% indoor at the end of 2018. We are also investing in 4.5G and performed a successful 5G field trial in Haasrode (Leuven). Deploying 5G along with fiber will allow us to provide consumers with a stable high-speed network both inside and outside their home.

In 2019, we plan to further explore 5G capabilities and continue extending 4,5G to offer an excellent experience to our customers.

White zones

While white and rural zones are less economically attractive, we aim to connect everyone everywhere by using new

Proximus at a glance

technologies and co-investing with public authorities. The main Belgian operators each promised to invest €20 million over three years (from 2017 to 2019) in Wallonia to improve the coverage of these zones.

In 2016 the BIPT identified 39 municipalities as white zones. At the end of 2018, 38 out of the 39 municipalities had a 4G (outdoor) mobile coverage of more than 99% of the population, and 32 out of 39 municipalities had a fixed broadband coverage of at least 30 Mbps for more than 60% of the households.

We have worked for several years with Tessares, a UCL spin-off, on innovative solutions to connect remote areas. Also, more recently, we have been testing microwave ROP technology, connecting VDSL street cabinets through wireless microwave technology. For example, in 2018, we launched a promising pilot in Felenne.

We continue to deploy new ROP's to offer high-speed fixed broadband services and digital TV with High Definition quality. Our aim is to offer outdoor 4G mobile coverage to the entire population of the defined white zones and we will continue launching innovative projects to further improve fixed and mobile network quality.

and supporting new ecosystems with universities, start-ups and scale-ups are key to unleashing the digital future

Digital innovation

amongst others on security and IoT solutions such as smart energy, smart mobility, smart logistics and smart health. Together, we not only create more impact and address societal and environmental challenges, we also open up a world of digital opportunities that improve the lives and work of people.

Academic partnerships

If we want to succeed in tomorrow's digital economy, we need open innovation. That's why we collaborate with major universities and their talent hubs.

It's a win-win partnership: we gain access to innovative designs and perspectives from academics, and they gain access to our infrastructure and resources to scale up their ideas.

Together, we'll shape our future.

KPI Result 2018 Result 2017 Active M2M cards 1.3 Mio 1.2 Mio ICT revenues (national + international) 561 Mio 509.2 Mio Number of projects with universities/education institutes 39 N.A.

*Materiality Matrix p. 27

Proximus has a comprehensive portfolio of initiatives with universities

Proximus has worked with universities for many years and this collaboration has gradually intensified.

In 2018, we contributed to many hackathons and tech events: the "Citizen of Wallonia" hackathon hosted by UMons, the "Dramco Ghent" event with KUL, the "Antwerp Chainport" hackathon with UA, the "Mons Hack Arena" event with UMons, the "Wallonia Futurocité" seminar, and many more.

Proximus supports academic research by providing relevant business input to ensure that research programs stay closely aligned to business demand. In addition, we can provide access to resources and infrastructure.We have research projects at ULB/UCL, KUL, and VUB where Proximus also participates in the Advisory Boards that steer these research projects. Proximus also actively participates in funded RD&I projects with universities, such as with KUL and ULB.

In 2017, Proximus and UGent announced their intention to jointly create research projects in the telecom and ICT fields and to cooperate on doctoral research and theses. We are currently working with UGent on several projects, such as studying exposure to air pollution using data from our mobile network, or making a predictive analysis of criminal offences, again using our mobile network.

Furthermore, we envisage cooperating even more closely on aligning training courses with the fast-evolving labor market and bringing the corporate and university worlds closer together.

In 2018, we launched the TalentHub in Ghent with seven pilot projects, recently expanded to all R&D flagged projects within Proximus. Here, we encourage collaboration between our employees and innovation communities such as universities and start-ups.

We also signed a strategic partnership with IMEC in 2018 on societal challenges such as Smart Cities and Artificial Intelligence.

In 2019, we want to rethink our strategic approach and structure and refine our collaboration with the education and academic ecosystem.

Support start-up and scale-up communities

Belgium has a huge network of young companies, start-ups and scale-ups. We want to be a motor of innovation and a catalyst of new Belgian companies.

By sharing our know-how, resources and infrastructure in collaborative partnerships, we can increase innovation and grow our digital economy.

InPost

InPost, launched in 2017 to facilitate collaboration with start-ups, is a portal where start-ups can quickly measure their value propositions against Proximus' business challenges to find a strategic fit. In these "calls-for-innovation", start-ups compete for selection to further co-create with Proximus. In 2018, we focused on the speech-to-text challenges of dialectal languages.

Through our IMEC partnership, the iStart start-up portfolio has been scanned to map Proximus' business challenges. Selected candidates will pitch their solutions in front of the Proximus team.

Going forward, we intend to involve and join forces with Belgian corporates from other industries in our calls-for-innovation.

Co.Station

Proximus has been a shareholder of Co.Station since 2017. Co.Station is a Belgian community that unites some 1,500 entrepreneurs, start-ups, scale-ups, corporates, investors and influencers. Besides Brussels and Ghent, an additional location opened in Charleroi. Co.Station was granted the management of Antwerp's IoT House, The Beacon, in 2018.

We supported various events around IoT, GDPR, Blockchain and social innovation, all aimed at a wide entrepreneurial community in Brussels, Ghent, and Charleroi.

We have also supported +90 start-ups and scale-ups representing +500 workers as Co.Station residents.

In 2019 we will include our customers in the Co.Station community.

MIC, B-Hive and Co.Station are key innovation partnerships for Proximus

FinTech

Belgium has an important ecosystem of FinTech start-ups and companies that we are proud to support.

Proximus is a founding partner of B-Hive, a European FinTech platform promoting collaborative innovation between major banks, insurers and market infrastructure to develop innovative solutions for financial markets.

In 2018, we worked with them on the organization of a series of events around blockchain that reached the entire Belgian FinTech scene. We will continue our efforts notably by facilitating start-ups' access to blockchain technology.

We invested in early-stage FinTech start-up in Luxembourg and also envision expanding our FinTech activities via our affiliate Telindus.

Microsoft Innovation Center

In 2017, Proximus joined the Microsoft Innovation Center (MIC) Belgium, a public-

private partnership with the Walloon Region and Microsoft, as a structural partner. MIC focuses on entrepreneurship through coaching sessions and works closely with the developer community to enhance technical skills, organize events, provide training and certifications, and provides access to the latest IT hardware. The objective is to encourage the adoption of new technologies such as IoT, Data and AR/VR that will facilitate the next wave of innovation and to accompany enterprises in their digital transformation. The IoT Lab – a first joint step taken in 2018 – provides an environment to prepare for the digital future in the spirit of open innovation. In 2018, jointly with MIC, we also promoted digital innovation. A great example is the launch of the new "Hack in the Woods" festival of code, bringing together developers and professionals around societal goals.

2019 will be a pivotal year for the Microsoft Innovation Center with the launch of new initiatives, bringing more cutting-edge

Appendix

We want to be the partner of choice for enterprises,

guiding them in their digital transformation and co-creating smart solutions together

technologies such as AI and Machine Learning to enterprises.

MIC's mission to inspire, educate and foster digital entrepreneurship will also extend to an ecosystem of business partners and humanitarian organizations, fully in line with Proximus' commitment to open up a world of digital opportunities to all actors of society.

Local innovation support

MIC, B-Hive and Co.Station are our three main innovation partnerships, but we also support ad hoc initiatives to foster agility and speed in innovation.

Going forward, we will continue advancing on the road of open innovation.

Innovations addressing societal challenges

In our in-house innovation center, we transform technologies such as IoT, Cloud or Big Data into impactful solutions for smart homes and buildings, smart retail, smart logistics, smart energy, smart mobility, smart industries, smart

cities, etc. Think of a digital future in which Belgium leads the way!

Proximus is Belgium's leading connectivity provider with more than 1.3 million connections over our different networks within the Internet of Things (IoT) ecosystem. We have secured this position by providing the best technology for each use case and by creating an ecosystem of more than 250 solution providers who combine our assets with their specific solutions thus covering every industry.

Our ambition is to be the partner of choice for enterprises, guiding them in their digital transformation and co-creating smart solutions together. We aim to show that every small change to digital can lead to higher value creation. Some examples:

Smart Industry

To become more efficient, Bombardier had to optimize the movement of materials between sites across Europe. This is now possible thanks to a smart solution connecting racks in each location.

Smart Utilities

To enable new digitally-driven services, Fluvius will connect more than 800,000 gas and electricity meters in Flanders in the coming five years using our IoT networks.

Smart Retail

Using Proximus Analytics, shopping malls collect data on attendance and location attractiveness.

Smart Logistics

Some of our logistics sites are managed in collaboration with H.Essers. On those sites, we need real-time positioning (within a precision range of 1m) of our trailers to optimize yard management processes. By connecting each trailer to the parking spot, H.Essers managed to increase visibility, eliminate useless search time and optimize onsite routing.

Smart Buildings

Smart Building solutions offer tremendous opportunities in terms of energy efficiency, waste management and occupancy. In this area, we collaborate with Besix to embed intelligence into new buildings in domains such as hospitality, workspace optimization, energy and floor efficiency and safety and security.

We collaborated with IPARC (International Platform for Art Research & Conservation, SME of the year in 2018) on the integration of new technologies in art conservation. The IoT solution we developed, Smart Care, monitors the environmental conditions of artworks.

In 2018, we also started developing a solution stack to support smart venues to offer a more complete customer experience. A first example is the renovation of the entire Tour&Taxis site in Brussels, with event halls, offices, living units, shopping zones, and more, integrated into one customer journey.

Smart Energy

In partnership with GoodPlanet Belgium we use LoRA sensors in schools to poll the behaviour of children and raise awareness in relation to sustainability. In 2018 we visited the first 15 schools. Secondly, we encourage schools to start to upload consumption data regarding electricity, gas, fuel, transport,

Appendix

Students are standing up for the climate and make their voice heard. With our partner GoodPlanet Belgium we track consumption patterns in schools with our IoT sensors and raise awareness on sustainability

waste, etc. The schools can check the evolution and compare consumption patterns with other schools.

With GoodPlanet, we have set goals to reach and install our sensors in more than 400 schools in 2019.

Smart Cities

In 2018, we refined our strategy for smart cities, as vital contributors to a better quality of life for Belgian citizens. Via our affiliate Be-Mobile, we tackle traffic congestion and parking challenges. In recent years, we have also delivered ANPR surveillance cameras to many cities. In the future, our ambition is to engage directly with citizens to codesign their city, in collaboration with city administrations. We are already doing this in Louvain-La-Neuve at the Living Live Lab and in Antwerp with IMEC in the City of Things project. These initiatives allow local citizens to connect with city officials to voice their needs, address traffic congestion, security and waste management.

Smart mobility

Mobility is an important driver in the economic, environmental and overall well-being evolution of a country. There is still plenty of room for improvement in Belgium and neighboring countries. Our affiliate Be-Mobile, one of the leading Smart Mobility companies, is already facilitating this. A key element of Be-Mobile's solutions is creating ecosystems that connect all stakeholders such as commuters, governments, road operators, automotive and fleet owners.

In 2018, Be-Mobile tested and implemented C-ITS solutions to influence traffic lights based on traffic conditions and to inform drivers and road operators of approaching vehicles such as ambulances to improve road safety. Additionally, Be-Mobile was able to enlarge the coverage of its mobile mobility payment solution to 58 cities and communes, facilitating payments for parking or public transport. Furthermore, Be-Mobile developed an inter-modal route planner for the city of Antwerp to encourage a modal shift by

helping commuters optimize their journeys. Finally, Be-Mobile grew its heavy vehicle road user charging or tolling business and is helping policy makers to analyze a Belgian road user charging solution for passenger cars, which is believed to be a crucial step towards effective mobility management and achieving a better balance between mobility capacity and demand.

Be-Mobile also grew its business internationally by acquiring Mediamobile in 2018. Mediamobile specializes in providing real-time traffic information for the navigation systems used in cars. This acquisition strengthens Be-Mobile's position in the automotive industry and increases the coverage of its traffic management services in France, Germany, the Nordics and Poland, where Mediamobile is active today.

Digital trust

Today's digital world offers many opportunities but also new types of threat. Trust is a prerequisite for people and companies to embrace the many

opportunities of digital and enable the digital future. As a leading digital company, we are actively involved in driving digital awareness initiatives.

Cybersecurity is at the core of our business. We continuously develop solutions to anticipate possible threats and make sure our infrastructure and processes are more secure. We give our customers the means to protect themselves and educate our stakeholders on the value and how-to of cybersecurity through training and partnerships.

As a major ICT player, we handle huge quantities of personal data and we ensure its privacy, confidentiality and security. We apply strict policies, make significant investments in the training of all employees and lead by example when it comes to data safety.

Cyber safe

We place cybersecurity at the core of our business: we make important investments to secure our infrastructure and protect it against attacks. We also offer our clients solutions to protect themselves and continuously train our employees, so they are up-to-date with the latest security practices.

Within our company

We aim to be the frontrunner in how we protect and transform our company in the face of today's and tomorrow's cyber challenges. We see cybersecurity as an enabler of digital transformation. Over the last four years, Proximus has invested €43 million in our Corporate Cyber Security Program with the aim of making our company more cyber resilient and to offer best-in-class secured services and networks to our customers.

Our corporate Cyber Security Incident Response Team (CSIRT1) continuously monitors security alerts and coordinates the response to cyber threats. In 2018, our CSIRT handled 2,087 incidents (versus 2,204 in 2017). No incident had a major business impact. Proximus CSIRT is internationally recognized as the only certified team in Belgium through the Trusted Introducer and is part of the European platform ETIS and global community FIRST. In 2017, Proximus successfully overcame the global cyberattacks WannaCry and NotPetya thanks to the prevention measures and the fast detection and response.

We are the proud holder of ISO certifications in data security and privacy. To date, we have five ISO 27001 certifications, covering our data centers (housing and hosting), our Security Operations Center, the enterprise Explore network and "Work Place As-a-Service" solutions.

1 The Proximus CSIRT is the central incident response team of the Proximus Group. Its mission is to provide information and assistance to reduce the risks of cybersecurity incidents as well as respond eff ectively to such incidents when they occur.

In 2019 and beyond, we want to raise cybersecurity efforts to an even higher level. We will continue investing in our Cyber Security Corporate Program over the next three years, further strengthening our capabilities and sustaining our ISO 27001 and Trusted Introducer certifications.

For our customers

We offer our customers best-in-class security solutions and expertise. Our partnership with Norton offers residential customers a multidevice security solution at a reduced price. We supply a vast range of security services to companies: analysis and diagnostics, monitoring and surveillance, reporting and interventions.

In addition, we offer solutions to protect companies' data, networks and servers.

KP I	Re lt 2 0 1 8 su	Re lt 2 0 17 su
Int ion l ce if ica ion lat d t iva at rt t ern a s re e o p r cy d c be ity an y rse cu r	6	6

Appendix

customers solve incidents. Privileged account management, controlling access to IT systems and data are becoming crucial given the rise in cloud applications and privacy regulations. We also successfully launched this solution internally and with key enterprise customers in 2018.

Our affiliate, Telindus Luxembourg, is an expert in cybersecurity. Telindus Luxembourg completed its existing range of cybersecurity services with a Cyber Security & Intelligence Operation Center (CSIOC) for the detection and management of cyber incidents. In recognition of its multi-domain expertise and determination to innovate, Telindus received the award for Best Security Partner of the year 2018 at IT One in Luxembourg.

In 2019, we will further expand our cybersecurity solutions for the professional market. Our ambition for the coming three years is to maintain leadership and grow at market pace. Recently acquired companies Davinsi Labs, Umbrio and ION-IP will help us achieve this.

For everyone

We are one of the partners behind BE-Alert, a 24/7 public warning system for the Belgian authorities. BE-Alert can broadcast news and information in the event of a crisis via SMS, fixed voice, email and social media.

With threats coming from many different places in this globalized digital world, we continued our engagement with NATO's Cyber Defense teams in 2018 and also participated in working groups with international law enforcement agencies to get first-hand information on the modus operandi of cyber criminals. Additionally, we are actively exchanging information about observed threats and attacks on a national and European level via the ETIS platform.

In 2019, we will continue expanding our collaboration network through active participation in the Cyber Security Coalition and its operational focus groups, through close collaboration with the Center for Cyber Security Belgium (CCB), with other European telecom operators via the ETIS platform, with global companies through the World Economic Forum's Center for Cybersecurity,

with the European Cybercrime Center of Europol and finally through new and existing partnerships, such as with NATO.

Cybersecurity education

For Belgium to become a digital leader, citizens need to have trust in digital. We want people to enjoy the online world and know how to behave safely when using it. We help them by sharing our security knowledge and educating them on the value and how-to of cybersecurity.

Educating our employees

Keeping the cyber environment safe starts from the inside, which is why we continuously educate our employees on responsible behavior to protect company information and customer data.

Each year we organize a Security Week for our employees. In addition, we organize dedicated training, awareness sessions and phishing exercises. In 2018, we tested 27,743 employees and contractors of the Proximus Group through two "real-life" phishing campaigns, which were inspired by real incidents. In addition, we gave them advice on how to detect such suspicious

On Safer Internet day,

Proximus employees together with Child Focus educate close to 11,000 kids every year on using the internet safely

e-mails. Furthermore, we launched two educational videos on the topics of phishing and information classification.

The 2018 Security Week, organized for the fifth consecutive year, reached 1,237 employees and offered a vast awareness program including new digital ways of working, physical security, privacy and GDPR, our customer security solutions, phishing detection and prevention, and child safety online in collaboration with Child Focus. For the first time in 2018, we organized an internal "capture the flag" contest - an online game where employees could test their cyber skills through hands-on exercises.

During Cyber Security Month in October, we transposed the national awareness campaign about cyber hygiene "boost your digital health" to our employees. Articles on our intranet reached no fewer than 4,590 readers.

We also want to offer employees the opportunity to develop careers in cybersecurity through an extensive one-year training course on cybersecurity, after which participants are cyber experts and receive the necessary certificates to start a new job in this field. In 2018, 15 employees followed this training. The training will be organized again in 2019.

Educating the business world & society

We also educate and raise awareness among companies, organizations and the general public.

For our customers

We organize the biannual Proximus Cyber Security Convention, where we bring customers up to speed on the latest trends. Our Proximus Corporate University (PCU) also provided security education programs for customers in 2018, including Network Security Explored, Hacking and Intrusion Detection, HEXID Assault, Wireshark, Davinsi Labs, Blockchain and Security Awareness, reaching 75 companies (47 from the public sector).

For Belgian citizens

We are a founder and steering member of the national Cyber Security Coalition, a non-profit organization aiming to raise cybersecurity capabilities in Belgium through experience sharing, awareness raising, policy recommendations and cross-sector operational collaboration.

In 2018, five one-day information and networking events were organized around secure application development, regulatory frameworks such as the European Directive "Network and Information Security" and GDPR, cloud security, cyber talent and innovation. In addition to awareness raising, privacy, NIS and CSIRT-SOC focus groups, three new operational focus groups addressing cloud security, cryptography and enterprise security architecture were launched in 2018.

We have a specific project aimed at primary school children. Twice a year - in February on the International Safer Internet Day and in October during the Safer Internet Day - our employees (trained by our partner Child Focus) educate children on how to use the Internet safely (10,259 children in 212 schools in 2018, vs 11,330 children in 229 schools in 2017). In 2018, Child Focus reviewed its pedagogical approach in order to improve the impact of the program in coming years. Drawing from the real-life experiences of the children, the latter will discover in workshops how to behave when surfing on the internet and interacting on social media.

In 2018, Proximus handled 72 requests from law enforcement authorities to block access to websites. Proximus is also constantly looking for new ways to prevent child pornography on its hosting infrastructure. In order to protect our customers from fraud, like phishing via fake Proximus websites, the Proximus CSIRT is closely monitoring any attempts to attack our customers – and is usually able to take down phishing websites in a matter of hours after the attacks were launched.

To reach undergraduates, in 2018 we organized for the second consecutive year a full-day "capture the flag" contest for 33 students following the new cross-university master's in cybersecurity (regrouping the ULB, UCL, U-Namur and the Royal Military School). We also welcomed students from HOWEST during our Security Week.

Finally, we believe in lifelong learning, we collaborate with CyberWayFinder, offering women who want to change career paths the opportunity to join the cybersecurity world. Through this collaboration, we offer on-the-job work experience in addition to the training they receive via the association. In 2018, we welcomed two women trainees in our cybersecurity teams. Although small, this type of initiative contributes to reskilling employees and job seekers to be ready for the jobs of tomorrow.

In 2019, we want to extend the reach of our training programs and learning partnerships. For example, by extending our "capture the flag" business game to new schools and universities. Finally, via our Safer Internet Day, we want to reach 10,000 students in the coming year.

Ensuring data privacy

As a major ICT player, we are responsible for keeping our customers' data safe and private. We have developed a privacy control framework to ensure personal data is processed in accordance with legislation and with the highest-grade security. The framework contains policies and procedures but also training and awareness initiatives.

We have also put in place infrastructure that spots data breaches to keep our network secure. Because we want to make sure data stays safe, always.

To ensure all our employees are aware of EU and Belgian privacy legislation, we organized dedicated GDPR training, reaching 93% of our workforce in 2018.

In 2018, Proximus continued its GDPR implementation project started in 2017. Our objective was to ensure compliance with GDPR without disruptions to Proximus data flow and business operations. More than 150 persons were directly involved in the project and approximately 500 others were involved in surveys, questionnaires, assessments, etc.

Being committed to protect personal data and privacy, we took a series of actions such as appointing a Data Protection Officer (DPO), developing a structure for consent management, security screening and corrective measures for our IT applications.

GDPR trainings reached93% of Proximus workforce

and a privacy control framework was installed

We also implemented a Privacy Control Framework to provide assurance on the fact that personal data is managed as intended, is accurate, is protected by default and by design and that our organization is compliant with applicable laws and regulations and able to demonstrate this.

GDPR implementation will remain on the agenda for 2019. We aim to optimize our internal processes to allow an efficient privacy by design/default approach. Proximus will further extend the privacy settings within the MyProximus app and website to allow our customers to efficiently choose how Proximus can use their personal data.

Caring for our stakeholders

4 0 Proximus Group Annual Report 2018

Caring for our stakeholders

Our corporate culture and values define how we work. Proximus is imagining a future that will be positive for everyone. Our focus is not only on what we do, but how we do it. How we engage with people. How we conduct business.

Our customers are at the center of everything we do. In an increasingly digital world, we want to remain relevant to them by offering new digital solutions and great experiences that are personalized and authentic. We want our customers to feel confident and able to rely on an expert digital provider.

We conduct our business ethically and with integrity. We live by our values and governance principles when engaging with our customers, suppliers, employees and other stakeholders.

We also care about the people who work with us.

We empower them to have an impact, to innovate, to grow and to live meaningful lives. We show our commitment to them by offering them an inclusive, safe and inspiring workplace that respects them as individuals.

Customer first

Material Topics*: 21 14 22 17

Our goal is to always provide a good customer experience thanks to a seamless digital customer journey.

We invest time and effort in getting to know our customers and making our appreciation of them felt at every customer touchpoint.

Being a Proximus customer means enjoying peace of mind because our products are

safety standards. We conduct marketing responsibly and respectfully and nurture a transparent relationship with our customers.

secure and comply with strict health and

And to ensure our products and services meet our customers' demands and expectations, we have introduced structural initiatives to engage with them and gather feedback, including co-creation, design thinking, forums, and more.

KP I	Re lt 2 0 1 8 su	Re lt 2 0 17 su
in c int inv ice (re ide ia ) De la lat d t l cu nt sto cre ase om p s re e o o s s me rs	% -14 1 17 vs	-
is ion ide ia Ble nd d u fac fo l cu at t nt sto e sag e s r re s me rs	9 6 % 4.	9 3. % 7
in- ien is ion Ha Ho ho fac sat t te pp use me ex pe r ce ra y	8 9 %	9 0 %
int ( ic jus if ie ) # c la fro J EP # o f w h h d t om p s m	( 2 ) 7	( 0 ) 5

*Materiality Matrix p. 27

Listening to our customers

To make our customers' lives better, we need continuous feedback on what they want or need. That's why we put our customers at the center when we develop new products and services.

We capture and centrally store customer feedback and enrich it with technical and operational data. This allows us to achieve a 360° customer view and to tailor interactions and areas for structural improvement.

To expand our product portfolio, we use an outside-in approach, starting from customer needs both in the residential and professional markets. Besides our regular sales channels, we use multiple forums to connect with our customers, including design thinking sessions during which we co-create together and Voice of the Customer meetings to collect customer feedback.

In 2018, we launched our new offer Epic. Proximus Epic is designed with and for millennials. Using design thinking methodologies, we co-created the product with 11 millennials for six months and tested it via our millennial test panel.

Customer experience

Giving our customers a good experience tops our agenda. We want to meet their expectations, from the very first contact.

We want to allow our customers to enjoy a digitalized, personalized and seamless experience. Customer experience starts from the first moment someone contacts us. It continues through every subsequent interaction, whether via our digital or live channels. To help us achieve this, in 2018, we developed a 360° customer view for all our sales agents. When a customer reaches out, our agents can directly see all their interactions with Proximus and provide them with the right answers.

A multi-disciplined High Care team with commercial and technical expertise has also been set up in order to better assist customers facing complex issues.

In 2018, we successfully completed more than 40 improvements, including automatically informing a customer of an outage, its expected resolution time and when the service is restored. We also fully digitalized

Epic, our new offer designed for and co-created with Millennials

the journey for residential customers moving house.

We introduced our chatbots, like Titus who answers questions when consumers are browsing our website looking for information.

Because digital can sometimes be complex, we continued our "Smart Café" initiative through which we offer free training on digital tools, open to all Small Enterprises (SE), both customers and non-customers. In 2018, we trained 183 participants in the SE market at our points-of-sale in 17 cities and another 1,056 during a digital roadshow. In 2019, we will continue this initiative.

We care about how our customers experience Proximus. After installing new services/

products for new customers, we call them to find out if everything went well and to check whether they have any additional questions about their products.

With our Happy House visits we try to give our customers the best in-home experience possible. During these visits, all Internet and Wi-Fi connections are checked and secured, and modems and decoders are replaced when necessary. In 2018, we visited another 40,000 homes (61,000 in 2017) and achieved an 89% satisfaction rate (vs 90% in 2017). To further improve our in-home experience, we launched a new Home Optimizer app in May 2018. This app allows customers to analyze Wi-Fi quality, after which they can configure the most optimal Wi-Fi channel on their modems at the touch of a button. The app

Particular attention goes to responsible marketing practices. We offer parental control solutions, solutions to protect from bill shocks and focus on safety and safe use of products

also gives information on Wi-Fi signal strength and if required, advises on the best position for Wi-Fi extenders. Within seven months, the new app was downloaded by more than 36,500 users and has already been used more than 573,000 times.

We also developed a new Mobile Coverage Extender solution to improve the mobile coverage at home using fixed Internet and another solution using mobile coverage with a 4G modem to improve internet at home.

In 2019, we aim to develop further improvements to our customers' in-home experience via a layered approach to deliver a more efficient and fluent Wi-Fi performance.

With the Free Smartphone Replacement, we offer our customers a smartphone free of charge for one month in the event of their phone being broken, lost or stolen.

Finally, to reward customers who choose Proximus as their digital service provider, we organize Proximus Customer Days. In 2018, in the framework of our Premium Club loyalty program, we also offered our customers the possibility to use their loyalty points to make a donation to the Foundation Against Cancer and UNICEF. This resulted in €173,738 and €217,938 donations respectively. .

Customer safety and peace of mind

Being a Proximus customer means peace of mind. Our devices follow the strictest health and safety guidelines in terms of emissions and electromagnetic fields, our services are reliable, and we communicate honestly and transparently.

Responsible marketing

We pay particular attention to responsible marketing practices and comply with the

rules prohibiting advertising the use of mobile phones to children under 7.

We received 7 complaints from the Jury of Ethical Practices, of which 2 were justified and corrective measures taken.

We also offer solutions to parents such as parental control on TV and smartphones to protect children from non-adapted programs and provide lots of tips on our website to parents on how to protect their children online.

We want to protect customers from bill shocks and offer solutions such as the product Mobilus Full Control, which ensures post-paid customers respect their budgets.Furthermore, for all our mobile post-paid customers, to avoid any risk of a bill shock in case of outof-bundle use, we give real-time info on their usage in our MyProximus app. We also have in place a system where automatic text messages are sent to warn customers of their consumption when they are approaching their

limit. And we inform them of the possibility to buy additional one-shot data bundles. For 2019, we will continue to proactively contact customers who have regular out-of- bundle usage to suggest more adapted offers and prevent bill shocks.

Safety of our products & services

Caring for safe use of our products and services means recognizing our responsibility regarding exposure to electromagnetic waves, a societal concern. We comply with the legislation in force, both for networks and for devices, monitor developments in scientific research and provide information.

Proximus has also been displaying the SAR (Specific Absorption Rate) of each device in all sales channels since 2008, while this only became legally required in 2014.

Finally, on our website, we offer very useful information to our customers on how they can mitigate the potential risks of radiation such as in their own homes. For example, we offer b-box set-up which turns it off at night. We also give tips on reducing exposure from mobile phones on our website and in our shops.

Caring for our employees

Material Topics*: 9 8

We need the help and commitment of all employees to make the digital future happen. We offer them the chance to bring about positive change, to develop themselves, make a difference, contribute to our results and be our best ambassadors.

KP I	Re lt 2 0 1 8 su	Re lt 2 0 17 su
Pe f P im loy ing nta rce ge o rox us em p ee s u s O ff ice 3 6 5 On Dr ive e	7 9 %	3 7 %
Pro ion f P im loy ive ly rt ct po o rox us em p ee s a loo k ing fo r k wle dg le by ing no e o r p eo p us ou r ise ia l ne k ( #W AP ) ter tw en pr so c or	% 9 6	9 3 %
Em loy 1 nt p ee en ga ge me	7 2. 7 %	7 2. 3 %
Fre f o ion l ac ide 2 rat t nts qu en cy e o ccu pa a c	6. 8	6. 6
Se ity f o ion ide 3 rat t nts ve r e o ccu pa ac c	0. 2 8	0. 3 6

1 Average result of the employee engagement survey (SpeakUp), measuring the engagement, agility and strategic alignment of the Proximus employees

2 Frequency rate (Fg) = # occupational accidents x 1000000/ total number of hours worked by company employees

3 Severity rate (Eg) = # lost days due to occupational accidents x 1000/ total number of hours worked by company employees

*Materiality Matrix p. 27 We show our commitment to our people by making Proximus a great place to work: a safe, inspiring and inclusive workplace of the future with equal opportunities, offering continuous training to ensure a long and fulfilling career with us, and the opportunity for each individual to balance their personal and professional lives in the right way for them.

As diverse as society around us

As a truly Belgian company, we want our workforce to reflect all the different communities in society.

At Proximus, we do not tolerate discrimination. Our people enjoy equal opportunities, regardless of gender, religion, ethnicity, background and any other characteristics unrelated to their abilities.

We subscribe a Charter on diversity and equal rights, which applies to all employees of the Proximus Group. (More in the Remuneration report)

Gender inclusion

Proximus strongly believes in the importance of diversity at all levels of the organization.

This is also reflected in the female representation at the different levels of our company:

43% of the Board of Directors
25% of the Executive Committee
21% of the members of the Leadership Team
31% of entire employees' population

Appendix

In 2018, out of 22 moves and new hires in the leadership team, we hired/promoted 11 women (50%, compared to 29.6% last year). The Proximus Group also has a very diverse workforce in terms of culture with 58 nationalities.

Proximus supports internal and external diversity network activities and initiatives such as the AfroPean network (APN) and WinC (women network). In 2018, Dr. Herminia Ibarra (Professor at the London Business School) came to talk to the leaders of Proximus on Woman Leadership. Proximus ensures ad hoc presence to external events such as "Yes she can" in order to encourage young girls to opt for engineering studies and a technical career. Our CEO is also ambassador of the initiative "She loves to code" from 19 coding school. Finally, the European Round Table of Industrialists (ERT) launched the #EmbraceDifference campaign in 2018, through which more than 50 business leaders, of Europe's largest companies, including our CEO, signed a pledge to promote diversity and inclusion in the workplace. Proximus also subscribed to the DigitalForHer declaration, an initiative of Commissioner Gabriel.

As a major ICT employer in Belgium, we understand the importance of gender diversity. Today, about 14% of the staff in our Technological department are women, and we hired 26 women in 2018. In ICT specifically, about 20% of our employees are female, representing about 130 FTEs. In our Security, Governance & Investigations division, 33% of employees are female.

Generational inclusion

With people having to work longer, we also focus on generational diversity. Priorities may shift towards the end of a career and some jobs may become too physical. We put in place specific initiatives for workers aged 55+ employed in strenuous physical jobs. For example, we allow them to be retrained, so they can move to another job or offer reduced work schedules.

Finally, we launched the initiative Experience@Work in collaboration with KBC, AXA and HazelHeartwood. The main aim with this objective is to allow people to work longer. Senior employees (from the age of 55 until retirement age) can share their experience with other organizations, while A diverse cultural workforce with 58 nationalities

We believe in the power of gender diversity

In 2018, 50% of new hires or promotions in the leadership team were women

Generational inclusion

We further developed our Experience@Work initiative to allow people to work longer and share their experience outside Proximus

keeping in touch with their current employer and without any changes to their contract or salary package. Meanwhile, 17 employers now offer this opportunity to their senior employees and 10 Proximus employees participated in 2018.

To further drive diversity and inclusion in our workplace in the following years, we developed an action plan around 3 axes:

• Gender: Proximus is committed to gender equity and we are in the top 200 of the most women-friendly companies worldwide. In the scope of our plan, we intend to take part in studies and events related to this subject. We will also collaborate with external organizations such as Center for Balanced Leadership, Women on Board, etc. In 2019, an event on women in digital will be organized in collaboration with JUMP1.

• Generations: From experienced employees to new graduates, we embrace the strengths and perspectives of different generations. We believe each generation brings valuable insights and perspectives to the workplace and encourage collaboration of ideas. We will thus take actions regarding end-ofcareer management for those aged 55+, millennials and the multigenerational workplace, and unconscious biases in performance management, recruitment and training.

• Communication: Proximus welcomes employees from around the world, promoting a culture of great ethnic and cultural diversity. In 2019, we want to make sure all employees can draw from the benefits of a diverse workplace through various initiatives within our offices (Talent in Action, FeelGreat@ Proximus, an internal blog on diversity, etc.). To ensure an inclusion mindset, we aim for all of our training tracks for team leaders, experts and trainees, and all of our welcome days for new hires to contain information on our inclusion program.

An inspiring workplace of the future

As a provider of digital services, a 'digital first' mind-set must be the new normal, enabled by the right digital tools.

Empowered organization

In the scope of our Good to Gold culture, we have been working for several years on giving teams more empowerment. In 2018, we accelerated this initiative, as autonomy will empower employees to create more value for our customers.

We are working more and more in transversal and multidisciplinary teams, also upscaling capabilities of employees in methodologies like Agile and Design Thinking. All this leads to increased accountability and faster delivery of the right products and services.

In 2019 we will go for even more empowerment, among other things by defining and implementing the best ways of working for all activities throughout Proximus.

Digital tools

We promote smarter working, by collaborating digitally and cross-functionally on any device with Office 365.

The adoption of O365 OneDrive supporting co-creation of documents in 2018 grew from 39% to 79% year over year and 3500 employees followed our digital journey training track on our new way of working.

In 2019, we will continue to invest to fully leverage the collaboration potential. We will build towards the ability for co-creation with external parties (partners, customers, suppliers). We will also continue to invest in employee experience tools.

Collaborative workplace

We piloted a new working environment that enables collaboration yet recognizes specific needs by integrating quiet or co-creation zones. Creating a variety of workspaces is

¹ JUMP Resources is the knowledge center for Gender Equality at work, with studies, toolboxes and corporate practices on gender equality.

Over the next two years, Proximus will double its training investments to support employees in the digital transformation

based on employee feedback. In 2018, we remodeled 35 floors and equipped 65 meeting rooms with easy-to-use videoconference technology, multiplying videoconferencing by a factor of 20 compared to 2017.

We continue investing in an inspiring workplace and plan to remodel an additional 12 office floors in 2019, while further deploying state-of-the art meeting room equipment in regional offices, such as facilitating

videoconferencing solutions to strengthen collaboration between different premises.

Always-on learning

Our employees don't face the digital transformation alone. Different learning channels will boost the use of our digital tools, with basic digital literacy training for most employees and in-depth digital skill tracks for focused communities in data, marketing and security.

In 2018, we invested €24 million to reskill and upskill our employees. Over 95% of our population followed formal training covering over 270,000 hours (20.6 hours per employee on average). These trainings were given in all sorts of areas, whether it be languages, soft skills, creative skills or hard skills.

Culture

We also strengthen our leadership competences. In 2018, we organized over 90 reverse mentoring sessions where younger colleagues trained the leadership teams on the digital tools, which they can then advocate to their employees.

Internal mobility

At Proximus, we try to instigate a more agile culture. This involves offering internal mobility, as we want to ensure all our employees keep learning and doing a job they love. In 2018, 725 employees changed jobs internally.

To promote internal mobility, we further scaled up NewTone, a program through which employees and teams can recruit colleagues

internally to work for a limited time (at a rate of defined hours per week) on a specific project.

Being our best selves at work

Proximus strives to create a positive work environment where people feel good and recognized, where working conditions are adapted to personal needs, where employees are resilient, engaged and actively contributing to realize our business strategy.

Work-life & Social Unit

At Proximus, a team of social consultants accompanying employees in different domains of psychosocial wellbeing at work constitutes our Work-life & Social Unit (WLU). This unit also offers our employees services such as childcare during the school holidays (summer and spring holidays). In 2018, 315 employees benefited from these services. It also organizes a Fun Day and a Kids Party for all our employees and their families each year. In 2018, 7,977 employees participated.

Our Affinity program offers all employees exclusive reductions on different products

In 2018, 7,020 employees

benefited from homeworking, with an average of 4.2 days per month

and services. In 2018, 57% of our employees made use of the Affinity program.

FeelGreat@Proximus

Launched in 2017, this corporate program aims to proactively support employees on improving their resilience. Through lectures, workshops, information stands, brochures, exercises and communication campaigns, we raise awareness among our employees on mental, physical and relational resilience.

In 2018, we focused on mental resilience by working on focus and concentration, positive thinking, how to identify and use your talents to increase your energy. A toolbox was developed to work in teams on appreciation, trust, autonomy and connection. In the context of the anti-stress moment for the employees of the contact centers, 367 employees signed up for a noon walk and 195 for a creative workshop.

A second part of the program are our proactive psychosocial risk analyses. In 2018, we conducted 6 analyses, covering 1,191 employees (an 18% increase over 2017).

Finally, Proximus makes considerable efforts to enable its employees to reconcile their professional and private lives as harmoniously as possible. Reducing the daily travel time between work and home, saves time and reduces stress for our employees, and reduces the environmental impact. Proximus offers its employees the possibility of teleworking in satellite offices specially equipped for this purpose or of working from home.

In 2018, 7,020 employees (vs 6,400 in 2017) benefited from homeworking, with an average of 4.2 days per month (vs 3.1 in 2017).

In 2019, we will focus on resilience and managing change.

A safe & healthy work environment

We have many different job profiles at Proximus: office jobs, customer service jobs, field technicians, developers, etc. Regardless of their role, we ensure that every employee is able to work in a safe and healthy way.

We have implemented additional measures, beyond the legal requirements, to protect and promote the physical and mental well-being of our employees.

At Proximus, we have a department for Prevention and Protection (CPP), the driving force behind Proximus' well-beingrelated activities. It defines a common wellbeing policy (definition of objectives) and gives opinions on all problems concerning wellbeing. All products, goods and services at Proximus need to meet the standards with regards to well-being at work.

Our Prevention & Well-being Committee is a permanent working group with representatives from management, the unions, the CPP department and occupational physicians. It deals with the elaboration and follow-up of the global prevention and protection plan and handles aspects such as personal protective equipment given to technicians, fire safety measures to protect workers, the protection of employees' health in the workplace (such as a smoking ban, health supervision, etc.), the adaptation of workplaces, the evaluation and resolution of psychological risks and issues, etc. We also have local prevention & well-being committees with representatives from local management, unions, the prevention department and local occupational physicians. In these committees all accidents at work, local prevention matters, respect of safety instructions, etc. are discussed.

There are national formal agreements with trade unions that cover all health and safety topics. In 2018, we had approximately 88 committees.

Our well-being at work policy provides an overview of the applicable legislation and

sets out the different areas of the Well-being Act. In terms of safety, it aims to prevent accidents at work. It deals with aspects from personal protective equipment given to technicians to the fire safety training of staff in our office buildings. In this policy, we also define the protection of employees'

Our FeelGreat@ Proximus initiative

4 9 was recognized in the 'Good Work, Good Health II Guidelines' of UNI Europa (European trade union federation)

Each year, we set a theme to reduce workrelated accidents. In 2018, we communicated strongly on the topic of "road safety" through different initiatives such as an e-learning about road safety, a road safety quiz and two sessions on bicycle safety awareness. In terms of work-related accidents, we observed a stable frequency rate compared to last year.We have an occupational medical surveillance program for our workers exposed to risks. In 2018, 4,823 examinations were conducted

risks and issues, etc.

In 2018, we developed a Global Prevention Plan for the next five years, based on our well-being policy and on risk management, with the application of the following principles: construction of a prevention and protection risk management approach, execution of the management approach, evaluation and

by our external medical service.

health in the workplace (such as a smoking

ban, health supervision, etc.), occupational

hygiene (insurance to have good social

facilities), the adaptation of workplaces, the

evaluation and resolution of psychological

put in place by conducting a risk analysis, taking the necessary prevention and protection measures reducing work-related accidents, communicating safety instructions to employees, and following the VCO/VCA (safety management systems for parties commissioning the works and for contractors) rules for operational departments. We also conducted a risk analysis of the new Digital workplace (the new way of working at Proximus based on the use of various digital tools, e.g. tablets, smartphones, laptop computers used as a (digital) telephone), a risk analysis of our new telecom equipment, a psychosocial analysis of different work posts, and a fire safety analysis of different workplaces and installations. In addition, we delivered new supplementary work clothing for certain divisions, new safe utility cars, vans and trucks, and held a safety quiz via e-learning for our employees working in shops. With those actions, we reached almost all our field force employees.

adaptation. This management approach is

Over the next four years, we intend to continue to implement the VCA/VCO policies. We will also analyze the risks of our new (digital) working equipment and telecom installations and determine appropriate prevention and protection measures.

Doing business right

Material Topic*: 5

Compliance and business ethics are our license to operate. We expect all our employees and affiliates to share and live by our values and standards.

We will never compromise on how we do business because this defines the vital role we play in society. We constantly review our principles, policies and procedures and even go beyond what is required or expected. This guarantees that our governance and ethics reflect not only legal but also societal expectations.

KP I	Re lt 2 0 1 8 su	Re lt 2 0 17 su
Nu mb f ca inv iga d by the est te er o ses Inv iga ion de t fo io lat ion f est t rtm s pa en r v o l ic ies /co de f co nd uct po o	2 9	5 2
Nu mb f w h ist le b low ing er o ca ses	7	7

At Proximus, we don't want to be put at the center of ethical dilemmas and we put the right measures in place to ensure our business is conducted the right way. This first means having a clear governance model, which is described in our governance section and follows the Law of 21 March 1991 on the

reform of certain autonomous economic public companies ("the 1991 Law").

Because business is personal for us, we not only follow the law but want to ensure every one of our employees is aware of the behaviors to follow and avoid. Therefore,

Proximus adopted its new Code of Conduct in 2016, applicable to all employees. So far, 93% of Proximus employees have followed mandatory training on the application of the principles of the Code of Conduct. On top of this, we have various internal policies.

We have anti-corruption/bribery, conflict of interest and competition policies. Corruption is a threat to business and society in general. In addition to unfair competition it can lead to undesirable consequences for the individual such as blackmail or imprisonment. Our anti-corruption procedures are not only a legal obligation and an ethical duty: as a responsible company we take a firm stand against corruption. Proximus applies a practice of zero tolerance.

Also, conflicts of interests involve personal considerations and can affect judgment, and ultimately decisions. They should be avoided whenever possible.

Fair and open competition between companies, and doing business on a level playing field is important to society in general and contributes to increased welfare for all. Therefore, we support fair and open competition in all our markets, with a competitiveness approach that is based on good products and services at the right price. These policies are all described, along with the responsibilities they engage for our employees, in our Code of Conduct. Firm sanctions and procedures (e.g. whistleblowing procedures) are in place to deal with cases that occur. In 2018, we handled seven whistleblowing cases.

Finally, respecting human rights is a fundamental value for us. People are entitled to be treated with respect, care and dignity. Proximus business practices can only be sustainable if we respect basic human rights and value diversity, cultural and other differences. Our Code of Conduct (which every employee is required to know), values and behaviors are inspired by fundamental principles such as those of the Universal Declaration of Human Rights, the European Convention on Human Rights and the United Nations Convention on the Rights of the Child.

Proximus is committed to creating working conditions which promote fair employment practices and where ethical conduct is

*Materiality Matrix p. 27

recognized and valued. We maintain a professional workplace with an inclusive working environment, and we are committed to respecting Belgian legislation and the International Labor Organization's (ILO) fundamental conventions.

Proximus recognizes and respects the right to freedom of association and the right to collective bargaining within national laws and regulations. End January 2018 the Collective Agreement 2017-2018 has been approved by the 'comité paritaire'. This Collective agreement contains sections with different measures; generic, well-being, employment, quantitative and non-actives. Next to this, a series of around 10 measures have been agreed upon. We will not contract child labor or any form of forced or compulsory labor as defined by ILO fundamental conventions. Moreover, we are opposed to discriminatory practices and do our utmost to promote equality and diversity in all employment practices.

In terms of our supply chain, we hold ourselves to high social and environmental standards, which are described in the section Sustainable supply chain.

Going forward, we will keep focus on our code of conduct training, to ensure all employees know the procedures to follow. We will continue to hold those we do business with to the highest ethical standard.

Starting in 2019, an increased focus will be given to compliance and resilience as a strategic objective in our #ShifttoDigital strategy. The new digital society goes with new types of responsibilities for a company like Proximus. Next to increased focus on cyber safety, data privacy and protection, a key initiative is dedicated to protecting our critical infrastructure, ensuring network resilience and crisis preparedness.

Contributing to society

5 2 Proximus Group Annual Report 2018

Contributing to society

We help design the future of our country by facilitating its digital evolution. Together with many others, we are building a digital society not just for the happy few, but for all Belgians, no matter their level of digital understanding, physical ability, age or background.

We invest in education and want to help tackle the enormous reskilling challenge the Belgian workforce is facing in the years to come. Ensuring employability and filling the digital jobs of the future is a priority and will determine the success of our digital economy.

We want to contribute to social initiatives in Belgium, and give back to the community we operate in. We also strongly invest in the Belgian media landscape and local culture.

Digital for all

Material Topic*: 2

We strongly believe that everyone should have access to the digital world, regardless of physical abilities, economic background, cultural origin, education or age. Proximus is committed to making digital technologies also accessible to

people with disabilities, people who are less well-off and the elderly, wherever they live.

And as a leading ICT employer in Belgium, we want to help new generations gain the technology skills and knowledge they need to flourish in the digital economy of the future.

KP I	2 0 8 Re lt 1 su	2 0 Re lt 17 su
Pe f a ib le t d de ice nta est rce ge o cce ss e v s (a t le fo r 1 d isa b il ity ) ast cat eg ory	9 1 %	1 0 0 %
Nu mb f jo b s ker d by rte er o ee s s up po ou r in it iat ive in B lg ium s e	4 0 4	3 27
ir Nu mb f s ic k c h ildr d t he ect o t er o en co nn e ho l by Be dn d Ta ke O ff et sc o an	0 0 0 > 1 ,	8 0 0 >

*Materiality Matrix p. 27 Proximus at a glance

Appendix

Our low-cost brand Scarlet offers the benefits of our high quality network

to people who don't need the frills of a premium offer

of the devices tested were accessible for at least one disability category and 36% were accessible for all categories.

In the next three years, we aim to strengthen our relationship with Passe-Muraille. In addition, we plan to review the accessibility of our shops and develop versions of our applications and services that are adapted to visually impaired and disabled customers.

Over the next years, we also aim to improve the accessibility of our TV interface for people with a hearing or visual impairment (audio description and subtitles). Already, Proximus TV offers subtitling on a large range of channels and the "audio description" feature on the channels één, één HD and La Une. We plan to extend this functionality in the future. Also, by 2024, 25% of programs in our video-on-demand catalog will have an audio description and 25% will have subtitles.

Everyone connected

In today's society, connectivity, like water and electricity, is a basic right. Proximus makes important investments in improving connectivity in rural and white zones, even

if commercially not relevant (see section Enabling a better digital life). Proximus also invests €3 billion in accelerating its roll-out of fiber, bringing fiber to industrial zonings and all centers of cities and municipalities, this way offering all citizen and companies access to the Gigabit network of the future.

For people in difficult economic situations, we offer social tariffs. This is a legal obligation for all operators with a turnover of more than €50 million. In 2018, more than 155,714 people benefited from one or more social tariffs granted on social or humanitarian grounds.

We have an offering for each type of customer. Scarlet is a no-frills offer at a low price, while Proximus offers a full premium service. Scarlet wants to make telecom services accessible to all Belgians and has the ambition to always give the best offer for the lowest price.

Scarlet was the first to offer unlimited SMS messages in all mobile deals. Also, Scarlet is the only brand to provide unlimited voice calls below €20, via its Hot subscription.

Accessibility to all, everywhere

We continuously work on making our products, services, shops and applications accessible for disabled or visually impaired people. We have also developed a low-cost brand, offering the benefits of our high-quality network to people who don't need the frills of a premium offer.

Everyone, including the disabled

Because people's physical abilities shouldn't influence their access to digital nor limit their opportunities, we continuously test the accessibility of our devices with the Passe Muraille association. Through their independent panel of disabled people, they guarantee that our devices meet their needs, based on an evaluation grid with different accessibility criteria.

We've also set up specific pictograms to make access to our services and sales channels easier and to make it easy to identify accessible devices. Our online catalog also contains information about devices adapted to the needs of users with a disability.

In 2018, 11 new devices were tested (vs 12 in 2017) before proposing them in our offer. We see that there has been improvement by the manufacturers in terms of accessibility. 91%

Appendix

Proximus is a founding partner of 19,

the first entirely free Belgian Coding School open to 18-30- year olds

Going forward, Scarlet will keep launching new types of offers in the fixed and mobile domains, adapted to market evolutions and customer needs. It will facilitate mobile Internet access with a new and simplified portfolio, and offer mobile data access at a competitive low price, while aiming to improve the quality of our services and ensure our customers can keep their telecom budget under control (usage warnings, new self-care interface, etc.).

Educating Belgians for the digital future

Within the next decade, many jobs will disappear. Also new types of jobs will appear, bringing new opportunities. However, digital skills will be a prerequisite. We want to address this challenge by already helping people to gain the skills they need to thrive in the new economy. That's why we partner with schools and other associations to bring the power of technology to new generations.

Ensuring digital employability

One area of focus is the work we do through the Proximus Foundation. The mission of the Proximus Foundation is to help young people with social, economic or personal difficulties enter the job market by acquiring the skills they need to have a job in the marketplace of tomorrow. This foundation supports mainly two initiatives: Digitalent, since 2015, and School 19, since 2018.

Digitalent

Digitalent was set up in collaboration with employment agencies and cities. It helps young people between the ages of 18 and 25 to become familiar with modern technologies thanks to projects they develop themselves. Digitalent offers an eight-week training course to small groups of young people based on three pillars: technical, entrepreneurial and the construction of a personal professional path for the future.

Started in Antwerp in 2015, we have since added 13 cities across Belgium. In total, 225 students have followed the courses and received certificates. Of those who followed our Digitalent courses over the last 18 months, 41 % have found a job and 28% are continuing education/training (amongst them 29% in the ICT sector).

19

Proximus is a founding partner of 19, the first entirely free Belgian Coding School open to all. Focused on 18-30-year-olds, the 19 Coding School is innovative in that there is no tuition fee, no diploma awarded, and education takes place without a teacher. It works as a school thanks to the pedagogic support of the leading coding school in the world: 42.

The collaboration between Proximus and 19 started in 2018. Within its first year, 19 received over 2,000 applications from students wanting to access its groundbreaking learning system. 1571 of those were

accepted. 19 also launched the 'She loves to code' initiative to attract more women to follow its coding courses.

With 19, our objective is to encourage even more applications and see people, especially women, benefiting from its innovative way of learning. In 2019, we will also welcome a first wave of 10 internships coming from 19 and will work with them on 9 specific projects.

BeCentral

BeCentral is a new digital campus located in Brussels Central Station. Its mission is to close the digital skills gap and help accelerate Belgium's Digital Transformation. It hosts digital schools and workshops in an

¹ Of which 92 have an unemployment statute.

entrepreneurial ecosystem. The campus offers more than 30 initiatives each day to over 200 tech enthusiasts, including educational programs, start-ups and NGOs. Proximus supported the start of BeCentral with connectivity, and the Proximus Foundation organized two Digitalent sessions at BeCentral in 2018.

Education through digital

Proximus has developed the project Web Experts program for seniors. Organized as a contest for schools, children are encouraged to submit their group projects and teach the elderly about the advantages of the Internet, how to use the Internet safely, etc. Every month, there is a prize for the best project. In 2018, 322 people were trained thanks to WebExperts, with 8 schools (270 children) taking part in this project.

We have decided to redesign the Web Experts initiative in a bid to reach more schools each month and extend the project's impact. In 2019, we aim to increase the number of schools participating to 30.

We are very proud to be supporting associations harnessing the power of digital to ensure sick children can follow classes in any situation.

We are a partner to Bednet in Flemish schools and Take Off in French-speaking schools. This allows long-term sick children stuck at home or in the hospital to follow and be a part of their classrooms. Through innovative software and solutions, Bednet and Take Off let kids feel like they are still an active part of their classrooms and to stay up to date on their education. Proximus supports those projects by providing internet lines and sponsoring. In 2018, Bednet and Take Off helped over 1,000 children through these initiatives.

In 2019, we will continue our support to Bednet and Take Off and help them grow their initiatives as Bednet plans to help 1,000 children and Take Off 100. Furthermore, the new Bednet interface will allow children to record the lessons in order to be able to follow them later.

Fans of Belgium's culture

2018 was an exceptional year for Belgian sports; think about our performance in football, gymnastics and hockey. Proximus is a historic sponsor of our national football team, the Proximus league as well as basketball and cycling events. Besides sports, we also sponsor local music festivals and cultural events.

We are the No. 3 advertiser in Belgium, we stimulate Belgian co-productions and share sports rights (football, cycling) with local media, thereby actively contributing to our local media industries, and looking with them at ways to safeguard the industry, through the development of new advertising models and innovation.

KP I	Re lt 2 0 1 8 su	Re lt 2 0 17 su
Un iqu h o f M ic a nd Sp ort ten t o e r ea c us s c on n Pro im lat for x us p ms	~5 M ill ion	N. A.
Un iqu h o f s ing ts e r ea c po nso r ev en	~2 5 M ill ion	N. A.

Music

We are a proud and active sponsor of local music and cultural events: Bozar, Queen Elisabeth Music Chapel, Rock Werchter, les Ardentes, Dour, Pukkelpop and the Francofolies. In the summer of 2018, we reached more 527,000 unique visitors via our Proximus music platforms. Audiences were able to watch the live streaming of the festivals, on-demand concerts or the special reports (42% more than in 2017) while 20,000 customers and prospects participated in our contest to win tickets, and 62,000 people visited our booth at the festivals.

In 2018, we reconfirmed our partnership with the AB concert hall in Brussels, thereby reaching 300,000 visitors each year.

We also renewed our partnerships with the Brussels cultural and classical music houses De Munt (opera) and Bozar (mix of classical and modern concerts), reaching about 500,000 visitors per year. Proximus is also partner of the Queen Elisabeth Music Chapel supporting young music talents from all over the world and the QE contest that each year welcomes many international artists. By sponsoring the Klara festival (VRT) and Musiq'3 Festival (RTBF), Proximus is actively supporting the accessibility of classical music to larger audiences.

This music support includes big names but also smaller, more niche events and organizations that depend on the support of companies like us, and who are proponents of Belgian culture. This is something we wish to do more of in the future.

Sport

Football

In sports, we continue to sponsor three Pro league clubs: Brugge, Anderlecht and Charleroi (reaching about 1 million active foot fans). Proximus also confirmed title sponsorship of the First Division B football competition and added an eSports competition in 2018. We were also a proud sponsor of the Red Devils and actively supported the World Cup campaign by offering free data during the Red Devils' games. By doing so, we reached more than 1 million fans. Finally, we reinforced our engagement to women's football in Anderlecht and with the Red Flames.

Cycling

In cycling we remain main sponsor of the six Classic races in Flanders with excellent

Through our 15 races of the Proximus Cycling Challenge we reached 40,000 cycling fans in 2018, up 60% vs 2017

visibility during the Tour of Flanders (2 million viewers). We put extra focus on content on our Proximus platforms for the women's races and starter events in Antwerp and Ghent. We reinforced the Proximus Cycling Challenge by offering 16 high-quality races in all Belgian regions, also in the southern part of Belgium, reaching about 40,000 amateur cycling fans and participants (60% more than in 2017). Proximus remains a partner of the DVV cyclocross races (12 in total) that are watched for free on VRT with, on average, 300,000 viewers per race and 30,000 visitors on location.

Basket

In 2018, we extended our sponsorship of Spirou Charleroi basketball club for one season (2018-2019) and also started to develop other initiatives in the Spiroudôme, such as the organization of the first Proximus-ESL eSports championship in December 2018. This event had more than 1,000 visitors for its first edition and over 150,000 unique viewers watched on the Proximus eSports channel, marking a very promising start.

The future of Belgian sports

In the coming years, we will continue to actively sponsor sports in Belgium. It is for us a great cultural heritage and we will expand our reach as we can. This will come by making sure the content can easily be shared and watched by Belgian citizens through our platforms and by sponsoring more local events as well. Focus will remain on football and cycling, with extra attention being paid to women and youth active in these sports.

Media

As a telco company, we are deeply connected to our media landscape. As a major media distributor in Belgium, we offer a strong platform for local content, with over 96 local channels in our basic offer (72 local TV and 2 local radio channels).

In addition, we actively encourage Belgian co-productions and invested €2.6 million in local co-productions in 2018 (e.g. the third season of Versailles by ENTRE CHIEN & LOUP was broadcast on the Proximus platform and later by RTBF). We share sport rights (football,

cycling, basketball and hockey) with local media.

We are also actively contributing to ensure a better future for our local media industry, which is under pressure, by developing new advertising models and are aiming to improve our platforms and user interfaces in order to compete with international OTTs and other social media players.

In 2019, several co-productions that we invested in will be released, both in the Flemish and French-speaking parts of the country. For instance, Studio Tarara by Production House

Shelter will be broadcast by VTM, while the

second season of Ennemi Public by ENTRE

CHIEN & LOUP will be shown on RTBF, and

Our Proximus Art Collection counts 123 artists

and 520 contemporary art pieces. Of those

artists, 50 are Belgian. This collection started

in 1996. Every year, we promote one Belgian

artist and in 2018, this was Lara Gasparotto.

To share this collection with visitors in 2018,

we organized 27 guided tours and conferences

around our collection (compared to 25 in

many more.

Art

2017).

Proximus at a glance

Proud sponsor

of the Belgian Paralympic Committee

Social engagement

As a company strongly rooted in Belgium, we want to give back to society in a concrete and direct way. We do this by supporting local initiatives around our offices and other national projects.

*Materiality Matrix p. 27 In 2018, we continued our partnership with Be.Face by participating in solidarity campaigns with this network of socially responsible companies. By appealing to the individual generosity of employees and companies, collective operations were conducted, including a large-scale collection of warm clothing and blankets for the homeless. In addition, a "Solidarity Sandwiches" marathon was set up. In

partnership with Be.Face and in collaboration with other partner companies, Proximus participated in the sale of sandwiches for the benefit of associations in Saint-Gilles (Restos du Coeur) and the North district (Point 32, Vluchtelingenwerk Vlaanderen, Harmonie). Proximus also supports the cause of refugees and migrants. In collaboration with NGO's and various humanitarian organizations, we installed free Wi-Fi and Internet in buildings offering shelter to families who have left their own country. These are a building close to Maximilien Park (humanitarian hub of Médecins du Monde, the Belgian Red Cross, and Médecins Sans Frontières of Belgium); two Fedasil buildings in Ixelles and Neder-Over-Heembeek and two buildings of the Plateforme Citoyenne de Soutien aux réfugiés, in Jette and Schaerbeek. We also donated computers to this organization to equip the classrooms of the

As part of the Winter Plan, we made one of our buildings in Brussels available to accommodate 50 homeless people every

"Ecole Maximilien pour Adultes".

night, offering them a bed, a hot meal, breakfast and health, medical and social support.

We also continued our support of Télévie, CAP48 and the Belgian Paralympic Committee. ,

We supported 9 employee initiatives, by giving them authorization and space in our common areas to request support for their associations. And by collaborating with the Red Cross, we donated 244 litres of blood (compared to 282 in 2017).

In 2019, we will continue supporting Be.Face initiatives and will propose employees to associate team buildings activities to a good cause support.

Respecting our planet

Sustainability

Proximus at a glance

Respecting our planet

At Proximus, we think long-term and want to reduce our ecological impact. At our company, in our partnerships with suppliers, and in our innovations, we want to make a net positive contribution to our planet.

We take initiatives to remain CO2-neutral and to become more circular in terms of materials and energy. And from our suppliers, we demand the same commitment to sustainability.

we take our impact on environment

and we have set up concrete measures to reduce it

Proud to be CO2 neutral

Material Topic*: 3

*Materiality Matrix p. 27

Energy reduction, waste management, an ecological network, green mobility: at Proximus, we take our impact on the environment seriously and we have set up concrete measures to reduce that impact.

We are one of the few CO2-neutral telecom players in the world and we are proud to have a place in the CDP Supplier Engagement leader board. But that's just the beginning: we'll continuously push ahead by improving our own good practices and through digital innovation, to ensure Belgium remains a good place to live in, and to play our part in combatting climate change.

KP I	Re lt 2 0 1 8 su	Re lt 2 0 17 su
ic ity ic Ele d w h h c fro b le ctr use am e m ren ew a en erg y s ou rce s	9 9 %	9 8 %
Ca rbo l ity lev l fo ion nd tra t n n eu e r o wn op era s a bu ine l tra s ss ve	1 0 0 %	1 0 0 %
Ca rbo iss ion 1+ 2 1 c d t n e m s s cop e om pa re o iou pre s y ea r v	-1 2 %	-4 %
En ion d t 2 0 0 8 t erg y c on su mp co mp are o	-27 %	-24 %

1 The methodology and detailed fi gures can be found in the chapters "Transparency", "Carbon emissions and energy: boundaries, scope and methodology" and "Environmental fi gures".

We are one of the few telco operators in the world and the only Belgian one that is climate neutral since 2016

Our first and main initiative is to reduce our CO2 emissions. In 2007, we set a target of reducing our emissions by 70% for Belgian operations by 2020. We achieved that goal in 2015, which is why we set a new target of reducing our Group GHG scope 1 and 2 CO2 emissions by 30% between 2015 and 2025. By actively focusing on the energy efficiency of our own car fleet, buildings, networks and data centers, we contribute significantly to reducing CO2 emissions. Over the past eleven years, carbon emissions of scope 1 and 2 decreased by 75% and fell by 12% in 2018 compared with 2017. Energy consumption also continues to fall each year, by 27% over the past 10 years and by 5% compared with 2017. 99% of the electricity supporting our network, data centers and office buildings comes from renewable energy sources.

Managing the life cycle and environmental footprint of our network in a responsible way, despite the significant data growth, is ensured through several major programs, such as:

• Reducing our network's electricity consumption in a structured way by putting the emphasis on outphasing and power savings in network simplification projects, and by adopting more energyefficient systems and features, resulting in an additional 13 GWh saving in 2018.

Extending the lifespan of the network with innovative technologies.
Recycling or reusing all technical equipment after dismantling.
Drastically reducing journeys made by technicians through virtualization and remote installation, maintenance and repair technologies.

Green mobility for our employees

Transportation represents more than 60% of the remaining scope 1 carbon footprint, so our strategy is oriented towards a drastic reduction. First of all, we keep reducing employee commuting:

• The mobility budget promotes the shift to public transport. In 2018, over 2,000 employees opted for commuting solutions instead of parking spot1.

Telecom solutions to facilitate teleworking and work from home.
Gradual shift to carbon-friendly or carbon-neutral offices, always near public transport stations.

In addition, we are making our vehicles more carbon-friendly. In 2018, we had more than 200 lease bikes in place, launched the business bike concept for technicians and logistics, and replaced more than 1,330 "Euro-3, -4 and -5" technical vehicles by much more energy-efficient Euro-6 and CNG vehicles. Total fuel consumption fell by 3% compared with the previous year.

Green energy consumption

Since 2009, all electricity consumed for our operations in Belgium has come from renewable energy sources. For example, electricity from local wind energy is used at Proximus' head office. The 100% renewable energy consumption also applies to Telindus' operations in the Netherlands and our Telindus and Tango operations in Luxembourg. In addition, a growing number of BICS sites worldwide are switching to renewable energy. This means we used up to 99 % electricity

from renewable energy sources in 2018. We joined the RE100 initiative to reinforce our commitment to 100% renewable power.

While we are continuing our efforts to reduce our emissions, we have also been climateneutral for our own operations since 2016. This is achieved by offsetting what we cannot reduce yet by originating and supporting international Gold Standard projects that fight global warming.

Green clients

We help our customers reduce their impact on the environment by maintaining a sound balance between ensuring a long life for our TV decoders and modems and rolling out energy-efficient devices, with a reduction in average consumption of 41% over the past four years.

Proximus provides many products and services that can help other organizations reduce their environmental footprint.

Green overall

We are also working on reducing our indirect scope 3 emissions. With a target of -10% by 2025 and -50% by 2040, since 2014 we

¹ Representing 53% of people with a mobility plan/ company car

As a responsible company, Proximus makes efforts to reduce waste

and recycle resources

and will continue doing what it takes to close the circle

Part of the circular economy

Material Topic*: 4

The current economic system of "take, make, waste" has reached its limits. We are rapidly shifting towards a more circular economy, requiring fewer resources and producing less waste.

At Proximus we are actively contributing to this circular economy, both in-house and together with our customers. As a responsible telecoms player, we make efforts to reduce waste and recycle resources, and will continue to do whatever it takes to close the circle.

Proximus' activities in Belgium in 2018 generated 14,700 tons of waste, including 13% residual waste which was converted into electricity and heat energy in waste treatment facilities. The remaining 87% was recycled, reused or reprocessed and consisted of 41% of stones and sand from our network activities, for 29% of glass, plastic, metal, paper, wood, batteries, toners and various items, and for 17% electronic waste.

The MIDAS project, which has been running for several years, is aimed at recycling as many valuable resources as possible from network installations. Over the past two years, more than 2,000 tons of copper cable were recovered from old exchanges and/or the earth and thousands of tons of various

KP I	Re lt 2 0 1 8 su	Re lt 2 0 17 su
Pe f w le d, r d o nta ast rce ge o e r ecy c eu se r d ste com po	8 7 %	8 5 %
Co llec d m b ile ho te o p ne s	1 8, 27 9	1 8, 4 9 3
Re fur b is he d m de d TV de de o ms an co rs	4 0 5, 5 44	3 2 2, 1 9 4

items of electronic equipment were recycled. Through these activities, we bring valuable metals back into business.

Besides our internal efforts, we also signed, in 2017, the Green Deal Circular Purchasing

of Circular Flanders. Our deal involves setting up two circular procurement projects and sharing each other's best practices with all other signatories. In 2018, we introduced two projects being the TV decoder and reuse of the installation and equipment of technical vehicles.

*Materiality Matrix p. 27 by 4% and use of sold products by 18%. However, as we're fully investing in the transformation of our network, indirect emissions relating to purchased goods and services and capital goods increased by 9%, and waste generated through operations by 12%.

have managed to reduce emissions relating

to employee commuting by 17%, business

travel by 20%, journeys by subcontractors

by 54%, fuel- and energy related activities

Our very ambitious reduction targets are in line with climate science and are approved by the Science Based Targets initiative. Reaching these targets will be achieved through multiple initiatives and plans: further migration of our network, continuous green fleet and logistics improvement, office-building optimization, energy efficiency improvement of end-user devices and carbon footprint reductions of procured products and services.

Bringing valuable metals back into business

Next, we also run an initiative in our shops and in schools to recycle phones. Anyone can come into a shop and ask for their electronic device to be recycled. In return, we donate €1 to Bednet or Take Off. In schools, we work with GoodPlanet Belgium to raise children's awareness of the life cycle of mobile phones. They can then bring in their devices to be recycled and we reward schools with refurbished computers in exchange for their help. In 2018, we recycled over 9,000 phones in 95 schools and shops and rewarded schools with 156 refurbished laptops, desktops or tablets.

These initiatives show our commitment to being circular, but because we know we need to go one step further, we are developing a multi-year plan to become a circular company.

For the future, we have set clear goals on our waste management. We intend to recycle as much as 90% by 2025.

We also want to reach the target of 200,000 collected phones in schools by 2020 in collaboration with GoodPlanet Belgium.

Finally, a new project, GoodSchool DigiTool, was launched in September 2018 in partnership with GoodPlanet Belgium to increase children's awareness of sustainability matters such as waste, mobility, food and energy, by using our LoRa IoT technology.

Sustainable supply chain

Material Topic*: 13

If we want to tackle climate change, we need everyone to do their part. As a company with hundreds of suppliers, we're taking our responsibility in building a sustainable supply chain.

By working closely with our suppliers and demanding they meet a set of strict sustainability standards and clauses, we can further reduce our impact and contribute to a better world.

Each year, Proximus works with some 4,000 suppliers of products or services, mainly in the fields of ICT and technology, and together we endeavor to improve social and environmental (SE) standards throughout the supply chain. This can be achieved by raising the suppliers' SE performance and improving their own supply chain management, while also increasing our own efficiency. Suppliers are essential in our operations to provide products and services. However, having close ties with suppliers implies that their reputation could impact on ours. We undertake to treat suppliers fairly and equally, and to promote relationships of trust with both existing and potential suppliers. Moreover, we expect our

KP I	Re lt 2 0 1 8 su	Re lt 2 0 17 su
Pe f s l ier d u ing ia l nta rce ge o up p s s cre en e s so c ( ite ia inc l. w k ing nd it ion hu ig hts cr r or co s, ma n r , ) w ive ilve it ion ho d a ld r etc re ce s r o r g o eco gn lev l 1 e	8 7 %	8 5 %
Pe f s l ier d u ing nta rce ge o up p s s cre en e s iro l cr ite ia w ho ive d a ilve ta en v nm en r re ce s r o r it ion 2 ld r lev l go eco gn e	8 3 %	8 2 %

1 Based on the EcoVadis assessment.

2 Based on the EcoVadis assessment.

suppliers to subscribe to our social, ethical and environmental principles. We will not work with parties who do not adhere to the same standards as we do.

As far as our suppliers are concerned, we integrate SE standards on labor, ethics, safety and the environment into our purchasing processes. By so doing, we not only improve

*Materiality Matrix p. 27

In 2018, 100% of our contracts contained a CSR clause

requiring vendors and their supply chains to respect and comply with worldwide social, ethical and environmental standards

our brand image but, above all, we bring about positive change in the communities in which our suppliers operate.

Those standards serve as supplier selection criteria and are included in all contracts through the CSR clause, which covers topics such as child labor, forced labor, health and safety legislation and protection of the environment. In 2018, 87% (85% in 2017) of our new suppliers were assessed against various social criteria, and 83% (82% in 2017) against various environmental criteria. We have standard RFx documents for the purchase of IT and terminal equipment with

relevant sustainability criteria, including a clause prohibiting the use of conflict minerals.

In addition to the original assessment, and on the basis of purchase value and strategic relevance, suppliers are selected to take part in a CSR assessment and/or audit. Such audits may entail an on-site audit at the premises of the supplier or their subcontractors, usually in China or India. Suppliers with a specific risk profile, or with a high contract value, are assessed for their CSR performance using the EcoVadis platform (http://www.ecovadis. com/). In 2018, CSR supplier scorecards were compiled for 40% of the total purchase amount. Of those 121 suppliers, 83% received a positive score for environmental risks and 87% for working conditions and human rights (thus leaving 16 suppliers having potential negative social impact and 20 having potential negative environmental impact). Proximus, as a supplier, has itself received a high rating for several years; since 2018 it has been granted the Gold label with a score of 67%. Our target is to have 75% of suppliers with a positive rating within 5 years.

Proximus, together with 15 other telecom operators, representing over 50% of worldwide telecom turnover, is a member of the Joint Audit Cooperation (JAC, http:// jac-initiative.com/). In 2018, 91 on-site company audits were conducted worldwide in collaboration with JAC, each of them resulting in an improvement plan. The purpose of the audits is to monitor, assess and develop the CSR standards of production sites of large ICT multinationals.

Proximus received 121 CSR supplier scorecards and conducted nine audits in 2018. Five other suppliers will be audited in 2019. The CSR selection and qualification process is described in detail on the Suppliers Portal.

In the event of one of our suppliers not passing the audit or obtaining a negative EcoVadis score, we invite them for re-assessment the next year. In 2018, 100% of our contracts contained a CSR clause. This clause requires vendors and their supply chains to respect and comply with worldwide social, ethical and environmental standards.

In 2019, every new supplier will have to complete a CSR survey and reach a predefined level of CSR compliance.

Governance and compliance, safeguarding long-term value

Governance and compliance, safeguarding long-term value

C t t t t o r p o r a e g o v e r n a n c e s a e m e n	6 8
R l f k t e g u a o r y r a m e w o r	8 5
i R k t t s m a n a g e m e n r e p o r	9 1
P i h r o m s s a r e x u	9 9
R i t t e m n e r a o n r e p o r u	1 0 0

Appendix

Corporate governance statement

Corporate governance aims to define a set of rules and behaviors according to which companies are properly managed and controlled, with the objective of increasing transparency. It is a system of checks and balances between the shareholders, the Board of Directors, the Chief Executive Officer and the Executive Committee. Proximus is committed to comply with the legal and regulatory obligations and best practices.

Proximus governance model

At Proximus, we know that doing business the right way is our license to operate. We never want to be put at the center of ethical dilemmas and we put the right measures in place to ensure our business is conducted ethically. This first means having a clear governance model, which for us, as a limited liability company under public law, is imposed by the Law of 21 March 1991 on the reform of certain autonomous economic public companies ("the 1991 Law"). For matters not explicitly regulated by the 1991 Law, Proximus is governed by Belgian Company Code and the 2009 Belgian Corporate Governance Code.

The key features of Proximus' governance model are:

• a Board of Directors, which defines Proximus' general policy & strategy and supervises operational management

an Audit & Compliance Committee, a Nomination & Remuneration Committee, and a Transformation & Innovation Committee (formerly Strategic & Business Development Committee) created by the Board within its structure
a Chief Executive Officer (CEO) who takes primary responsibility for operational management including, but not limited to, day-to-day management
an Executive Committee which assists the CEO in the exercise of her duties
Proximus designates the 2009 Belgian Code on Corporate Governance as the applicable Code (www. corporategovernancecommittee.be).

We not only follow the law but want to ensure every one of our collaborators is aware of the behaviours to follow and avoid. Therefore, Proximus adopted its new Code of Conduct

in 2016, applicable to all employees. Until now, 93% of Proximus employees followed a mandatory training on the application of the principles of the Code of Conduct. On top of this, we have various internal policies to make sure our employees conduct their business ethically.

Board of Directors

Since the modified 1991 Law and the changes to the bylaws in April 2016, the following principles apply:

All Directors are appointed by the Shareholders' Meeting with 50% + one vote, upon proposal by the Board from those candidates withheld by the Nomination & Remuneration Committee
Any shareholder holding at least 25% has the right to propose a number of Directors proportionate to its shareholding
All Directors other than the CEO and those appointed through the aforementioned nomination right are independent. In any case there must be 3 independent Directors according to the criteria of article 526ter of the Belgian Company Code and of the Belgian Corporate Governance Code
The Board is composed of maximum fourteen members
Directors are appointed for a maximum term of four years. Mandates are renewable but there is a maximum term of in total 12 years for independent Directors.

Today, the Board is composed of fourteen members. Seven Directors are appointed by the Belgian State in accordance with the previous version of the 1991 Law. Their mandates expire at the end of their term, except in case of early termination by the Shareholders' Meeting. The other seven Directors are independent as per article 526ter of the Belgian Company Code and of the Belgian Corporate Governance Code.

Proximus is proud of a substantial female representation on its Board of Directors. This composition and the complementary expertise and skills of all directors create a dynamic which benefits the good management of the company.

Composition of the Board of Directors

On 18 April 2018 Mrs. Agnès Touraine and Mrs. Catherine Vandenborre were reappointed for a new mandate of four years.

Members of the Board of Directors appointed by the Belgian State under the previous version of the 1991 Law

Na me	Ag e	it ion Po s	Te rm
Ste faa n D E C LE R C K	6 7	C ha irm an	2 0 1 3 - 2 0 1 9
Do in iqu LE R O Y m e	5 4	C h ie f E ive O ff ice ut xec r	2 0 14 2 0 2 0 -
Ka l D E G U C HT re	6 5	D ire cto r	2 0 15 2 0 21 -
Ma ine D U RE Z rt	6 8	D ire cto r	1 9 9 4 - 2 0 1 9
La LE VA U X nt ure	6 3	D ire cto r	2 0 1 3 - 2 0 1 9
Isa be lle S AN TE N S	5 9	D ire cto r	2 0 1 3 - 2 0 1 9
Pa l V AN D E P ER RE u	6 6	D ire cto r	1 9 9 4 - 2 0 1 9

Members of the Board of Directors appointed by the General Shareholders' Meeting

Na me	Ag e	it ion Po s	Te rm
P ier DE MU EL EN AE RE re	6 0	Ind de D ire nt cto ep en r	2 0 11 2 0 21 -
Gu ido J. M. DE MU YN C K	6 8	Ind de D ire nt cto ep en r	2 0 0 7 - 2 0 1 9
Ma in DE PR Y C KE R rt	6 4	Ind de D ire nt cto ep en r	2 0 15 2 0 1 9 -
Ta ja RA ND ER Y nu	5 2	Ind de D ire nt cto ep en r	2 0 1 6 - 2 0 2 0
ès Ag T O U RA INE n	6 4	Ind de D ire nt cto ep en r	2 0 14 2 0 2 2 -
Ca th ine VA ND EN B O RR E er	4 8	Ind de D ire nt cto ep en r	2 0 14 2 0 2 2 -
Lu VA N D EN H O VE c	5 9	Ind de D ire nt cto ep en r	2 0 1 6 - 2 0 2 0

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 holds five regularly scheduled meetings annually.

The Board of Directors also yearly discusses and evaluates the strategic long-term plan in an extra meeting.

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 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 stipulates, 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.

Files on important decisions are prepared by standing or ad hoc Board Committees, with significant representation of non-executive, independent Directors within the provisions of Article 526ter of the Belgian Company Code.

Committees of the Board of Directors

Proximus has an Audit & Compliance Committee, a Nomination & Remuneration Committee and a Transformation & Innovation Committee (formerly Strategic & Business Development Committee).

Audit & Compliance Committee

The Audit & Compliance Committee (ACC) consists of five non-executive Directors, the majority of whom are independent. In line with its Charter, the Committee is chaired by an independent Director.

The Audit & Compliance Committee's role is to assist and advise the Board of Directors in its oversight of:

The financial reporting process
Efficiency of the systems for internal control and risk management of the company
The company's internal audit function and its efficiency
The quality, integrity and legal control of the statutory and the consolidated annual accounts and the financial statements of the company, including the follow-up of questions and recommendations made by the auditors
The relationship with the company's auditors and the assessment & monitoring of the independence of the auditors
The company's compliance with legal and regulatory requirements
Compliance within the company with the company's Code of Conduct and the Dealing Code.

The Audit & Compliance Committee meets at least once every quarter.

The members of the Audit &Compliance Committee are: Messrs. Guido J.M. Demuynck (Chairman), Stefaan De Clerck, Pierre Demuelenaere, Paul Van de Perre and Mrs. Catherine Vandenborre.

A majority of the members of the Audit & Compliance Committee have extensive expertise in accounting and audit. The Chairman of the Audit & Compliance Committee, Mr. Guido J.M. Demuynck, holds a degree in Applied Economics. Mrs. Catherine Vandenborre holds a degree in Business Economics as well as degrees in Tax and Financial Risk Management. Mr. Paul Van de Perre holds a Master's degree in Economics and several postgraduate degrees. The Chairman and the majority of the members exercised several Board or executive mandates in large Belgian or international companies.

Nomination & Remuneration Committee

The Nomination & Remuneration Committee (NRC) consists of five Directors, the majority of whom are independent. In line with its Charter, this Committee is chaired by the Chairman of the Board of Directors, who is an ex -officio member.

The Nomination & Remuneration Committee's role is to assist and advise the Board of Directors regarding:

The nomination of candidates for appointment to the Board of Directors and the Board Committees
The appointment of the CEO and of the members of the Executive Committee on proposal of the CEO
The appointment of the Secretary General
The remuneration of the members of the Board of Directors and the Board Committees
The remuneration of the CEO and members of the Executive Committee
The annual review of the remuneration concept and strategy for all personnel, and specifically the compensation packages of the Leadership Team
The oversight of the decisions of the CEO with respect to the appointment, the dismissal and the compensation of Management
The preparation of the Remuneration report and the presentation of that report at the Annual General Shareholders' Meeting
Corporate governance matters.

The Nomination & Remuneration Committee meets at least four times per year.

At the beginning of each year, the Committee reviews the performance, budgets for pay-out of bonuses and merits, and long-term and short-term incentive plans. At that meeting, the concept and strategy of the remuneration policy is also discussed. The Committee determines the performance measurement targets of the CEO and the members of the Executive Committee through Key Performance Indicators.

The members of the Nomination & Remuneration Committee are: Messrs. Stefaan De Clerck (Chairman), Pierre Demuelenaere, Guido J.M. Demuynck, Martin De Prycker and Mrs. Martine Durez.

Transformation & Innovation Committee (formerly Strategic & Business Development Committee)

The Transformation & Innovation Committee (TIC) consists of a maximum of six Directors. In line with its Charter, the Chairman of the Board of Directors is ex officio member, and the Committee is presided by the Chairman of the Board of Directors. Three members are appointed among the independent Directors.

The Transformation and Innovation Committee is a permanent committee of the Board, discussing those selected files that need preparatory reflection and need to mature before being brought to the Board for decision. The topics discussed at the Transformation and Innovation Committee may be of diverse nature and will evolve overtime depending on the company's needs and could deal with matters concerning a.o. technology, network, branding/marketing, transformation, HR skills, digitalization…

If appropriate, the Board of Directors can decide on establishing a special ad hoc Committee, dealing with a specific subject and composed of members with the appropriate experience.

The members of the Transformation & Innovation Committee are: Messrs. Stefaan De Clerck (Chairman), Karel De Gucht, Martin De Prycker, Luc Van den hove, Mrs. Tanuja Randery and Mrs. Agnès Touraine.

Deviation from the 2009 Belgian Corporate Governance Code

Proximus complies with the 2009 Belgian Corporate Governance Code, with the exception of two deviations, which were imposed under the former 1991 Law. These deviations will cease to exist as from the expiry of the mandate of the last Director appointed by the Belgian State.

The 2009 Belgian Corporate Governance Code states that the term of a board mandate should not exceed maximum four years. However, the mandates of the Directors who were appointed by the Belgian State in the past expire after six years as prescribed by the former article 18 paragraph 3 of the 1991 Law. As from 2016, all Directors are appointed for a term of 4 years.

The 2009 Belgian Corporate Governance Code states that the Board of Directors appoints its Chairman. The current Chairman was appointed by the Belgian State by Royal

Decree in the Council of Ministers in accordance with the former article 18 paragraph 5 of the 1991 Law. The next Chairman will be appointed by the Board of Directors from amongst its members.

Conflict of interest

A general policy on conflict of interest applies within the company. It prohibits the possession of financial interests that may

On 24 February 2011, the Board adopted a "related party transactions policy" which was updated in September 2016, which governs all transactions or other contractual relationships between the company and its Board members.

In accordance with article 523 of the Belgian Companies Code, the CEO, Mrs. D. Leroy, declared during the Board of Directors of 1 March 2018 to have a conflict of interest in connection with her performance evaluation for 2017, item on the agenda of that Board meeting.

Proximus has contractual relationships and provides also telephony, Internet, digital and/ or ICT services to many of the companies in which Board members have an executive or non-executive mandate. These transactions take place in the ordinary course of business and at arm's length.

Activities Report of the Board and Committee meetings

In 2018, seven meetings of the Board of Directors were held, five meetings of the Audit & Compliance Committee, four of the Nomination & Remuneration Committee and two of the Transformation & Innovation Committee.

A list with the attendance of the members is included in the Remuneration report.

Insider trading and market manipulation (market abuse)

In order to comply with legislation on insider trading and market manipulation, Proximus adopted a Dealing Code prior to the Initial Public Offering. This Code aims to create awareness about possible improper conduct

by employees, officers and Directors and possible sanctions. This Dealing Code has been widely communicated and is available to all employees. A list of key persons is kept, and all Directors and key employees were requested to sign an affidavit that they had read, understood and agreed to comply with the Dealing Code. Closed periods (including prohibited periods) are defined and any deal must be communicated to and cleared by the Director Internal Audit & Risk Management before transaction (see "Compliance" section on p.82).

Evaluation of the Board

At the end of 2016, the Board of Directors started an external Board evaluation together with Guberna. The Board members were invited to answer an extensive questionnaire, followed by an interview between Guberna and each individual Board member. The Board members were asked their opinion on corporate governance at Proximus, the functioning of the Board and of the committees. Guberna concluded in 2017 that the assessment was overall positive and identified as main strengths a well-balanced composition of the Board, the high quality of information flow to the Board, a Board culture stimulating the decision-making in the interest of the company and an excellent leadership by the Board's Chair.

As a result of the evaluation, the Board reflected on the role of the 'Strategic and Business Development Committee' and decided to change this as of 2018 into a 'Transformation & Innovation Committee', which is a permanent committee of the Board, discussing those selected files of diverse nature that need preparatory reflection and need to mature before being brought to the Board for decision. This Committee will be convened at the request of the Chairman or the Board whenever required by the interest of the company.

As a further action point from the Board evaluation, the Board decided to strengthen the reporting from the committees and to review and update the delegation from the Board to the CEO which was last published in 2006. The new delegation was published in the appendices to the Belgian Official Gazette on 23 May 2018.

The Board of Directors will examine in 2019 how to prepare its renewed composition taking into account the new legal framework.

Executive Committee

Chief Executive Officer

The CEO was appointed by the Belgian State by Royal Decree deliberated in the Council of Ministers, in accordance with the provisions of the previous version of the 1991 Law. Future CEO's will be appointed by the Board of Directors, deciding by a normal majority vote.

In line with the 1991 Law and the company's bylaws, the CEO is a member of the Board of Directors. The CEO and the Chairman of the Board of Directors must come from different language groups.

The CEO is entrusted with day-to-day management and reports to the Board of Directors.

The Board of Directors has delegated broad powers to the CEO.

The current CEO is Mrs. Dominique Leroy. Her renewable six-year fixed term contract started on 13 January 2014.

Executive Committee members

The members of the Executive Committee are appointed and dismissed by the Board of Directors at the proposal of the CEO, after consultation of the Nomination & Remuneration Committee.

The powers of the Executive Committee are determined by the CEO. The Executive Committee's role is to assist the CEO in the exercise of her duties.

The Executive Committee aims to decide by consensus, but in the event of disagreement, the view of the CEO will prevail.

The Executive Committee generally meets on a weekly basis.

In 2018, the Executive Committee, in addition to the CEO, was composed of the following members:

Na me	Ag e	it ion Po s
Gu illa B O U TIN um e	44	C h ie f Co r M ket O ff ice nsu me ar r
Sa nd ine D U F O U R r	5 2	C h ie f F ina ia l O ff ice nc r
D irk LY BA ER T	5 8	C h ie f Co Aff irs O ff ice rat rpo e a r
Ge S TA ND AE RT ert	4 8	C h ie f T hn log O ff ice ec o y r
Re d TIL MA N S na u	5 0	C h ie f Cu Op ion O ff ice sto t me r era s r
Ja n V AN A C O LE YE N	5 6	C h ie f H Re O ff ice um an sou rce s r
Ba rt V AN D EN M EE R S C HE	6 1	C h ie f E ise Ma rke O ff ice nte t rpr r

Board of Auditors

Composition

The Board of Auditors of the company is composed as follows:

Deloitte Auditors SC sfd SCRL, represented by Mr. Michel Denayer also Chairman of the Board of Auditors
Mr. Jan Debucquoy, Member of the Court of Auditors
Mr. Pierre Rion, Member of the Court of Auditors
CDP Petit & Co SPRL, represented by Mr. Damien Petit

Deloitte Auditors SC sfd SCRL, represented by Mr. M. Denayer and Mr. N. Houthaeve, are responsible for the audit of the consolidated financial statements of Proximus and its subsidiaries.

The other members of the Board of Auditors are, together with Deloitte, entrusted with the audit of the non-consolidated financial statements of Proximus as parent company.

The mandates of Deloitte Auditors SC sfd SCRL and CDP Petit & Co SPRL will expire at the annual General Shareholders Meeting in 2022.

Additional fees paid to the auditors

In accordance with the provisions of Article 134 § 2 of the Belgian Company Code, Proximus declares the supplementary fees that it granted during the 2018 financial year to two auditors, members of the Joint

Auditors: Deloitte Auditors SC sfd SCRL and and CDP Petit & Co SPRL.

The Group spent during the year 2018 an amount of 453,909 EUR for non-mandate fees for Deloitte Auditors SC sfd SCRL, the Group's auditors. This amount is detailed as follows:

Amount spent by the Group for non-mandate fees for Deloitte Auditors SC sfd SCRL

( ) in EU R	Au d ito r	Ne k o f a d ito tw or r u
Ot he da d it m iss ion to r m an ry au s	5 0, 3 2 0	4 2, 9 7 2
Ta dv ice x a
Ot he iss ion r m s	6 6, 8 75	2 9 3, 74 2
To l ta	117 1 9 5 ,	3 3 6, 71 4

The Group also spent during the year 2018 an amount of 1,557 EUR for non-mandate fees paid to CDP Petit & Co SPRL. This amount is detailed as follows:

Amount spent by the Group for non-mandate fees for CDP Petit & Co SPRL (in EUR) Auditor Other mandatory audit missions 1,557 Tax advice Other missions Total 1,557

Members of the Board of Directors

Mrs. Dominique Leroy has been Chief Executive Officer since January 2014 and presides over the Executive Committee of Proximus. She joined Proximus (formerly Belgacom) as Vice President of Sales for the Consumer Business Unit in October 2011 and was appointed Executive Vice President of the Consumer Business Unit of Proximus in June 2012.

Prior to Proximus, Mrs. Leroy worked for 24 years at Unilever. She was Managing Director of Unilever Belux and member of Unilever's Benelux Management Committee. She previously held various positions in marketing, finance and customer development.

Mrs. Leroy is Chairwoman of the Boards of BICS and Be-Mobile and Chairwoman of the International Advisory Board of the Solvay Business School. She is an independent Board member at Ahold Delhaize and Compagnie de Saint-Gobain. She was also independent Board member at Lotus Bakeries until May 2018.

Mrs. Leroy holds a Master's degree in Business Engineering from the Solvay Business School.

Stefaan DE CLERCK

Mr. Stefaan De Clerck is Chairman of the Proximus Board of Directors since 20 September 2013. He chairs the Proximus Joint Committee, the Proximus Pension Fund and the Proximus Art ASBL/VZW. He is board member of the Proximus Foundation and of Connectimmo. He is also member of the Orientation Council of Euronext, of the Strategic Committee of FEB/VBO, of the Board of VOKA, of the BBR (Benelux Business Roundtable) and of the Bureau of Eurometropole Lille-Kortrijk-Tournai. Before Proximus, he served as a Member of the Belgian Parliament from October 1990 until October 2013. From June 1995 until April 1998 and from December 2008 until December 2011 he was the Belgian Minister of Justice. From 1999 until 2003 he was President of CD&V, the Flemish Christian-Democratic Party. He was the Mayor of the city of Kortrijk (Belgium) from January 2001 until end-December 2012. Mr. De Clerck holds a Master's degree in Law from the Catholic University of Leuven.

Mr. Karel De Gucht, State Minister, was the European Commissioner for Trade from February 2010 until 31 October 2014, where he was pivotal in negotiating, concluding and managing several European Free Trade and Investment Agreements worldwide. Previously he served as Belgium's Minister of Foreign Affairs from 2004 to 2009, Deputy Prime Minister from 2008 to 2009, and as European Commissioner for International Cooperation, Humanitarian Aid and Crisis Response from 2009 to 2010. Currently he is the President of the Institute for European Studies (IES) at the Vrije Universiteit Brussel (VUB) – his alma mater (Masters of Laws, 1976) and where he teaches European Law. He serves as a Director on the Boards of ArcelorMittal SA, of EnergyVision and is a Member of the Advisory Board of CVC Capital Partners. He is also the manager of a family-run wine producing company in the Chianti region (Italy).

Appendix

DEMUELENAERE

Until 31 August 2015, Mr. Pierre Demuelenaere was President and CEO of I.R.I.S. (Image Recognition Integrated Systems), a company he co-founded in 1987 to commercialize the results of his PhD.

Mr. Demuelenaere has more than 30 years of experience in Imaging and Artificial Intelligence. He has accumulated solid experience in technology company management, R&D management and setting up international partnerships with US and Asian companies (HP, Kodak, Adobe, Fujitsu, Samsung, Canon, etc.).

Throughout the years, he remained very involved in defining the R&D vision of I.R.I.S and contributed to the development of new technologies, new products and the filing of a number of patents.

Mr. Demuelenaere received the "2001 Manager of the Year" award and I.R.I.S. the "2002 Company of the Year" award. In 2008, Data News elected him as ICT personality of the year. He is a member of the Board of directors of Guberna and also Chairman of the Board of Directors of EVS Broadcast Equipment. He served for 7 years as a director on the Board of BSB, an insurance and banking software company, for 23 years on the Board of Pairi Daiza and for 10 years on the Board of e-capital, a Venture Capital Fund.

In 2013, Pierre Demuelenaere successfully negotiated the acquisition of I.R.I.S. Group by Canon. The company has now become a member of the Canon Group.

Mr. Demuelenaere holds a Civil Engineering degree in Microelectronics from the Université Catholique de Louvain (UCL) and received his PhD in Applied Sciences in 1987.

Until December 2010, Mr. Demuynck was CEO of Liquavista. Before that, he held various positions within Royal Philips Electronics NV from 1976 until 2002. Amongst others, he was Vice President Marketing Audio in the USA, CEO of Philips in South Korea, General Manager Line of Business Portable Audio in Hong Kong, and CEO Group Audio in Hong Kong.

Guido J.M.

DEMUYNCK

In 2000, he became CEO Product Division Consumer Electronics in Amsterdam and member of the Group Management Committee of Philips.

In 2003, Mr. Demuynck joined Royal KPN where he became member of the Board of Management and CEO of the Mobile Division (KPN Mobiel Netherlands; Base Belgium, E-Plus Germany). Until July 2008, he was CEO of Kroymans Corporation BV in the Netherlands. He was a member of the Supervisory Board of TomTom from June 2005 until April 2016. In addition, he has been a Board member of Teleplan International N.V. since May 2011, of Aito BV since January 2012 and of Wizz Air Holding Plc since March 2014.

He holds a degree in Applied Economics from the University of Antwerp (UFSIA) and a degree in Marketing from the University of Ghent (R.U.G).

Mr. De Prycker is a managing partner of the Qbic Fund, an inter-university fund of 100 million euro, supporting university spin-off companies in Belgium. Mr. De Prycker was CEO of Barco between 2002 and 2009. Under his leadership he focused on, and made the company grow in, markets using displays such as the medical, digital cinema, control and airline industry, and spinning off the non-core product lines such as graphics, textile and subcontracting. Prior to that, he was CTO and member of the Executive Committee of Alcatel-Lucent. Before becoming CTO of Alcatel-Lucent, Mr. De Prycker was responsible for establishing the company's worldwide market leadership in the broadband access market. Under his leadership, ADSL was transformed from a research project into a multibillion dollar business for Alcatel-Lucent. Between 2009 and 2013 Mr. De Prycker was CEO

of Caliopa, a startup in silicon photonics, allowing the transport of hundreds of Gbps on optical fiber; Caliopa was acquired by Huawei in 2013.

He is also a member of the Board of directors of several companies, including EVS, Sentiance, Molecubes and EYEco eyeCO.

Mr. De Prycker holds a Ph.D. in Computer Sciences, a Master of Science in Electronics from the University of Ghent, as well as an MBA from the University of Antwerp.

Mrs. Durez served as Chief Financial and Accounting Officer at bpost until January 2006, when she became Chairman of the Board, a position she held until June 2014. She is a member of the Board of directors of several companies, including Ethias Co and SNCB (Belgian Railways).

Mrs. Durez was also Professor of Financial Management and Analysis at the University of Mons-Hainaut until 2000. She has also served as a member of the High Council of Corporate Auditors and the Committee of Accounting Standards and as a special emissary at the Cabinet for Communication and State Companies.

She has been a member of the Royal Academy of Belgium (Technology and Society Action) since 2010. She served as a regent of the National Bank of Belgium.

Mrs. Durez graduated as a Commercial Engineer and holds a PhD in Applied Economics from the University of Brussels (ULB).

A 'magna cum laude' graduate in Economics at UCL (Louvain-la-Neuve), Mr. Levaux began his career at the age of 22 at the head of a small struggling company in Liège, at the time employing some 100 people. Four years later the company was turned around, developed, and was merged with a large international group.

Laurent

LEVAUX

He next obtained an MBA from the University of Chicago (1985) before going to work for McKinsey & Co, where he spent some 10 years, the last four as a partner, undertaking strategic and restructuring assignments throughout Europe.

In 1995 he joined the Executive Committee of Belgian steel group Cockerill-Sambre as head of its non-steel subsidiaries, in particular CMI, a lossmaking company, where he was CEO. When he left CMI in February 2003, it was a debt-free, growing and profitable engineering and maintenance Group. In March 2003, Mr. Levaux became CEO of ABX Logistics, a multinational logistics group, operating in over 30 countries and headquartered in Belgium. It was a company which had suffered heavy losses since its creation in 1998.

Since 2003, the results have been constantly improved to reach a level that is among the industry's best. In October 2008, ABX Logistics merged with the Danish Group DSV, quoted in Copenhagen.

From October 2008 until June 2016, Mr. Levaux has been Chairman and CEO of Aviapartner. In June 2016 he handed over his daily operational duties as CEO and remains Chairman of the Board. Headquartered in Brussels, Aviapartner is a leading player in ground-handling services for passengers in 38 European airports.

Mr. Levaux is also a director of bpost, FN Herstal, Investsud, Interparking, Sogepa and Hamon.

Mrs. Tanuja Randery is an Operating Advisor to private equity firms and was most recently with Apax Partners in London. Before Apax, she was CEO, UK & Ireland for Schneider Electric the global energy management and automation firm, since February 2015. Prior to Schneider, she spent more than 10 years in telecom and Managed Services at Colt Technology Services, a leading pan-european telecoms provider, and most recently at BT Global Services, a €7.0Bn business, as President of Strategy & Transformation. While at Colt, Mrs. Randery led Strategy, Global Accounts, and was also Managing Director of the Benelux business during 2006- 2008.

Prior to joining Colt, Mrs. Randery led the Strategy function at EMC Corporation in Massachusetts, USA and was instrumental in a number of key software acquisitions.

Mrs. Randery started her career at McKinsey, the global strategy consulting firm where she spent 7 years specializing in technology and telecoms growth strategy serving leading global companies. Mrs. Randery graduated from Boston University with an MBA and has an undergraduate degree in Economics. She was born and raised in India and now lives in the UK with her husband and son.

Appendix

TOURAINE

Mr. Luc Van den hove is President and Chief Executive Officer (CEO) of imec since July 1, 2009. Before holding this position, he was Executive Vice President and Chief Operating Officer. He joined imec in 1984, starting his research career in the field of interconnect technologies. In 1988, he became manager of imec's micro-patterning group; in 1996, Department Director of Unit Process Step R&D; and in 1998, Vice-President of the Silicon Process and Device Technology Division. In January 2007, he was appointed as imec's Executive Vice President & Chief Operating Officer (COO).

Under his guidance imec has grown to an organization with a staff of around 4000 people, operating with an annual budget of around €545M (2017) and with offices in Belgium, the Netherlands, US, Japan, Taiwan, China and India.

Currently, Mr. Luc Van den hove is also professor of Electrical Engineering at the University of Leuven. He is also a member of the Technology Strategy Committee of ASML. He has authored or co-authored more than 150 publications and conference contributions. He is a frequently solicited speaker on technology trends and applications for nano-electronics at major top conferences. He has presented more than 50 key note presentations. Mr. Luc Van den hove received his Ph.D. in Electrical Engineering from the University of Leuven, Belgium.

Mrs. Isabelle Santens was the previous owner and Design Director of Labels of Andres NV, a Belgian fashion company that designs, produces and distributes the ladies clothing brands Xandres, Xandres xline and Hampton Bays. After studying geography and economics at the KUL,

Isabelle

SANTENS

she joined Andres NV in 1985, became Director of Design and then CEO in 2000 until she sold the company to a French listed Company in 2016. She turned Andres NV from a mere productionoriented facility into a sales and marketing-driven fashion company with a focus on building strong brands, opening pilot stores and building a strong e-commerce site. She is also a Board member in several cultural institutions.

Mrs. Touraine is CEO of Act III Consultants, a management consulting firm dedicated to digital transformation.

Previously, Mrs. Touraine served as Chairman and CEO of Vivendi-Universal Publishing, a \$4.7 billion company, after having spent 10 years with the Lagardère Group as Head of Strategy and CEO of the mass market division and five years with McKinsey. She graduated from Sciences-Po Paris and Columbia University (MBA). She sits on the Boards of Rexel SA, Tarkett SA, GBL (since 31 October 2018) and previously Darty Plc as well as Neopost SA. She is also sitting on non-profit organizations board such as The French-American Foundation and IDATE. Since May 2014 she has been Chairwoman of the Board of Directors of IFA (French Governance Institute).

Mrs. Vandenborre is Chief Financial Officer at Elia. Previously, she was a member of the executive committee of APX-ENDEX, the Anglo-Dutch gas and electricity exchange based in Amsterdam, and CEO of Belpex. She began her career at Coopers & Lybrand as an auditor.

Mrs. Vandenborre is member of various Boards, including Contassur, an insurance company. She holds a degree in Business Economics from the UCL as well as degrees in Tax Law and Financial Risk Management.

the Executive Committee

Members of

Dominique

LEROY

Mrs. Leroy holds a Master's degree in Business Engineering from the Solvay Business School.

Committee as Chief Consumer Market Officer in August 2017. With a very strong mix of strategic, financial and marketing experiences in the telecom and the media sectors in France, Mr. Boutin has gained a very deep knowledge and understanding of new market dynamics and business models of these sectors.

Mr. Boutin started his career as strategy consultant and as web entrepreneur. He then joined SFR where he successively held the positions of Director Chairman Office, Chief Financial Officer and Chief Marketing Officer, until he joined Canal+ Group in 2015 as Chief Marketing Officer.

Mr. Boutin is a member of the Board of directors of Scarlet Belgium. Since 1 January 2019, he is also member of the Board of Directors of Proximus Luxembourg which is the surviving entity after the merger between Tango and Telindus Luxembourg. Mr. Boutin holds a Master's degree in Business Management from HEC Business School and an Executive MBA from INSEAD.

He is currently director of Greenbridge Incubator (University of Ghent), Scientific Investment Board (University of Brussels), President of the Board of Directors of CityDepot (a subsidiary of bpost) and member of the Investment Committee of Participatie Maatschappij Vlaanderen (PMV).

Mr. Van de Perre is CEO of Five Financial Solutions (a corporate finance house). Mr. Van de Perre is co-founder of Parinsu (an added value company to mature scale-ups) and member of the advisory Board of several high-tech start-ups. He holds a Master's degree in Economics and several postgraduate degrees.

Sandrine DUFOUR

Mrs. Sandrine Dufour assumed the post of Chief Financial Officer of Proximus on 1 April 2015. In addition to the Finance domains, Sandrine Dufour is also responsible for the Wholesale activities as well as the Group Internal Services. From 1999 to May 2013, Mrs. Dufour held various positions at Vivendi in France and the US; the latest being Deputy Chief Financial Officer and Director of Innovation. Afterwards, she became Executive Vice President Finance & Strategy at SFR. Before that, she held various posts as a financial analyst in France, at BNP and Credit Agricole Cheuvreux (European telecom sector).

Mrs. Dufour holds several degrees from ESSEC Business School, the Société Française des Analystes Financiers, and the Chartered Financial Analyst (CFA) Institute.

Mrs. Dufour was an independent director at the French company Solocal until March 2018. She is a member of the Board of directors of the Proximus subsidiaries BICS, Connectimmo, Be-Mobile, PGS, Proximus Pension Fund, and Proximus Art. Since 1 January 2019, she is also the chairman of the Board of Directors of Proximus Luxembourg which is the surviving entity after the merger between Tango and Telindus Luxembourg.

Dirk LYBAERT

Mr. Dirk Lybaert is Chief Corporate Affairs Officer of Proximus and has the following responsibilities: Legal, Regulatory, Public Affairs, Group Communications, Internal Audit & Risk Management, Security Governance & Investigations, Corporate Prevention & Protection and Secretary General.

Mr. Lybaert was Secretary-General of Belgacom from 2005 to 2014. From 1995 until 2007, he was an assistant at the Law Faculty of the University of Brussels for the "Named Contracts" course. From 2000 to 2005 he held different positions within the legal department of Belgacom.

Prior to joining Belgacom, Mr. Lybaert served as an officer with the Federal Police, where he reached the position of Lieutenant-Colonel and Director of the Anti-Terrorism Program.

Mr. Lybaert is a member of the Board of directors of BICS, Proximus Foundation, Proximus Art and Proximus Opal.He also has external mandates at Bednet and Festival van Vlaanderen.

Mr. Lybaert holds a Master's degree in Criminology from the University of Ghent, Law from the University of Brussels (VUB) and Business Law from the University of Antwerp, and degrees in Advanced Management and Social and Military Sciences.

Mr. Geert Standaert is Chief Technology Officer. He has been a member of the Executive Committee since March 2012. In this function, he oversees all IT development, service engineering, the fixed and mobile network, technical infrastructure and operations for the Group.

Mr. Standaert joined the Group in 1994 and held director positions in various disciplines, including IT, Infrastructure Operations and Data Operations before becoming Vice President Customer Operations in 2007.

Mr. Standaert is also a Board member of Synductis. Mr. Standaert holds a Master's degree in Civil Engineering from the University of Ghent (RUG).

as Chief Customer Operations Officer of Proximus in May 2014. In this function, he works with his teams to align procedures and create synergies between the operational after-sales activities of the different Business Units.

Mr. Tilmans joined Belgacom in 1993. He held various director positions in the field of ICT and networks before becoming Vice President Customer Operations of the Business Unit Service Delivery Engine & Wholesale in 2012.

Within the Proximus Group, Mr. Tilmans is since 1 January 2019, member of the Board of Directors of Proximus Luxembourg which is the surviving entity after the merger between Tango and Telindus Luxembourg.

Mr. Tilmans is a civil engineer from the UCL (Louvainla-Neuve) and holds degrees in IT and management.

Appendix

Mr. Jan Van Acoleyen is Chief Human Resources Officer of Proximus. He joined Proximus in May 2016, after a 28-year career with various international HR management roles, mainly in high-tech companies such as Alcatel, Agfa-Gevaert and Barco. As a HR leader, he acquired extensive experience in organizational and corporate culture transformations.

Mr. Van Acoleyen has a Master's degree in Educational Studies from Leuven University and an Executive MBA from the University of Antwerp. He is an independent member of the Board of directors of SD Worx and Board member of Experience@Work. Within the Proximus group he is board member of BICS, Proximus Foundation, Proximus Pension Fund and is Chairman of the Remuneration Committee of BICS. Since 1 January 2019, he is also member of the Board of Directors of Proximus Luxembourg which is the surviving entity after the merger between Tango and Telindus Luxembourg.

Mr. Bart Van Den Meersche is Chief Enterprise Market Officer of Proximus. In 2011, he joined Proximus (formely Belgacom) following 28 years of experience in the ICT sector with a professional career at IBM, where he held various executive management functions for 16 years and spent eight years as Country General Manager of IBM Belgium/Luxembourg. In his last year at IBM, he was Vice President Industries & Business Development IBM South-West Europe, and a member of the IBM South-West Europe Executive Committee.

For six years, Mr. Van Den Meersche was Chairman of Agoria ICT and a member of the Board of Directors of Agoria, VOKA and VBO.

Within the Proximus Group, Mr. Van Den Meersche is a member of the Board of directors of Proximus SpearIT and Be-Mobile. Since 1 January 2019, he is also member of the Board of Directors of Proximus Luxembourg which is the surviving entity after the merger between Tango and Telindus Luxembourg. He is also a member of the Board of directors of Belgian Mobile ID, a joint venture between the 4 major banks (BNP Paribas Fortis, Belfius, ING and KBC) and the 3 mobile network operators (Proximus, Orange, Telenet/Base).

Mr. Van Den Meersche has a Master's degree in Mathematics from Leuven University.

Non-financial governance

Living up to the commitment of a structured sustainability framework requires a very welldefined organization within Proximus, as our strategic areas stem from different business units. This is also set up to ensure we reach our ambition and have a strong follow up from the higher management.

Thus, for each of the pillars in the strategic areas, an owner is appointed within Proximus.

Our most material topics are also mapped in specific pillars of the sustainability framework. For each material topic, at least one KPI has been defined.

Each pillar and their associated topics & KPIs are reported on quarterly to the executive committee & Board.

The KPIs for each topic and their targets as well as link to the SDGs can be found in the section "Overview of non-financial information".

Compliance

Role of compliance at Proximus

In an increasingly complex legal and regulatory context and a changing business environment, compliance plays an increasingly important role in the business world.

The Proximus Group Compliance Office is responsible for coordinating compliance activities within the Proximus Group, and aims to promote, at all levels, ethical conduct, respect of values and compliance with laws and internal and external rules and policies, prevent unlawful or unethical behavior and ensures an appropriate response in case such behavior does manifest itself.

Our compliance program is a key building block for our Corporate Social Responsibility strategy (more information available in the Sustainability chapter).

All employees must perform their daily activities and their business objectives according to the strictest ethical standards and principles using the Proximus Code of Conduct, as reflected in multiple Group and Company policies and procedures as their guide.

Moreover, our company values aim to inspire our employees in their daily behavior and attitudes.

Ethical behavior is thus not limited to the texts of the Code of Conduct and basic guiding policies and procedures, which only reflect a summary of the main basic principles and are thus not exhaustive.

The Code of Conduct is available on www. proximus.com and www.proximus.be.

Organization of compliance activities

The Compliance Office is managed by the Director Internal Audit and Risk Management & Compliance, who reports directly to the Chairman of the Audit and Compliance Committee (ACC).

The ACC Charter determines the ACC's responsibility in helping and advising the Board of Directors with respect to monitoring

Proximus' compliance with the legal and regulatory requirements, as well as internal compliance with the Code of Conduct and the Group policies and procedures.

The Compliance Program

Ethical behavior and respect for the values are part of the compliance approach within the Proximus Group.

The following efforts have been done in 2018 in order to improve the visibility of the Group Compliance strategy:

A mandatory e-learning about the General Data Protection Regulation (GDPR) and its principles has been launched during the year
Continuous communication campaigns towards our staff through the intranet, posters and specific events (e.g. Security week) concerning information security, data classification, working securely,…
Annual updates of policies, procedures given the fast changing business environment
Investment in a dedicated data governance tool allowing to document E2E data flows, perform effective data (lifecycle) management and ensure data (quality) by design
The compliance domains which were the compliance focus areas for 2018 were:
Data protection/Privacy

Strict ethical

principles

standards and

Information Security.

Diversity & Inclusion statement

In accordance with article 3 of the Law of 3 September 2017 on the disclosure of nonfinancial and diversity information by certain large companies and groups, Proximus' diversity policy, its purpose and results are described below.

Strategic orientation about diversity & inclusion

Proximus believes that a diverse workforce, through employees' unique capabilities, experiences and all other characteristics unrelated to someone's abilities, will help to

Equal opportunities

reach a more diverse marketplace and will create sustainable business. It is also important to reflect the diversity of our customers and markets in our workforce.

Therefore, Proximus has a Charter on diversity and equal rights, which applies to all employees of the Proximus Group.

With this policy Proximus wants to enable conditions, where these differences are recognized and respected, and where all employees are given equal opportunities. For Proximus, diversity and equality mean:

Treating all applicants and employees equally, based only on relevant competencies and objective criteria
Creating an open and welcoming work environment that encourages contributions from people of all backgrounds and experiences
Promoting a mind-set of respect and openness throughout all levels of the organization and treating all employees fairly and equally
Demonstrating behaviour free from any form of racism, intolerance, discrimination, harassment or other attitude that could negatively affect the dignity of men and women at the workplace
Incorporating diversity in all aspects of the way we do business without any form of intolerance.

Within Proximus specific teams are in charge of monitoring the compliance with the Charter and of taking the correct measures in case of non-compliance.

Diversity & inclusion in our leadership and employees communities

Proximus is particularly conscious about the importance of diversity at all levels of the organization and concentrates on recruiting employees with an inclusion and growth mindset. Once they are part of the company, we ensure that they are the best ambassadors of our company values by including a part on our inclusion program and philosophy in our welcome days as well as in all related trainings for team leaders, experts, trainees,…

While taking care of putting in place wellbalanced and talented mixed teams, Proximus reinforces its capacity for innovation and fosters its learning culture, the satisfaction of its employees and their creativity towards the future challenges of a digital world.

With regards to gender diversity, this approach is also reflected in the female representation at the different levels of our company:

43% of the Board of Directors
25% of the Executive Committee
21% of the members of the Leadership Team
31% of all employees' population.

Proximus Group also has a very diverse workforce in terms of culture with 58 nationalities.

Proximus supports internal and external diversity network activities and initiatives such as the AfroPean network (APN) and WinC (women network). We have a

Diamond Sponsorship in the organization "Women on Board". Our CEO participates in events regarding women at the top and signed the "Pledge", a European Business Leaders' commitment to Inclusion & Diversity. Proximus also ensures ad hoc presence to external events such as "Yes she can", "Digital4Her" and "She loves to code" in order to encourage young girls to choose for engineering studies and a technical career.

Creation of a culture that allows to reconcile activities during the different life phases

Proximus wants to create conditions to allow its personnel to reconcile the different aspects of their professional and private life during their different life phases by offering opportunities for internal job change and development opportunities, homeworking, part-time schedules, home child care, … These measures allow our employees to work in a safe, inspiring and inclusive workplace with equal opportunities for everyone, allowing them to combine their personal and professional lives in order to be optimally present and feel supported, motivated and engaged at work.

Sustainability

Working environment standards

Proximus is founding partner of "Experience@ Work". Thanks to this company, experienced talents from organizations can be deployed in other organizations which are looking for specific experience and/or talent.

Diversity as part of Proximus Code of Conduct

Proximus' mission consists in opening up a world of digital opportunities, so people live better and work smarter. This also means that we have to earn and keep the trust of our customers, our employees, our suppliers, our shareholders, our partners and the company as a whole.

Successful business must go hand in hand with honest and ethical behaviour. Each employee has a crucial role to play in this matter. This is the reason why the Code of Conduct is in place, representing our corporate culture and values. This Code of Conduct reflects the fundamental principles and rules which are the foundations of our engagement to be a socially responsible company. The Code of Conduct applies to everyone: Board Directors, managers and all employees. Although the Code of Conduct cannot directly be imposed to our business partners, we seek to always work with partners respecting the same ethical standards.

Proximus expects its employees to respect the Code of Conduct and use it as a reference in their day-to-day way of working.

Human rights

People are entitled to be treated with respect, care and dignity. Proximus business practices can only be sustainable if we respect basic human rights and value diversity, cultural and other differences. Our Code of Conduct, values and behaviour are inspired by fundamental principles such as those of the Universal Declaration of Human Rights, the European Convention on Human Rights and the United Nations Convention on the Rights of the Child.

Working conditions

Proximus is committed to creating working conditions which promote fair employment practices and where ethical conduct is recognized and valued. We maintain a

professional workplace with an inclusive working environment, and we are committed to respecting Belgian legislation and the International Labour Organization's (ILO) fundamental conventions.

Proximus recognizes and respects the right to freedom of association and the right to collective bargaining within national laws and regulations. We will not contract child labour or any form of forced or compulsory labour as defined by ILO fundamental conventions. Moreover, we are opposed to

discriminatory practices and do our utmost to promote equality, diversity and inclusion in all employment practices.

Our working environment standards are applied to every member of our diverse community and are exemplified by all managers, team leaders and employees who are expected to act as role models in this matter.

Regulatory framework

In 2018 as in the previous years, Proximus remained subject to a number of regulatory measures and new important regulations have been approved such as the decisions on the review of the broadband & TV market analysis as well as the new EU telecom Code that overhauls the previous EU framework.

8 5

Cable & Broadband Regulation

After the green light granted by the European Commission end-May, the Belgian regulators published on 29 June 2018 their final decisions on the review of the broadband and television market analysis. The new decisions confirm the deepening of the cable regulation and the extension of Proximus' regulation from its copper to its fibre network. Proximus' planned network topology is not impacted by these decisions.

Overall the new fibre regulation is in line with the wholesale strategy of Proximus to open its networks to other operators, and therefore no negative implications are expected in the near term. During the past years Proximus developed and evolved its wholesale offer and signed several commercial agreements with its main broadband wholesale customers.

Cable operators are obliged to give access to a stand-alone broadband service, without the television service. Under the previous decision (2011), they only had to provide access to a joint broadband and television resale offer. Cable operators are also required to make it possible for alternative operators to provide voice telephony services via the regulated access

In terms of fibre pricing, the regulators have imposed a "fair pricing" (i.e. price based on current costs, increased with a reasonable profit margin), be it as a yard stick to identify excessive pricing. This principle is also applied to cable (was based on "retail minus" under former market analysis). The obligation to apply these fair prices must be monitored by means of cost models reflecting the costs of an efficient operator. In this context the BIPT launched on 13 December 2018 a consultation on the cost models that will be used to evaluate the fair pricing. The regulators announced that they will take a decision on the wholesale prices in 2019. In the meantime, the intermediary tariffs set by the decisions of June 2018 remain applicable.

The decisions have also established a clear framework for reciprocal access between cable and fibre. It was also confirmed that Proximus is allowed to access cable where there is no own coverage (and no viable business case to build).

The regulation also allows for differentiation according to geographic area. It will take a lighter touch in areas where at least three operators, based on own infrastructure, offering at least 30 Mbps are active, as well as in areas lacking broadband infrastructure, in order to encourage investment.

Both Telenet and VOO (Brutélé and Nethys) lodged an appeal against these decisions and are demanding for the suspension and annulation. The Court has rejected the suspension request. A judgment on the annulation request is expected in 2019.

The 'high quality broadband services' (leased lines/connectivity) are not addressed in these decisions (review planned in the course of 2019).

Spectrum

Multi-band auction

In preparation of the upcoming multi-band spectrum auction, the Belgian Government approved, in July 2018, the different Royal Decrees defining the conditions for the renewal of the existing 2G/3G spectrum (900, 1800 and 2100 MHz licenses due to expire on 21 March 2021) as well as for the granting of new 5G spectrum (700 MHz, 1400 MHz and 3500 MHz) and unsold spectrum in the 2100 and 2600MHz bands.

Based on the July 2018 proposals, all licenses will be valid for 20 years with the possibility to extend by 5-year periods. The total reserve price (minimum price) is around EUR 670 million for the whole market, with the final outcome fully depending on the result of the auctions.

These proposals also include conditions favourable for new entrants (spectrum reservation in the 700MHz, 900MHz, 1800MHz and 2100MHz bands, national roaming obligation and less stringent coverage obligations).

Some spectrum would also be reserved for the existing operators in the 900, 1800 and 2100 MHz bands. The amount of spectrum reserved would depend on the presence or not of a new entrant.

Specific conditions would also be imposed to the 700 MHz operators concerning the railway coverage and the provision of national roaming and specific services for Astrid (the operator in charge of the management of all emergency and security services in Belgium).

As the final texts have not been approved yet, the timing and the final conditions of

Current spectrum holdingsOverview of the overall spectrum holdings and the bands to be included in the auctions

the auctions remain uncertain. Depending on timing of final approval of the texts (before or after the elections planned in May 2019), the spectrum auction could be organized either end of this year or could be further postponed.

Termination Rates

The termination rates are the fees that fixed and mobile operators pay to other fixed and mobile operators to terminate a call on their network.

On 23 November 2018, the BIPT defined new Fixed Termination Rates (FTR) at 0.116 eurocent/min (from 0.709 eurocent for regional and 0.909 eurocent for national previously) based on a pure LRIC "Long Run Incremental cost" model. The FTR have been applicable since 1 January 2019. Local call termination is no longer considered since Proximus closed the last local access points in 2017. Other measures imposed by the BIPT decision include an access obligation on the basis of IP interconnect, transparency and non-discrimination. In addition, Proximus is subject to an obligation of cost accounting and publication of a reference offer.

In Luxembourg, a Regulation of 28 November 2016 decreased the maximum FTR to 0.131 eurocent/min for 2017 (from 0.14 eurocent/ min previously), 0.135 eurocent/min for 2018 and 0.138 eurocent/min for 2019.

The Mobile Termination Rates (MTR) remained unchanged in 2018. In Belgium, they have been set at 0.99 eurocent/min for the period 2017-2019 by the BIPT and in Luxembourg, they have been set at 0.89 eurocent/min since 1 July 2017 until 31 December 2019.

International roaming

The "Roam-Like-At-Home" (RLAH) that completely abolished the roaming surcharges

Wholesale roaming caps (€ excl. VAT)

has been applicable since June 2017. Since then all Proximus customers can surf, call and text within the European Union like at home, without extra charges within the "Fair Use Policy" (FUP) aimed at preventing abusive usage of retail roaming services beyond periodic travelling in the EU. An interim report presented by the European Commission on 14 December 2018 shows that mobile data roaming usage in the EU has increased fivefold since the introduction of RLAH.

In 2017 a decision to gradually reduce roaming wholesale prices over five years was also taken as follows:

The Commission will present a comprehensive report on the review of the RLAH rules in December 2019. It is also tasked with reviewing the wholesale rates every two years. Its first report, which, if necessary, will be accompanied by a legislative proposal to amend the maximum wholesale charges, is scheduled for 15 December 2019.

Fixed Telephony Regulation

On 7 December 2018, the BIPT took its final decision deregulating the fixed retail access and the wholesale call origination markets and withdrawing the obligations imposed to Proximus on these markets in 2013 and 2006 respectively. The decision entered into force on 1 February 2019. Proximus committed to add an addendum to its BRIO reference offer, where it explains that it will continue

as follows:	Proximus on these markets in 2013 a
	respectively. The decision entered
will present a comprehensive	on 1 February 2019. Proximus co
	review of the RLAH rules to add an addendum to its BRIO i
	2019. It is also tasked with o offer, where it explains that it will

2015 30/04/16 15/06/17 2018 2019 2020 2021 2022Voice call/min 0.05 0.05 0.032 0.032 0.032 0.032* 0.032* 0.032SMS 0.02 0.02 0.01 0.01 0.01 0.01 0.01* 0.01Data/GB50507.764.53.532.5

* 2020 tariff s and beyond subject to Commission review

to offer Carrier Selection (CS) and Carrier Pre-selection (CPS) services on a voluntary basis until 31 December 2022, except if some conditions have been met in the meantime and that it will continue to offer the VAS services until 31 December 2019.

Consumer protection

As in the previous years, end-users' matters remained under regulatory scrutiny in 2018.

The new obligations concerning the nonpayment of invoices introduced by the law of 31 July 2017 modifying the e-com law of 2005 entered into force on 1 July 2018. The law foresees that the first reminder must be for free and a ceiling of EUR 10 is set for the subsequent reminders. The fee for the reactivation of the services after a full cut is capped at EUR 30 for all services.

A Royal Decree of 2 September 2018 has set the legal basis for the automatic introduction of the recent usage data of a consumer in the BIPT tariff simulator. This new rules aim at allowing the clients to identify more easily their "best tariff plan", based on their real usage profile. The operators will have to put an URL (for each service) at the disposal of their clients in their e-services. The new Royal Decree also foresees a link from the tariff simulator into the client zone of the operator allowing to transfer the usage data to the tariff simulator.

A Royal Decree of 12 December 2018 has established the responsibilities of the telecom operators and the service providers concerning the premium rates services. The rights of the consumers are being reinforced entitling them to receive refund for undue payments via their telecom operator..

Through its "Atlas" project, the BIPT publishes maps showing the coverage of the mobile and fixed networks. On 15 February 2019, the Atlas has been complemented by information concerning mobile customer experience.

The mobile maps enable the customers to verify the coverage of each of the three mobile operators (Telenet/Base, Orange and Proximus), individually or together, on the map of Belgium. On 15 February 2019, the BIPT published the latest edition of its maps showing for the first time different coverage levels (very good/deep indoor, good/indoor, satisfactory/outdoor) instead of one layer previously. The new maps show that Proximus has the most extensive coverage for both 4G and 3G. These maps are accompanied by the results of a study comparing the quality of the experience offered by the three mobile operators. These results show that Proximus performs best for a large number of KPIs. A new smartphone application now also allows citizens to participate in the coverage and quality measurement.

Net Neutrality

"Net neutrality" represents the idea that equivalent types of traffic should be treated

equally when providing internet access services.

Through its

networks

"Atlas" project,

coverage of the

mobile and fixed

the BIPT publishes

maps showing the

The EU Telecom Single Market Regulation of 25 November 2015 fixes the principle of Net neutrality into EU law and prevents any kind of discrimination in the provision of online content, applications and services. This Regulation has been completed by Guidelines issued by the Body of European Regulators, BEREC, and aimed at providing guidance to the national regulators. The Guidelines cover issues related to commercial practices (such as "zero-rating", i.e. apps not counted in the data allowance), traffic management measures and specialized services. They also define how regulators should realize their supervision, enforcement and reporting duties.

The European Commission has to prepare a first reporting on the implementation of the Regulation to the European Parliament and Council by end April 2019. The report should also evaluate the Regulation - and

The BIPT is closely monitoring how the offers of the different operators comply with the EU Net Neutrality rules

if relevant - suggest adaptations to this Regulation. BEREC on its side issued a report on 13 December 2018 stating that the Regulation and the Guidelines are working well. Nevertheless, BEREC considers that its Guidelines could be clarified in certain aspects such as zero-rating, traffic management or specialized services. A draft update of the Guidelines will be issued in the course of 2019.

In Belgium, the BIPT is also closely monitoring how the offers of the different operators comply with the Net Neutrality rules. Its second annual monitoring report published in June 2018 concluded that there are no major reasons for concern in Belgium as regards open Internet access.

Review of the EU regulation

EU Telecom Review

The EU Telecom review, the so-called

"European Electronic Communications Code" (Code) was published in the Official Journal of the EU on 17 December 2018. The Code overhauls the previous EU telecoms regulation. It entered into force on 20 December. Member states have until 21 December 2020 to transpose it into national law. This text will determine the regulation of telecommunication networks and services in Europe for the next decade.

In the margin of the Code, the European legislators also adopted an amended Regulation on BEREC and a Regulation inserting caps on intra-EU calls and SMS prices (calls and SMS to another EU country). The new caps will take effect from 15 May 2019 at 19 eurocents/minute for calls and 6 eurocents/min for SMS.

On spectrum, it has been decided to set a minimum duration of 15-year for the licenses with 5-year extensions as well as to perform a voluntary peer review process for the spectrum auctions as part of efforts to coordinate spectrum terms more across the EU. 5G spectrum should be made available before end 2020.

The Code also foresees new access regulation measures designed to support the roll-out of fibre, such as an exemption of ex-ante regulation for operators with Significant Market Power (SMP) committing to co-investment plans and a so-called "symmetric regulation" on oligopoly markets imposing rules on non SMP operators if SMP ex-ante regulation is deemed not sufficient.

Consumer protection is characterised by harmonisation and broadening but many of new elements are inspired by rules that have already been imposed in Belgium (e.g. rules related to switching of customers between providers, called "Easy Switch" in Belgium).

The future Universal Service will be limited to access to network and social tariffs. An adequate and affordable connection on a fixed location for broadband internet remains at the center of the Universal Service. The Code leaves it up to the Member states

to define the adequate broadband speed taking into account several factors (in Belgium currently set at 1 Mbps). Financing will be possible through the general state budget or shared among operators (industry fund). Requirement of determination of an unfair burden remains.

Review of the Audio-visual Media Services Directive

On 28 November 2018, the new Audiovisual Media Service (AVMS) Directive was published. The new text modifies a directive from 2010. Since then, the market for these services has evolved significantly. Rapid technical developments have sparked new types of services, viewing habits have changed and user-generated content has gained in importance. The legal framework has been updated to take account of these developments.

The new Directive addresses now Videosharing platforms (such as YouTube and audiovisual content shared on social media services, such as Facebook) that will have to comply with certain rules on commercial communication/advertising and to restrict minors' access to harmful content.

New quotas are set for on-demand services (at least 30% share of European content in the catalogues). The rules to protect minors are aligned for all services (linear and ondemand) and the accessibility obligation for disabled users are strengthened. To be noted in this respect that the Belgian CSA has adopted on 17 July 2018 new measures to increase accessibility of programs (quotas of programs with specific subtitling and audiodescription).

The new Directive entered into force on 18 December 2018. Member states have to transpose it into their national legislations within 21 months.

The new EU Code will determine the regulation of telecommunication networks and services in Europe for the next decade

Sustainability

Appendix

Risk management report

Most important risks and uncertainties

Taking risks is inherent to doing business, and successfully managing risks delivers a return to Proximus stakeholders. Proximus believes 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. Effective risk management is a key success factor in the realization of our objectives. The aim of risk management is not only to safeguard the Group's assets and financial strength but also to protect Proximus' reputation. A structured risk management process allows management to take risks in a controlled manner. Financial risk management objectives and policies are reported in Note 33 of the consolidated financial statements, published on the Proximus website. Risks related to important ongoing claims and judicial procedures are reported in Note 35 of these statements. The enterprise and financial reporting risks are detailed below, together with the related mitigating factors and control measures. Please note that this is not intended to be an exhaustive analysis of all potential risks that Proximus might be facing.

Enterprise-wide risks

Proximus' Enterprise Risk Management (ERM) is a structured and consistent framework for assessing, responding to and reporting on risks that could affect the achievement of Proximus' strategic development objectives. The Group's ERM covers the spectrum of business risks ("potential adverse events") and uncertainties that Proximus could encounter. It seeks to maximize value for shareholders by aligning risk management with the corporate strategy. It does this by assessing emerging risks (e.g. from regulation and new technologies on the market) and developing mitigating strategies in line with its risk tolerance.

Proximus' ERM framework was reviewed and updated in 2017 to align with the market

The market is in constant evolution,

with competitive dynamics at play that might impact market value going-forward

best practices. This risk assessment and evaluation takes place as an integral part of Proximus' annual strategic planning cycle. All relevant risks and opportunities are prioritized in terms of impact and likelihood, considering quantitative and/or qualitative aspects. The bottom-up identification and prioritization process is supported by a self-assessment template and validation sessions. The resulting report on major risks and uncertainties is then reviewed by the Executive Committee, the CEO and the Audit and Compliance Committee. The main findings are communicated to the Board of Directors. Among the risks identified by the last ERM exercise, the following risk categories were prioritized (in the following order):

Competitive market dynamics
Business model and servicing evolution
Employee skills and motivation
Customer experience
Human Resource cost flexibility.

Competitive market dynamics

Proximus' business is primarily focused on Belgium, a small country with a few large telecom players, with Proximus being the incumbent. Proximus operates in growing markets (e.g. mobile data, security, IOT, smart mobility, and API platforms), maturing markets (e.g. smartphones), saturated markets (e.g. Fixed Internet, postpaid mobile, and fixed voice) and even declining markets (e.g. prepaid mobile and enterprise voice).

The market is in constant evolution, with competitive dynamics at play (e.g. frequent new product launches, competitors entering new segments of the market) that might impact market value going-forward. Specifically, the market structure could change significantly with the possible entry of a new mobile operator on the market, supported by favourable conditions set in the upcoming spectrum auction. Sector federation Agoria estimates that the possible arrival of a 4th mobile entrant could impact the total Mobile market in Belgium with a reduction of 6,000- 8,000 jobs and a reduced sector contribution to the state of €200 M - €350 M.

Substitution of fixed line services by OTT services (e.g. by apps and social media such as Skype, Facebook, WhatsApp, etc.) and TV content could put further pressure on revenues and margins, as these over-the-top services continue to gain ground.

As a result of its long-term strategy and continued network investments (Fiber, VDSL/Vectoring, 4G/4G+), Proximus has been consistently improving its multiplay value propositions by putting more customers on the latest technologies, maintaining its lead in mobile innovation, structurally improving customer service, partnering with content and OTT players to offer a broad portfolio of content (Sports, Netflix, families & Kids with the Studio 100 agreement, etc), developing an omnichannel strategy and improving digital customer interfaces, etc. Proximus has established an advantageous and solid competitive position, providing the company with other levers besides price, reducing the risk to churn and price disruption exposure. Proximus also successfully launched a new mobile offer, Epic, targeted at the millennial segment, with a specifically designed offer to meet the mobile needs of these customers.

Proximus is also responding through a convergent and bundled approach and by offering new services and opting for an aggregator model, putting the best content at the disposal of its customers (e.g. Netflix).

The price-sensitive segment, which has continued to rise in 2018 as more consumers seek no-frills offers at a lower price, is successfully addressed through its subsidiary Scarlet. The latter offers attractively priced mobile and triple-play products.

In the corporate large-company market, the scattered competitive landscape drives price competition, which might further impact revenue and margins.

Here also, Proximus intends to respond to increasing competition by strengthening its voice-data-IT convergence strategy, leveraging unmatched sales reach, broad portfolio and expertise. Proximus has developed specific solutions to accompany our customers in the transition to both local and cloud-based communication services, leveraging our various assets to offer simple, reliable and technologically

advanced solutions to meet our customers' communication needs. Furthermore, Proximus also seeks to answer new customer business needs through solutions combining core assets with innovation like IoT, Cloud, Security and big data, which will help preserve value.

Business model and servicing evolution

Proximus' business model and financial performance have been and will continue to be impacted by (disruptive) technologies, such as SD-WAN, 5G and OTT (over-thetop) services. Proximus' response to new technologies and market developments and its ability to introduce new competitive products or services, which are meaningful to its customers, will be essential to its performance and profitability in the long run.

For ultra-broadband, fiber-based connectivity, Proximus adopts a local marketing approach, in which the sales forces, technical staff and local partners join forces for its fiber deployment project.

Proximus also continues to develop capabilities to support business customers in their digital transformation with its industrytailored support and convergent products combining connectivity, hybrid cloud, and managed security solutions.

Proximus continuously explores ways to diversify revenue streams outside the classical connectivity business. Examples include our rapidly growing IoT business (including adjacent services), our EnCo platform, smart advertising and smart mobility (through our B-Mobile subsidiary among others). In these adjacent domains Proximus explores new partnership models and considers inorganic growth paths.

Employee skills and motivation

In the digital era, knowledge workers are a competitive asset if they have the right skills and mindset. Proximus could face a shortage of skilled resources in specific domains such as security, digital front-ends, data science, and agile IT. This shortage could hamper the realization of our #shifttodigital and customer-centric strategy, and delay some of our ambitions in innovation. In addition, we need to upgrade skills in customer-facing and other functions to become digitally oriented.

This is why the company is paying so much attention to training programs, internal mobility, hiring of young graduates from relevant fields, and employer branding.

In this context, it is also essential for Proximus to adapt its way of working to the needs and requirements of the new generation – the "millennials" - and to manage all talents within an inclusive, multi-generational environment.

Considering the imperative to align skills with customer and business needs, Proximus has taken the necessary steps to identify the skills that will be critical for facing tomorrow's challenges, and to discover, develop and share talents in order to have the right talent in the right place. Proximus also continues to invest in leadership, a collaborative work environment, digitalization, and development in order to stimulate a company culture that nurtures a growth mindset, new ways

of working, and our five company values: the digital mindset, customer centricity, accountability, collaboration and agility.

Customer experience

For Proximus, delivering a superior customer experience is a core strategic mission, but also an ongoing risk domain, considering:

the fast evolution of market expectations
the large and complex offer of products and services
the process/legacy IT application complexity.

Proximus is committed to meeting its "Always close" brand promise by transforming into a digital-first service provider and delivering a superior customer experience: a consistent and intuitive experience across interactions, a high-quality stable network, easy-to-use products and services, a good recommendation index, and low effort on all interactions in all customer journeys.

Appendix

The customer experience is the key focus of Proximus' strategy, which is implemented through key transformational initiatives such as "End-to-End Journey Evolution", "Voice of the Customer", and business as usual activities. With these initiatives, we aim to:

ensure products and services are designed to match customer expectations before a launch
maximize usage satisfaction of products and services with focus on in-home and in-office experience
design or redesign end-to-end customer journeys, ensuring a personalized and effortless interaction with the Proximus brand
create and maintain a continuous dialogue with our customers to engage with them and evolve towards a real customercentric company
react more quickly when we do not deliver a first-time right experience or even proactively address an issue before the customer notices it.

A few examples of what has already been achieved:

massive upgrading of customers to the latest technology
"Happy House" visits to improve the inhome experience
"Safety nets" for customers at risk via 360° multi-skilled transversal teams
multi-objective calls and e-mails to proactively address customers at risk
improvement of our digital channels and tools, such as "MyProximus" app redesign, new "Home optimizer" app, etc
launch of the new Wi-Fi booster to improve Wi-Fi coverage in the home
redesign of customer journeys.

Human resource cost flexibility

Even though Proximus has been on the path of growth since 2015, strong competition, the impact of regulation and fast market evolution

mean that it needs to further reduce costs in order to remain competitive and preserve EBITDA. A significant portion of Proximus' expenses is still driven by the cost of the workforce (whether internal or outsourced, expensed or capitalized). Expressed as a ratio of turnover, Proximus' total cost of workforce still lies well above the average of international peers and main competitors, even if steady progress has been made in recent years.

Moreover, Belgium applies automatic inflation-based salary increases, leading to higher costs, not only of Proximus' own employees but also of the outsourced workforce, with outsourcing companies being subject to the indexation as well.

At Proximus Group level, about one in four employees is a statutory employee. The application of HR rules as defined during successive Collective Agreements is quite strict and doesn't allow for as much flexibility as competition. This restricts Proximus' ability to improve efficiency and increase flexibility to levels comparable to those of its competitors.

In 2018, another wave of employees left the company under the voluntary early leave plan that was agreed by the unions in 2016.

But in the future, major efforts will be needed to increase organizational flexibility and agility.

That's why we intend to accelerate our transformation in the next three years, to become an increasingly digital company with an agile and efficient organization.

First, Proximus will continue to adapt and simplify its organizational structure in order to evolve towards a high-performance organization by transforming the way we work.

In addition, different initiatives (drastic simplification and/or automation of Proximus' products, services, processes and systems) will optimize and safeguard the balance between workforce and workload (both in numbers and competencies). The objective is to adapt workforce cost and HR rules to Proximus' future needs, so that we remain competitive and can evolve with customers' needs.

In this respect, discussions with the unions are aim, on one hand, to adapt workforce to workload, and on the other, to simplify the current social model, enhance functional and geographical mobility, increase HR flexibility, and further optimize the balance between insourcing and outsourcing. This will improve our productivity, flexibility and agility on the market.

Operational risks

Operational risk relates to risks arising from systems, processes, people and external events that affect the operation of Proximus businesses. It includes product life cycle and execution; product safety and performance; information management, data protection and cyber security; business continuity; supply chain; and other risks, including human resources and reputation risks. Depending on the nature of the risk involved and the particular business or function affected, Proximus uses a wide variety of risk mitigation strategies, including adverse scenario stress tests, back-up/business-continuity plans, business process reviews, and insurance. Proximus' operational risk measurement and management relies on the Advanced Measurement Approach (AMA) methodology. A dedicated "as-if" adverse scenario risk register has been developed in order to make the stress tests relevant.

Proximus is covered by extended general and professional liability, property damage and business interruption insurance, as well as by a dedicated cyber security insurance program. Nevertheless, these insurance programs may not provide indemnification should the traditional insurance exclusions (non-accidental event) apply.

The most prominent examples of operational risk factors are explained below:

resilience and business continuity
legacy network infrastructure
security (confidentiality, integrity, availability)
sourcing and supply chain reliability
data protection and privacy.

Appendix

For each critical product and service, a relevant Maximum Tolerable Period of Disruption (MTPOD) has been defined in line with the sales business unit requirements.

Proximus closely follows the international standards best practices guidelines. The level of preparedness (relevant KPIs and score cards) is submitted annually to the Audit and Compliance Committee.

In case of a major adverse event, Proximus has put in place and is continuously testing a crisis management process called PERT (Proximus Emergency Response Team).

Cyber security

Increased global cyber security vulnerabilities, threats and more sophisticated and targeted cyber-related attacks pose a risk to the security of Proximus as well as its customers, partners, suppliers and third-party service providers in terms of products, systems and networks. The confidentiality, availability and integrity of the data of Proximus and its customers are also at risk.

We are taking the necessary actions and making investments to mitigate those risks by employing a number of measures, including employee training, monitoring testing, maintenance of protective systems and contingency plans.

Legacy network infrastructure

The systems need to talk to each other over a connected information highway that can deliver information at high speed and without distortion. There is no doubt that in the coming years there will be a continued demand for ever-greater quantities of data at ever-greater speeds. There is a widely held belief that the increased use of wireless and fiber optic technology will render copper wire obsolete.

The problems with services over copper are speed, reliability and value for money. All too often, legacy systems are costly to operate and maintain. Copper has been around for decades and has far outlived any guarantee period. Outages on the lines will become more frequent.

Business continuity

Interruptions to our ICT and telecom infrastructure which supports our business activities (including services provided by thirdparty vendors such as power suppliers) could seriously impact our revenues, our liabilities and our brand reputation.

Therefore, building and ensuring the resilience of our products and services is and remains a top priority. We are convinced that our business continuity plans will keep our company up and running through interruptions of any kind:

power failures, IT system crashes, natural disasters, supply chain problems, and more.

For each critical business function, business continuity plans have been developed in order to:

identify and prevent risks where possible
prepare for risks that we can't control
respond and recover if an incident or crisis occurs.

Proximus at a glance

Appendix

Proximus is among the world's top five operators

for the proportion of Fiber in its VDSL network with over 21,000 kilometres of optical fiber connecting its street cabinets

Considering those elements, in 2004 Proximus was the first operator in Europe to start building a national Fiber-to-the-Home network. And today, Proximus is among the world's top five operators for the proportion of fiber in its VDSL network, with over 21,000 kilometers of optical fiber connecting its street cabinets.

In the last two years, Proximus has accelerated the roll-out of fiber on its fixed network, thanks to its "Fiber for Belgium" €3 billion investment plan over 10 years.

The initiatives from utility players, such as Fluvius, to invest in a parallel fiber network, risk to have an impact on the business case of the Proximus Fiber investments.

Sourcing and supply chain

Proximus depends on key suppliers and vendors to provide the equipment its needs to carry out its business activities.

Supply chain risk management (SCRM) is defined as "the implementation of strategies to manage both everyday and exceptional risks along the supply chain, based on continuous risk assessment with the objective of reducing

vulnerability and ensuring continuity".

The following actions have been taken to keep the supply chain risk at an acceptable level:

top critical suppliers or their sub-suppliers under constant watch
stock management
consideration of alternative sourcing arrangements
business interruption / contingency plans
risk assessments and audits
awareness campaigns and training programs
strict follow-up of critical suppliers' contractual liability and Service Level Agreement (SLA) clauses
data protection & privacy.

Data protection and privacy

Data protection laws exist to strike a balance between the rights of individuals to privacy

and the ability of organizations to use data for business purposes. Keeping personal data confidential, private, safe and secure is a top priority for Proximus.

Under the General Data Protection Regulation (GDPR), the unification of data protection standards across the European Union has raised the privacy bar on personal data by requiring organizations to locate data, understand its purpose and appropriately secure it.

In 2018, Proximus continued the GDPR implementation project it started in 2017. Our objective was to ensure compliance with GDPR without disruptions to Proximus data flow and business operations. More than 150 people were directly involved in the project and approximately 500 others were involved in surveys, questionnaires, assessments, etc.

As part of our commitment to protect personal data and privacy, we took a series of actions such as appointing a Data Protection Officer (DPO), developing a consent management structure, security screening, and corrective measures for our IT applications.

We also implemented a Privacy Control Framework to provide assurance that personal data is managed as intended, is accurate, protected by default and by design, and that our organization is compliant with applicable laws and regulations and able to demonstrate this.

The GDPR implementation will remain on the agenda for 2019. We aim to optimize our internal processes to allow an efficient privacy by design/default approach. Proximus will further extend the privacy settings within the MyProximus app and website to allow customers to efficiently choose how Proximus can use their personal data.

Risk Management and Compliance Committee

In 2018, the Risk Management and Compliance Committee (RMC) held four sessions. The related decisions were reported to EXCO and the Audit & Compliance Committee. RMC meetings provide an opportunity to review files in which decisions have to be taken by finding a balance between risk taking and cost, in line with the Group's risk appetite.

Proximus has general response strategies for managing risks, which categorize them according to whether the company will avoid, transfer, reduce or accept the risk. These response strategies are tailored to ensure that risks are within acceptable Proximus risk and compliance guidelines.

The RMC's objectives are: 1. To oversee the company's most critical enterprise and operational risks and how management is monitoring and mitigating those risks; 2. To enhance pending/open internal audit action points which remain open for more than six months.

A disciplined approach to risk is key in a fast-moving technological and competitive environment, in order to ensure that Proximus only accepts risk for which it is adequately compensated (risk/return optimization).

Internal Audit

In line with European best practices requirements, Proximus' internal audit function

forms an integral part of the Internal Risk Management and Control System and provides assurance to the Audit and Compliance Committee concerning the "in-control status" of the Proximus Group segments/units/ entities and processes. Internal Audit provides analyses, appraisals, recommendations, counsel, and information to both the Audit and Compliance Committee and Proximus Management. Therefore, the objectives of the Internal Audit, using COSO and other professional standards, are to ensure:

the effectiveness and adequacy of internal controls
operational effectiveness (doing it right) and/or efficiency (doing it well)
compliance with laws, regulations and policies
the reliability and the accuracy of the information provided.

Internal Audit helps Proximus to accomplish these objectives through its systematic, disciplined approach to evaluating and improving the effectiveness of risk management and control and governance processes. Internal Audit's activities are based on a continuous evaluation of perceived business risks, and it has full and unrestricted access to all activities, documents/records, properties and staff. The Chief Auditor has a reporting line to the Chairman of the Audit Committee. Quarterly Audit activity reports are submitted and discussed with the Audit and Compliance Committee.

Financial reporting risks

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

New transactions and evolving accounting standards

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

It is the responsibility of the Corporate Accounting department to follow developments in the area of evolving standards (both local General Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS)).

Changes are identified and the impact on Proximus' financial reporting is proactively analyzed.

For each new type of transaction (e.g. new product, new employee benefit, business combination), an in-depth analysis is performed from the point of view of financialreporting, risk-management, treasury, and tax. In addition, the development requirements for the financial systems are defined in a timely manner and compliance with internal and external standards is systematically

analyzed. Emphasis is on the development of preventive controls and setting up reporting tools that enable a posteriori controls. The Audit and Compliance Committee (A&CC) and the Executive Committee are informed on a regular basis about new and upcoming financial reporting standards and their potential impact on Proximus' financials.

Changes in tax law and regulations

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

The tax department continuously monitors 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 available draft laws, etc., a financial and operational impact analysis is performed. The outcome of the analysis is reflected in the corresponding financial statements, in accordance with the applicable framework.

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 financial statements have been defined. During the monthly, quarterly, halfyearly and annual financial statement closing processes, there is continuous monitoring of the different steps. In addition, different controls are performed to ensure quality and compliance with internal and external requirements and guidelines.

For Proximus and its major subsidiaries, a highly detailed closing calendar is drawn up, which includes a detailed overview of cross-divisional preparatory meetings, deadlines for ending 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, and detective controls, where the outcome of the processing is analyzed and confirmed. Special attention is paid to reasonableness tests, where financial information is analyzed against 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 nonrecurrent transactions and on a sample basis for others. The combination of all these tests provides sufficient assurance on the reliability of the financials.

The Proximus share

Share listing

Sto k M ket c ar	irs F t M ke f E Br ls t o xt ar uro ne us se
ic T ker	O PR X
S I IN de co	0 0 0 3 8 0 27 3 BE 1
Blo be de om rg co	PR O X- BB
Na da de s q c o	PR O X- EB
Re de ute rs c o	O P R X. B R

Proximus share Performance in 2018

The Proximus share closed 2018 at EUR 23.62, -13.6% compared to the last closing price of 2017. This relates to a 13.2% decline for the European Telecom sector (STOXX EUR 600 Telecom).

After a disappointing 2017, the European telecoms market performance continued its negative pattern during the first nine months of 2018. Trade war fears, regulatory interventions and competition concerns were the main drivers of this rough patch. Belgian telecom companies hit a long time low over the 2018 summer months following the news on Belgium opening the path for a potential fourth mobile operator. The downward trend for European telecoms was turned around in the last quarter, supported by sector rotation, with the PROX share also benefitting from this trend. The telecom sector was also helped by a more positive sentiment on pricing and competition, a slight improvement on regulation, a renewed focus of the sector on cost reduction and easing concerns on capex. 10

Proximus share price evolution 2018 vs. 3 indices (in %- rebased)

i K f h t e g r e s o n e y u
i P h r o x m u s s a r e

S inf ion ha t re or ma	2 0 0 9	2 0 0 1	2 0 11	2 0 2 1	2 0 3 1	2 0 14	2 0 15	2 0 6 1	2 0 17	2 0 1 8 S 8 IA 1	2 0 1 8 S IFR 15
Sh ice hig h are pr	28 .65	29 .11	27. 64	24 .60	23 .25	32 .29	35 .67	31 .74	32 .81	28 .1	28 .1
Sh ice low are pr	21 .67	24 .31	21 .40	20 .80	16 .32	20 .78	27. 93	25 .31	26 .42	19 .31	19 .31
Sh ice 31 De ber at are pr cem	25 .32	25 .13	24 .24	22 .21	21 .55	30 .1	30	27. 36	27. 35	23 .62	23 .62
adi (nu ) An l tr vol mb of s har nua ng um e er es	18 36 30 9 1, 4,	138 56 9, 37 6 ,	8, 78 6, 32 14 4	2, 139 14 111 ,	89 3, 83 1 75 4 ,	178 80 2, 90 5 ,	179 82 07 6 5, ,	36 8, 09 0 157 ,	79 9 14 7, 75 4,	16 9, 84 9, 25 2 1	69 84 9, 25 2 ,
(nu ) Av din olu r d mb of s har tra era ge g v me pe ay er es	70 8, 45 4	53 2, 95 9	57 8, 93 5	55 5, 23 1	74 4, 133	70 1, 18 8	70 2, 44 2	61 2, 32 7	57 9, 43 1	65 0, 76 3	65 0, 76 3
Nu mb of and ing sh tst er ou are s	32 0, 61 4, 68 3	32 1, 48 2, 64 1	317 64 8, 82 1 ,	31 8, 32 1, 66 5	31 9, 20 4, 18 1	32 1, 23 0, 59 7	32 2, 00 3, 75 1	32 2, 63 7, 10 3	32 2, 63 8, 98 9	32 2, 70 3, 81 7	32 2, 70 3, 81 7
We ig hte d a mb of and ing sh tst ver age nu er ou are s	32 0, 47 5, 55 3	32 1, 138 04 8 ,	31 9, 96 3, 42 3	31 8, 01 1, 04 9	31 8, 75 9, 36 0	32 0, 119 10 6 ,	32 1, 76 7, 82 1	32 2, 317 20 1 ,	32 2, 777 44 0 ,	32 2, 64 9, 91	7 3 22 64 9, 91 7 ,
( R) Ma rke ital iza tio t 3 1 D mb bill ion EU 1 t ca p n a ece er	8.1 2	8.0 8	7.7 0	7.0 7	6.8 8	9.6 7	9.6 6	8.8 3	8.8 2	7.6 2	7.6 2
Ke da ha d ba is ta ort y pe r s re - o n r ep e s
EB ITD A	6.1 4	7.5 6	5.9 3	5.6 2	5.3 3	5.4 8	5.1 2	5.3 8	5.4 9	5.5 7	5.5 6
Ea rni 2 ngs	2.8 2	3.9 4	2.3 6	2.2 4	1.9 8	2.0 4	1.5 0	1.6 2	1.6 2	1.5 7	1.5 8
Pri nin at 3 er 3 ce/ 1 D mb ear gs ece	8.9 8	6.3 7	10 .26	9.9 2	10 .9	.73 14	20 .03	16 .86	16 .90	.07 15	.00 15
(gr ) Or din div ide nd ary oss	1.6 8	1.6 8	1.6 8	1.6 8	1.6 8	1.0 0	1.0 0	1.0 0	1.0 0	1.0 0	1.0 0
(gr ) Int eri div ide nd m- oss	0.4 0	0.5 0	0.5 0	0.8 1	0.5 0	0.5 0	0.5 0	0.5 0	0.5 0	0.5 0	0.5 0
Gro div ide nd ield 3 ss y	8.2 0%	8.7 0%	9.0 0%	11. 20 %	10 .10 %	4.9 8%	5.0 0%	5.4 8%	5.4 8%	6.3 5%	6.3 5%
Ke da ha nd ly ing ba is ta y pe r s re - o n u er s
EB ITD A	NA	NA	NA	NA	NA	5.1 5	5.3 8	5.5 7	5.6 5	5.7 8	5.7 8
Ea rni ngs	NA	NA	NA	NA	NA	1.8 5	1.6 8	1.7 1	1.7 2	1.7 1	1.7 1
Pri nin at 3 ce/ 1 D mb ear gs ece er	NA	NA	NA	NA	NA	16 .28	87 17.	.96 15	.92 15	13 .84	13 .78

1 Calculation based on number of outstanding shares & last closing price of the respective year

2 Corresponds to the Net Income (Group Share) / weighted average number of outstanding shares

3 Based on the last closing price of the respective year

Our Shareholders

Proximus' main shareholder is the Belgian Government, owning 53.5% of the company's shares. Proximus itself held 4.5% of its own shares end-2018. The free float represented 42%.

Proximus share ownership – 31 December 2018

	Nu mb f s ha er o res	% ha s res	% Vo ing ig hts t r	% D iv ide nd ig hts r	Nu mb f s ha ith er o res w ing ig hts t vo r	Nu mb f s ha ith er o res w d iv ide nd ig hts r
Be lg ian sta te	1 8 0, 8 8 7, 5 6 9	5 3. 5 1 %	5 6. 0 5 %	5 5. 9 1 %	1 8 0, 8 8 7, 5 6 9	1 8 0, 8 8 7, 5 6 9
Pro im ha x us ow n s res	15 3 21 3 1 8 , ,	4. 5 3 %	0. 0 0 %	0. 25 %	0	8 2 0, 0 3 6
Fre flo at e-	14 1, 8 1 6, 24 8	41 9 5 %	4 3. 9 5 %	4 3. 8 3 %	14 1, 8 1 6, 24 8	14 1, 8 1 6, 24 8
Tot l a	3 3 8, 0 25 3 1 5 ,	0 0. 0 0 % 1	0 0. 0 0 % 1	0 0. 0 0 % 1	3 2 2, 0 3, 8 7 17	3 2 3, 2 3, 8 3 5 5

Evolution of treasury shares

En d o f p io d 2 0 17 er	15 3 8 6, 14 6 ,
Op ion ise d du ing 2 0 1 8 t s e xe rc r	-3 8, 3 9 8
D isc Pu ha Pla nt ou rc se n loy em p ee	-14 4 3 1 ,
io 2 0 8 En d o f p d 1 er	3 21 3 8 15 1 , ,

End-2018, Proximus held 15,321,318 treasury shares, representing 4.5% of the total number of shares. In the course of 2018, 14,431 treasury shares were used in a Discounted Share Purchase Plan, and 38,398 options were exercised 1 .

The voting rights of the treasury shares are suspended by law. The dividend rights of the treasury shares acquired in 2004 are also suspended, whereas the dividend rights for shares acquired as from 2005 are cancelled.

Under Belgian law, companies are prohibited from owning more than 20% of their outstanding share capital.

Transparency declarations

According to Proximus' bylaws, the thresholds as from which a shareholding needs to be disclosed have been set at 3% and 7.5%, in addition to the legal thresholds of 5% and each multiple of 5%.

In 2018, Blackrock Inc. notified of the following changes in their shareholding in Proximus.

To Proximus' knowledge, no other shareholder owned 3% or more of Proximus' outstanding shares as at 31 December 2018.

Notifications of important shareholdings to be made according to the Law of 2 May 2007 or Proximus' bylaws should be sent to:

FSMA on [email protected]
Proximus on investor.relations@ proximus.com

¹ For more information, please refer to the Remuneration report"

				Vo ing ig hts t r		To l inc l. e iva len t f ina ia l ins ta tru nts qu nc me
ic Da h h t hre h te on w s ld d: o wa s c ros se	if ie No d on t :	No if ier t	Re fo as on r if ica ion t t no :	ing ig f v hts fte ot nr o r a r th if ie d t ion ot ct e n ran sa :	% ing ig in f v hts l o f ot tot o r a 3 3 8, 0 25 1 3 5 v ing ig hts ot r ,	ing ig f v hts fte ot nr o r a r th if ie d t ion ot ct e n ran sa :	% ing ig in f v hts l o f ot tot o r a 3 3 8, 0 25 1 3 5 v ing ig hts ot r ,
27 /1 1/ 1 8	2 9 /1 1/ 1 8	Bla kro k In c c c.	<5 %	15 6 6 6, 7 2 3 ,	4. 6 3 %	17, 6 9 1, 8 5 1	5. 2 3 %
2 9 /1 0 /1 8	3 0 /1 0 /1 8	Bla kro k In c c c.	>5 %	17, 0 5 8, 0 4 9	5. 0 5 %	17, 8 4 6, 9 2 8	5. 2 8 %
2 3 /1 0 /1 8	25 /1 0 /1 8	Bla kro k In c c c.	<5 %	1 6, 8 6 8, 24 4	4. 9 9 %	17, 6 21 1 24 ,	5. 21 %
2 2/ 1 0 /1 8	24 /1 0 /1 8	Bla kro k In c c c.	>5 %	17, 15 6, 1 8 9	5. 0 8 %	17, 9 0 9, 0 6 9	5. 3 0 %
0 5 /1 0 /1 8	0 9 /1 0 /1 8	Bla kro k In c c c.	<5 %	1 6, 71 2, 3 9 0	4. 9 4 %	17, 44 9, 5 41	5. 1 6 %
27 0 9 8 / /1	2 8 0 9 8 / /1	Bla kro k In c c c.	% >5	6, 9 9 8, 9 9 1 4	0 3 % 5.	8 3 8, 9 17, 7 4	2 8 % 5.
14 / 0 9 /1 8	17/ 0 9 /1 8	Bla kro k In c c c.	<5 %	1 6, 7 2 6, 5 3 1	4. 9 5 %	17, 4 3 6, 9 6 9	5. 1 6 %
1 3 / 0 9 /1 8	14 / 0 9 /1 8	Bla kro k In c c c.	>5 %	17, 114 3 5 7 ,	5. 0 6 %	17, 8 3 3, 4 6 5	5. 2 8 %
1 2/ 0 9 /1 8	14 / 0 9 /1 8	Bla kro k In c c c.	<5 %	1 6, 7 2 9, 8 0 4	4. 9 5 %	17, 45 7, 5 5 2	5. 1 6 %
0 7/ 0 9 /1 8	1 0 / 0 9 /1 8	Bla kro k In c c c.	>5 %	17, 0 2 0, 8 15	5. 0 4 %	17, 75 9, 3 8 8	5. 25 %
0 5 / 0 9 /1 8	0 7/ 0 9 /1 8	Bla kro k In c c c.	<5 %	1 6, 75 3, 6 3 7	4. 9 6 %	17, 4 6 1, 8 6 9	5. 17 %
0 4/ 0 9 /1 8	0 6 / 0 9 /1 8	Bla kro k In c c c.	>5 %	17, 0 7 6, 9 5 5	5. 0 5 %	17, 7 6 5, 7 3 5	5. 2 6 %
3 0 8 8 1/ /1	0 3 0 9 8 / /1	Bla kro k In c c c.	% <5	6, 3, 6 8 1 77 1	9 6 % 4.	2 8, 21 17, 4 7	6 % 5. 1
14 / 0 8 /1 8	1 6 / 0 8 /1 8	Bla kro k In c c c.	>5 %	17, 2 3 5, 3 9 4	5. 1 0 %	17, 6 9 3, 0 7 9	5. 2 3 %
1 3 / 0 8 /1 8	14 / 0 8 /1 8	Bla kro k In c c c.	<5 %	1 6, 7 6 1, 21 8	4. 9 6 %	17, 2 3 9, 2 9 3	5. 1 0 %
0 6 / 0 8 /1 8	0 8 / 0 8 /1 8	Bla kro k In c c c.	>5 %	17, 27 9, 5 8 1	5. 11 %	17, 7 8 2, 9 3 6	5. 2 6 %
27 / 0 7/ 1 8	3 0 / 0 7/ 1 8	Bla kro k In c c c.	<5 %	1 6, 8 0 4, 1 3 3	4. 9 7 %	17, 44 1, 6 0 7	5. 1 6 %
0 9 / 0 7/ 1 8	11 / 0 7/ 1 8	Bla kro k In c c c.	>5 %	1 6, 9 21 0 8 7 ,	5. 0 1 %	17, 6 3 6, 0 5 1	5. 2 2 %
0 6 / 0 7/ 1 8	1 0 / 0 7/ 1 8	Bla kro k In c c c.	<5 %	1 6, 8 9 3, 8 45	5. 0 0 %	17, 7 2 0, 8 3 9	5. 24 %
0 0 8 4/ 7/ 1	0 6 0 8 / 7/ 1	Bla kro k In c c c.	% >5	0 0 8, 0 17, 7 7	0 3 % 5.	8, 0 8 1 11 14 ,	3 3 % 5.
0 2/ 0 8 7/ 1	0 0 8 4/ 7/ 1	Bla kro k In c c c.	% <5	6, 6 3 0 8 1 71 ,	9 3 % 4.	0 6, 0 8 17, 7 7	24 % 5.
2 9 / 0 6 /1 8	0 3 / 0 7/ 1 8	Bla kro k In c c c.	>5 %	1 6, 9 6 1, 5 15	5. 0 2 %	1 8, 0 41 8 6 8 ,	5. 3 4 %
2 0 / 0 6 /1 8	21 / 0 6 /1 8	Bla kro k In c c c.	<5 %	1 6, 7 3 9, 9 6 1	4. 9 5 %	17, 8 8 2, 3 4 0	5. 2 9 %
1 9 / 0 6 /1 8	21 / 0 6 /1 8	Bla kro k In c c c.	>5 %	1 6, 9 3 0, 9 15	5. 0 1 %	1 8, 0 24 4 3 1 ,	5. 3 3 %
1 8 / 0 6 /1 8	1 9 / 0 6 /1 8	Bla kro k In c c c.	<5 %	1 6, 74 0, 2 9 2	4. 9 5 %	17, 8 3 3, 8 0 8	5. 2 8 %
15 / 0 6 /1 8	1 8 / 0 6 /1 8	Bla kro k In c c c.	>5 %	17, 0 5 5, 7 3 0	5. 0 5 %	1 8, 1 0 5, 21 9	5. 3 6 %
1 3 / 0 6 /1 8	1 8 / 0 6 /1 8	Bla kro k In c c c.	<5 %	1 6, 77 6, 47 2	4. 9 6 %	17, 7 3 1, 9 9 0	5. 25 %
2/ 0 6 8 1 /1	0 6 8 14 / /1	Bla kro k In c c c.	% >5	6, 9 0 3, 6 9 9 1	0 0 % 5.	8 21 2 24 17, ,	27 % 5.
24 / 0 5 /1 8	25 / 0 5 /1 5	Bla kro k In c c c.	<5 %	1 6, 7 9 4, 4 8 6	4. 9 7 %	17, 6 0 3, 4 2 6	5. 21 %
2 3 / 0 5 /1 8	25 / 0 5 /1 5	Bla kro k In c c c.	>5 %	1 6, 9 41 9 4 9 ,	5. 0 1 %	17, 75 0, 8 8 9	5. 25 %
0 3 / 0 5 /1 8	0 7/ 0 5 /1 8	Bla kro k In c c c.	>5 %	1 6, 3 3 1, 3 2 9	4. 8 3 %	17, 0 21 3 5 2 ,	5. 0 4 %
0 1/ 0 5 /1 8	0 3 / 0 5 /1 8	Bla kro k In c c c.	<5 %	15 3 77 0 7 2 , ,	4. 5 5 %	1 6, 5 6 0, 7 9 2	4. 9 0 %
3 0 / 0 4/ 1 8	0 2/ 0 5 /1 8	Bla kro k In c c c.	>5 %	1 6, 0 7 9, 1 6 5	4. 7 6 %	17, 25 7, 4 3 4	5. 11 %

Shareholder remuneration

Shareholder return policy

Proximus commits to an attractive shareholder remuneration policy by returning, in principle, most of its annual free cash flow to its shareholders.

The return of free cash flow either through dividends or through share buybacks will be reviewed on an annual basis in order to keep strategic financial flexibility for future growth, organically or via selective M&A, with a clear focus on value creation. This also includes confirming appropriate levels of distributable reserves.

The shareholder remuneration policy is based on a number of assumptions regarding future business and market evolutions, and may be subject to change in case of unforeseen risks or events outside the company's control.

Shareholder return from the financial year 2018

On 28 February 2019, the Board of Directors approved to propose to the Annual General

Shareholder meeting of 17 April 2019 to return over the result of 2018 a gross dividend of EUR 1.50 per share, of which EUR 0.50 interim dividend per share was paid in December 2018.

After approval by the Annual Shareholder Meeting, the normal dividend of EUR 1.00 per share will be paid on 26 April 2019, with record date on 25 April 2019 and ex-dividend date on 24 April 2019.

This brings the total declared dividend over the result of 2018 to EUR 484 million.

In line with the announced 3-year commitment on 16 December 2016, Proximus expects to return over the result of 2019 a stable gross dividend per share of €1.50.

Investor Relations

Proximus Investor Relations (IR) aims at ensuring open communication with the Belgian and international investment world on a regular basis. Through transparent, consistent dialog with investors and financial

analysts, the Group strives for a fair share value based on high-quality financial information.

To keep Proximus' current and potential shareholders informed, Proximus' management speaks to the financial community on a regular basis. Each quarterly results announcement is followed by a conference call or investor/analyst presentation during which maximum time is reserved for a "questions & answers" session. Twice a year, typically following the full-year and half-year results, Proximus organizes a roadshow with top management covering the most important money centers of Europe

Financial calendar*

11 Ap il 2 0 1 9 r	Sta Qu iet io d a he d o f Q 1 2 0 1 9 r lts rt pe r a esu
17 Ap il 2 0 1 9 r	An l S ha ho lde ' m ing t nu a re rs ee
3 Ma 2 0 1 9 y	An f Q 1 2 0 1 9 r lts t o no un cem en esu
8 2 0 9 Ju ly 1	Sta Qu iet io Q 2 2 0 9 r d a he d o f 1 lts rt pe r a esu
3 0 2 0 9 Ju ly 1	Q 2 2 0 9 r An f 1 lts t o no un cem en esu
Oc 2 0 9 7 be 1 to r	Sta Qu iet io Q 3 2 0 9 r d a he d o f 1 lts rt pe r a esu
25 Oc 2 0 9 be 1 to r	Q 3 2 0 9 r An f 1 lts t o no un cem en esu
* D be sub jec ch ate t to s m ay ang e

and the United States. Furthermore, Proximus has participated in several major international investment conferences. In between these events, meetings and conference calls are held with senior management. In all these activities, management is supported by the Investor Relations team (IR).

The Proximus IR team offers daily support to the retail and institutional shareholders as well as to the sell-side analysts.

A strict quiet period is observed before the communication of the quarterly results. The start of the quiet period is published on the Proximus Investor Relations website.

Appendix

Remuneration Report

The remuneration policies of the Directors and of the Executive Committee are inspired by current legislation, by the corporate governance code and by the market practices and trends. Our company is taking particular care to provide relevant and transparent information on the principles and the level of remuneration of the members of the Board of Directors and of the Executive Committee, as well as an overview of the key elements of the remuneration policy of the Proximus Group.

Remuneration of the members of the Board of Directors

Director's remuneration policy

The principle of continuity with the past has been maintained. The policy adopted by the General Assembly of 2004 has remained applicable in 2018 and no substantial change of the policy is expected for the coming two years.

The CEO, Mrs. Dominique Leroy, who is the only executive Director, is not remunerated for the exercise of her mandate as member of

the Board of Directors and of the Committees, nor for any other mandate within the Group subsidiaries Boards of Directors.

The remuneration policy of the nonexecutive Directors foresees an annual fixed compensation of EUR 50,000 for the Chairman of the Board of Directors and of EUR 25,000 for the other members of the Board of Directors. All members of the Board of Directors have the right to an attendance fee of EUR 5,000 per attended meeting of the Board of Directors. This fee is doubled for the Chairman. Attendance fees of EUR 2,500 are foreseen for each member of an advisory committee of the Board of Directors. For the Chairman of the respective advisory

Appendix

Activities report and attendance to Board and Committee meetings

Name Board (total 7*) ACC (total 5) NRC (total 4) TIC (total 2**) Total yearly gross remuneration *** Stefaan De Clerck 7/7 5/5 4/4 2/2 166,499 € Dominique Leroy 7/7 2/2 0 € Karel De Gucht 7/7 2/2 64,500 € Pierre Demuelenaere 7/7 5/5 4/4 84,500 € Guido Demuynck 7/7 5/5 4/4 97,000 € Martin De Prycker 7/7 4/4 2/2 74,500 € Martine Durez 7/7 4/4 72,000 € Laurent Levaux 4/7 47,000 € Tanuja Randery 7/7 2/2 64,500 € Isabelle Santens 7/7 62,000 € Agnès Touraine 7/7 2/2 64,500 € Catherine Vandenborre 6/7 5/5 69,500 € Luc Van den hove 6/7 2/2 59,500 € Paul Van de Perre 7/7 5/5 74,500 €

ACC: Audit & Compliance Committee; NRC: Nomination & Remuneration Committee; TIC: Transformation & Innovation Committee (previously called Strategic & Business Development Committee)

* Extraordinary remunerated Board meeting on 6/6/2018

** TIC meeting of 6/6/2018 not remunerated

*** Total remuneration

• gross amounts on a yearly basis

for all members of the Board, this amount includes the telecom advantage
for the Chairman of the Board, this amount also includes the benefi t in kind related to the private use of a company car:

committee, these attendance fees are doubled. These amounts, defined in 2004, have remained unchanged since then and are not subject to indexation.

The members also receive EUR 2,000 per year for communication costs. For the Chairman of the Board of Directors, the communication costs are also doubled.

These remunerations are granted on an annual basis pro rata temporis of the duration of the mandate during the year in question and are paid semi-annually.

For the execution of their Board mandates, the non-executive Directors do not receive any variable performance-based remuneration such as bonuses or stock options, nor do they receive benefits linked to complementary pension plans or any other group insurance.

The Chairman of the Board of Directors is also Chairman of the Joint Committee and of the Pension Fund. Mrs Catherine Vandenborre is member of the Board of the Pension Fund. They do not receive any fees for these board mandates.

Overview of the Directors' remuneration

The total amount of the remunerations granted in 2018 to all the members of the Board of Directors, Chairman included, is amounting to gross EUR 1,000,499.

The individual Directors' gross amounts paid out to the Directors in 2018, based on their activities and attendance to Board and Committee meetings, is presented in the following table.

These amounts have been granted based on seven Board meetings, one being an extraordinary and remunerated Board meeting, and eleven Committee meetings.

xim Pro us	Gro up	An nua	rt 2 l R epo	01 8

Global reward policy and principles

Our Group has an innovative remuneration policy which is regularly assessed and updated through close cooperation with external human resources fora and universities. The remuneration policies of our employees are defined in a process of dialogue with the Board of Directors and with the social partners.

Because of our history as a public-service company, there are some differences in our dynamics and structure, compared to the private sector. This has a considerable influence on how our remuneration policy has evolved. Our Human Resources department has 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 harmonized policies between civil servants and contractual employees.

To accomplish our company goals within a highly and fast changing competitive global telecom market, we need qualified, talented and engaged employees working in close

cooperation in a high performance culture. To foster this culture, it is critical to have a market attractive Global Rewards Program for both the Executive Committee members and all other members of the Top Management, as well as for the entire workforce.

The main objectives of our 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 a fair and equitable remuneration to our staff (both to civil servants and to the contractual employees), and competitive on the market;
To recognize and reward high performance and the promotion of the company values and culture;
To link pay to both individual performance and the overall success of our company;
To enable our company 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.

Our company 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 our 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, we have won several awards for the continuous efforts of our company to create a balanced working environment for its staff.

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

Executive remuneration

Procedure for drafting of the remuneration policy and defining of the remuneration level of the members of the Executive Committee

Both the executive remuneration policy and the individual remuneration packages for the CEO and the other members of the Executive Committee are set by the Board of Directors upon recommendations from the Nomination & Remuneration Committee. The individual remuneration packages are defined according to the individual responsibilities and skills.

It consists of a balanced executive remuneration policy rewarding executives competitively and at rates which are attractive in the market, aligning the interests of management and shareholders and complying with the governance rules applicable in Belgium. Our company wants to attract and retain high performing top executives for its Executive Committee and wants to recognize clear role models, who deliver a high level of performance and promote the company values.

Like the rest of the top management of our company, the members of the Executive Committee benefit from dedicated reward programs which focus on the principles of our strategy to consistently reward high performance of individuals and of the company. A significant part of their total remuneration is variable, based on stringent quantitative and qualitative performance criteria, and is driven by our company's objectives in terms of performance and growth. This way, our company wants to encourage its executives to deliver a longterm, sustainable profitable growth, in line with our Group's strategy and the expectations of our shareholders.

The market positioning of these remuneration packages is reviewed on a regular basis by benchmarking the remuneration of the members of our Executive Committee against both the BEL 20 companies (financial sector excluded) and a set of peer companies in the European Telecommunications and ICT sector. This analysis aims to ensure that the global remuneration of each member of the Executive Committee remains adequate, fair and in line with market practices and consistent with the evolution of both his/ her responsibilities and the market situation of the Proximus Group in terms of size, scope of activities and financial results.

Current remuneration policy does not provide for a specific contractual claw back stipulation in favour of our company for the variable remuneration of the members of the Executive Committee, CEO included, allocated on the basis of incorrect financial information.

To distinguish ourselves from other employers, our company seeks to excel in the total package offered, by providing not only a cash remuneration but also numerous other benefits.

A fundamental principle of our company's remuneration policy is the degree of freedom for the top management, the CEO and the other members of the Executive Committee included, with regard to the choice of pay out mean of their variable remuneration.

All the amounts mentioned in this report are gross amounts before employer's social contribution.

Executive Committee's remuneration structure

The remuneration of the members of the Executive Committee is built upon the following components:

Basic remuneration
Short-term variable remuneration
Long-term variable remuneration
Group insurance premiums and other benefits

The relationship between the distinct remuneration components of the CEO and of the other members of the Executive Committee is illustrated in the graphs below. These graphs show the relative importance of the various components of on-target remuneration.

As per her contract, the CEO is only entitled to a short-term variable remuneration which payment is spread over 3 years. The variable remuneration of the other members of the Executive Committee consists of a short-term part and a long-term part, with equal target amounts which are set up as percentages of the basic remuneration. This remuneration policy therefore fully complies with the article 520ter of the Belgian Company Code and with the Belgian law of 6 April 2010.

As for the Executive Committee members others than the Chief Executive Officer, the Board of Directors took action end 2015 to evolve towards an alignment of their variable remuneration on market median practices, aligning their minimum target short- and long-term variable remuneration as from the performance year 2016.

As mentioned later in this report, the longterm variable remuneration for the Executive Committee members others than the Chief Executive Officer is allocated through a long-term incentives plan consisting of a

Proximus Group Annual Report 2018

long-term Performance Value Plan which has been adopted by our company in 2013. The design of this Performance Value Plan has been reviewed. As from the 2019 grant, in order to better reflect the Group's achievements, additional company driven performance criteria will be added to the Total Shareholder Return (see under "long-term variable remuneration"), which is the only performance criterion of the current plan. These additional performance criteria will consist of the Group free cash flow and the reputation index.

No other substantial change of the remuneration policy is expected for the coming two years.

Basic remuneration

The basic remuneration consists of a basic salary earned by Chief Executive Officer and by the other members of the Executive Committee for the reported year in such respective roles. This remuneration is defined by the nature and the specificities of the function, is allocated regardless of the results and is contractually subject to the index applicable to Proximus.

The basic remuneration of the Executive Committee members is regularly reviewed by the Nomination & Remuneration Committee, based on an extensive review of performance and assessment of potential provided by the Chief Executive Officer, as well as on external benchmarking data on market practices. Thereby, the evolution of the basic remuneration depends on the competency level of the Executive Committee member, of his or her continued performance level, of the evolution of his or her responsibilities, as well as of the evolution of the market. Possible adjustments are always submitted to the Board of Directors for approval.

Basic remuneration in kEUR before employer social contribution

It should be noted that in 2017 there was no active Chief Consumer Market Offi cer for 6 months, while in 2018 Guillaume Boutin acted for a full year.

■ 2017 ■ 2016

Year-to-year variations in the amounts are mainly resulting from the 2% index of October 2018 (former one was in July 2017), and from the fact that there has been no Chief Consumer Market Officer during six months in 2017.

■

Short-term variable remuneration Short-term variable remuneration components

Our short-term variable remuneration system has been designed to support the strategy and the values of our Group and to enhance a performance-based management culture.

Our company indeed considers close collaboration of all employees to be imperative, all efforts need to be focused and aligned towards Group success.

Group results are therefore highly impacting (for 60%) the short-term variable remuneration of the members of the Executive Committee, on top of individual performance (for 40%), and this in line with our company values.

Group performance – Key Performance Indicators (KPIs)

Short-term annual variable remuneration is thus partly calculated – for 60% – in relation to performance against Key Performance Indicators (KPI's) set by the Board of Directors upon recommendation of the Nomination & Remuneration Committee. These performance indicators include financial indicators as well as non-financial indicators at Group level.

The performance indicators at Group level are as follows:

the business cash flow
the number of new customers in voice, fix, internet and TV businesses, as well as churn reduction
the Simplification and the Customer Experience, measuring our progresses versus our ambition in these domains
the "employee engagement index", measuring on a yearly basis our employees' engagement, agility and strategic alignment.

The achievement of these KPI's are regularly followed-up and communicated. Business cash flows is based on audited reported financial figures that are adjusted to obtain 'underlying' financial figures after exclusion of 'incidentals'. Non-financial indicators are measured by internal and external agencies specialized in market and customer intelligence, of which the processes are audited on a regular basis.

The result at Group level is based on a predefined formula taking these key performance indicators into consideration according to a predefined weight per indicator.

Individual performance

On top of the Group results, the individual performance is annually evaluated in the course of the first quarter following the end of the year by the Board of Directors. This evaluation is based on the recommendations made by the Nomination & Remuneration Committee versus pre-defined measurable individual objectives and versus the promotion of our company values and culture.

The individual performance is taken into account for 40% in the short-term variable remuneration. Besides the individual differentiation in terms of talent, performance and impact on the Group performance, the Board of Directors ensures the consistency between the total allocated amount for the individual performance and the Group results.

Short-term variable remuneration allocation

The Chief Executive Officer receives a target short-term variable remuneration amounting to gross EUR 150,000. This amount is subject to the index applicable to Proximus. For the other members of the Executive Committee, the target short-term variable remuneration is expressed in a percentage of the basic remuneration.

As explained above, the short-term variable remuneration is allocated by the Board of Directors upon proposal of the Nomination & Remuneration Committee. The amount effectively allocated to the Chief Executive Officer and to the other members of the Executive Committee varies according to the Group results and to the evaluation of the individual performances by the Board of Directors.

In case of objectives realisation at 100%, the Chief Executive Officer or the other member of the Executive Committee gets 100% of his short-term variable remuneration target amount. In case of sustained excellent performance at Group and individual level, the short-term variable remuneration can go above the 100% of the target amount, with a cap at 200%, according to a linear allocation curve. Conversely, this percentage can drop down to 0% in case of severe underachievement.

As per her contract and in accordance with article 520ter of the Belgian Company Code, the payment of the short-term variable remuneration of the CEO is currently spread over 3 years. Indeed, 50% of her variable remuneration is related to performance indicators of the accounting year (= direct short-term variable remuneration) while the other 50% will be deferred: 25% is related to performance indicators pertaining over a period of 2 years and 25% is related to performance indicators pertaining over a period of 3 years (= deferred short-term variable remuneration).

In 2018, a deferred short-term variable remuneration, for the performance indicators related to 2015 and 2016 has been allocated to the CEO on top of a direct short-term variable remuneration, for the performance indicators related to 2017.

In the last couple of years, the Board of Directors did a positive evaluation of the realizations of the Chief Executive Officer, given the overachievement of her objectives and the long term value she has created since her nomination in this role.

In 2018, a direct and deferred short-term variable remuneration were allocated to her for respectively gross EUR 111,585 (performance indicators related to 2017) and gross EUR 113,710 (EUR 54,010 linked to performance indicators related to 2016 and EUR 59,700 linked to performance indicators related to 2015).

The total short-term variable remuneration effectively allocated in 2018 to the other members of the Executive Committee (2017 performance year) amounts to gross EUR 1,110,745.

1,111

1,106

• Chief Executive Officer : impact of the index of July 2017 and of the variations in the Group KPI results over the last 3 performance years.

• Members of the Executive Committee others than the CEO: Impact of the index of July 2017 an of the KPI results which slightly increased for performance year 2017 compared to performance year 2016.

Long-term variable remuneration

The Chief Executive Officer is not eligible to long-term variable remuneration.

The long-term variable remuneration is allocated to the other members of the Executive Committee by the Board of Directors upon recommendations of the Nomination & Remuneration Committee. Various factors are considered for the decisions taken by the Board of Directors in terms of effective allocation, such as the retention of talents, the individual performance evaluations or/ and the Group results. This allocation is made through a long-term incentives plan, currently consisting of a long-term Performance Value Plan which has been adopted by our company since 2013.

Long-term Performance Value Plan

The long-term incentive plan offered by our company to its executives currently consists of a "Performance Value Plan". This plan has been designed as to keep our executive remuneration policy balanced and attractive, as well as compliant with the shareholders' expectations. It aims to ensure that the actions and initiatives taken by the executives are guided by long-term interests. Therefore, this remuneration clearly constitutes a long-term incentive.

Our Performance Value Plan is based on a balance between the individual and the Group performances.

The performance criterion of this plan is the Total Shareholder Return. Our Total Shareholder Return is measured against the respective Total Shareholder Return of a basket of 10 other European telecom operators.

Peer companies currently included in the basket

BT
Deutsche Telekom
OTE
KPN KON
Orange
Swisscom
Telecom Italia
Telefonica
Telenor
Telia Company

Under this Performance Value Plan, the granted awards are blocked for a period of 3 years, after which the Performance Values vest. After this period, the beneficiaries may exercise their Performance Values and the amounts effectively allocated will depend on the performance of our Total Shareholder Return compared to the group of peer companies at the exercise time.

T he design of this Performance Value Plan has been reviewed further to a benchmark analysis, aimed at a better alignment on

market practices and more particularly on the practices of the other European telecommunications companies. As from the 2019 grant, in order to better reflect the Group's achievements, additional company driven performance criteria will be added to the Total Shareholder Return (see below), which is the only performance criterion of the current plan. These additional performance criteria will consist of the Group free cash flow and the reputation index.

The CEO is not eligible to long-term variable remuneration. As a consequence, no longterm variable remuneration has been granted to her since her nomination.

The total long-term variable remuneration effectively granted to the members of the Executive Committee others than the CEO was amounting to gross EUR 1,005,000 EUR in 2017 and to gross EUR 1,025,000 EUR in 2018.

Long-term variable remuneration in kEUR before employer social contribution

1,025

1,005

■ 2018 ■ 2017

Former long-term variable remuneration plan: Stock Options Plan

Stock options have been granted to the senior executives from 2004 until 2012, members of the Executive Committee included.

Only one member of the Executive Committee still holds stock options, as shown in the table below. Neither the other members of the Executive Committee nor the CEO hold any more stock options.

In 2017 and 2018, the CEO and the other members of the Executive Committee did not receive any Proximus shares nor Proximus stock options.

Overview of the stock options still held by the members of the Executive Committee

		Ba rt V AN DE N M EE RS CH E
ST OC K O PT ION S
20 18 Jan 1st on ua ry ,		00 0 15 ,
Exe rcis ed	Nu mb er	0
in 2 01 8	Ye of nt ar gra	-
Lap sed	Nu mb er
in 2 01 8	Ye of nt ar gra
For fei ted	Nu mb er
in 2 01 8	Ye of nt ar gra
r 3 20 18 De be 1, on cem		00 0 15 ,

The CEO and the other members of the Executive Committee do not hold stock options anymore.

Group insurance premiums and other benefits

Group insurance premiums

The CEO and the other members of the Executive Committee are participating in a complementary pension scheme. This complementary pension scheme consists of a "Defined Benefit Plan" offering rights which are in line with market practices.

They also benefit from other group insurances in line with market practices, such as life and invalidity insurances.

Other benefits

Our Group wants to stimulate its executives by offering a portfolio of benefits and advantages that are competitive in the market place and consistent with the Group's culture. The CEO and the other members of the Executive Committee receive benefits on top of their remuneration, including medical insurance, the use of a company car, welfare benefits and other benefits in kind. Comparative assessments are regularly made on these

benefits which are adapted according to the common market practices.

General overview

Below chart reflects the remuneration and other benefits allocated directly or indirectly to the members of the Executive Committee in 2018 and 2017 by the company or any other undertaking belonging to the Group (benefit based on gross or net remuneration, depending on the type of benefit).

It should be noted that the global remuneration has been affected by the index of October 2018, by the variations in terms of Group KPI results over the last performance years and by the nomination of a new Chief Consumer Market Officer mid-2017.

Remuneration overview of the members of the Executive Committee

	CE	O	Ot he be f th e E uti Co itte r m em rs o xec ve mm e
RE MU NE RA TIO N	20 17	20 18	20 17	20 18
sic tio Ba rem un era n	10 8 € 51 5,	52 2, 81 0 €	2, 25 3, 0 € 54	2, 46 6, 94 6 € *
Dir ria ion sh ble ect ort -te rat rm va re mu ne	10 8, 02 0 €	58 5 € 111 ,	10 53 7 € 1, 5,	110 5 € 1, 74 ,
De fer red sh ria ble ion ort -te rat rm va re mu ne	119 175 € ,	113 710 € ,	0 €	0 €
Lon Ter ari ab le r tio g- m v em un era n	0 €	0 €	1, 00 5, 00 0 €	1, 02 5, 00 0 €
Re tire d p loy be nef its nt ost nt me an -em p me	18 1, 24 3 €	18 0, 00 3 €	51 6, 193 €	49 4, 31 9 €
Ot he r b efi ts en	13 35 7 € ,	12 43 8 € ,	10 8, 43 3 €	124 172 € ,
SU BT OT AL (ex ) cl. loy er' oci al c trib uti em p s s on on	93 6, 90 3 €	94 0, 54 6 €	4, 98 8, 70 3 €	5, 22 1, 18 2 €
Ter min ati be nef its on	0 €	0 €	0 €	0 €
TO TA L (ex cl. loy er' oci al c trib uti ) em p s s on on	93 6, 90 3 €	94 0, 54 6 €	4, 98 8, 70 3 €	5, 22 1, 18 2 €

* It should be noted that in 2017 there was no active Chief Consumer Market Offi cer for 6 months, while in 2018 Guillaume Boutin acted for a full year.

All these amounts are gross amounts before employer's social contribution.

Main provisions of the contractual relationships

Contractual agreement related to the mandate of the CEO

In January 2014, Mrs. Dominique Leroy has started her six-year mandate as CEO. She has a contract as a self-employed executive

and is thus not subject to employers' social security charges.

at least 5% of its consolidated revenues. If activated by our company, she would receive an amount equal to one year's base salary as compensation. The CEO is also bound by exclusivity and confidentiality obligations and is liable for respecting the company codes and policies, like the Code of Conduct and the Dealing Code.

If the CEO mandate is revoked before the end of the six-year term, our company will pay her a contractual termination indemnity equal to one year's base salary.

Main contractual terms of the other Executive Committee members

All other members of the Executive Committee, who are all bound by a noncompetition 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. If activated by our company, they would receive an amount equal to six months' base salary as compensation.

Just like the CEO, the other members of the Executive Committee are also bound by exclusivity and confidentiality obligations and is liable for respecting the company codes and policies, like the Code of Conduct and the Dealing Code.

They have a contractual termination clause which foresees an indemnity of one year's remuneration.

Appendix

O i f f i i l i f i t v e r v e w o n o n- n a n c a n o r m a o n	1 1 8
T r a n s p a r e n c y	1 2 2
S i l f i o c a g u r e s	1 3 4
E i l f i t n v r o n m e n a g u r e s	1 3 8
G R I C i d t t o n e n n e x	1 4 2
M i l i t t a e r a o p c s	1 5 7
K P I d i i t e s c r p o n	1 5 8

Overview of non-financial information

Pa ge	Str ic p illa ate g r	Hig h m ria l ate ics top	Th e/ KP I* em	t 2 01 8 Ta rge	t 2 01 8 Re sul	t 2 01 Re sul 7	Ta t 2 01 9 & rge bey d on	GR I K PI/ ref	Im / S D G ct pa
ling dig ita l lif En ab a b ett er e
30 p.	l inf Dig ita tru ctu ras re	Inn tio nd ova n a tai ble sus na inf tru ctu ras re	4G ind oo r co ver ag e	For eti tiv co mp e rea son s w e do wi sh not dis clo to se tar ts o ge n o ur inf tru ctu ras re inv est nts me	99 .5%	98 .1%	For eti tiv co mp e rea son s. w e do wi sh not dis clo to se tar ts o ge n o ur inf tru ctu ras re inv est nts me	Ind ire ct mic eco no im ts pac Loc al nit ies com mu
			4G tdo ou or cov era ge		99 .9%	99 .8%			9. I nd ust ry, tio n & Inn ova Inf tru ctu ras re Su ina 11. ble sta Cit ies & Co itie mm un s
			Fix ed Int 30 Mb et: ern ps cov era ge		92 %	86 %
			Co mb ine d A e V DS L & ver ag AD SL ed spe		72 .6 M bps	68 Mb ps
			Ve rin e in cto g c ove rag ium Be lg		88 .6%	83 %
	l inn Dig ita tio ova n	Dig ita l Co eti tiv mp en ess nie of com pa s d in stit uti an on s	Ac tiv e M 2M rds ca	1.4 Mi llio n	1.3 Mi llio n	1.2 Mi llio n	1.8 Mi llio n	ire Ind ct mic eco no im ts pac	9. I nd ust ry, Inn tio n & ova Inf tru ctu ras re
31 p.			(n ICT ati al + re ven ues on al) int ati ern on	€5 33 illio .5 M n	€5 61 Mil lion	€5 .2 Mil 09 lion	€5 illio 77. 4 M n
			Nu mb of jec ith ts w er pro ive rsit ies /ed tio un uca n ins titu tes	No aila ble t av	39	No t Av aila ble
36 p.	Dig ita l tr ust	Pri nd dat vac y a a uri ty sec	Int ati al c ific ati ert ern on on s riv rel d t d ate o p acy an be ity cy rse cur	6	6	6	aila No ble t av	Cu sto r Pri me vac y	11. Su ina ble sta Cit & Co ies itie mm un s

*The defi nition of each KPI can be found in the section "KPI defi nition".

Pa ge	Str ic p illa ate g r	Hig h m ria l ate ics top	Th e/ KP I* em	t 2 01 8 Ta rge	t 2 01 8 Re sul	t 2 01 Re sul 7	Ta t 2 01 9 & rge bey d on	GR I K PI/ ref	Im / S D G ct pa
	Ca rin for ake ho lde r st g ou rs
50 p.	Do ing bu sin ess rig ht	sin Bu ess du nd ct a con eth ics	inv iga Nu mb of ted est er cas es by the Inv iga tio est ns de fo r vi ola tio rtm ent pa n lici of es/ cod f po e o du ct con	30	29	52	30	An ti-c tio orr up n	8. D nt W ork ece d E ic an con om h wt gro
			Nu mb of w his tle blo win er g cas es	No aila ble t av	7	7	No aila ble t av
41 p.		Qu alit y du d cts pro an vic ser es	Ble nd ed isfa ctio sat usa ge n (re sid ial ) ent tom cus ers	No t d isc los ed	94 .6%	93 .7%	No t d isc los ed	Eco mic no rfo pe rm an ce Cu r h eal th sto me d s afe ty an An ti itiv pet com e be hav iou r	3. G d H eal th oo
	Cu r fi sto rst me	Pri cin g illin d b an g tra nsp are ncy	De in lain ts cre ase com p o in ice rel d t ate vo s (re ) sid ial ent tom cus ers	isc No t d los ed	-14 .1% vs '17	-	No t d isc los ed
		Cu sto me r rel ati shi on p	Ha Ho in- ho ppy use me eri isfa ctio sat ate exp en ce n r	We do n't dis clo NP S se	89 %	90 %	No t d isc los ed
		nsi Re ble spo rke tin ma g	lain P ( # c ts f JE # o f om p rom ed) wh ich jus tifi	No aila ble t av	7( 2)	5( 0)	No aila ble t av
44 p.	Em loy p ee car e	ita Hu l ma n c ap d e loy an mp ee dev elo ent pm He alt h a nd saf ety	Pe of Pro xim nta rce ge us loy ing Of fice 36 5 em p ees us On eD riv e	74 %	79 %	37 %	x	Em loy nt p me Lab r/ ou Ma ent nag em Re lat ion s	8. D nt W ork ece d E ic an con om
			Pro rtio f P imu po n o rox s loy tiv ely lo oki em p ees ac ng for kn led le b ow ge or peo p y usi ise cia l nte ng ou r e rpr so ( ) rk #W AP net wo	95 %	96 %	93 %	x
			Em loy nt p ee en ga ge me	72 .7%	72 .7%	72 .3%	72 .7%	Tra inin nd g a Ed tio uca n	Gro h wt
			Fre f rat qu en cy e o ati cci al a de nts occ up on	Sta in ble rel ati to on vio pre us yea r	6.8	6.6	Sta in ble rel ati to on vio pre us yea r	Oc ati al cup on He alt h a nd saf ety	3. G d H eal th oo
			Sev eri f o ion ty rat pat e o ccu ide nts acc	Sta ble in ati rel to on vio pre us yea r	0.2 8	0.3 6	Sta ble in ati rel to on vio pre us yea r

Pa ge	Str ic p illa ate g r	Hig h m ria l ate ics top	Th e/ KP I* em	Ta t 2 01 8 rge	Re sul t 2 01 8	Re sul t 2 01 7	Ta t 2 01 9 & rge bey d on	GR I K PI/ ref	Im / S D G ct pa
Co ibu tin iet ntr to g soc y
53 p.	Dig ita l fo ll r a	Co ivit nd ect nn y a dig ita l in sio clu n	Pe of ible nta rce ge acc ess (at ted de vic lea st f 1 tes es or dis ab ilit ) ate y c go ry	90 %	91 %	10 0%	90 %	Loc al nit ies com mu	9. I nd ust ry, Inn tio n & ova Inf tru ctu ras re 11. Su ina ble sta Cit ies & Co itie mm un s
			of j Nu mb ob ker er see s d b init iat ive rte sup po y o ur s in B elg ium	35 0	40 4	32 7	35 0
			Nu mb of sic k c hild er ren ted th eir sch l by to con nec oo Be dn nd Tak e O ff et a	Ov 1, 00 0 er	Ov 1, 00 0 er	Ov 80 0 er	Ov 1, 10 0 er
Re ctin lan et spe g o ur p
61 p. Env iro al ent nm fig .13 8- ure s, p 14 0	Be ing CO 2 al utr ne	En nd erg y a ho gre en use ga ses	Ele icit sed wh ich ctr y u ca me fro ab le e m r en ew ne rgy sou rce s	98 %	99 %	98 %	10 0% in 20 20	En erg y	13 . Cl ima te Ac tio n
			Ca rbo ral ity lev el f eut n n or ion nd bu sin rat ow n o pe s a ess vel tra	10 0%	10 0%	10 0%	10 0%
			Ca rbo mis sio 1+2 n e ns sco pe red evi to com pa pr ou s y ear	-4%	-12 %	-4%	-4% arl ye y
			En ion pt erg y c on sum 20 08 red to com pa	No aila ble t av	-27 %	-24 %	Co nti s im nu ou ent pro vem
63 p. iro Env al ent nm fig .14 1 ure s, p	ing cir Be cul ar	Cir cul ar eco no my : ic w ele ctr ast on e d e ipm ent an qu ling rec yc	Pe of w nta ast rce ge e led d o rec yc , re use r ted com pos	No aila ble t av	87 %	85 %	90 % by 20 25	ials Ma ter	12 . Re nsi ble spo Co tio nsu mp n d P rod ion uct an
			Co lle d m ob ile ho cte p nes	No aila ble t av	18 27 9 ,	18 49 3 ,	20 0.0 00 in sch ls w ith oo Go od lan et p ium Be lg by 20 20
				Re fur bis hed od nd TV m em s a de cod ers	No aila ble t av	40 5, 54 4	32 2, 19 4	No aila ble t av

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Pa ge	Str ic p illa ate g r	Hig h m ria l ate ics top	Th e/ KP I* em	t 2 01 8 Ta rge	t 2 01 8 Re sul	t 2 01 Re sul 7	Ta t 2 01 9 & rge bey d on	GR I K PI/ ref	Im / S D G ct pa
64 p. Su ina sta Env iro al ent nm ly c sup p fig .14 1 ure s, p	ble	Su ina ble sta	Pe of lier nta rce ge sup p s ed usi ial crit eri scr een ng soc a ( inc l. w ork ing nd itio co ns, hu ig hts c.) wh , et ma n r o eiv ed ilve old rec a s r o r g nit ion lev el rec og	80 %	87 %	85 %	80 %	Su lier pp Env iro al ent nm As ent ses sm ig Hu hts ma n r nt ass ess me Su lier cia l pp so nt ass ess me	12 . Re nsi ble spo Co tio nsu mp n d P rod ion uct an
	hai n	Su ly Ch ain pp	Pe of lier nta rce ge sup p s usi ed scr een ng iro al c rite ria wh ent env nm o eiv ed ilve old rec a s r o r g nit ion lev el rec og	80 %	83 %	82 %	80 %		13 . Cl ima te Ac tio n

Transparency

About this report

Scope of the sustainability information

The purpose of this report is to inform our stakeholders about our contribution to society, in relation with our ambition, sense of purpose and goals. Our stakeholders are all the individuals and organizations affected by our operations or with whom we have a relationship. These include but are not limited to: customers (both corporate and residential), employees, shareholders, suppliers, the press, government representatives & institutions, partners and social organizations. For more information on how we maintain our relationship with our stakeholders, see the section on Stakeholder Dialogue.

This report has for scope the Proximus Group, including the subsidiaries in which Proximus has a majority shareholding. Unless stated otherwise, references to Proximus should be read as referring to the Proximus Group, except for the section "Our contribution to Belgium", "Overview of non-financial information" and "GRI content index" which are focused on Proximus in Belgium unless stated otherwise. In this report (including all its appendix), Proximus S.A. refers to the activities of the Proximus Group in Belgium. In the Netherlands, our division is called Telindus Netherlands. In Luxembourg, we operate as Proximus Luxemburg under the brand names Tango and Telindus Luxembourg. Internationally, we are active through our affiliate, BICS. We also have other affiliates integrated in our Entreprise Business Unit such as Be-Mobile, Davinsi Labs, Umbrio, Codit, ION-IP, etc.

For our financial information, we include new acquisitions in our report as of the first full year of ownership.

Reporting criteria non-financial information

The Annual Report is published in March 2019. For the sustainability information included in this report we followed the indications of the Global Reporting Initiative (GRI) guide. We comply with the EU Directive Non-Financial Reporting (translated in the Belgian law of 3rd September 2017) and integrated all elements in our Annual Report.

Re ire EU nts qu me Dir ive ect	Su bto ic p	Ch / P efe ter ap ag e r ren ce
	Th e b usi nes s iro ent env nm	Pro xim lan 8-9 at a us g ce, p. For ord fro CE O & Ch air .4- 7 ew m o ur ma n, p Key hie .13 -16 ent ac vem s, p
	Or niz ati d ga on an str uct ure	Pro xim lan 8-9 at a us g ce, p. Pro xim de l, p .68 -69 us gov ern an ce mo
	Ma rke he he ts w re t de kin rta rat un g o pe es	Pro xim lan 8-9 at a us g ce, p. GR I Co Ind 14 2-1 56 nte nt ex, p.
A b rie f d rip tio f th esc n o e sin bu od el ess m	Ob jec tiv d es an ies str ate g	For ord fro CE O & Ch air .4- 7 ew m o ur ma n, p Pro xim lan 8-9 at a us g ce, p. Key hie .13 -16 ent ac vem s, p #s hif dig ita l ou 3- tto r st rat r n ew yea egy , 17- 19 p.
	Ma in t ds d ren an fac s th tor at ffe he ct t ma y a de kin 's f rta utu un g re dev elo ent pm	Ris k m 91 -99 ent rt, an ag em re po p. For ord fro CE O & Ch air .4- 7 ew m o ur ma n, p xim 8-9 Pro lan at a us g ce, p. (av Ma aila ble ent rt, nag em re po on ou r te) bsi we
	A d rip tio f th esc n o e lici ed po es pu rsu , inc lud ing du e dil ige nce	Ca rin for loy 44 -50 g ou r e mp ees , p. Ris k m 91 -99 ent rt, an ag em re po p. Re ion 10 6-1 15 rat rt, mu ne re po p.
cia Re lev l an d ant so (e el m att pe rso nn ers .g. tc.) HR fet , sa y e	Th f th utc e o om e o ose lici po es	Ca rin -50 for loy 44 g ou r e mp ees , p.
	Pri nci le r isk s in p ow n tio d w ith in op era ns an ain lue ch va	Ca rin for loy 44 -50 g ou r e mp ees , p. So cia l fig .13 4-1 37 ure s, p Ris 91 -99 k m ent rt, an ag em re po p.
	Ho isk w r s a re ed ma nag	Ca rin for loy 44 -50 g ou r e mp ees , p. Ris k m 91 -99 ent rt, an ag em re po p.
	ina nci No n-f al key rfo pe rm an ce ind ica tor s	Ca rin for loy 44 -50 g ou r e mp ees , p. So cia l fig .13 37 4-1 ure s, p Ris k m 91 -99 ent rt, an ag em re po p. Ov iew of n-f ina nci al i nfo ati erv no rm on , 118 -12 1 p.

EU Directive 2014/95/EU: Non-Financial Information and Diversity information

reference table, translated in the Belgian law of 3rd September 2017

Re ire EU nts qu me Dir ive ect	Su ic bto p	Ch / P efe ter ap ag e r ren ce	Re ire EU nts qu me Dir ive ect	Su ic bto p	Ch / P efe ter ap ag e r ren ce
	rip tio A d f th esc n o e lici ed po es pu rsu , inc lud ing du e dil ige nce	Re ctin lan 61- 65 et, spe g o ur p p. Ris k m 91 -99 ent rt, an ag em re po p.		rip tio A d f th esc n o e lici ed po es pu rsu , inc lud ing du e dil ige nce	Do ing bu sin rig ht, 50 -51 ess p. Pro xim de l, p .68 -69 us gov ern an ce mo
	Th f th utc e o om e o ose lici po es	ctin 61- 65 Re lan et, spe g o ur p p. Env iro al f igu 13 8-1 41 ent nm res , p.		Th f th utc e o om e o ose lici po es	Do ing bu sin rig ht, 50 -51 ess p.
Re lev vir l ant nta en on me rs ( . cl ima tte te ma e.g rel d im ts) ate pac	Pri nci le r isk s in p ow n tio d w ith in op era ns an lue ch ain va	Re ctin lan 61- 65 et, spe g o ur p p. Env iro al f igu 13 8-1 41 ent nm res , p. Ris k m 91 -99 ent rt, an ag em re po p.	Re lev ant att m ers wit h r ti ect to esp an tio nd bri be cor rup n a ry	Pri nci le r isk s in p ow n tio d w ith in op era ns an lue ch ain va	Do ing bu sin rig ht, 50 -51 ess p. Ris k m 91 -99 ent rt, an ag em re po p.
	isk Ho w r s a re ed ma nag	Re ctin lan 61- 65 et, spe g o ur p p. Env iro al f igu 13 8-1 41 ent nm res , p. Ris 91 -99 k m ent rt, an em re		Ho isk w r s a re ed ma nag	Do ing bu sin rig ht, 50 -51 ess p. Ris k m 91 -99 ent rt, an ag em re po p.
	No n-f ina nci al key rfo pe rm an ce	ag po p. Re ctin lan 61- 65 et, spe g o ur p p. Env iro al f igu 13 8-1 41 ent nm res , p. Ov iew of n-f ina nci al i nfo ati		No n-f ina nci al key rfo pe rm an ce ind ica tor s	Do ing bu sin rig ht, 50 -51 ess p. Ris k m 91 -99 ent rt, an ag em re po p. Ov iew of n-f ina nci al i nfo ati 119 erv no rm on , p.
	ind ica tor s	erv no rm on , 12 0-1 21 p.	Ins ig ht int he div ity o t ers	A d rip tio f th esc n o e lici ed po es pu rsu	Ca rin for loy 44 g ou r e mp ees , p. xim .68 -69 Pro de l, p us gov ern an ce mo
Re lev wi th ant att m ers	rip tio A d f th esc n o e lici ed po es pu rsu , inc lud ing du e dil ige nce	Su ina ble ly c hai .64 -65 sta su pp n, p Do ing bu sin rig ht, 50 -51 ess p. xim .68 -69 Pro de l, p us gov ern an ce mo Ris k m 91 -99 ent rt, an ag em re po p. Re ion 10 6-1 15 rat rt, mu ne re po p.		Div ity tar ts ers ge	Re ion 10 6-1 15 rat rt, mu ne re po p. Ca rin for loy 44 g ou r e mp ees , p. Pro xim de l, p .68 -69 us gov ern an ce mo ion 10 6-1 Re 15 rat rt, mu ne re po p. Ov iew of n-f ina nci al i nfo ati 119
	Th f th utc e o om e o ose lici po es	Su ina ble ly c hai .64 -65 sta su pp n, p ing sin rig 50 Do bu ht, -51 ess p. Pro xim de l, p .68 -69 us gov ern an ce mo Ris k m 91 -99 ent rt, an ag em re po p. ion 10 6-1 Re 15 rat rt, mu ne re		De ipt ion of ho he w t scr licy is im lem ed ent po p	erv no rm on , p. Ca rin for loy 44 g ou r e mp ees , p. Pro xim de l, p .68 -69 us gov ern an ce mo Re ion 10 6-1 15 rat rt, mu ne re po p.
	Pri nci le r isk s in p ow n	po p. Su ina ble ly c hai .64 -65 sta su pp n, p Do ing bu sin rig ht, 50 -51 ess p.		Re sul f th ts o e div ity licy ers po	Ca rin for loy 44 g ou r e mp ees , p. Pro xim de l, p .68 -69 us gov ern an ce mo ion 10 6-1 Re 15 rat rt, mu ne re po p.
rig t fo r h hts res pec um an (e.g ) . la bo ion rot ect r p	tio d w ith in op era ns an lue ch ain va	Pro xim de l, p .68 -69 us gov ern an ce mo Ris k m 91 -99 ent rt, an ag em re po p. Re ion 10 6-1 15 rat rt, mu ne re po p.
	Ho isk w r s a re ed ma nag	Su ina ble ly c hai .64 -65 sta su pp n, p ing sin rig 50 Do bu ht, -51 ess p. Pro xim de l, p .68 -69 us gov ern an ce mo Ris k m 91 -99 ent rt, an ag em re po p. ion 10 6-1 Re 15 rat rt, mu ne re po p.
	No n-f ina nci al key rfo pe rm an ce ind ica tor s	ing sin rig 50 Do bu ht, -51 ess p. Ris k m 91 -99 ent rt, an ag em re po p. Su ina ble ly c hai .64 -65 sta su pp n, p Ov iew ina nci al i ati 119 of n-f nfo erv no rm on , p.

The following of the indications of the GRI guide means that Proximus reports on all general standard disclosures related to identified material topics.

The way through which we defined our material topics and thus the contents of this integrated report is described below in the Materiality Determination section. The overview of the GRI linked to this report can be found in GRI Content Index. This index specifies the boundaries of each material topics, as well the GRI indicators which were omitted from this report (including clarifications).

Proximus prepared this integrated report by following the indications of the GRI guide, including where relevant or available data for 2018.

External assurance

The parts of the sustainability chapter assured by our external auditor are indicated by a tickmark in the GRI index (limited assurance).

Scoping and calculation methodologies for environmental figures

Carbon emissions scopes 1 and 2 Measurement of the Group's CO2 emissions is based on the guidelines of the Greenhouse Gas Protocol.

We measure all activities that are subject to operational control. This not only concerns emissions in Belgium, but also, since 2010, the CO2 emissions of Proximus Group subsidiaries outside Belgium. Their consumption represents 7% of the Group's total energy consumption.

Reporting on environmental figures for the group subsidiaries is done depending on data availability and quality. This is positively evolving over the years, in the sense that more and more subsidiaries are monitoring their environmental impact.

The new subsidiary Be-Mobile acquired in 2016 and TeleSign, Davinsi Labs and Unbrace, all acquired in 2017, are not included in the figures.

The CO2e consumption represents a CO2 equivalent emission figure of all greenhouse gases combined, i.e. CO2, CH4, N2O, HFCs, PFCs, SF6. The gases of primary interest for Proximus are CO2 and HFCs, but CH4 and N2O are also included in the calculation.

( l) + Sco GH G P tiv ity rot pe oco ac	Po ssi ble im ct pa fro m P im rox us	Sco /% Gr l p t ota pe vs ou	Cli ali /re ab le te utr ty ma ne new en erg y	GW P	So mi ssi fa cto urc e e on rs	Ext al dit ern au le l ass ura nce ve
Sco 1 – Di mis sio t e pe rec ns
Ca r fl fu el eet	Hig h	Pro xim Gro / 1 00 % us up	10 0% rbo red its - G old ca n c Sta nd ard	AR 5 IP CC	Ba Ca rbo + B ila n C arb se ne on e adj ed wit h t he du al ust gra E) ad dit ion of bio fue l B	Lim ite d
ati ildi ins ion He of bu tal lat ng ng s	Hig h	xim Gro 00 % Pro / 1 us up	10 0% rbo red its - G old ca n c Sta nd ard	CC AR 5 IP	Ga s: G HG col he ati fue l: oto pr ng Ba Ca rbo + B ila n C arb se ne on e	Lim ite d
Co oli of bu ildi ins tal lat ion ng ng s rig ref nts era	Hig h	Pro xim Gro / 1 00 % us up	10 0% rbo red its - G old ca n c Sta nd ard	AR 5 IP CC	Bil Ca rbo an ne	Lim ite d
Sco 2 – Ind ire mis sio ct e pe ns
Em iss ion lea sed du rin the s re g ion icit is of ele hat rat ctr y t ge ne rch d b he y t pu ase com pa ny	Hig h	xim Gro 00 % Pro / 1 us up	Re ab le e new ne rgy s: 9 9% sou rce Of fse t b arb y c on dit Go ld cre s - Sta nd ard : 1%	CC AR 5 IP	( IEA CO mis sio fro m f l 2 e ns ue ) - bu stio hig hlig hts 20 18 com n –	Lim ite d

Carbon emissions scope 3

Proximus reports on all relevant scope 3 figures according to the scope 3 corporate value chain standard of the GHG protocol (www.ghgprotocol.org), Bilan Carbone and other relevant emission factors.

Scope 3 refers to the upstream and downstream GHG emissions which are indirectly generated by Proximus. Given that we are dealing with indirect emissions, the possible impact from Proximus in reducing the emissions varies from low to high, and the choice of suppliers and solutions plays a key role. For most of the scope 3 categories only the operations in Belgium are taken into account.

( l) + Sco GH G P tiv ity rot pe oco ac	Po ssi ble im ct pa fro m P im rox us	Sco /% Gr l p t ota pe vs ou	Cli ali /re ab le te utr ty ma ne new en erg y	GW P	So mi ssi fa cto urc e e on rs	Ext al dit ern au le l ass ura nce ve
Sco 3 - Ca t. 1 pe
Re ctio tra sou rce ex n, ati d p rod ion of tra ort uct nsp on an rch d g ds d s ice pu ase oo an erv s	Low	Pro xim in B elg ium / 9 5% us	No ne	AR 5 IP CC	LCA ba sed (cu rod s), sto uct me r p Bil bo IEA an car ne, , l (o EE IO de the has mo r p urc e dit ) exp en ure	Lim ite d
Sco 3 – Ca t. 2 pe
Ac ire d in tm ent qu ves s	Low	Pro xim in B elg ium / 9 5% us	No ne	AR 5 IP CC	EE IO de l ap ach IEA mo pro ,	Lim ite d
Sco 3 – Ca t. 3 pe
Ext tio rod ion d uct rac n, p an ati of dir fu els tra ort ect nsp on tric ity d e lec rch d b he y t an pu ase Pro xim Gro ed in ort us up , no n-r ep 1 a nd 2. Ne ork los tw sco pes ses , inc the lud ed am on g o rs, are ati tra ort nsp on	Hig h	Pro xim Gro / 1 00 % us up	No ne	AR 5 IP CC	Bil Ca rbo IEA an ne,	Lim ite d
Sco 3 – Ca t. 4 pe
ati Tra of sub ort tra cto nsp on con rs for ork tiv itie tw ne ac s	Low	Pro xim in B elg ium / 9 5% us	No ne	AR 5 IP CC	Bil bo an car ne IO l (o EE de the mo r sub rs f all tra cto con ) wit hin Ca t.1	Lim ite d
Sco 3 – Ca t. 5 pe
Tre of flo atm ent ste wa ws	diu Me m	xim in B ium / 9 5% Pro elg us	No ne	CC AR 5 IP	Bil bo an car ne	Lim ite d
Sco 3 - Ca t.6 pe
Air ft a nd ins fo r b usi tra cra nes s vel tra	Low	Pro xim in B elg ium / 9 5% us	Ful ly o ffs by bo red its et car n c - Go ld S da rd tan	CC AR 5 IP	Of fici al f igu of vel tra res ag en cy d t nie rt c an ran spo om pa s	Lim ite d

Sco ( GH G P l) + tiv ity rot pe oco ac	Po ssi ble im ct pa fro m P im rox us	Sco /% Gr l p t ota pe vs ou	Cli ali /re ab le te utr ty ma ne new en erg y	GW P	So mi ssi fa cto urc e e on rs	Ext al dit ern au le l ass ura nce ve
Sco 3 – Ca t.7 pe
Em loy tin Co p ee com mu g. mp any ted fo r in e 1 car s a re a cco un sc op	Hig h	Pro xim Gro 98 % us up	No ne	AR 5 IP CC	Bil bo an car ne	Lim ite d
Sco 3 – Ca t.1 1 pe
En ion of pt erg y c on sum ' Pr oxi s d evi tom cus ers mu ces (m od bo d et- top em s, s xes an bile ho mo p nes	Hig h	Pro xim in B elg ium / 9 5% us	No ne	AR 5 IP CC	Bil bo IEA an car ne,	Lim ite d
Sco 3 – Ca t.1 2 pe
Pro sin f p rod s (e nd of uct ces g o life ): inc in c lud ed 5 at.	N.A	Pro xim in B elg ium / 9 5% us	No ne	AR 5 IP CC	N.A	Lim ite d
Sco 3 – Ca t.1 5 pe
Inv : in clu de d in t.2 est nts me ca	N.A	Pro xim in B elg ium / 9 5% us	No ne	AR 5 IP CC	N.A	Lim ite d
Sco 3 – Ca t.8 9, 10 13 14 pe , , ,
N.A	N.A	N.A	N.A	AR 5 IP CC	N.A	N.A

Proximus at a glance

Appendix

Accuracy

Since many years we adopt the principle of best available data quality.

G old Standard carbon credits

By being carbon neutral means we will first of all continue reducing our carbon emissions but will offset what is left over by supporting international projects that fight global warming.

In practice, this has allowed the Proximus Group to become a climate-neutral company for its car fleet, electricity, heating, refrigerants (scopes 1 and 2) and for business travel (scope 3) since 2016.

Proximus is the main driving force behind the development of the multiannual 'Gold Standard' certified climate project called the TEG Stove project. More info: www.tegstove. org

In this specific region in Benin, where 69% of the population lives in poverty, 91% of households use wood as an energy source and there is very limited access to electricity.

The TEG STOVE is an efficient cookstove on which a thermoelectric generator (TEG) is installed as an extra. Thanks to this TEG module, part of the heat is converted into electricity, which can be used for charging smartphones or LED lamps.

The LED lamps can be used in the evening to light homes or for reading. They replace

dangerous and polluting paraffin lamps. Intensive research is being conducted to find the most efficient way to design and use this TEG module with a view to integrating it into a growing number of cookstoves.

In 2018, 1200 households were provided with improved cookstove compared to 1700 in 2017.

The use of these cookstoves is registered and serves as proof for the issuance of carbon credits.

The budget made available for carbon credits by Proximus allows 100 times more CO2 to be reduced in developing countries as compared to Belgium. This is because the cost of setting up CO2-friendly projects in Africa is lower, and current energy efficiency in the region can also be dramatically improved. We also support cookstove projects in Uganda, Malawi and rural Asia. The benefits are mainly forest conservation, improved air quality, health, employment and quality of life.

The projects were also selected because they contribute to several Sustainable Development Goals. More info: http://www. tegstove.org/

Another project we support is the stove project in Uganda, in which efficient cookstoves drastically reduce the use of firewood. The benefits are mainly forest conservation and improved air quality, health, employment and quality of life.

Energy conversion factors1 Electricity

Calculation based on the invoices of energy suppliers and internal energy management system GENY (Belgian activities).

Electricity savings within the organization

Calculation based on actions undertaken during the reporting period calculated over a window of 12 months. The savings projects were implemented in the course of the reporting year, hence the results only become material in the current and following reporting year, but the order of magnitude remains comparable on a year-by-year basis.

The infrastructure savings are calculated based on the directly measured electricity consumption and an estimated indirect consumption such as for cooling before and after the savings operation. For multiple installations, the consumption of one type installation is multiplied by the total number of installations.

Electricity savings sold products

The baseline for the calculation of savings related to the electricity consumption of TV decoders installed at customer premises is based upon the formula described in the EU Code of Conduct for digital TV services, the technical consumption data provided by the vendor and the installed base devices by type at customer premises.

1 CDP Technical Note: Conversion of fuel data to MWh

Transport

Calculation based on invoices and reports of the supplier, based on fuel card consumption or expense statements.

Heating

Calculation based on supplier billing data:

Gas: meter readings
Heating oil: heating oil tank refills

Waste calculation

Monthly bills and certificates of waste processors are combined into a single annual report, which is then updated with additional information received from the waste processors:

The average weights of the subscriptions and the individually measured weights of the waste collections.
Distinction between hazardous and nonhazardous waste.
Processing method such as composting, recycling, reprocessing, reuse or residual waste with energy recovery.
Additional reduction in residual waste through a posteriori sorting of the residual waste by the waste processor into recyclable categories such as wood, metal, paper, etc.

Environmental management system Proximus' environmental management

Appendix

system is made up of different components. There are different parties involved and the system has a variety of tools and resources.

Stakeholders

• The Corporate Social Responsibility (CSR) department, with a strong focus on environmental issues and CO2 reduction

• The corporate prevention & protection department, including the environmental department

• The internal audit department, which reports to the board of directors and carries out audits on all kinds of environmental aspects at the request of the environment or CSR departments, the Board of Directors, or the Executive committee

• Government-accredited independent external organizations, which audit our waste policy and procedures (packaging, WEEE, batteries).

Resources and activities

• Procedures, guidelines, plans and campaigns related to environmental issues (mobility campaigns, surveys and info sessions for employees to further promote the use of public transport and bicycles).

• New packaging waste prevention plan 2016-2019 for IVCIE and awareness campaigns on waste recycling,

• Anti-pollution plan in the event of severe air pollution in the Brussels Region,

Environmental policy,
Field visits concerning environmental issues such as hazardous products, waste and control of permits,
Communication channels: intranet news, toolboxes, internal reporting to the executive committee,
Integrated management system, ISO9001 certificate,

• Environmental clauses in purchasing procedures concerning waste reduction, such as recycling, eco-design and life cycle,

Noise studies and control measurements to ensure compliance with noise standards and limit disturbance for neighbours,
Soil survey for high-risk installations,
E-learning module on the impact of mobile and wireless telephony on the health of employees.

Stakeholder engagement and materiality determination

Materiality

This year, for the first time and with external expert assistance, we proceeded to a materiality assessment process. As such we gained a structured understanding of where we have a social, environmental and economic impact and what matters to our stakeholders the most. Also, this enables us to further report on these most relevant topics. The assessment concluded in a materiality matrix, which was also validated by our Board of Directors. The process consisted of three steps:

Step 1: External analysis

First an external materiality view was taken not only capturing Proximus' sustainability issues but also the ones of the industry as a whole. A media analysis as well as a peer review and reputation survey were taken into account.

The media analysis, as well as the peer review and reputation survey served as the input for the identification of material topics and stakeholders.

Indeed, in this way also the stakeholders described in our section on stakeholder dialogue were taken into account.

Relevant topics, on which Proximus can have an impact in society were identified. Based upon this subsequently a shortlist could then be validated with internal stakeholders.

Step 2: Internal materiality workshop

We organized a well prepared, semistructured and facilitated workshop thereby mapping our stakeholders and material topics.

The workshop included representatives of all the business units, management and support functions of Proximus.

We started from the aforementioned long list of material topics and stakeholders obtained in the external analysis, which we then plotted to define those that are truly key.

Step 3: Integrated Materiality Matrix

The integrated materiality matrix combines the external analysis and the results of the internal materiality workshop into one materiality matrix. It provides a comprehensive overview of the most material topics taken from both views.

Materiality Matrix 2018

Significance of economic, environmental & social impacts Innovation and sustainable infrastructure

Human capital & employee development

Responsible sourcing and resource effi ciency

Responsible taxes and state contribution

Digital competitiveness of institutions and companies

Social engagement and development

Quality products and services

Pricing and billing transparency

Circular economy: Electronic waste and equipment recycling

Connectivity and digital inclusion

Energy and greenhouse gases

Business conduct & Ethics

Sustainable supply chain

Privacy & data security

Health and safety

Remuneration

Law suits/ claims

Sponsoring

Redundancies

Human rights

Responsible marketing

Customer relationship

Influence on stakeholder assessments & decisions

The combination of the horizontal axis and the vertical axis determines the degree of impact that Proximus has with the topic on society. The vertical axis indicates what impact or influence the topic has on the selected stakeholders and how important this topic is to these stakeholders. The horizontal axis indicates the potential impact (positive or negative) Proximus has in terms of economic, environmental and social impacts on these topics.

The upper quadrant (topic 1 to 11, 14 and 21) are then the topics which are most material for stakeholders and the impact Proximus can have. These topics are formally reported on and this is further detailed in GRI Content Index.

The definition of each most material topic as well as their boundary can be found in the Material Topics section.

Step 4: Implementation

Based on the materiality matrix, we can determine which topics to address going forward.

Internally, 2018 is a transition year. We will further prepare in 2019 the reporting systems and develop the necessary targets and definitions.

Stakeholder dialogue

A big part of implementing our contribution framework and including the material topics, is making sure we maintain a structured

stakeholder dialogue, to ensure we do not stray from what really impacts them and their decisions. What we do must stem from what they expect and want from us as a provider of digital services and part of the Belgian society.

In the past, we reached out to some of our stakeholder groups very organically, based on project or business needs while others (e.g. investors, the financial community, etc.) have always been engaged in a structured and regular way. However, we understand the need to connect with them on a more structured and regular basis in order for what we do to stay relevant. We thus have developed an approach to structure our stakeholder dialogue and ensure engagement on a regular basis.

At Proximus, we consider the following groups as our stakeholders: General public (including customers, and with a specific focus on the youngsters (18-25 y.o.)), Corporate clients (SE, ME, COR), Press, Government & regulatory bodies, Start-up communities, Sales & CSR partners, Employees, Opinion leaders (such as university heads, etc.) and Investors.

This year, we have had the following interactions with our stakeholders:

Sta keh old er gro up	Wh the at ect y e xp	Ho ed the e e ng ag m w w	Ma in t ics & in 2 01 8 op con cer ns	Ou r re spo nse
Em loy p ees	Em loy ovi de t u s to p ees ex pec pr the ith afe d a dva d w ork m w a s an nce iro ll a s th e f lex ibil ity it ent env nm as we wit h. T hey als ive ct t com es o e xpe o r ece nit ies & cha lle fitt ed the ir rtu to op po ng es bit ion nd hav n im n h to t o am s a e a pac ow rks . Fi nal ly, the ct ou r co mp any wo y e xpe off he sib ilit f le ing th to er t us pos y o arn e sk ills th d in th is c ha ing jo b new ey nee ng rke t. ma	We loy arl in a en gag e o ur em p ees ye y d S is s lle kup . In th sur vey ca pea urv ey, the hav he sib ilit lua e t y t te y pos o e va int f o rk e nvi nt, ma ny po s o ur wo ron me he nit ies d m atm rtu osp re, op po , an ore We als ffe ssi bili tie s fo ch o o r m any po r ea loy tal k to HR eci alis to t em p ee an sp ab t th eir ( des crib ed re i ou con cer ns mo n ). Em loy .44 p ee car e, p	Ou ice loy d t he d t r e mp ees vo nee o inc ilit in t he rea se ou r ag y wa y w e a nsw er itiv ell in t he to pet com e m ove s a s w as ion of cut r st rat exe ou egy	Ou all ed Sp eak Up ent r e ng ag em su rve y c is y ly p ed d u f ear roc ess an po n a rea s o rai sed by loy con cer ns ou r e mp ees , w e de loy bu sin it, de rtm ent , te p ess un pa am d c ion lan act s to an om pa ny p en sur e w e f im rk t ard ent wo ow s a rea s o pro vem ide nti fie d in th e s urv ey. Sp eak Up is f th e G Key rt o pa rou p ica Pe rfo Ind rly tor et rm an ce s s on yea bas is. We lar ly o niz ale iew e t nt re gu rga rev boa rds s h be ale n b to st t nts as ses ow ca e de loy ed in t he p com pa ny. Int al m ob ilit is f d t hro h jo b ost ern y ere ug ati ing ll a of w ork rot on as we s n ew wa ys h a ile, d o niz ati suc s a g em pow ere rga on , fos ing al w of rki ter tra nsv ers ays wo ng rki Ho has be de d la ly ext me wo ng en en rge fle xib ilit for th ajo rity of to ens ure y e m ou r loy wh jo bs all it. em p ees ose ow

Sta keh old er gro up	Wh the at ect y e xp	Ho ed the w w e e ng ag m	Ma in t ics & in 2 01 8 op con cer ns	Ou r re spo nse
Re sid ial ent tom cus ers	Ou sid ial ent tom tu rn t r re cus ers o u s eiv e h ig h-q lity od d to uct rec ua pr an vic Th alw be ect to ser es. ey exp us ays -da the lat nd s in -to te est tre te up on rm s tiv ity rie of d u con nec an ser ex pe nce Cu nly ha sto ant t o to me rs w no ve filt d a he dig ita l w orl d, but ss t o t un ere cce trib oci als o f th to ute to ety or us con e s the live in. Th fil l ou le ect to ey exp us r ro y a k lay in B elg ium as ey p er	Inc lud ing rs i tio sto ou r cu me n o ur op era ns is k for nd the be to st w ey us re spo e c an the ir n eed s. W hu to e t et to s s up wa ys tin usl ith te w tom con uo y c o-c rea cus ers thr h d esi thi nki sio d ou g gn ng ses ns an foc s. W lso ha int al us gro up e a ve an ern init iat ive lle d v oic f th ust ca e o e c om er. In 2 01 8, 20 ion & eat co nsu me r co -cr des ign th ink ing ssi niz ed se on s w ere or ga , nti ha n 5 00 rtic ipa re t nts cou ng mo pa	Ne ed for lev d d iffe tia tin ant • re an ren g olu tio tom cus er s ns Ne ed for eti tiv o-f rill ffe co mp e n s o rs • Ne ed for les s d ig ita l ex rie • se am pe nce s Cu rie sto • me r ex pe nce • S ho wi -fi d T V u rt p ma ne, an sag e	ic, ile Lau nch of Ep ob • a n ew m eri wit h f ull dig ita l on boa rdi exp en ce ng Lau nch of lim ite d P im • an un rox us bile itiv rice of fer at pet mo a c om e p • A bo of th e b d a of ost ran wa ren ess Sca rle he bes o f rill ffe he t, t t n n t s o r o rke t ma Lau nch tai ter ent a n ew en nm • lica tio ap p n Fu rth inv in ork est nts etw • er me ou r n
rs ( Bu sin SE sto ess cu me , R) ME CO ,	Ou usi r b ust t a nes s c om ers ex pec nal ize d a nd hig h-q lity rvi pe rso ua se ce ll t ime s. T hey ly at a nt to not wa us on the ir c tiv ity ds, bu lso t a ser ve on nec nee col lab ith the o b te w m t ora eco me m ore dig ita l an d t hu s h elp th th eir em se rve ow n clie be nts tte r.	r in ion Ne ula ch ls xt t ter act o o ur reg an ne wit h o th h o tom nt ur cus ers rou g ur acc ou d in dir nta ct c ent ect ma nag ers , co res an cha el w e h d o the rtn ate pa er nn ave cre r ch r cl ien We to t to ts. wa ys rea ou ou bu sin hro h sto rs t en gag e o ur ess cu me ug ula al s ady fo reg r p ers on urv eys , re r ing ell Vo ice tom eet orr ow m s a s w as of t he Cu r fo nd adv iso sto me rum s a ry iffe boa rds . Th h t hes e d t fo rou g ren ra aim re f eed bac k in lat ion to ptu we ca re the ir c eri fe ed bac k to ust om er exp en ce, nd dev elo tra teg ent on ou r ow n s y a pm dm but als o d div e in th o t roa ap eep e er' s d ig ita l tr sfo ati ds tom cus an rm on nee d h he ith rt t an ow we ca n s up po m w ou r chn olo ies . In 20 18 wi ll est te new g we hav nis ed 60 ady fo r to e o rga re mo rro w eti me ng s	Re lev lut ion ant sto • cu me r so s Cu rie sto • me r ex pe nce Bu sin nti ity ess co nu •	• S ctiv &A ele e M nd to ex pa ou r ab ilit ies in ber uri ty, cap cy sec lica tio n in ion & clo ud teg rat ap p r jo icu Fou lar sto t p art • r cu me urn eys go foc im eri to tom us pro ve cus er exp en ce Fu rth inv in ork est nts etw • er me ou r n ica ion s & Mo ard l so lut tow ert • ve s v tio dev elo tom nta to cus er s eg me ns p rel sol uti s in eci fic nt mo re eva on sp He alt hca tor sec s e .g. re
Go & ent ver nm ula tor reg s	Go d r ula ent tor ct ver nm an eg s e xpe ly w ith all rul d to us com p es an ula tio in p lac e in Be lg ium Eu reg ns rop e , & i tio nal ly. Th als nte ct rna ey o e xpe a B elg ian & rtly ned sta te- us, as pa ow lay ole in dev elo ing th to com pa ny, p a r p e dig ita cie & e l so f to ty con om y o mo rro w thr h in nd inv olv tm ent ent ou g ves s a em Th is i ncl ud trib uti iet nd to es con ng soc y a ing lim lay slo w d art to ate p ou r p ow n c cha e. W d t cte ect ng e a re e xpe o r esp bu sin hic et ess s.	We tiv ely & ula rly ith pr oac reg en gag e w ive nd ent tat ou r g ove rnm re pre sen s a ula s th h b usi cia tio tor reg rou g nes s a sso ns ria h a s A he Eu , t suc go rop ean Tel ica tio Ne ork Op s' tw tor eco mm un ns era As iat ion ( ET NO ), GS MA c.W , et soc e ain tai r in ion ith als ula ter act o m n r eg s w liti cia d r ati de vel ent to po ns an ep res ves op s (s hip uch th inc rtn to pa ers as e o ne rea se int in w hit es) et ern cov era ge e z on Th int ctio ula ese era ns occ ur on a r eg r bas is.	Pro xim ula tio nd ed fro m i xte ts us reg n e its fib rk r to net cop pe er wo Be lg ian Go nsi de rin ent to ver nm co g int rod nd itio fav rin the try uce co ns ou g en of a 4 th bile lay in t he ctr mo p er spe um ctio be ize d in 20 19 to au ns org an Re ion lan nin inv in ral lel to est g s p g pa rks net wo Be lg ian Go ain tai ned fo ent ver nm m cus tio ob liga tio tec on con sum er pro n: n ew ns in c of of inv oic d ent ase no n-p aym es an icte les fo ium mb / str r ru r p rem nu ers SM S a bile tic nd ent uto mo pa ym s; a ma tio f u s in of rk net com pe nsa n o ser ca se wo fai lur e b ein sid d g c on ere	We ad osi tio rds ate n to voc ou r p wa the lev tho riti ant re au es, we en sur e tim ely lian wit h n les d co mp ce ew ru an the bu sin nd ith ad uat ess re spo s w eq e rcia l ac tio im itio f n to com me ns pos n o ew ob liga tio ns.

Sta keh old er gro up	Wh the at ect y e xp	Ho ed the w w e e ng ag m	Ma in t ics & in 2 01 8 op con cer ns	Ou r re spo nse
Inv est ors	Ou r in nd the fin cia l m ark tor ets ves s a an lea nd ect a t t, c rat exp ran spa ren r, a ccu e a sis ica tio nd ten t co con mp any co mm un n a ins ig hts th ark e in . W et w rat on e m e o pe e cle ith the ach iev ent are ar w m o n o ur em s, itio ing d a mb fo ard r st rat ou egy an ns go rw d s ho id- tiv rt t ter an o m m p ers pec es. Th als kn ho ant to ct ey o w ow w w e e xpe tim lue d n eed ely to ate ate cre va an ac cur dat W lso d t cte up es. e a ar e e xpe o vid he he e t m t s to to pro nec ess ary ac ces p wi nit th the ent rtu y t ma nag em op po o eiv lar ific ati d a sk ion est rec e c on an qu s.	In 2 01 8, w niz ed 2 m ent e o rga an ag em dsh fte r fu ll a nd hal f-y roa ow s, a ear ult he CE O, CF O a nd Inv est res s, w re o ur or Re lat ion s D ire r vi site d o inv cto est ur ors in v ari trie he s to e t ou s co un ex pos m o ur d r lts . Th is w let ed str ate gy an esu as com p by the rtic ipa tio in s ral cto pa ns eve se r fer IR- ly r oad sho con en ces on ws , re ver se , dsh nd fer cal ls. For roa ow s a con en ce sio inv ' fe ed bac k est som e o cca ns ors ide hic h is inc d, w th lud ed wa s p rov en in t he ult of ati put res ou r re on sur vey d m ria lity aly sis . O th ate an an ver e y ear 20 18 xim t 2 00 Pro ke ab to us spo ou , ins titu tio nal inv . W lso niz est ors e a or ga e ly g l as bly wh al l a y ear en era sem ere inv e in vit ed est ors ar	Inv ion nd du rin est est or qu s a con cer ns g 20 18 inly lat ed to: we re ma re Co eti tiv nvi d t he im nt t mp e e ron me an pac Pro xim on us. (su Re lat im rici ch t o gu ory pac n p ng a n). min rici ula tio roa g p ng reg Up ing ctio d t he ect com sp rum au ns an ial in t he Be lg ian pot ent tra nt new en rke t. ma Ov ll c lev el a nd Fib era ap ex er inv est nts me	A d iled dis clo llo inv eta est to sur e a ws ors t in sig in P imu s' a chi ht nts ge rox eve me in t he Be lg ian ark hro h t he et t m ug (n blic ati of l K PIs et tom pu on sev era cus er tc.) h, m ark ha AR PU wt et s gro res s, e on , s ( the ain od Int TV Fix ed uct et, m pr ern , c.). Vo ice Mo bile A lso he lut ion of , et , t evo , icin is c ica lea rly ted pr g co mm un Pro xim dis clo sed its tim d f ina nci al ate us es im t fr lat ion fo r 2 01 8 a nd pac om re gu dis al i clo sed th by ctu act art e a mp qu er. Inf ati d a ion ctr uct orm on on spe um an dit ion s h be dis clo sed in con ave en the erl inf ati k, a nd art qu y orm on pac ive ly dis sed du rin ing ext eet ens cus g m s. Pro xim has 3-y t a ta t us se ear ca pex rge wh cin the Fib jec nd t a en an no un g er pro has dis sed wi th inv th nti al est ote cus ors e p rio oin for rd. sce na s g g wa
Su lier pp s	Ou lier fu lfil ct u s to r su pp s e xpe ou r mit lon d u ho ld o ter nt g- m c om me an p ur d o f th e d eal . Th off nt to en ey wa us er ith fai rice tra nt tra ct w nsp are con r p s.	We nsi de lier co r o ur sup p s a s v ery im tfu l an d w ith the m i pac e e ng ag e w n dit the fo of lar hey s to e t rm re gu au en sur fol low r C SR d e thi cal inc ip les ou an pr Su ch int ctio de ibe d f he r in urt era ns are scr ctio n S ain hai the ab le s ly c ust se n o up p n.	Pro xim aim ha 75 % of lier s to us ve sup p s (a wit h a siti ing nd rat ent po ve sse ssm s a dit s) w ith in 5 au ye ars	Su lier ed hu ig hts d pp s s cre en on ma n r an iro isk ith tiv al r ent env nm s w a n ega e s cor e tica lly d t he ste are sy ma rea sse sse yea r fol low ing ini tia l as ent ses sm tio oin ina bili dit Ac f su ts o sta ty n p au s a re ati cal ly fol low ed by Pr oxi tem sys -up mu s wit hin th e J oin t A ud it C ion rat oo pe
So cie lar ty at ge	So cie s P im off ty ect to exp rox us er tiv ity d d ig ita l op nit ies rtu con nec an po rig ice hin he ht d t o le be d a at t pr an ave itiv e le for Be lg ium . Th nt pos gac ey wa y bo the ir d be eth ica l an d to ut ata us car e a , trib cie ile tin wh the ute to ty con so res pec g iro . Th dev elo ent nt to env nm ey wa us p du d s ice s th lve cts at pro an erv can so t ch all cur ren en ges	In 2 01 8, w niz ed in- de h pt e o rga an tio bas ed ial uta ter rep n s urv ey on ma ics de d o ive d top to rst un an ur pe rce rfo the ll a pe rm an ce on se as we s the im th hav e fo rta po nce ey r o ur keh old . Th is s nd ed sta uct ers urv ey wa s co r th of th d ove e c ou rse on e m on an inc blic lud ed the ral . It ge ne pu wa s ize d b he ch y t org an res ear ag en cy, Kyn c. A Be lg ian ete s a co mp any , w e osi tiv o le ark nt t wa ave a p e m on ou r nd ing nd rk w ith rio sur rou s a we wo va us NG Os d a cia tio im to an sso ns pro ve dif ian cie fer of th e B elg We ent rts ty. pa so trib a l in t f IC T e du ion ute ot cat con erm s o , loy ab ilit but als o in th ult l em p y, e c ura ium of Be lg d m sco pe an ore	A c n f citi s is th e im f t o on cer or zen pac ele ic w e d lop ctr net om ag ave s a s w eve nd nsi rks xte net mo re a mo re e ve wo Th als ovi de cle ant to ey o w us pr are r nic ati nd th eir dat to com mu on s a ens ure a is t ted in the rig ht rea ma nn er. Be sid the ics cie is c ned top ty es se , so on cer ab t th e f nd the sk ills ed ed utu to ou re a ne be f it rt o pa Mo f th eir rel th st o ate to con cer ns e ial ite ion ed lier in the ter ent ma ms m ear tio sec n.	We ibu hei by ntr te t o t co r co nce rns off eri cle nic ati d a dv ice ng ar com mu on an ic w bsi ele ctr net te. on om ag ave s o n o ur we We ha ict rul d g uid elin str ve es an es d d iva d c ly w ith ata aro un pr cy an om p the st l s. W lso ire ISO ne we aw e a ac qu tifi ion he sub jec t. F ina lly, cat n t cer s o ibu oci d t he dig ita l ntr te t ety we co o s an inc lus ion th h o trib uti rou g ur con on fra rk. Th is f ork is bas ed me wo ram ew on the du d a nd tai cte su rve y w e c on con ns cle KP Is f h to ic. ar or eac p

Going forward, we want to organize our stakeholder outreach in a more structured way, as follows:

• We will involve stakeholders on a day-today basis according to more specific demands.

• We will set a bi-yearly panel of stakeholders to discuss specific topics that are mutually important to address. This panel will be overseen by an objective third party and define points of action for Proximus.

• Every 3 years, we aim to conduct an indepth survey of all our stakeholder groups to measure progress on reputation items and update our materiality matrix, with the aim to adjust our strategy. In 2018, we conducted such survey on all our stakeholder groups, as starting point for our new 3-year sustainability strategy.

Ho w we engage with policymakers Proximus is a public autonomous company with the state as majority shareholder, resulting in regular interactions with policymakers.

Proximus actively engages with policymakers on every political level and sponsors activities which help to debate in the public arena the consequences of a rapidly changing (digital) world.

We are member of various (business) associations and through them, we also engage with politicians at the Belgian & European level.

Proximus refrains from any sponsorship of political parties, political individuals or government institutions. Management upholds strict standards on ethical and transparent behaviour. In the past years, Proximus has always had the policy to approach policy makers directly.

Appendix

Social figures

Total number of employees (FTE) by employment contract (Proximus SA/NV)

	20 17	20 18
Em	10	10
loy	33	16
p	0.8	8.1
ees	,	,
Wo	1,	1,
rke	14	00
rs	9.8	1.6

Total number of employees (FTE) by gender (Proximus SA/NV)

	20 17	20 18
Fem ale	3, 1.8 41	3, 37 5.5
Ma le	8, 06 8.8	4.2 7, 79

		20 17	20 18
Em loy nt tra ct p me con
De fin ed du ion rat		16 1.0	18 4.0
Re lac ent ntr act p em co		35 .0	1.0
Sta tut ory		3, 74 6.9	3, 23 8.6
Un def ine d d tio ura n		7, 53 7.7	7, 74 6.0
Ge nd er
Fem ale	fin ion De ed du rat	64 .0	84 .0
	Re lac ent ntr act p em co	9.0	0.0
	Sta tut ory	69 0.0	60 0.2
	Un def ine d d tio ura n	2, 64 8.8	2, 69 1.2
Ma le	De fin ed du ion rat	97. 0	10 0.0
	Re lac ent ntr act p em co	26 .0	1.0
	Sta tut ory	3, 05 6.9	2, 63 8.4
	ine tio Un def d d ura n	88 8.9 4,	05 4.8 5,

Total number of employees (FTE) by employment contract, by gender (Proximus SA/NV)

Total number of employees (FTE) by employment contract, by region (Proximus SA/NV)

		20 17	20 18
Bru l / sse Bru xel les	fin ion De ed du rat	.0 54	.0 51
	Re lac ent ntr act p em co	8.0	0.0
	Sta tut ory	58 9.8 1,	37 2.5 1,
	Un def ine d d tio ura n	5, 00 5.1	5, 02 1.2
Vla de an ren	De fin ed du ion rat	70 .0	83 .0
	Re lac ent ntr act p em co	19 .0	0.0
	Sta tut ory	1, 09 6.9	95 4.1
	Un def ine d d tio ura n	1, 217 .4	1, 34 1.5
nie Wa llo	fin ion De ed du rat	37. 0	50 .0
	Re lac ent ntr act p em co	8.0	1.0
	Sta tut ory	1, 06 0.2	91 2.0
	Un def ine d d tio ura n	1, 31 5.3	1, 38 3.4

Total number and rate2 of new employee hires (FTE) during the reporting period, by gender and age group

	Fem ale	Ma le	Tot al
20 17	( ) 4.1 % 13 9.0	( ) 3.1 % 25 1.3	( ) 3.4 % 39 0.3
20 18	( .0) 5.2 % 177	( ) 4.8 % 37 1.0	( ) 4.9 % 54 8.0

	de r 3 0 un	30 -50	r 5 0 ove	Tot al
20 16	30 .7% ( 32 7.0 )	3.9 % ( 25 8.0 )	0.4 % ( 16 .0)	5% ( 60 1.0 )
20 17	( ) 25 .2% 24 7.0	( ) 2% 12 9.3	( .0) 0.3 % 14	( ) 3.4 % 39 0.3
20 18	( ) 33 .2% 34 1.0	( 1) 3.2 % 20	( 6) 15 %	( 8) 4.9 % 54

Total number and rate of employee turnover (FTE) during the reporting period, by gender and age group

	Fem ale	Ma le	Tot al
20 17	5.3 % ( 18 1.2 )	% ( 60 8.2 ) 7.5	6.9 % ( 78 9.4 )
20 18	( ) 4.9 % 16 6.2	( ) 7.4 % 57 2.5	( ) 6.6 % 73 8.7

Total number of employees (FTE) by employment type, by gender (Proximus SA/NV)

		20 17	20 18
Fem ale	Ful l ti me	2, 52 4.6	2, 54 1.8
	Pa tim rt e	88 7.2	83 3.7
Ma le	l ti Ful me	05 3.8 7,	6, 82 1.0
	Pa ime rt t	1, 01 5.0	97 3.2

	de r30 un	30 -50	50 ov er	Tot al
20 17	11. 9% ( 116 .7)	2.1 % ( 13 5.7 )	13 % ( 53 7)	6.9 % ( 78 9.4 )
20 18	9.5 % ( 96 .1)	2.1 % ( 119 .9)	12 .1% ( 52 2.7 )	6.6 % ( 73 8.7 )

2 We defi ne a rate as being the number of new entries over the reporting period, divided by the total number of entries in that category at the end of the reporting period. E.g.: (Number of new female hires within the reporting period/Number of women working at Proximus by end of the reporting period)*100.

Total number of employees (FTE) that were entitled to parental leave, by gender

	Fem ale	Ma le	Tot al
20 17	08 4.9 1,	2, 38 2.9	3, 46 7.8
20 18	1, 03 2.5	2, 24 5.8	3, 27 8.3

Total number of employees (FTE) that took parental leave, by gender

	Fem	Ma	Tot
	ale	le	al
20	18	16	34
17	5.6	3.9	9.5
20	18	178	36
18	5.8	.2	4.0

Total number of employees that returned to work in the reporting period after parental leave ended, by gender3

	Fem	Ma	Tot
	ale	le	al
20 17	214	193	38 5
20	20	18	39
18	8	9	6

Total number of employees that returned to work after parental leave ended that were still employed 12 months after their return to work, by gender.4

	Fem	Ma	Tot
	ale	le	al
20	19	193	38
17	2		5
20 18 3	20 3	16 6	36 9

Return to work5 and retention rates6 of employees that took parental leave, by gender

Re ork tur n t o w	Fem ale	Ma le	Tot al
20	99	98	99
17	.1%	.9%	.0%
20	97.	98	98
18	7%	.4%	.0%

Re tio ten ate n r s	Fem ale	Ma le	Tot al
20 17	95 .5%	93 .2%	94 .4%
20 18 4	94 .0%	94 .9%	94 .4%

Average hours of training that the organization's employees (FTE) have undertaken during the reporting period, by gender and employee category (in hours)

	Fem ale	Ma le	Tot al
20 17	24	21	22
20 18	23	24	24

	ive Exe cut	Se nio r M t g	Mid dle Mg t	Low Mg t er	Em loy p ees
20 17	23	27	24	32	19
20 18	35	28	24	25	22

6 Calculation: (Total number of employees retained 12 months after returning to work following a period of parental leave/ Total number of employees returning from parental leave in the prior reporting period(s))*100

³ Expressed in headcount, not FTE.

⁴ Expressed in headcount, not FTE.

⁵ Calculation: (Total number of employees that did return to work after parental leave/ Total number of employees due to return to work after taking parental leave)*100

Proximus at a glance

Types of injury, injury rate (IR7), occupational disease rate (ODR8), lost day rate (LDR9), absentee rate (AR10), and work-related fatalities, for all employees, with a breakdown by gender

IR	Fem ale	Ma le	Tot al
20 17	0.0 00 00 6	0.0 00 00 9	0.0 00 00 6

0.000007 IR

2017

2018 Female

OD R	Fem ale	Ma le	Tot al
20 17	0.0 00 00 04	0.0 00 00 03	0.0 00 00 03
20 18	0	0.0 00 00 04	0.0 00 00 03

0.000008

0.000005

LD R	Fem ale	Ma le	Tot al
20 17	0.0 00 2	0.0 00 4	0.0 00 4
20 18	0.0 00 2	0.0 00 4	0.0 00 3

AR	Fem	Ma	Tot
	ale	le	al
20	10	6.2	7.5
17	.5%	%	%
20	10	6.3	7.7
18	.8%	%	%

Proximus had no work-related fatalities in 2017 and 2018.

137

2018 Types of injury, injury rate (IR), and work-related fatalities, for all workers (excluding employees)

whose work, or workplace, is controlled by the organization, with a breakdown by gender

Male

⁷ Frequency of injuries, relative to the total time worked by all workers during the reporting period. Calculation: number of injuries in Proximus Group/total number of hours scheduled to be worked by Proximus Group employees

⁸ Frequency of occupational diseases (disease arising from a work situation or activity, or from a work-related injury) relative to the total time worked by all workers during the reporting period. Calculation: number of occupational diseases/ total number of hours scheduled to be worked by Proximus Group employees

⁹ Impact of occupational diseases and accidents as refl ected in time off work by the aff ected workers. A Lost day is defi ned as time ('days') that cannot be worked (and are thus 'lost') as a consequence of a worker or workers being unable to perform their usual work because of an occupational disease or accident. Calculation: total number of lost days (due to occupational disease or accident)/total number of hours scheduled to be worked by Proximus Group employees

¹⁰ Measure of actual absentee days lost, expressed as the number of illness days divided by the number of theoretical working days, taking into account by defi nition the work regime of the person. An absentee is a worker absent from work because of taking an illness day (with or without attest), excluding work accidents & pregnancy. Calculation example for female employees: (sum of all the illness days registered amongst female employees/sum of all the theoretical working days amongst female employees)*100.

Environmental figures

in C O2 Be l: En tr g -n eu a er g y	20 16	20 17	20 18	Ta t rge	GR I ind ica tor
n ( TJ) Tot al e tio ith in t he iza tio ne rgy co nsu mp n w org an	1, 99 7	1, 96 7	1, 87 6		30 2-1 e
s ( TJ) Tot al f l co tio ith in t he iza tio n f ab le s ue nsu mp n w org an rom no n-r en ew ou rce	59 5	57 5	55 2		30 2-1 a
( TJ) He ati : Na al g tur ng as	10 5	10 1	10 1		30 2-1 a
He ati : H ing oil ( TJ) eat ng	59	63	50		30 2-1 a
hic ies el ( TJ) Ve le f lee t: D	42 9	40 9	39 8		30 2-1 a
hic ol ( TJ) Ve le f lee t: P etr	2	1	4		30 2-1 a
s ( TJ) Tot al f l co tio ith in t he iza tio n f ab le s ue nsu mp n w org an rom re new ou rce	0	0	0		30 2-1 b
( TJ) Ele icit ion ctr pt y c on sum	1, 40 2	1, 39 2	1, 32 3		30 2-1 c
% ele icit ed fro ab le s ith GO RE C o r IR EC - B elg ium / ctr y c on sum m r en ew ou rce s w , Gro up	10 0/ 98	10 0/ 98	10 0/ 99	RE 10 0 mit nt com me
ffic ien io ( ion wi thi iza tio n in En he TJ tal rat pt n t to erg y e cy en erg y c on sum org an vs ) in M io € rev en ue	0.3 40	0.3 39	0.3 22		30 2-3
io ( E) En ffic ien ion wi thi he iza tio n in TJ FT rat pt n t erg y e cy en erg y c on sum org an vs	0.1 46	0.1 47	0.1 40		30 2-3
n ( TJ) He ati oli tio ste ng , co ng or am co nsu mp	0	0	0		30 2-1 c
ld ( TJ) Ele icit hea tin ling ctr ste g, c oo or am so y,	0	0	0		30 2-1 d

Be in C O2 l: En tr g -n eu a er g y	20 16	20 17	20 18	GR I ind ica tor
icit ion wi thi iza tio n ( GW h) Ele he ctr pt n t y c on sum org an	38 9	38 7	36 8
Fix ile ( GW h) ed d m ob rk net an wo	28 2	28 5	26 9
rs ( h) Da Ce GW ta nte	59	56	55
s ( h) Of fice Sh GW s + op	48	45	43
( TJ) En avi ork etw erg y s ng s n		137	47	30 2-4
PU E d ata nte ce rs	1, 66	1, 63	1, 65

in C O2 G G Be l: H tr g -n eu a	20 14 ba sel ine	20 16	20 17	20 18	Ta et rg	GR I ind ica tor
CO mis sio 2 ( s) 1 a nd KT 2e e ns sco pe on		48 .4	46 .5	40 .9
2 (v ) Evo lut ion CO mis sio 1 a nd iou 2e e ns sco pe s p rev s y ear		-4%	-4%	-12 %		30 5-5
2 (v ) - Evo lut ion CO mis sio 1 a nd s 2 01 5 b line Sci Ba sed Ta t 2e e ns sco pe ase en ce rge		-4%	-8%	-19 %	( ) -30 % 20 25	30 5-5
Evo lut ion CO mis sio 1 a nd 2 (v s 2 00 7 b line ) 2e e ns sco pe ase		-71 %	-72 %	-75 %		30 5-5
Ca rbo n in sity ( To CO e 1 d 2 /M io€ ue) ten ns 2e s cop an re ven		8.2	8.0	7.0		30 5-4
Ca n in sity ( CO d 2 E's ) rbo To e 1 /# FT ten ns 2e s cop an		3.6	3.5	3.1		30 5-4
el ( s) CO mis sio 1 - he ati frig d f lee t fu KT nts 2e e ns sco pe ng , re era an on		45 .4	43 .9	38 .0		30 5-1
( s) CO mis sio 1 - he ati KT 2e e ns sco pe ng on		10 .9	11. 0	10 .0		30 5-1
( s) CO mis sio 1 - frig KT nts 2e e ns sco pe re era on		4.8	4.6	0.3		30 5-1
l ( s) CO mis sio 1 - fle et f KT 2e e ns sco pe ue on		29 .7	28 .3	27. 7		30 5-1
CO mis sio 2 - ele icit ark bas ed tho d ( KT s) ctr et 2e e ns sco pe y - m me on		3.0	2.6	3.0		30 5-2
CO mis sio 2 - icit ion ( s) ² ele lo ba sed eth od KT ctr cat 2e e ns sco pe y - m on		69 .3	68 .4	65 .0
CO iss ion dit s (s 2 e e 3 sin d b arb e 1 bu ate 2e- em s co mp ens y c on cre cop en n s cop ess ) ( s) vel KT tra on		50 .0	47. 9	42 .2
3 ( s) - CO mis sio KT 8 r ele ori es2 nt cat 2e e ns sco pe on va eg	76 7	76 5	76 5	80 9		30 5-3

Be in C O2 l: G H G tr g -n eu a	20 14 ba sel ine	20 16	20 17	20 18	Ta et rg	GR I ind ica tor
Evo lut ion CO mis sio 3 (v s 2 01 4 b line ) - Sci Ba sed Ta t2 2 e ns sco pe ase en ce rge		0%	0%	+5 %	( ) -10 % 20 25 d - 50 % an ( 20 40 )	30 5-3
s ( s) - 2 Sco 3 - 1 - rch d g ds d s ice KT Be lg ium teg pe ca ory pu ase oo an erv on	51 8	49 2	48 1	54 0		30 5-3
s ( s) - 2 Sco 3 - 2 - ita l go od KT Be lg ium teg pe ca ory ca p on	14 6	16 9	177	18 4		30 5-3
s (n 2) ( s) - Sco 3 - 3 - fu el a nd ela ted tiv itie in s e 1 KT teg ot pe ca ory en erg y r ac cop en on Gro up	11	11	11	11		30 5-3
Sco 3 - tio dis trib uti ( s) - ium 4 nd KT Be lg teg - tr rta pe ca ory an spo n a on on	7	7	4	3		30 5-3
Sco 3 - dis al ( s) - ium 5 - KT Be lg teg ste pe ca ory wa pos on	1	1	1	1		30 5-3
( s) - Sco 3 - 6 - bu sin vel KT Be lg ium teg tra pe ca ory ess on	2	2	1	1		30 5-3
( s) - Sco 3 - 7 - loy tin KT Be lg ium teg pe ca ory em p ee com mu g on	5	4	4	4		30 5-3
s ( s) - Sco 3 - 11 of sol d p rod KT Be lg ium 2 teg uct pe ca ory - u se on	78	80	87	64		30 5-3

Deloitte provided a limited external assurance on these indicators for the year 2018

99% of the hazardous waste is battery related and temporary high because of the network migration program
Restatement of fi gures due to better data quality and/or update of emission factors
New calculation methodology - direct refi ll reports from subcontractors (better data quality)

in irc Be la g c r u	20 14 ba sel ine	20 16	20 17	20 18	Ta et rg	GR I ind ica tor
( s) - Wa KT Be lg ium ste on		14 .5	11. 8	14 .7		30 6-2
% of haz ard Be lg ium ast ou s w e -		2.8 %	4.3 %	4.0 %		30 6-2
% d/r cle d - Be lg ium ste wa re use ecy		88 %	85 %	87 %	90 % in 2 02 5	30 6-2
d ( s) - ium No n-h rdo cle d o KT Be lg ste aza us wa - r ecy r re use on		12 .3	9.6	12 .2		30 6-2
( s) - No n-h rdo ith KT Be lg ium ste aza us wa - w en erg y r eco ver y on		1.8	1.7	2.0		30 6-2
d ( s) - Ha do cle d o KT Be lg ium 1 ste zar us wa - r ecy r re cov ere on		0.4	0.5	0.6		30 6-2
Mo bile ho lle d in Pr oxi nd Tan sho for d r clin cte p nes co mu s a go ps re use an ecy g		2, 14 1	4, 49 3	9, 23 7		30 6-2
Mo bile ho lle d in ho ols wi th Go od Pla Be lg ium fo d r clin cte net s p nes co sc r re use an ecy g		25 00 0 ,	14 00 0 ,	9, 04 2	20 0, 00 0 i n 20 13 -20 20
ish bile Nu mb of ref urb ed of fer ed sch ls a rd f ho put to er com ers oo s re wa or mo p ne ling rec yc		32 0	25 0	15 6
Nu mb of ref urb ish ed de er mo ms		170 76 5 ,	12 2, 39 7	18 2, 55 3		30 1-2
s ( %) Nu mb of ref urb ish ed de /nu mb of ins tal led od er mo ms er new m em		24 %	24 %	32 %		30 1-3
Nu mb of ref urb ish ed TV de cod er ers		13 4, 35 6	19 9, 79 7	22 2, 99 1		30 1-2
ish ins ( %) Nu mb of ref urb ed TV de cod /nu mb of tal led TV de cod er ers er new ers		19 %	56 %	% 44		30 1-3
Evo lut ion ion r d de s 2 01 4 pt sto av era ge en erg y c on sum cu me eco rs v	0%	-28 %	-33 %	-41 %	( -50 % 20 19 vs 20 ) 14	30 2-2 5 ,
n ( s) Pa tio KT pe r co nsu mp on		29 9	26 0	19 4
Wa ( '00 0L ) - Be lg ium ter		123 53 0 ,	124 61 1 ,	14 6, 59 9		30 3-1

Su in in b le ly ha ta s a su p p c	20 14 ba sel ine	20 15 ba sel ine	20 16	20 17	20 18	Ta et rg	GR I ind ica tor	Ext dit . au
% of t he al s nd d b lier CS R s rds - P im PL C tot pe cov ere y s up p cor eca rox us			43 %	40 %	40 %
Nu mb of site dit s in lla bo ion wi th JA C rat er on au co			69	89	91

: Assured by our external auditor

Proximus at a glance

GR I st da rd an	#	GR I di scl osu re	er( s), LS (s ) a inf ati Pa mb UR nd /or ge nu orm on	Om iss ion
Ge Di ral scl ne osu res
Or niz ati Pro file ga on	10 2-1	Na of th niz ati me e o rga on	Pro xim blic lim ite d c de r B elg ian Pu blic La us pu om pa ny un w
	10 2-2	Ac tiv itie bra nd rod nd vic uct s, s, p s, a ser es	Wh & w hat do 8 o w e a re we , p.
	10 2-3	Loc ati of hea dq rte on ua rs	Bo ule rd du Ro i Al be rt I I, 27 B - 10 30 Br lle va uxe s
	10 2-4	Loc ati of tio on op era ns	Wh & w hat do 8 o w e a re we , p.
	10 2-5	Ow rsh ip a nd leg al f ne orm	Pro xim de l, p .68 us gov ern an ce mo
	10 2-6	Ma rke ed ts s erv	Wh & w hat do 8 o w e a re we , p.
	10 2-7	Sca niz ati le o f th e o rga on	So cia l fig .13 4 ure s, p Key Fin cia l H ig hlig hts 10 -12 an , p.
	10 2-8	Inf ati loy d o the orm on on em p ees an r rke wo rs	So cia l fig .13 4-1 35 ure s, p	Re rtin loy of po g o n e mp ees rs i nsi de red tra cto t con s co no lica ble Pr oxi s G to ap p mu rou p.
	10 2-9	Su ly c hai pp n	Su ina ble ly c hai .64 sta su pp n, p
	10 2-1 0	Sig nif ica cha the niz ati nt to ng es or ga on d it ly c hai an s s up p n	N.A	No in 20 18 to ort ne rep on
	10 2-1 1	Pre tio inc ip le o ch cau na ry pr r a pp roa	Pro ud be CO ral 61 to eut 2 n , p.
	10 2-1 2	al i nit iat ive Ext ern s	iffe Di ita tio #e mb ed led lfo rHe r d ecl De ork t w rac ren ce p ge; g ara n; cen for al l - Co itm ch ent art mm er	ive lis xha ust t no n-e

GR I st da rd an	#	GR I di scl osu re	er( s), LS (s ) a inf ati Pa mb UR nd /or ge nu orm on	Om iss ion
	10 2-1 3	hip iat ion Me mb of ers as soc s	NO ET VB O/ FE B VO KA ori Ag a CI ( es) BE Un ion de rise s d e B ell ntr s e ep rux E ( s) UW Un ion W all des En ise tre on ne pr Ce rcl e d e W all ie on VK W Be nel Bu sin Ro dta ble ux ess un GS MA Ce n R ula tio n in Eu nte r o eg rop e ISP A B elg ium ET IS Gu be rna Cy be r S rity Co alit ion ecu Th e S hif t Be .Fa ce Joi nt A ud it C ion rat oo pe Tal 2C ent t on nec ian iat ion tin Be lg As of Ma rke soc g	ive lis xha ust t no n-e
Str ate gy	10 2-1 4	Sta fro ior de cis ion ake tem ent m s en -m r	For ord fro CE O & Ch air .4- 7 ew m o ur ma n, p
Eth ics d in rity teg an	10 2-1 6	Va lue rin cip les da rds d n , st s, p an , an orm s of be hav iou r	Do ing bu sin rig ht, 50 -51 ess p. Fo ord fro CE O & Ch air .4- 7 rew m o ur ma n, p Co ct ( ila ite) de of du ble ebs con ava on ou r w Va lue oll ab tio ilit tab ilit ori ati ust ent s: c ora n, a g y, a cco un y, c om er on d d ig ita l m ind set an
Go ver na nce	10 2-1 8	Go str uct ver na nce ure	Co 68 -74 rat sta tem ent rpo e g ove rna nce , p.
	10 2-1 9	ati rity De leg ho aut ng	xim .68 Pro de l, p us gov ern an ce mo No n-f ina nci al g 81 ove rna nce , p.
Sta keh old er nt en ga ge me	10 2-4 0	Lis f st ake ho lde t o r g rou ps	Sta keh old d m ria lity de min ati 13 0 nt ate ter er en ga ge me an on , p.
	10 2-4 1	Co lle ctiv e b ain ing nts arg ag ree me	98 .5% of loy ed by col lec tiv e b ain ing nts em p ees co ver arg ag ree me (a m) ll e loy t E nd ed Lea de rsh ip Tea xte mp ees ex cep
	10 2-4 2	Ide nti fy ing d s ele ctin tak eh old an g s ers	Pro xim sel s it ake ho lde rs b d o n it s b usi hei ect s st s, t us ase nes r rel r in du nd ain ibu tio he s. W to str ntr n t eva nce ou y a ou r m co me e inc e im ion lud ll t hos ted by ell tho rat e a pac ou r o pe s, a s w as se we d m ain tai lat ion shi ith rtn pa er an n a re p w
	10 2-4 3	Ap ach keh old to sta nt pro er en ga ge me	Sta keh old d m ria lity de min ati 13 0-1 33 nt ate ter er en ga ge me an on , p.
	10 2-4 4	Key ics d c rai sed to p an on cer ns	Sta keh old d m ria lity de min ati 13 0-1 33 nt ate ter er en ga ge me an on , p.

GR I st da rd an	#	GR I di scl osu re	er( s), (s ) a Pa mb UR LS nd /or inf ati ge nu orm on
Re rtin tice po g p rac	10 2-4 5	Ent itie s in clu de d in th sol ida ted e c on fin cia l st ate nts an me	Th e b asi s fo r th nti tie ed in t he sol ida ted fin cia l e e s co ver con an s is oxi s G ' le nti tie Pr l st e. A ll e ed by sta tem ent tur mu rou p ga ruc s co ver the lida ted fin cia l st lso inc lud ed in t he ate nts ort co nso an me ar e a rep
	10 2-4 6	De fin ing nd ic rt c ten t a top re po on Bo da rie un s	No n-f ina nci al r ing ach 20 18 1 ort ep ap pro , p. Tra 12 2 nsp are ncy , p.
	10 2-4 7	Lis f m ria l to ics t o ate p	Ou ria lity ix, 27 ate atr r m m p. Ma ial ics 15 7-1 58 ter top , p.
	10 2-4 8	Re f in for tio sta tem ent s o ma n	Th is of inf ati les ific ally he ise tat ent ot ere no res em orm on un s s pec rw ted in the sta te xt
	10 2-4 9	Ch in ing ort an ges rep	Sta keh old d m ria lity de min ati 12 8 nt ate ter er en ga ge me an on , p.
	10 2-5 0	rtin eri Re od po g p	31 20 18 Jan 1 t o D ec ,
	10 2-5 1	Da of te st r nt ort mo ece rep	Ma rch 20 17 ,
	10 2-5 2	Re rtin le po g c yc	An ally nu
	10 2-5 3	Co oin t fo tio ard ing th nta ct p r q ues ns reg e ort rep	@p im csr rox us. com
	10 2-5 4	Cla ims of rtin in a rda wi th the re po g cco nce GR I st da rds an	No n-f ina nci al r ing ach 20 18 1 ort ep ap pro , p.
	10 2-5 5	GR I Co ind nte nt ex	GR I Co Ind 14 2-1 56 nte nt ex, p.
	10 2-5 6	Ext al a ern ssu ran ce	Tra l as 124 xte nsp are ncy - e rna sur an ce, p.
		Lin ked wi th hig h m ria l to ic: Inn tio ate p ova n a	nd tai ble inf tru ctu sus na ras re
GR I 10 3: M ent an ag em ach 20 16 ap pro	10 3-1	Exp lan ati of t he ial ic a nd its ter top on ma Bo da rie un s	Ma ial ics 15 7 ter top , p. Fut oof dig ita l in fra 29 -31 str uct ure -pr ure , p. Dig ita l in ati 31- 35 nov on , p. Bo da rie un s: sid oxi s G - In of Pr ent e: m an ag em mu rou p - O ide : al l cu nit ies d g s in stit uti uts sto ent me rs, com mu an ove rnm on s in c ies of tio ntr ou op era ns.
	10 3-2	Th ach d it ent e m an ag em ap pro an s nts com po ne	Fut oof dig ita l in fra 29 -31 str uct ure -pr ure , p. Dig ita l in ati 31- 35 nov on , p. Pro xim de l, p .68 us gov ern an ce mo No n-F ina nci al g 81 ove rna nce , p. Tra nsf ati & I tio n C mit 71 tee orm on nn ova om , p.

GR I st da rd an	#	GR I di scl osu re	er( s), (s ) a Pa mb UR LS nd /or inf ati ge nu orm on
	10 3-3	Eva lua tio f th ach ent n o e m an ag em ap pro	Pro xim de l, p .68 us gov ern an ce mo No n-F ina nci al g 81 ove rna nce , p. Tra nsf ati & I tio n C mit 71 tee orm on nn ova om , p. Ov iew of n-f ina nci al i nfo ati 118 erv no rm on , p.
GR I 20 3: I nd ire ct mic im 20 16 ts eco no pac	20 3-1	Inf re i nd vic tru ctu stm ent ras nve s a ser es d rte sup po	Fu f d ig ita l in fra 29 -31 tur str uct e-p roo ure , p.
	Ow n ind ica tor	4G ind oo r co ver ag e	Fut oof dig ita l in fra 30 str uct ure -pr ure , p. Ov iew of n-f ina nci al i nfo ati 118 erv no rm on , p.
	Ow n ind ica tor	4G tdo ou or cov era ge	Fut oof dig ita l in fra 30 str uct ure -pr ure , p. Ov iew of n-f ina nci al i nfo ati 118 erv no rm on , p.
	Ow n ind ica tor	Fix ed int 30 Mb et: ern ps cov era ge	Fut oof dig ita l in fra 30 str uct ure -pr ure , p. Ov iew ina nci al i ati 118 of n-f nfo erv no rm on , p.
	Ow n ind ica tor	Co mb ine d a e V DL S & AD SL ed ver ag spe	Fut oof dig ita l in fra 30 str uct ure -pr ure , p. Ov iew of n-f ina nci al i nfo ati 118 erv no rm on , p.
	Ow n ind ica tor	Ve rin e in Be lg ium cto g c ove rag	Fut oof dig ita l in fra 30 str uct ure -pr ure , p. Ov iew ina nci al i ati 118 of n-f nfo erv no rm on , p.
	Ow n ind ica tor	jec ith ive rsit ies Nu mb of / ts w er pro un ed tio n in stit ute uca s	Dig ita l in ati 31 nov on , p. Ov iew of n-f ina nci al i nfo ati 118 erv no rm on , p.

GR I 10 3: M ent an ag em 20 16 ach ap pro	10 3-1	Exp lan ati of t he ial ic a nd its ter top on ma rie Bo da un s	Ma ial ics 15 7 ter top , p. Dig ita l in ati 31- 35 nov on , p. Bo da rie un s: - In sid of Pr oxi s G ent e: m an ag em mu rou p - O ide nit ies s in stit uti : al l cu d g uts sto ent me rs, com mu an ove rnm on s in c ies of tio ntr ou op era ns.
	10 3-2	Th ach d it ent e m an ag em ap pro an s nts com po ne	Dig ita l in ati 31- 35 nov on , p. Pro xim de l, p .68 us gov ern an ce mo No n-F ina nci al g 81 ove rna nce , p.
	10 3-3	Eva lua tio f th ach ent n o e m an ag em ap pro	Pro xim de l, p .68 us gov ern an ce mo No n-F ina nci al g 81 ove rna nce , p. Ov iew ina nic al i ati 118 of n-f nfo erv no rm on , p.

GR I st da rd an	#	GR I di scl osu re	er( s), (s ) a Pa mb UR LS nd /or inf ati ge nu orm on
GR I 20 3: I nd ire ct mic im ts 2 01 6 eco no pac	20 3-1	Inf re i nd vic tru ctu stm ent ras nve s a ser es d rte sup po	Fut oof dig ita l in fra 29 -31 str uct ure -pr ure , p.
	Ow n ind ica tor	Ac tiv e M 2M rds ca	Dig ita l in ati 31 nov on , p. Ov iew ina nci al i ati 118 of n-f nfo erv no rm on , p.
	Ow n ind ica tor	(n al) ICT Re ati al + int ati ven ues on ern on	Dig ita l in ati 31 nov on , p. Ov iew of n-f ina nci al i nfo ati 118 erv no rm on , p.
		Lin ked wi th hig h m ria l to ic: Bu sin nd ate p ess co	d e thi uct an cs
GR I 10 3: M ent an ag em ach 20 16 ap pro	10 3-1	Exp lan ati of t he ial ic a nd its ter top on ma Bo da rie un s	Ma ial ics 15 7 ter top , p. Do ing bu sin rig ht, 50 -51 ess p. Bo da rie un s: - In sid e: P im Gro (m d e loy ) ent rox us up an ag em an mp ees - O ide : al l cu lier nit ite nd uts sto nt me rs, sup p s, c om mu s, a gov ern me ins titu tio in c ies of tio ntr ns ou op era ns
	10 3-2	Th ach d it ent e m an ag em ap pro an s nts com po ne	Do ing bu sin rig ht, 50 -51 ess p. xim .68 -69 Pro de l, p us gov ern an ce mo No n-f ina nci al g 81 ove rna nce , p.
	10 3-3	Eva lua tio f th ach ent n o e m an ag em ap pro	Do ing bu sin rig ht, 50 -51 ess p. Pro xim de l, p .68 -69 us gov ern an ce mo ina nci 81 No n-f al g ove rna nce , p. Ov iew of n-f ina nci al i nfo ati 119 erv no rm on , p.
GR I 20 5: A nti tio cor rup n 20 16	20 5-2	Co ica tio nd inin bo i tra ut ant mm un n a g a tio olic ies d p ed cor rup n p an roc ure s	Pro xim de l, p .68 -69 us gov ern an ce mo
	20 5-3	Co nfi inc ide ion ed of d nts pt rm co rru an ion ken act s ta	In 2 01 8, o inc ide tio dir ime lth h n ly a d nt ot ect ne on cor rup n, a ou g Pro xim uld be ion ed loy has be at ent us, co m as on e e mp ee en int d in tio du rin the rtin eri od . N ate err og a c orr up n c ase g re po g p o ism iss dis cip line tio loy re d ed d f nd em p ees we or or cor rup n a no wi th bu sin ina ted ed tra cts rtn re t t re con ess pa ers we erm or no new du vio lat ion lat ed tio e to to s re cor rup n.
GR I 41 2: H rig hts um an 20 16 nt ass ess me	41 2-2	Em loy inin n h rig hts tra p ee g o um an lici ced po es or pro ure s	Pro xim de l, p .68 -69 us gov ern an ce mo
	Ow n ind ica tor	Nu mb of inv iga ted by th est er cas es e Inv iga tio de fo r vi ola tio f est rtm ent ns pa n o lici es/ cod f co nd uct po e o	Do ing Bu sin rig ht, 50 ess p. Ov iew of n-f ina nci al i nfo ati 119 erv no rm on , p.
	Ow n ind ica tor	Nu mb of w his tle blo win er g c ase s	Do ing Bu sin rig ht, 50 ess p. Ov iew of n-f ina nci al i nfo ati 119 erv no rm on , p.

GR I st da rd an	#	GR I di scl osu re	er( s), (s ) a Pa mb UR LS nd /or inf ati ge nu orm on
		Lin ked wi th hig h m ria l to ic: Qu alit rod ate p y p	nd vic uct s a ser es
GR I 10 3: M ent an ag em ach 20 16 ap pro	10 3-1	Exp lan ati of t he ial ic a nd its ter top on ma Bo da rie un s	Ma ial ics 15 7 ter top , p. Cu r fi 41 -44 sto rst me , p. Bo da rie un s: - O ide : al l cu uts sto me rs
	10 3-2	Th ach d it ent e m an ag em ap pro an s nts com po ne	Cu r fi 41 -44 sto rst me , p. Pro xim de l, p .68 us gov ern an ce mo No n-f ina nci al g 81 ove rna nce , p.
	10 3-3	Eva lua tio f th ach ent n o e m an ag em ap pro	Cu r fi 41 -44 sto rst me , p. Pro xim de l, p .68 us gov ern an ce mo ina nci 81 No n-f al g ove rna nce , p. Ov iew of n-f ina nci al i nfo ati 119 erv no rm on , p.
GR I 41 6: C ust om er He alt h a nd Sa fet 20 16 y	Ow n ind ica tor	n (r Ble nd ed isfa ctio esi de nti al sat usa ge ) tom cus ers	Cu r fi 41 sto rst me , p. Ov iew of n-f ina nci al i nfo ati 119 erv no rm on , p.
Lin wi hig ria ic: Pri cin bill ing ked th h m l to nd ate tra p g a nsp are ncy
GR I 10 3: M ent an ag em ach 20 16 ap pro	10 3-1	ati ial ic a its Exp lan of t he nd ter top on ma Bo da rie un s	ial ics 8 Ma 15 ter top , p. Cu r fi 43 -44 sto rst me , p. Bo da rie un s: - O ide : al l cu uts sto me rs
	10 3-2	Th ach d it ent e m an ag em ap pro an s nts com po ne	Cu r fi 43 -44 sto rst me , p. Pro xim de l, p .68 us gov ern an ce mo No n-f ina nci al g 81 ove rna nce , p.
	10 3-3	tio Eva lua f th ach ent n o e m an ag em ap pro	Cu r fi 43 -44 sto rst me , p. Pro xim de l, p .68 us gov ern an ce mo No n-f ina nci al g 81 ove rna nce , p. Ov iew ina nci al i ati 119 of n-f nfo erv no rm on , p.
GR I 20 6: A nti itiv e b eha vio pet com r 20 16	20 6-1	ctio ti-c itiv Leg al a for pet ns an om e be hav iou nti d m oly -tr ust r, a , an on op ctic pra es	rt ( ite) Co lida ted ila ble ebs ent nso m an ag em re po ava on ou r w 3 le l ac tio ard ing ti-c itiv e b eha vio d v iola tio pet ga ns reg an om ur an ns of i-tr d m oly leg isla tio ant ust an on op n Ou tio thi f le l ac tco to ort me s o ga ns: no ng rep
	Ow n ind ica tor	De in lain ela ted inv oic ts r to cre ase com p es (re ) sid ial ent tom cus ers	Cu r fi 41 sto rst me , p. Ov iew of n-f ina nci al i nfo ati 119 erv no rm on , p.

Appendix

Proximus at a glance

Sustainabilty

Governance and Compliance

GR I st da rd an	#	GR I di scl osu re	er( s), (s ) a Pa mb UR LS nd /or inf ati ge nu orm on
		Lin ked wi th hig h m ria l to ic: En nd ate p erg y a	ho gre en use ga ses
GR I 10 3: M ent an ag em ach 20 16 ap pro	10 3-1	Exp lan ati of t he ial ic a nd its ter top on ma Bo da rie un s	Ma ial ics 15 7 ter top , p. Pro ud be CO ral 61- 63 to eut 2 n , p. rie Bo da un s: - In sid of Pr oxi s G ent e: m an ag em mu rou p - O ide lier nit ies d c in ies of uts ust ntr : su pp s, c om mu an om ers cou tio op era ns.
	10 3-2	Th ach d it ent e m an ag em ap pro an s nts com po ne	Pro ud be CO ral 61- 63 to eut 2 n , p. Pro xim de l, p .68 us gov ern an ce mo No n-f ina nci al g 81 ove rna nce , p.
	10 3-3	Eva lua tio f th ach ent n o e m an ag em ap pro	Pro ud be CO ral 61- 63 to eut 2 n , p. Ov iew of n-f ina nci al i nfo ati 12 0 erv no rm on , p. Pro xim de l, p .68 us gov ern an ce mo No n-f ina nci al g 81 ove rna nce , p.
GR I 30 2: E 20 16 ne rgy	30 2-1	ion wi thi En he pt n t erg y c on sum iza tio org an n	iro igu 13 8-1 39 Env al f ent nm res , p.
	30 2-3	En int ity erg ens y	Env iro al f igu 13 8-1 39 ent nm res , p.
	30 2-4	Re du ctio f e tio n o ne rgy co nsu mp n	Env iro al f igu 13 8-1 39 ent nm res , p. Pro ud be CO ral 61 to eut 2 n , p. Ov iew ina nci al i ati 12 0 of n-f nfo erv no rm on , p.
	30 2-5	ctio in e ire Re du of nts ns ne rgy re qu me du d s ice cts pro an erv s	iro igu Env al f 14 1 ent nm res , p.
GR I 30 5: E mis sio 20 16 ns	30 5-1	( 1) Dir Sco GH G e mis sio ect pe ns	Env iro al f igu 13 9 ent nm res , p. Tra 124 nsp are ncy , p.
	30 5-2	ind ire ct ( Sco 2) GH G e mis sio En erg y pe ns	iro igu 13 9 Env al f ent nm res , p. Tra 124 nsp are ncy , p.
	30 5-3	( 3) Ot he r in dir Sco GH G e mis sio ect pe ns	Env iro al f igu 13 9-1 40 ent nm res , p. Tra 12 5-1 26 nsp are ncy , p.
	30 5-4	GH G e mis sio int ity ns ens	iro igu 13 9 Env al f ent nm res , p.
	30 5-5	ctio f G HG iss ion Re du n o em s	iro igu 13 9-1 40 Env al f ent nm res , p. Pro ud be CO ral 61 to eut 2 n , p. Ov iew of n-f ina nci al i nfo ati 12 0 erv no rm on , p.
	Ow n ind ica tor	Ca rbo ral ity lev el f ion eut rat n n or ow n o pe s d b usi l s tr an nes ave	Pr d t o b e C O2 al, 61 utr ou ne p. Ov iew of n-f ina nci al i nfo ati 12 0 erv no rm on , p.

GR I st da rd an	#	GR I di scl osu re	er( s), (s ) a Pa mb UR LS nd /or inf ati ge nu orm on
		Lin ked wi th hig h m ria l to ic: Su ina ble ate sta p	Su ly Ch ain pp
GR I 10 3: M ent an ag em ach 20 16 ap pro	10 3-1	Exp lan ati of t he ial ic a nd its ter top on ma Bo da rie un s	Ma ial ics 15 7 ter top , p. Su ina ble ly c hai .64 -65 sta su pp n, p rie Bo da un s: - In sid of Pr oxi ent e: m an ag em mu s g rou p - O ide lier nd nit ies in ies of tio uts ntr : su pp s a com mu cou op era ns
	10 3-2	Th ach d it ent e m an ag em ap pro an s nts com po ne	Su ina ble ly c hai .64 -65 sta su pp n, p Pro xim de l, p .68 us gov ern an ce mo No n-f ina nci al g 81 ove rna nce , p.
	10 3-3	Eva lua tio f th ach ent n o e m an ag em ap pro	Ov iew of n-f ina nci al i nfo ati 12 1 erv no rm on , p. Su ina hai .64 -65 ble ly c sta su pp n, p Pro xim de l, p .68 us gov ern an ce mo No n-f ina nci al g 81 ove rna nce , p.
GR I 30 8: S lier up p s iro al ent env nm nt 2 01 6 ass ess me	30 8-1	Ne lier s th ned ing at w w s up p ere sc ree us iro rite ria al c ent env nm	Su ina ble ly c hai .64 -65 sta su pp n, p Ov iew ina nci al i ati 12 of n-f nfo 1 erv no rm on , p.
	30 8-2	Ne tiv nvi l im ts i he nta n t ga e e ron me pac ly c hai nd ion ken act s ta sup p n a	Su ina ble ly c hai .64 -65 sta su pp n, p In 2 01 8, 18 % ( 22 ) o f su lier ed iro al r isk ent pp s s cre en on env nm s had tiv e. N f th hei lat ion shi ith w t a n ega e s cor on e o em sa r re p w Pro xim Gro min d a sul f th s. T hes ter ate t o ent us up s a re e a sse ssm e ed tai bili lier nd rai the ir to te ty to are us pro mo sus na am on g s up p s a se tai bili nd ard ty sta sus na s. Su lier ed iro al r isk ith tiv ent pp s s cre en on env nm s w a n ega e s cor e a re ati cal ly r sed th fo llo win the ini tia l as tem ent sys eas ses e y ear g ses sm tio oin ina bili dit ati Ac f su cal ly fol low ed ts o sta ty yst n p au s a re s em -up by Pro xim Gro wit hin th e J oin t A ud it C ion rat us up oo pe
GR I 41 2: H rig hts um an nt 2 01 6 ass ess me	41 2-1	Op tio tha t h be sub jec t era ns ave en hu ig hts vie im to t ma n r re ws or pac nts ass ess me	Su ina ble ly c hai .65 sta su pp n, p
	41 2-3	Sig nif ica inv d nt est nt nts me ag ree me an th inc lud e h rig hts tra cts at con um an ig cla r th de hu hts at ent use s o un rw ma n r ing scr een	Su ina ble ly c hai .64 -65 sta su pp n, p 10 0 % of inv inc lud e h rig hts cla est nt nts me ag ree me um an use s ing efi sig nif ica inv de ch . W e d ent nt est nt or un rw su scr een ne me ith alu bov l to €1 25 K. nts ntr act ag ree me as co s w a v e a e o r eq ua
GR I 41 4: S lier cia l up p so nt 2 01 6 ass ess me	41 4-1	Ne lier s th ned ing at w w s up p ere sc ree us ial crit eri soc a	Su ina ble ly c hai .64 -65 sta su pp n, p Ov iew of n-f ina nci al i nfo ati 12 1 erv no rm on , p.

Appendix

Proximus at a glance

Sustainabilty

Governance and Compliance

GR I st da rd an	#	GR I di scl osu re	er( s), LS (s ) a inf ati Pa mb UR nd /or ge nu orm on
	4-2 41	tiv oci al i s in hai Ne th ly c act ga e s mp e s up p n d a ctio tak an ns en	Su ina hai .64 -65 ble ly c sta su pp n, p ( ) o In Y 20 18 25 % 18 f su lier ed lab tice s & ear pp s s cre en on ou r p rac , hu ig hts ris ks had tiv ma n r a n ega e s cor e. No of t he th eir rel ati shi ith Pro xim Gro min d ter ate ne m s aw on p w us up lt o f th s. T hes sed ent to ote as a r esu e a sse ssm e a re u pr om tai bili lier nd rai the ir s ain ab ilit ty to ust sus na am on g s up p s a se y nd ard sta s. Su lier ed lab tice s & hu ig hts ris ks wit h pp s s cre en on ou r p rac ma n r tiv ati cal ly r sed th fo llo win yst a n ega e s cor e a re s em eas ses e y ear g init ial Ac tio oin f su ina bili dit nt. ts o sta ty ass ess me n p au s a re ati cal ly fol low ed by Pr oxi s G ith in t he Joi nt A ud it tem sys -up mu rou p w Co tio op era n.
	Ow n ind ica tor	% of t he al s nd d b lier tot pe cov ere y s up p CS im C R s rds - P PL cor eca rox us	Env iro al f igu 14 1 ent nm res , p.
	Ow n ind ica tor	site dit s in ion Nu mb of lla bo rat er on au co wit h J AC	iro igu Env al f 14 1 ent nm res , p.
Lin ked wi th hig h m ria l to ic: Cir cul ate p ar eco no			: el ic w nd uip ling ect ast nt my ron e a eq me rec yc
GR I 10 3: M ent an ag em 20 16 ach ap pro	10 3-1	Exp lan ati of t he ial ic a nd its ter top on ma rie Bo da un s	Ma ial ics 15 7 ter top , p. ircu .63 -64 Pa f th lar rt o e c ec on om y p Bo da rie un s: - In sid of Pr oxi ent e: m an ag em mu s g rou p - O ide itie in ies tio nd of uts tom ntr : co mm un s a cus ers cou op era ns
	10 3-2	Th ach d it ent e m an ag em ap pro an s nts com po ne	Pa f th ircu lar .63 -64 rt o e c ec on om y, p Pro xim de l, p .68 us gov ern an ce mo No n-f ina nci al g 81 ove rna nce , p.
	10 3-3	tio Eva lua f th ach ent n o e m an ag em ap pro	iro igu Env al f 14 1 ent nm res , p. Ov iew of n-f ina nci al i nfo ati 12 0 erv no rm on , p. Pro xim de l, p .68 us gov ern an ce mo No n-f ina nci al g 81 ove rna nce , p.

Proximus Group Annual Report 2018

150

GR I st da rd an	#	GR I di scl osu re	er( s), (s ) a Pa mb UR LS nd /or inf ati ge nu orm on	Om iss ion
GR I 30 1: M ria ls ate	30 1-3	Re cla ime d p rod nd the ir p ack ing uct s a ag ials ter ma	Pa f th ircu lar .63 -64 rt o e c ec on om y, p Env iro al f igu 14 1 ent nm res , p. Ov iew of n-f ina nci al i nfo ati 12 0 erv no rm on , p.	Re rtin ecl aim ed po g o n r kag ing ria l is ate pac m sid d n rel ot nt con ere eva for Pr oxi s G inc mu rou p s e lso al low ed tom cus ers ar e a bri the ol des nd -of to t e ng life de vic WE EE to es as scr ap ling int s in th e lo cal rec yc po nic ipa l co ine ark nta mu r p s. Sin Pro xim Gro is ce us up be r of Re el, a m em cup we rel he n t m t y o o m an ag e thi ling ch l. T he s re cyc an ne tai ark he rt t con ne r p s re po WE EE fig th e R l s to ure ecu pe iza tio xim n b Pro ut org an us Gro has vie his n t up no w o dat a.
GR I 30 6: E ffl d nts ue an 20 16 ste wa	30 6-2	Wa by d d isp l m eth od ste ty pe an osa	Pa f th ircu lar .63 rt o e c ec on om y, p Ov iew of n-f ina nci al i nfo ati 12 0 erv no rm on , p. Env iro al f igu 14 1 ent nm res , p.
Lin ked wi th hig h m ria l to ic: Hu ita l an d e loy dev elo ate ent p ma n c ap mp ee pm
GR I 10 3: M ent an ag em 20 16 ach ap pro	10 3-1	Exp lan ati of t he ial ic a nd its ter top on ma rie Bo da un s	Ma ial ics 15 7 ter top , p. Ca rin -48 for loy 44 g ou r e mp ees , p. Bo da rie un s: - In sid e: P im loy rox us em p ees
	10 3-2	Th ach d it ent e m an ag em ap pro an s nts com po ne	Ca rin for loy 44 -48 g ou r e mp ees , p. Pro xim de l, p .68 us gov ern an ce mo No n-f ina nci al g 81 ove rna nce , p.
	10 3-3	Eva lua tio f th ach ent n o e m an ag em ap pro	Ca rin for loy 44 -48 g ou r e mp ees , p. Ov iew of n-f ina nci al i nfo ati 119 erv no rm on , p. Pro xim de l, p .68 us gov ern an ce mo No n-f ina nci al g 81 ove rna nce , p.
GR I 40 1: E loy nt mp me 20 16	40 1-1	Ne loy hir d e loy w e mp ee es an mp ee tur nov er	So cia l fig .13 5 ure s, p

GR I st da rd an	#	GR I di scl osu re	er( s), (s ) a Pa mb UR LS nd /or inf ati ge nu orm on	Om iss ion
	40 1-2	Be nef its vid ed ful l-ti loy to pro me em p ees tha ovi de d t t a not o t re pr em po rar y o r tim loy rt- pa e e mp ees	Pro xim do 't e xcl ud -tim loy fro art r te us esn e p e o mp ora ry em p ees m the be nef it p ack ime d a t th e f ull -tim loy ag e a e e mp ees Ho we ver , 1) its wit dir lin ith tio ice for be nef h a k w n/s he lev el ect , t rem un era erv of t he be nef it is im ted by th -tim ime du ion art at ort pac e p e r eg e p rop (su lem tire lan dea th dis ab ilit ent nt pp ary re me p cov era ge y , , ) cov era ge 2) Su lem tire lan fo inim of 1 y of ent nt pp ary re me p res ees a m um ear (t vic ion rig hts his le d n't ly a fro e to t p ser ge ens ru oes ap p nym ore as m /2 01 9). is r im rt ( d) 1/1 Th ule he ho d n lon ts t ot pac ver y s an pro ge tem tra ct. po rar y c on	As Pr oxi ake mu s m s n o ion fo r th e b efi ept ts exc en ive its loy n to g em p ees , a def init ion fo r "s ign ific ant loc ati f o ion " is rat t on s o pe no rel dd nt t eva o a
	40 1-3 Pa tal lea So cia l fig .13 6 ren ve ure s, p
GR I 40 4: t rai nin nd g a tio n 2 01 6 ed uca	40 4-1	Av ho of inin tra era ge urs g p er y ear pe r loy em p ee	So cia l fig .13 6 ure s, p
	40 4-2	Pro fo rad ing loy ski lls gra ms r u pg em p ee d t siti ista an ran on ass nce pr og ram s	Ca rin for loy 44 g ou r e mp ees , p. Ov iew of n-f ina nci al i nfo ati 119 erv no rm on , p. ( Pro rtio f P im loy tiv ely lo oki for kn led po n o rox us em p ees ac ng ow ge sin rise cia ( ) ) le b l ne ork #W AP ent tw or peo p y u g o ur erp so
	40 4-3	Pe of loy cei vin ula nta rce ge em p ees re g r eg r rfo d c dev elo ent pe rm an ce an are er pm iew rev s	Pe rfo iew dev elo d c chi clo sel ent rm an ce rev pm an are er coa ng are y , lin ked ltu Ou erf iew ss f th to ou r cu re. r p orm an ce rev pr oce ocu ses on e ths of loy sh the m f he hro h c tin str to urt r, t en g em p ees arp en ug on uo us chi d f eed bac k. W inc ed tha t th is a ch is coa ng an e a re c onv pp roa be nef icia l fo r th loy him sel f. In de ed loy wh e e mp ee , an em p ee o lve nd dev elo wi ll p erf al l th e b It is als o b efi cia l ett evo s a ps, orm er. en for Pr oxi s b it h elp s it in t he d, t th. etu rn t mu eca use en o r o g row , At lea st 2 tim ch ive loy eiv erf ce/ act es a y ear ea em p ee rec es a p orm an vie car eer re w.
	Ow n ind ica tor	Em loy nt p ee en ga ge me	Ca rin for loy 44 g ou r e mp ees , p. Ov iew of n-f ina nci al i nfo ati 119 erv no rm on , p.
		Lin ked wi th hig h m ria l to ic: He alt h a nd saf ate p	ety
GR I 10 3: M ent an ag em ach 20 16 ap pro	10 3-1	Exp lan ati of t he ial ic a nd its ter top on ma Bo da rie un s	Ma ial ics 15 7 ter top , p. Ca rin for loy 48 -50 g ou r e mp ees , p. Bo da rie un s: - In sid e: P im loy rox us em p ees
	10 3-2	Th ach d it ent e m an ag em ap pro an s nts com po ne	Ca rin for loy 48 -50 g ou r e mp ees , p. xim .68 Pro de l, p us gov ern an ce mo No n-f ina nci al g 81 ove rna nce , p.
	10 3-3	Eva lua tio f th ach ent n o e m an ag em ap pro	Ov iew of n-f ina nci al i nfo ati 119 erv no rm on , p. Pro xim de l, p .68 us gov ern an ce mo No n-f ina nci al g 81 ove rna nce , p.

Proximus Group Annual Report 2018

GR I st da rd an	#	GR I di scl osu re	er( s), LS (s ) a inf ati Pa mb UR nd /or ge nu orm on	Om iss ion
ial ic 4 03 Ma ter top : ati al h eal th & occ up on saf 20 18 ety	40 3-1	Oc ion al h eal th d s afe pat ty ccu an ent ste ma nag em sy m	Ca rin 48 -50 for loy g ou r e mp ees , p.
	40 3-2	Ha d id ific ati isk d ent ent zar on , r as ses sm , an inc ide inv iga tio nt est n	Ca rin for loy 48 -50 g ou r e mp ees , p. Eve cci de ork rin t P im st b ed nt at w ort ry a oc cur g a rox us mu e r ep as ick ly a ible ati al & fre ho mb A s rat qu s p oss on a n on e p ne nu er. epa e ced ists fo r th ub sid iar ies . Th is c be sul ted via pro ure ex e s an con sid iar Hu n R es/ HR de of th ub rtm ent ma eso urc pa e s y. Ac cid da is t ted by th e R ISK de in a d bas e & ent ta rtm ent ata rea pa h w ork cid aly sis wil l be rfo ed by the Co ent rat eac ac an pe rm rpo e tio n & ctio ( CP P). Pre Pr n D ote rtm ent ven epa In c of eri cci de ork CP P w ill e re i t is d nt at w rte ase a s ou s a nsu re po , uir ed the W ell -be ing Wo rk s iso bo dy he to at ot as req up erv ry or any r blic riti tho pu au es. For ch rk a cci de CP P w ill l k to the ith the nt ent ea wo oo ge r w m an ag em of t he ned de fo ion d/o ion rtm ent ent rot ect con cer pa r p rev an r p cci ill h ain hat th de ned ent s to nt t nt w me asu rem s a pr eve e a ap pe ag de r th ircu tan un e s am e c ms ces
	40 3-3	Oc ati al h eal th vic cup on ser es	Ca rin for loy 48 -50 g ou r e mp ees , p.	We ok the dis clo to ste p to se hea lth d s afe ord ing ty on an acc sio the dat ed f th to up ver n o e GR I di scl nin osu re c on cer g ati al h eal th d occ up on an ( 20 18 ), e saf th h ety ven ou g thi ill ly be lso s w on com pu ry fro m 2 02 1. is y Th e fo ear , w cus on ing th uir ed ort rep e r eq inf ati ab t o orm on ou ur ow n loy em p ees
	40 3-4	Wo rke icip ati lta tio nd art r p on , co nsu n, a nic ati ati al h eal th com mu on on occ up on d s afe ty an	Ca rin for loy 48 -50 g ou r e mp ees , p.
	40 3-5	ain ing ati Wo rke al h eal th r tr on oc cup on d s afe ty an	Ca rin 48 -50 for loy g ou r e mp ees , p.	dis We ok the clo to ste p to se hea lth d s afe ord ing ty on an acc the dat ed sio f th to up ver n o e GR I di scl nin osu re c on cer g ati al h eal th d occ up on an ( ), e saf 20 18 th h ety ven ou g thi ill ly be lso s w on com pu ry fro m 2 02 1. T his fo ye ar, we cus ing th uir ed ort on rep e r eq inf ati ab t o orm on ou ur ow n loy em p ees

GR I st da rd an	#	GR I di scl osu re	Pa mb er( s), UR LS (s ) a nd /or inf ati ge nu orm on	Om iss ion
	40 3-6	Pro tio f w ork hea lth mo n o er	Ca rin for loy 48 -50 g ou r e mp ees , p.	We ok the dis clo to ste p to se hea lth d s afe ord ing ty on an acc the dat ed sio f th to up ver n o e GR I di scl nin osu re c on cer g ati al h eal th d occ up on an ( ), e saf 20 18 th h ety ven ou g thi ill ly be lso s w on com pu ry m 2 02 his fro 1. T fo ye ar, we cus ing th uir ed ort on rep e r eq inf ati ab t o orm on ou ur ow n loy em p ees
	40 3-7	Pre tio nd mit iga tio f o ion al pat ven n a n o ccu hea lth d s afe im ts d ire ctly lin ked ty an pac by bu sin lat ion shi ess re ps	Ca rin for loy 48 -50 g ou r e mp ees , p.
	40 3-9	d in jur ies Wo rk- rel ate	Ca rin 48 -50 for loy g ou r e mp ees , p. So cia l fig .13 7 ure s, p Ov iew of n-f ina nic al i nfo ati 119 erv no rm on , p.	dis We ok the clo to ste p to se hea lth d s afe ord ing ty on an acc the dat ed sio f th to up ver n o e GR I di nin scl osu re c on cer g ati al h eal th d occ up on an ( ), e saf 20 18 th h ety ven ou g thi ill ly be lso s w on com pu ry fro m 2 02 1. Th is y e fo ear , w cus on ing th uir ed ort rep e r eq inf ati ab t o orm on ou ur ow n loy em p ees
		Lin ked wi th hig h m ria l to ic: Co ivit ate ect p nn y a	nd dig ita l in clu sio n
GR I 10 3: M ent an ag em ach 20 16 ap pro	10 3-1	Exp lan ati of t he ial ic a nd its ter top on ma Bo da rie un s	Ma ial ics 15 7 ter top , p. Dig ita l fo ll, p .53 -56 r a Bo da rie un s: - In sid of Pr oxi s G ent e: m an ag em mu rou p - O ide ins titu tio itie nd in uts ent tom : go ver nm ns, co mm un s a cus ers ies of tio ntr cou op era ns
	10 3-2	Th ach d it ent e m an ag em ap pro an s nts com po ne	Dig ita l fo ll, p .53 -56 r a Pro xim de l, p .68 us gov ern an ce mo No n-f ina nci al g 81 ove rna nce , p.
	10 3-3	Eva lua tio f th ach ent n o e m an ag em ap pro	Pro xim de l, p .68 us gov ern an ce mo No n-f ina nci al g 81 ove rna nce , p. Ov iew ina nci al i ati 12 0 of n-f nfo erv no rm on , p.

GR I st da rd an	#	GR I di scl osu re	er( s), (s ) a Pa mb UR LS nd /or inf ati ge nu orm on
GR I 41 3: l l oca nit ies 20 16 com mu	Ow n ind ica tor	(at Pe of ible d d evi nta te ste rce ge acc ess ces isa bili ) lea st f 1 d ty cat or eg ory	Dig ita l fo ll, p .53 r a Ov iew ina nci al i ati 12 0 of n-f nfo erv no rm on , p.
	Ow n ind ica tor	of j Nu mb ob ker d b rte er see s s up po y o ur init iat ive s in Be lg ium	Dig ita .53 l fo ll, p r a Ov iew of n-f ina nci al i nfo ati 12 0 erv no rm on , p.
	Ow n ind ica tor	Nu mb of sic k c hild ed the ir ect to er ren co nn sch l by Be dn nd Tak e O ff et a oo	Dig ita l fo ll, p .53 r a Ov iew of n-f ina nci al i nfo ati 12 0 erv no rm on , p.
		Lin wi hig ria ic: Pri ked th h m l to nd ate p vac y a	rity dat a s ecu
GR I 10 3: M ent an ag em ach 20 16 ap pro	10 3-1	Exp lan ati of t he ial ic a nd its ter top on ma Bo da rie un s	Ma ial ics 15 7 ter top , p. Dig ita l tr 35 -39 ust , p. Bo da rie un s: (m ) - In sid e: P im Gro d e loy ent rox us up an ag em an mp ees - O ide ins titu tio itie nd in uts ent tom : go ver nm ns, co mm un s a cus ers ies of tio ntr cou op era ns
	10 3-2	d it Th ach ent e m an ag em ap pro an s nts com po ne	Dig ita 35 -39 l tr ust , p. Pro xim de l, p .68 us gov ern an ce mo No n-f ina nci al g 81 ove rna nce , p.
	10 3-3	Eva lua tio f th ach ent n o e m an ag em ap pro	Pro xim de l, p .68 us gov ern an ce mo ina nci 81 No n-f al g ove rna nce , p. Ov iew of n-f ina nci al i nfo ati 118 erv no rm on , p.
GR I 41 8: c ust om er iva 20 16 pr cy	41 8-1	Su bst iat ed lain nin ant ts c com p on cer g bre ach of iva d lo f tom es cus er pr cy an sse s o dat tom cus er a	In 2 01 8, Pro xim ed 4 p al d inc ide th e B elg ian ort ata nts to us rep ers on Da Pro tio n A uth ori tie ta tec s.
	Ow n ind ica tor	Int ati al c ific ati lat ed ert to ern on on s re iva d c be ity pr cy an y rse cur	Dig ita l tr 36 ust , p. Ov iew of n-f ina nci al i nfo ati 118 erv no rm on , p.
		Lin ked wi th hig h m ria l to ic: Re nsi ble ate p spo	ark eti m ng
GR I 10 3: M ent an ag em ach 20 16 ap pro	10 3-1	ati ial ic a its Exp lan of t he nd ter top on ma Bo da rie un s	ial ics Ma 15 7 ter top , p. Cu r fi 43 -44 sto rst me , p. Bo da rie un s: - In sid of Pr oxi s G ent e: m an ag em mu rou p - O ide rs i ies of tio uts sto ntr : cu me n c ou op era ns
	10 3-2	Th ach d it ent e m an ag em ap pro an s nts com po ne	Cu r fi 43 -44 sto rst me , p. Pro xim de l, p .68 us gov ern an ce mo ina nci 81 No n-f al g ove rna nce , p.

Proximus at a glance

GR I st da rd an	#	GR I di scl osu re	er( s), LS (s ) a inf ati Pa mb UR nd /or ge nu orm on	Om iss ion
	10 3-3	tio Eva lua f th ach ent n o e m an ag em ap pro	xim .68 Pro de l, p us gov ern an ce mo No n-f ina nci al g 81 ove rna nce , p. Ov iew of n-f ina nci al i nfo ati 119 erv no rm on , p.
GR I 41 7: M ark eti d ng an lab elin 20 16 g	41 7-3	Inc ide of lian nin nts no n-c om p ce con cer g rke tin nic ati ma g c om mu on s	Cu r fi 41 sto rst me , p. Ov iew of n-f ina nci al i nfo ati 119 erv no rm on , p.
		Lin ked wi th hig h m ria l to ic: rel ate tom p cus er	ati shi on p
GR I 10 3: M ent an ag em ach 20 16 ap pro	10 3-1	Exp lan ati of t he ial ic a nd its ter top on ma Bo da rie un s	Ma ial ics 15 8 ter top , p. Cu r fi 41 -44 sto rst me , p. rie Bo da un s: Ou tsid ll c in c ies of tio ust ntr e: a om ers ou op era ns ,
	10 3-2	Th ach d it ent e m an ag em ap pro an s nts com po ne	Cu r fi 41 -44 sto rst me , p. Pro xim de l, p .68 us gov ern an ce mo No n-f ina nci al g 81 ove rna nce , p.
	10 3-3	Eva lua tio f th ach ent n o e m an ag em ap pro	Pro xim de l, p .68 us gov ern an ce mo No n-f ina nci al g 81 ove rna nce , p. Ov iew ina nci al i ati 119 of n-f nfo erv no rm on , p.	We do n't dis clo thi se s inf ati it is orm on as rcia siti lly com me sen ve inf ati orm on
GR I 41 6: C ust om er He alt h & fet 20 16 sa y	Ow n ind ica tor	Ha Ho in- ho ppy use me eri isfa ctio sat ate exp en ce n r	Cu r fi 41 sto rst me , p. Ov iew of n-f ina nci al i nfo ati 119 erv no rm on , p.

Material topics

Material topic: Innovation and sustainable infrastructure

Keeping up to date with the newest technologies and including them within the products and services portfolio. Investments in digital infrastructure (connectivity -5G, Fiber, network) and innovation in smart energy, smart mobility, smart cities, smart education, smart buildings, smart health, smart security, etc

Material topic: Connectivity and digital inclusion

How the company makes sure that its infrastructure is up-to-date and inclusive for all members of the community, as well as ensuring that the connectivity of the customers is at all times at a good level. Further it relates to the digital inclusion of the all layers of the general public.

Material topic: Energy and greenhouse gases

Energy consumption, plans to reduce it and how this affects emissions. It also includes overall contribution of the company to climate change due to its emissions and the plans in place or in plan to minimize this impact and reduce emissions.

Material topic: Circular economy: Electronic waste and equipment recycling

How the company deals with waste management system and solutions to create

less waste and recycle equipment. How the company contributes to the circular economy. It comprises the use of recycled material and actions related to promoting recycling.

Material topic: Business conduct & Ethics Comprises the conduct of business practices in regard to transparency, integrity, corruption, lawsuits and claims. It should include the corporate governance of the company.

Material topic: Sustainable supply chain

The way the company manages its responsibility towards the sustainability practices of its supply chain. Some other topics already involve this issue, however Proximus should also present an overarching approach to manage the impact of its supply chain and address its economic impact.

Material topic: Privacy & data security

The way the company makes sure that privacy laws are complied with, and that the data of the customers are handled in a secure way. The topic also relates to GDPR and the development of new technologies relating to this topic.

Material topic: Health and safety

The way the company treats its employees in terms of health and safety in linkage to production and overall health and safety management.

Material topic: Human capital & employee development How the company deals with its human

capital including labor conditions. It includes topics such as: Diversity and inclusion; gender; aging population; turn-over; training and development.

Material topic: Social engagement and development

How the company deals with the local communities from the places where it has operations. Further it relates to the support of local initiatives such as Child focus and Talent2Connect. Topics might include: hiring of local community, environmental impact on local community, donations and CSR/ Sustainability work in local communities.

Material topic: Digital competitiveness of institutions and companies

How the company is enhancing the competitiveness of institutions, cities and companies in terms of digitalization.

Material topic: Remuneration

Disclose the policies related to remuneration and specially to senior management remuneration (including bonuses).

Material topic: Responsible sourcing and resource efficiency

Due to the growing resource scarcity that the world is facing and the pressure it puts on the current system, companies are encouraged to take part in the solution and invest in green innovations (through greener products or through process that reduce their impact).

Material topic: Quality products and services

How the company ensures that it delivers top quality products and services to its customers, including safe and healthy products.

Material topic: Responsible taxes and state contribution

Concerns the payment of taxes compliant with relevant legal, regulatory and professional requirements, including reference total avoidance and evasion as well as the application of sustainable tax strategies. The fulfilment of responsibilities related to the payment of taxes and other government levies. Further it relates to dividends issued to the state (main shareholder) and the employment of Belgian workforce

Material topic: Lawsuits/claims

Concerns all law suits or claims that were placed over the company in the concerning year. It refers to both social or environmental complaints.

Material topic: Responsible marketing

The policies and practices around marketing and advertising.

Material topic: Sponsoring

Includes the contribution of the company to the community in terms of financial support or voluntary work. Additionally, it relates to support of local intitiatives and sport activities such as the Red Devils and music festivals etc.

Material topic: Redundancies

Explanation on how the company deals with redundancies. Issue relevant specially in years that the company has been hit by a crisis.

Material topic: Human rights

How the company is ensuring that labour conditions align with international standards. Human rights relate to the basic rights that form the foundation for freedom, justice and peace, which apply equally and universally in all countries (UN Universal Declaration).

Material topic: Pricing and billing transparency

How the company discloses its pricing of its different products and services in a transparent way.

Material topic: Customer relationship

How the company ensures that customers are satisfied. It also includes the impact on their health of these customers and providing them with all necessary information.

KPI definition

4G i ndoor coverage

The indoor coverage refers to the average coverage of 4G inside of buildings. The 2018 figure is based on a Q4 measurement by an external agency, Commsquare.

4G outdoor coverage

The outdoor coverage refers to the average coverage of 4G outside of buildings. The 2018 figure is based on a Q4 measurement by an external agency, Commsquare.

Fixed Internet: 30Mbps coverage

This is the percentage of homes in Belgium that can be connected to our network with a speed of at least 30 Mbps. This includes copper & fiber homes passed.

Average DSL speed

This records the average DSL speed of the homes connected to the Proximus DSL network.

Vectoring coverage in Belgium

This records the percentage of Belgium which is covered by the vectoring technology. This technology allows for higher speed of the copper network connections.

Acti ve M2M cards

Records the number of M2M (machine to machine) active cards in our network, not including the connections to our LORA network.

ICT revenues (national + international)

This corresponds to all ICT revenues realised by the Proximus Group (including affiliates), both internationally and in Belgium.

International certifications related to privacy and cybersecurity

Records the number of international certifications Proximus has acquired in the domain of cybersecurity and privacy.

Employee Engagement

Average result of the employee engagement survey (SpeakUp), measuring engagement, agility and strategic alignment of the Proximus employees.

Frequency rate of occupational accidents Number of occupational accidents (multiplied

by 1.000.000) divided by the total number of hours worked by Proximus S.A. employees.

Severity rate of occupation accidents

Number of lost days due to occupational accidents (multiplied by 1.000) divided by the total number of hours worked by Proximus S.A. employees.

Percentage of accessible tested devices (at least for 1 disability category)

Percentage of devices which have been tested and proven accessible for at least one disability category by our partner Passe-Muraille.

Number of job seekers supported by our initiatives in Belgium

Number of job seekers which were helped through our initiatives (Digitalent, 19, Technobel) over the course of the year.

Uniq ue reach of Music & Sports content on Proximus platforms

Unique reach on Pxs Social Media Platfoms = is the total number of unique users who see your content

Unique reach of sponsoring events

Uniq ue visitors on sponsored events (estimate based on organization's figures)

CSR investment amount: financial, in kind, time

The amount invested in our CSR initiatives (including our social and environmental initiatives), including in kind, financial and Proximus S.A. employee time contribution.

CSR investment amount in percentage of net income

The percentage of Proximus S.A.'s net income that our investment in social and environmental initiatives (in kind, financial and time) represents.

Elec tricity used which came from renewable energy sources

Percentage of electricity used by Proximus Group which came from renewable energy sources.

Carbon neutrality level for own operations and business travel

To which extent Proximus Group is carbon neutral for all its operations and business travel.

Carbon emissions scope 1+2 compared to previous year

Carbon footprint of Proximus group, in line with the GHG protocol, including the emissions related to heating gas and fuel, electricity consumption and fleet fuel.

Energy consumption compared to 2008

Decrease or increase seen in the energy consumption of Proximus Group in comparison with 2008 (when we set our objective to reduce our carbon footprint by 70% in the period 2007- 2020).

Percentage of waste recycled, reused or composted

The percentage of waste produced by Proximus S.A.'s operations which was then recycled, reused or composted. The remaining percentage is incinerated with energy recovery.

Collected mobile phones

Number of mobile phones collected over the course of the year in the aim of recycling them.

1 Based on the EcoVadis assessment and on the total number of suppliers assessed.

2 Based on the EcoVadis assessment and on the total number of suppliers assessed.

3 Following the defi nition, people who ended their parental leave in 2018 cannot yet be counted as 12 months have not passed.

4 Following the defi nition, people who ended their parental leave in 2018 cannot yet be counted as 12 months have not passed

Proximus PLC under Belgian Public Law, Bd. du Roi Albert II 27 – 1030 Brussels – Belgium

Proximus SA de droit public / NV van publiek recht Document subtitle= Verdana Heading 12 0/0 single

Proximus SA de droit public / NV van publiek recht

Deloitte Bedrijfsrevisoren / Reviseurs d'Entreprises

Independent auditor's report on the limited review performed on a selection of non-financial performance indicators published in the document "Annual Report 2018" of Proximus SA de droit public / NV van publiek recht for the year ended 31 December 2018

Independent auditor's report on the limited review performed on a selection of non-financial performance indicators published in the document "Annual Report 2018" of Proximus SA de droit public / NV van publiek recht for the year ended 31 December 2018

To the board of directors

We have been engaged to perform limited review procedures aimed at expressing a limited assurance conclusion on a selection of non-financial performance indicators (the "Non-Financial Data") published in the document "Annual Report 2018" of Proximus SA de droit public / NV van publiek recht ("Proximus") for the year ended 31 December 2018 (the "Document"). The Non-Financial Data have been defined following the Global Reporting Initiative (GRI) standards and Proximus' internal non-financial reporting guidelines. The Non-Financial Data have been selected by Proximus management and are as follows:

Enabling a better digital life

4G indoor coverage
4G outdoor coverage
Fixed internet: 30Mbps coverage
Number of projects with universities/education institutes

Respecting our environment

Energy efficiency index (energy consumption vs total revenue) Group
Electricity (Terajoules) Group
Heating (Terajoules) Group
Vehicle fleet fuel (Terajoules) Group
CO2 emissions scope 1 and 2 (KTons) Group
CO2 emissions scope 1 heating, refrigerants and fleet fuel (KTons) Group
CO2 emissions scope 2 electricity market based method (KTons) Group
CO2 emissions scope 3 all reported categories i.e. category 1, 2, 3, 4, 5, 6, 7 and 11 (KTons) Belgium
Waste (KTons) Belgium
% of hazardous waste Belgium
% waste reused/recycled Belgium
Non-hazardous waste recycled or reused (KTons) Belgium
Non-hazardous waste with energy recovery (KTons) Belgium
Hazardous waste recycled or recovered (KTons) Belgium

Caring for our stakeholders

Number of cases investigated by the investigations department for violation of policies/code of conduct
Number of whistleblowing cases

Contributing to society

Number of job seekers supported by Proximus initiatives in Belgium
Number of sick children connected to their school by Bednet and Take Off
Percentage of accessible tested devices (at least for 1 disability category)

The scope of our work has been limited to the Non-Financial Data covering the year 2018 and including only the values retained within the scope of reporting defined by Proximus. The reporting scope covers Proximus SA de droit public / NV van publiek recht and its subsidiaries Telindus-ISIT B.V., Telindus Luxembourg SA, Tango Luxembourg SA and BICS SA (the "Group"). The limited review was performed on the data gathered and retained in the reporting scope by Proximus. Our conclusion as formulated below covers therefore only these Non-Financial Data and not all information included in the Document.

Responsibility of the board of directors

The board of directors of Proximus is responsible for the Non-Financial Data and the references made to it presented in the Document as well as for the declaration that its reporting meets the requirements of the GRI standards and of Proximus' internal non-financial reporting guidelines.

This responsibility includes the selection and application of appropriate methods for the preparation of the Non-Financial Data, for ensuring the reliability of the underlying information and for the use of assumptions and reasonable estimations. Furthermore, the board of directors is also responsible for the design, implementation and maintenance of systems and procedures relevant for the preparation of the Non-Financial Data.

Nature and scope of our engagement

Our responsibility is to express an independent conclusion on the Non-Financial Data based on our limited review. Our report has been made in accordance with the terms of our engagement letter dd. 7 February 2019.

We conducted our work in accordance with the International Standard on Assurance Engagements (ISAE) 3000 "Assurance Engagements other than Audits or Reviews of Historical Information".

Our procedures are aimed at obtaining limited assurance on the fact that the Non-Financial Data do not contain material misstatements. These procedures are less profound than the procedures of a reasonable assurance engagement.

The scope of our work included, amongst others, the following procedures:

Assessing and testing the design and functioning of the systems and procedures used for data-gathering, processing, classification, consolidation as well as validation of the methods used for calculating and estimating the Non-Financial Data published in the Document;
Conducting interviews with responsible officers;
Examining, on a sample basis, internal and external supporting evidence to validate the reliability of the Non-Financial Data and performing consistency checks on the consolidation of the Non-Financial Data.

Conclusion

Based on our limited review, as described in this report, nothing has come to our attention that causes us to believe that the Non-Financial Data, as defined above, related to Proximus published in the Document, have not been prepared, in all material respects, in accordance with the GRI standards and Proximus' internal non-financial reporting guidelines.

__________

Zaventem, 1 March 2019

The independent auditor

DELOITTE Bedrijfsrevisoren CVBA / Réviseurs d'Entreprises SCRL Represented by Nico Houthaeve

Financial report 2018

group

Underlying revenue and EBITDA

Since 2014, Proximus' management discussion has been focused on underlying figures, i.e. after deduction of the incidentals. The underlying company figures are reported to the chief operating decision makers in view of resources allocation and performance assessment.

In order to allow a like-for-like comparison, Proximus provides a clear view of the operational drivers of the business by isolating incidentals, i.e. revenues and costs that are unusual or not directly related to Proximus' business operations, and which had a significant impact on the year-on-year variance of the Proximus Group revenue or EBITDA. The adjusted revenue and EBITDA are referred to as "underlying".

Definitions can be found in section 6 of this document.

	Revenue (IAS 18)			EBITDA (IAS 18)
(EUR million)	2016	2017	2018	2016	2017	2018
Reported	5,873	5,802	5,826	1,753	1,772	1,796
Underlying	5,871	5,778	5,804	1,796	1,823	1,866
Total incidentals	3	24	21	-63	-51	-70
Capital gains on building sales	3	23	21	3	23	21
Divesture Telindus France		1			1
Early Leave Plan and Collective Agreement *				-95	-70	-41
M&A-related transaction costs					-6	-8
Enterprise software impairment & settlement						-22
Reversal rent provision Felindus UK					1
Update provision Tax on Pylons (previous years)				29		-20

Reporting changes as from 2018

Split workforce and non-workforce expenses

The split in expenses between work force and non- workforce has been aligned with the group definitions for all subsidiaries, with the total unchanged on a Group level. The 2017 figures have been restated accordingly, with for full year 2017 EUR 30 million moving from nonworkforce to workforce expenses.

Tango revenue

The 2017 Tango revenue reallocation key was finetuned between the Consumer and Enterprise segments, with a very limited impact

on the segment revenue (EUR 1 million), while neutral on a Group level.

GDPR impact

The application of GDPR has led to a limited impact on the reported household data for the Consumer segment with some information no longer being available to define the composition of households.

To make comparison easier, the data of 2017 has been adjusted accordingly, assuming a stable impact of GDPR over this period in the total HH/SO serviced by Proximus. The derived KPI's such as ARPH and RGU have been restated as well.

Other reporting remarks

Reporting standard

All financials and comments provided in this management discussion are under the IAS 18 standard, in order to enable a like-for-like comparison with 2016 and 2017.

Exception has been made for the household reporting (X-Play) within the Consumer segment. In section 3, for the X-play reporting, the financials, and derived ARPH, are provided under IFRS 15, with a 2017 pro-forma comparison.

Disaggregation of revenue

The revenue by segment is disclosed in the table below.

(EUR million)		31 December 2018 (IAS 18)
(EUR million)	GROUP	BICS	Domestic (Group excl. BICS)	Consumer	Enterprise	Wholesale	Others
Net revenue (underlying)	5,761	1,346	4,415	2,875	1,410	201	-71
Net revenue (incidentals)	0	0	0	0	0	0	0
Net revenue (reported)	5,761	1,346	4,415	2,875	1,410	201	-71
Other operating income (underlying)	4 3	0	43	23	5	1	15
Other operating income (incidentals)	2 1	0	21	0	4	0	17
Other operating income (reported)	6 5	0	65	23	9	1	32
Revenue (underlying)	5,804	1,347	4,458	2,898	1,415	201	-57
Total income (incidentals)	2 1	0	21	0	4	0	17
Total income (reported)	5,826	1,347	4,479	2,898	1,420	201	-39

(EUR million)		31 December 2018 (IFRS 15)
(EUR million)	GROUP	BICS	Domestic (Group excl. BICS)	Consumer	Enterprise	Wholesale	Others
Net revenue (underlying)	5,764	1,346	4,417	2,880	1,408	201	-71
Net revenue (incidentals)	0	0	0	0	0	0	0
Net revenue (reported)	5,764	1,346	4,417	2,880	1,408	201	-71
Other operating income (underlying)	4 3	0	43	23	5	1	15
Other operating income (incidentals)	2 1	0	21	0	4	0	17
Other operating income (reported)	6 5	0	65	23	9	1	32
Revenue (underlying)	5,807	1,347	4,460	2,903	1,413	201	-57
Total income (incidentals)	2 1	0	21	0	4	0	17
Total income (reported)	5,829	1,347	4,482	2,903	1,417	201	-39

Rounding

In general, all figures are rounded. Variances are calculated from the source data before rounding, implying that some variances may not add up.

Key Figures - 10-year overview

										IAS 18	IFRS 15
Income Statement (EUR mil l ion)	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2018
Reported income	6.065	7.040	6.417	6.462	6.318	6.112	6.012	5.873	5.802	5.826	5.829
Revenue incidentals	N/A	N/A	N/A	N/A	N/A	248	17	3	2 4	21	21
Underlying revenue	N/A	N/A	N/A	N/A	N/A	5.864	5.994	5.871	5.778	5.804	5.807
Reported EBITDA (1)	1.967	2.428	1.897	1.786	1.699	1.755	1.646	1.733	1.772	1.796	1.794
EBITDA incidentals	N/A	N/A	N/A	N/A	N/A	102	-88	-63	-51	-70	-70
Underlying EBITDA (1)	N/A	N/A	N/A	N/A	N/A	1.653	1.733	1.796	1.823	1.866	1.865
Depreciation and amortization	-706	-809	-756	-748	-782	-821	-869	-917	-963	-1.016	-1.016
Operating income (EBIT)	1.261	1.619	1.141	1.038	917	933	777	816	809	780	778
Net finance income / (costs)	-117	-102	-106	-131	-96	-96	-120	-101	-70	-56	-56
Share of loss on associates	0	0	0	0	0	-2	-2	- 1	- 2	-1	-1
Income before taxes	1.144	1.517	1.035	907	822	835	655	715	738	723	721
Tax expense	-241	-233	-262	-177	-170	-154	-156	-167	-185	-194	-191
Non-controlling interests	-1	17	17	19	2 2	2 7	17	2 5	3 0	23	22
Net income (Group share)	904	1.266	756	712	630	654	482	523	522	506	508
Cash f l ows (EUR mil l ion)	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2018
Cash flows from operating activities	1.406	1.666	1.551	1.480	1.319	1.447	1.386	1.521	1.470	1.558	1.558
Cash paid for Capex	-597	-734	-757	-773	-852	-916	-1.000	-962	-989	-1.099	-1.099
Cash flows from / (used in) other investing activities	-12	4 8	-7	-16	3 8	180	2 2	0	-189	-8	-8
Free cash flow (2 )	797	980	788	691	505	711	408	559	292	451	451
Cash flows from / (used in) financing activities	-1.030	-728	-1.051	-809	-353	-364	-608	-764	-256	-444	-444
Net increase / (decrease) of cash and cash equivalents	-233	252	-264	-118	152	347	-200	-205	3 6	7	7
Bal ance sheet (EUR mil l ion)	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2018
Balance sheet total	7.450	8.511	8.312	8.243	8.417	8.522	8.283	8.117	8.527	8.490	8.671
Non-current assets	5.505	6.185	6.217	6.192	6.254	6.339	6.386	6.372	6.735	6.752	6.850
Investments, cash and cash equivalents	408	627	356	285	415	710	510	302	338	344	344
Shareholders' equity	2.521	3.108	3.078	2.881	2.846	2.779	2.801	2.819	2.857	2.862	3.005
Non-controlling interests	7	235	225	211	196	189	164	162	156	150	148
Liabilities for pensions, other post employment benefits and termination	677	565	479	570	473	504	464	544	568	605	605
Net financial position	-1.716	-1.451	-1.479	-1.601	-1.815	-1.800	-1.919	-1.861	-2.088	-2.148	-2.148

										IAS 18	IFRS 15
Proximus share	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2018
Weighted average number of ordinary shares (3)	320.475.553	321.138.048	319.963.423	318.011.049	318.759.360	320.119.106	321.767.821	322.317.201	322.777.440 3	2 2 6 4 9 9 17	3 2 2 6 4 9 9 17
Basic earnings per share - as reported (EUR) (4)	2,82	3,94	2,36	2,24	1,98	2,04	1,50	1,62	1,62	1,57	1,58
Total dividend per share (EUR)	2,08	2,18	2,18	2,49	2,18	1,50	1,50	1,50	1,50	1,50	1,50
Share buyback (EUR million)	0	0	100	0	0	0	0	0	0	0	0
Data on empl oyees	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2018
Number of employees (full-time equivalents)	16.804	16.308	15.788	15.859	15.699	14.187	14.090	13.633	13.391	13.385	13.385
Average number of employees over the period	16.878	16.270	15.699	15.952	15.753	14.770	14.040	13.781	13.179	13.161	13.161
Underlying revenue per employee (EUR)	N/A	N/A	N/A	N/A	N/A	410.746	426.958	425.997	438.413	440.995	441.238
Total income per employee (EUR)	359.322	432.685	408.760	405.084	401.080	413.826	428.194	426.201	440.240	442.667	442.870
Underlying EBITDA per employee (EUR)	N/A	N/A	N/A	N/A	N/A	111.923	123.467	130.315	138.325	141.802	141.681
Total EBITDA per employee (EUR)	116.551	149.247	120.834	111.973	107.851	118.798	117.251	125.743	134.483	136.483	136.342
Ratios - on underl ying basis	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2018
Return on Equity	N/A	N/A	N/A	N/A	N/A	21,8%	18,9%	19,4%	19,2%	19,2%	18,4%
Direct margin	N/A	N/A	N/A	N/A	N/A	57,8%	59,6%	61,8%	62,5%	63,5%	63,4%
Net debt / EBITDA	N/A	N/A	N/A	N/A	N/A	1,09	1,11	1,04	1,15	1,15	1,15

(1) Earnings Before Interests, Taxes, Depreciation and Amortization.

(2) Cash flow before financing activities.

(3) i.e. excluding Treasury shares

(4) No difference between basic and diluted earnings per share

Revenue

For its Domestic operations, Proximus posted stable revenue of EUR 4,458 million revenue. The revenue was primarily supported by the ongoing expansion of the TV, Internet and Mobile Postpaid customer base, in spite of a competitive landscape. Moreover, the revenue from ICT showed good progress, benefitting from a strengthened ICT portfolio, including the acquisition of several small, specialized ICT companies. Furthermore, 2018 benefitted from a continued positive revenue evolution in Advanced Business Services and a revenue increase posted for Tango.

These favorable evolutions were able to offset the continued revenue erosion from Fixed Voice and Mobile prepaid; and from a lower Wholesale revenue.

Group underlying revenue +0.5%

Revenue evolution per product group Revenue evolution by product group (underlying, M€)

(underlying, M€)

In 2018, BICS' revenue totaled EUR 1,347 million, 2.0% above that of 2017, including the revenue contribution from TeleSign. BICS faces the ongoing transition within the International Carrier market, with usage moving from Voice to Data. In 2018, BICS Voice volumes further declined, be it at a slower pace compared to

the prior year. The volume losses in Voice traffic were however combined with a less favorable destination mix, and a negative USD currency effect in the first half-year. This was more than offset by a strong increase in messaging volumes, with TeleSign boosting the A2P volumes. This led to a solid 28.8% increase in non-Voice revenue.

Revenue evolution by segment (underlying, M€)

For its Consumer segment in 2018, Proximus posted nearly stable revenue of EUR 2,898 million. This was 0.4% below that of the prior year, including EUR 11 million lower mobile device revenue, with no effect on margin.

The Consumer segment achieved a continued growth in the customer base for its main products, supported by its Proximus-branded All-in offers, and by its low-cost brand Scarlet.

The growing customer base increased Proximus' revenue for TV, Internet, and Mobile Postpaid – despite the annualizing carry-over effect from the roaming regulation.

In contrast, legacy revenue from Fixed Voice further declined due to the combination of a smaller customer base and lower usage.

Mobile Prepaid revenue continued to decline as well on a lower customer base, in part driven by the company's active efforts to migrate customers to higher-value Postpaid offers.

Direct margin (underlying M€)

Proximus posted strong progress in its converged customer base, with 508,000 customers having subscribed to the All-in offers Tuttimus and Bizz-All-in end-2018. With an increasing number of customers on 4-Play offers at higher ARPU's and lower churn, the customer mix was enhanced in terms of loyalty and value.

Proximus' Enterprise segment posted a 1.1% underlying revenue growth for 2018 to reach EUR 1,415 million. The Proximus Enterprise segment benefited from its convergence strategy in ICT, differentiating on high service levels and expanding its portfolio beyond pure connectivity services. To this end, Proximus acquired some small but highly-specialized companies, providing expertise in offering meaningful solutions for the digital transformation of Enterprise customers.

The focus directed on these growth areas allowed Proximus to more than offset the revenue loss in the eroding legacy Fixed Voice and Data services, and the regulatory and competitive pressure on Mobile ARPU.

The 2018 underlying Direct Margin of the Proximus Group improved by 2.0% to total EUR 3,683 million for the year.

The Domestic direct margin was up by 1.0%, reaching EUR 3,366 million, including a net loss in roaming margin of EUR 30 million, with the roaming out price regulation especially impacting the first-half of the year.

The Domestic margin benefitted from the growing customer base, focus on value management, acquired ICT companies in the Enterprise segment and some one-offs in the Consumer segment partly offset by lower wholesale direct margin.

BICS' direct margin progressed to EUR 317 million, a year-on-year increase of 13.5%, especially driven by a continued growth in non-Voice services, with TeleSign largely contributing to this uplift.

Direct Margin evolution by segment (underlying M€)

Operating expenses

Over 2018, the Proximus Group operating expenses totaled EUR 1,816 million.

Proximus continued to keep a strong focus on structurally improving its cost base. However, in 2018 these efforts were offset by the operational costs from acquired companies, with TeleSign elevating costs in BICS, and ICT companies in the Enterprise segment. The additional expenses from TeleSign and acquired ICT companies aside, Proximus posted a slightly declining cost base, keeping the company well on track to reach its ambition of EUR 150 million net cost savings in the four-year period 2016-2019.

Proximus' Domestic expenses totaled EUR 1,653 million for 2018, fairly stable in relation to the prior year (+0.1%). Within the mix, the Domestic workforce expenses were slightly up (+0.4%), including the effect from inflation-based wage increases. This on a flattish Domestic headcount of 12,658 FTEs. This includes an increase of 258 FTEs linked to acquisitions in the ICT domain over the past 12 months, mainly revenue-generating employees, offering consultancy-like services to ICT customers. On top of these acquisitions, 612 FTE's in business-critical domains were hired by the Proximus Domestic organization. In parallel, 549 FTEs left the company in 2018 either in the ongoing 'voluntary early leave before retirement'-program or when reaching the legal retirement age, with in addition a natural attrition of over 300 FTEs.

Operating expenses (1)

Operating expenses (2) (underlying M€)

Headcount evolution (in FTE)

Underlying EBITDA

The Proximus Group posted an underlying EBITDA of EUR 1,866 million for 2018, an increase of 2.4% compared to 2017.

EBITDA (underlying M€)

The Domestic operations of Proximus grew the EBITDA by 1.9% to a total of EUR 1,713 million. This was driven by Direct margin generated by Proximus' growing customer base, more than offsetting the EUR -30 million net decline in roaming margin, while at the same time keeping its Operational costs nearly stable in spite of its expanding ICT business.

EBITDA evolution

(underlying, M€)

Reported EBITDA (incidentals included)

Incidentals included, the Proximus Group reported EBITDA of EUR 1,796 million, compared to EUR 1,772 million for the year before, i.e. +1.3%. See page 3 for more information on the incidentals.

In 2018, the Proximus Group recorded EUR -70 million net EBITDA incidentals, compared to EUR -51 million for 2017. The 2018 incidentals included mainly expenses recorded in the framework of the running headcount plan (early leave plan ahead of retirement), updated Pylon Tax provisions, and the impairment of Enterprise software, as well as capital gains on building sales.

Depreciation & Amortization

In 2018, the depreciation and amortization totaled EUR 1,016 million. This compares to EUR 963 million for 2017, with the increase mainly due to a higher asset base to depreciate following the increased investment levels, including the ongoing Fiber roll-out, and the depreciation and amortization from acquired companies.

Net finance cost

The net finance cost for the year 2018 totaled EUR 56 million, EUR 14 million lower versus last year's level of EUR 70 million, mainly resulting from refinancing at a lower interest rate.

Tax Expense

The 2018 tax expenses amount to EUR 194 million, representing an effective tax rate of 26.8 %. This is 2.8 % below the Belgian statutory tax rate of 29.58%. The difference mainly relates to the application of general principles of tax law applicable in Belgium such as the patent income deduction and other R&D incentives offset by nondeductible expenses for income tax purposes.

Net income

Proximus reported a 2018 net income (Group share) of EUR 506 million. This is down from the prior year with higher underlying Group EBITDA and a lower finance cost more than offset by higher depreciation and amortization, incidentals and tax expenses.

Net income (Group Share)

Net income evolution

* includes Non-controlling interests and Share of loss from associates

Capex

The level of Capex reflects the Group strategy to invest extensively in enhancing its networks and improving the overall customer experience. In 2018 Proximus invested a total amount of EUR 1,019 million. This compares to EUR 1,092 million for 2017 which included the renewal of 3-year contracts for football broadcasting rights (Jupiler Pro League and the UEFA Champions League). This aside, the 2018 investments were somewhat up from 2017, including an increasing share of capex for Proximus' Fiber for Belgium project. The deployment of this future-proof network kicked off early 2017, with the roll-out ongoing in 9 cities in 2018. Proximus also invested extensively in its IT systems and digital platforms and in simplification and transformation. In addition, it ensured attractive content for its TV customers.

Free Cash Flow

Proximus' 2018 FCF totaled EUR 451 million, or EUR 501 million when excluding the 2018 cashout related to the acquisition of subsidiaries in the ICT domain. This compares to a EUR 517 million FCF for 2017, excluding the cash-out related to the acquisition of Davinsi Labs (May), Unbrace (October) and TeleSign (November).

Free Cash Flow (underlying, M€)

€501 ^M Normalized Free Cash Flow

Free Cash Flow evolution (M€)

Net financial position

Proximus maintained a solid financial position with a net debt of EUR 2,148 million end-2018.

The net debt increased from one year ago following the acquisitions in the ICT domain, whereas the normalized 2018 FCF level covered for the committed dividend pay-out.

*Including dividends to non-controlling interests

Revenue

The Consumer revenue over 2018 totaled EUR 2,898 million, -0.4% compared to 2017. This was mainly driven by higher revenue from Fixed Services and Tango, offset by lower revenue from Mobile services due to Roam like at Home regulation and the erosion in Prepaid, and by reduced low-margin mobile device sales.

Proximus' dual-brand strategy and its segmentation approach for the residential market delivered results, especially in a more competitive context. The Proximus brand grew a more valuable customer base with the ongoing traction of Tuttimus and Bizz All-In offers, for which a total of 508,000 subscribers was reached by end-2018.

The EPIC mobile offers launched end-June were also proving successful, bringing a full digital experience to millennials. In the price seekers segment, the Scarlet brand continued to grow, benefitting from its no-frills offers.

The revenue increase resulting from the customer growth for TV and Internet more than compensated for the ongoing erosion in Fixed Voice revenue. A solidly growing Mobile postpaid customer base also resulted in higher revenue, in spite of substantial roaming regulation headwinds impacting the first half-year.

Mobile Prepaid continued to face a steep revenue loss. In a shrinking Prepaid market, Proximus' Prepaid base is becoming smaller, partly due to active migrations to more valuable postpaid subscriptions, with the Full Control offer in particular proving a successful alternative.

Revenue evolution per product group

(underlying, M€)

The revenue from the Consumer segment was strongly supported by upselling additional services to its customer base, strengthened by the appealing Tuttimus and Bizz-All-in offers.

This translated into a growing 4-play customer base, with Proximus closing the year 2018 with 731,000 4-play households, an increase of 7.0% from the prior year.

Internet

The Proximus Consumer segment generated 4.9% more revenue from its Internet subscriptions compared to the prior year, totaling EUR 649 million in revenue for 2018. This resulted from a solid 47,000 customer growth over the past 12 months. The total Internet customer base increased to 1,894,000, a steady annual growth of 2.5%, supported by both the Proximus and Scarlet brands. This was achieved through a sound level of gross customer gains and fairly stable Proximus Internet churn compared to the prior year, in a competitive market.

The average revenue per customer was up by 1.9%, with the 2018 ARPU at EUR 28.9. This reflected the price changes since the start of 2018, partly offset by an increased proportion of Scarlet customers, with Internet offers typically at lower pricing.

With a 4-play ARPH of EUR 111.4, and low fullchurn of 3.4%, the Consumer customer base became more valuable and loyal in 2018.

For the full-year 2018, the Consumer revenue of Tango, Proximus' Luxembourgish subsidiary, totaled EUR 118 million, 3.6% above that of the prior year. This was driven by a steady growth in mobile revenue and the successful execution of Tango's convergence strategy with FTTH driving an increase in broadband revenue.

Furthermore, as Internet subscriptions are mostly sold as part of a larger bundle, the Fixed Internet ARPU was also affected by the accounting pack discounts allocation per product.

TV

In one year, the Proximus and Scarlet brands combined grew their TV customer base by 50,000 TV households, to a total of 1,611,000 Proximus TV customers, an annual growth of 3.2%.

The TV ARPU for 2018 stood at EUR 20.9, stable compared to the prior year (-0.1%). The growing TV subscriber base remains an important revenue driver for the Consumer segment, with TV revenues up by 3.5% year-on-year to total EUR 399 million for 2018.

⁺50,000 TV households

Revenue up by +3.5%

The customer growth was well supported by the Proximus branded Tuttimus and Familus offers, providing customers with more extensive TV content.

TV revenue (M€)

TV households (in '000)

Fixed voice

By end-2018 Proximus' Fixed Voice customer base totaled 1,969,000 lines for both the Proximus and Scarlet brands. Supported by All-in offers including Fixed Voice, the year-on-year decrease was mitigated to 3.3%.

The Fixed Voice ARPU for 2018 was EUR 19.7, i.e. a decline of 3.1% compared to the previous year. This was due to an ongoing decline in the use of Voice traffic, partly offset by the 1 January 2018 price changes for single-play Fixed Voice.

A lower Fixed Voice customer base compared to a year ago, combined with a lower ARPU, resulted in a -5.7% year-on-year revenue decline for Fixed Voice, reaching EUR 474 million in 2018.

Erosion of Fixed Voice customer base contained by the success of multiplay offers

Consolidated Management Report 2018 p. 20

Omzet (onderli ggend, M€)

Mobile

MOBILE POSTPAID

The Consumer segment closed the year 2018 with a further revenue growth for Postpaid services, up by 1.0%, benefitting from its growing customer base. End-2018 the Postpaid base totaled 2,737,000 cards, or 3.3% more compared to one year ago.

Despite bold competitive moves, the Mobile postpaid churn remained contained at 15.8%, +0.2pp from one year ago. With churn rates kept under control and successful changes to the Proximus mobile portfolio, adding unlimited Voice and Data offers, and launching the millennial oriented EPIC offer, Proximus grew its Consumer Postpaid subscriptions by 86,000 in 2018.

Omzet

The Postpaid ARPU for 2018 was EUR 27.5, a year-on-year decrease of 1.7%. This reflects a mixed effect from the roaming price impact in the first-half of 2018 and the lapsing support of the more-for-more Mobile price adjustments of 1 August 2017.

Postpaid cards (in '000)

Postpaid ARPU (in '€)

MOBILE PREPAID

In contrast to Mobile Postpaid, the revenue from mobile Prepaid showed a steep decline, down by 24% from the prior year.

The loss of Prepaid cards remained elevated, with the Prepaid base reduced by 130,000, totaling 772,000 Prepaid cards end-2018. The continued erosion in an already declining market, was partly driven by the strategy to migrate customers to similar Postpaid pricing plans, at higher value.

For 2018 the Prepaid ARPU was EUR 7.6, a 10.1% decline from 2017.

-130,000 Mobile prepaid cards

-14.4% YoY

Prepaid ARPU (in €)

Consumer Tango

Tango, Proximus' Luxembourgish telecom operator, posted a solid 3.6% revenue growth to EUR 118 million for 2018 for the Consumer segment, in an aggressive competitive market. This was driven by a steady growth in mobile revenue and the successful execution of its convergence strategy with FttH driving an increase in broadband revenue.

Consumer Tango revenue (M€)

Consumer direct margin

The Consumer direct margin over 2018 grew by 1.3% to EUR 2,218 million, i.e. 28 million above that of 2017. In spite of the first half of 2018 being impacted by the Roam-like-at-Home regulation, this growth was achieved thanks to a solidly growing customer base, improved revenue mix, and the benefit from price changes. Moreover, the first half of 2018 was supported by some substantial one-off tailwinds, whereas the second half was negatively impacted by a loss in direct margin due to a renewed collection process¹ .

Success of All-in offers leads to continued strong growth in 4-Play.

The progress on Proximus' long-term convergence and value strategy is measured through 'multi-play' reporting. In contrast to the traditional reporting per product group, the X-play reporting focuses on operational and financial metrics in terms of Households and Small Offices (HH/SO) serviced by Proximus and the number of "Plays" (i.e. Mobile Postpaid -Fixed Voice - Fixed Internet -TV) and Revenue Generating Units (RGU) offered. The X-play reporting also includes HH/SO services from Scarlet.

Under IFRS15, the Consumer segment posted EUR 2,903 million in revenue for 2018, a 0.9 % decline from the prior year. While the services revenue from households (X-Play) increased by 0.2% to EUR 2,348 million. Revenue from Prepaid and low-margin Terminals decreased.

¹ Reminder fees were lowered following a new legislation. Moreover, Proximus' collection process was adapted with a to improving the customer experience, reducing the number of reminders on open invoices.

Revenue evolution per X-Play product group

(underlying, M€ under IFRS15)

In 2018, Proximus continued to improve its customer mix, with an increasing number of its Households/Small Offices on 4-Play. Over the twelve months of 2018, 48,000 4-Play HH/SO were added, or +7.0%. By end-2018, Proximus serviced 731,000 4-Play HH/SO, i.e. 24.7% of its total base.This positive evolution was especially driven by the continued success of the Proximus offers Tuttimus and Bizz All-in for which an additional 149,000 HH/SO signed up in 2018 to reach 508,000 by end-2018. This further increased the penetration rate of All-in bundles in the total 4-Play base.

The enlarging 4-Play base drove a steady yearon-year 4-Play revenue increase of 7.5%. The ARPH of a 4-Play HH/SO stood at EUR 111.4 for 2018 -1.2% from the prior year. This is a mixed result from an enhanced level of RGU's to 4.89 (+1.1%), regulatory pressure on Mobile roaming and annualizing support from the more-for-more price increase. Moreover, the ARPH reflects a continued erosion in Voice traffic.

HH/SO revenue per X-Play (M€)

With more customers moving to 4-Play, the average RGUs of the total HH/SO base increased by 2.5% from the prior year, to reach 2.77. This resulted in a 0.8% growth in ARPH to EUR 65.9 for 2018.

In a more competitive landscape, the overall 2018 annualized full churn rate was 13.6%, up 0.7pp from one year ago.

With Proximus mainly upselling to 4-Play, the number of customers on a 2-Play of 3-Play decreased over the year.

The erosion of Single-Play Fixed Voice HH/SO continued its even trend with a decrease of 43,000 HH/SO for 2018. As a consequence, revenue from standalone Fixed Voice was further reduced to a total of EUR 94 million, representing 3.2% of the total Consumer revenue.

Proximus' 1-Play mobile HH/SO base totaled 686,000 at end-2018, with an ARPH of EUR 37.8 (for 1.34 RGU), i.e. a year-on-year decrease of - 4.7%. This was mainly driven by the impact from RLAH in the first-half of 2018, and the upselling effect to multi-play offers for higher-end mobile subscribers.

Proximus' Single-Play Internet HH/SO base increased to 151,000, with 12,000 added over 2018, including the effect of Scarlet's successful standalone broadband offers. The corresponding ARPH of EUR 31.1. was up 2.8% from the prior year, including the price increase of the Proximus standalone broadband offers.

Average RGU

2.77

Average revenue per HH/SO €65.9

HH/SO having Fixed & Mobile 58.3%

Revenue

For 2018, Proximus' Enterprise segment posted EUR 1,415 million in revenue, up 1.1% from 2017, in spite of an more competitive business market, regulatory headwinds on Roaming in the first half of the year, and the continued revenue erosion in Fixed Voice.

The 2018 revenue progress for the Enterprise segment was driven by higher revenue from ICT, including the benefit from acquisitions. Moreover, Advanced Business Services and Tango delivered a positive revenue contribution, in addition to higher mobile devices revenue.

Revenue evolution per product group

(underlying, M€)

Fixed data

The 2018 revenue from Fixed Data totaled EUR 246 million, nearly stable in relation to the prior year (-0.3%). This includes a steady revenue generation from Data Connectivity, by far the largest part in this product category. The Enterprise segment continued to migrate customers to Proximus' VPN flagship "Explore", benefitting from the further roll-out of P2P fiber, while legacy products are being outphased and migrated in the context of simplification programs, offering customers new solutions at a more attractive pricing.

The Enterprise segment continued to face high competition on the low-end and medium-end Internet markets. Nonetheless, Proximus managed to mitigate its net line loss to 4,000 Internet lines, mainly low-end, bringing the total base to 131,000 by end-2018. This is a 2.6% decrease from one year ago. The lower Internet base was for a large part compensated for by a 1.2% increase in Broadband ARPU to EUR 43.7, supported by price indexation effects and a growing share of high-end Internet lines in the park.

Fixed Data revenue (M€)

Fixed Voice

The Enterprise segment posted EUR 203 million in Fixed Voice revenue for 2018, showing a steady year-on-year decline of 7.1%. The Enterprise segment faces an ongoing rationalization by customers on Fixed-line connections, lower usage, technology migrations to VoIP and competitive pressure. The line loss in 2018 was -39,000, bringing the Enterprise total Fixed Voice Line base to 541,000 at end- 2018, i.e. a year-onyear line loss of 6.8%. The Fixed Voice ARPU of EUR 30.2 remained fairly stable compared to the prior year (-0.4%), with the decrease in traffic per line and a higher penetration of unlimited call options for a large part compensated for by some price indexations on 1 January 2018.

The Enterprise segment made further progress in Advanced Business Services (+6.2%), driven by Smart Mobility, with BeMobile² occupying a unique position in the field. Furthermore, Proximus' convergent business solutions gained traction, growing the number of Call Connect customers (PABX in the cloud).

Fixed Voice revenue (M €)

Advanced Business Services revenue (M€)

² Be-Mobile is a Proximus subsidiary specialized in smart mobility. In November 2018 it expanded its smart mobility services in Europe by acquiring the French company Mediamobile

ICT

Operating in a competitive environment, the Enterprise segment has deployed a successful strategy, expanding its portfolio well beyond pure connectivity services, offering meaningful solutions for the digital transformation of its professional customers. This led to a solid 4.5% revenue increase for ICT in 2018, including the contribution from acquired specialized companies, accelerating the shift from product deals to service revenue.

The most recently acquired company in 2018 was Codit, a Belgium-headquartered market leader in business application integration, API Management and Cloud services. This was preceded by the acquisition of Umbrio, a Dutch IT and Business analytics company and by ION-IP, a Dutch company specialized in Managed Security services. Furthermore, the year-on-year ICT performance also benefitted from Unbrace, an application development company and cybersecurity company Davinsi Labs.

Mobile services

The Enterprise mobile service revenue for 2018 remained stable relative to the prior year, totaling EUR 317 million.

The good customer experience provided by Proximus' mobile network and high service levels led to a continued growth in the Enterprise customer base. The Mobile churn remained low in 2018 at 9.6%, compared to 10.2% for the prior year. This resulted in a strong net increase of 40,000 Mobile Voice cards in 2018, and a Mobile Voice base of 1,028,000, 4.1% higher than the prior year.

The benefit of continued customer growth was however offset by a lower Postpaid ARPU, down by 5.0% to EUR 25.1. This was the consequence of the annualizing carry-over effect from the regulated Roam-like-at-Home pricing since June 2017, an ongoing decrease in subscriptions for Roaming Options, customers moving to more advantageous price bundles, and competitive price pressure.

Acquired ICT companies 2017 & 2018

Proximus' Enterprise segment maintained its leadership position on the M2M market.

In 2018 its M2M base grew by 117,000 cards to reach 1,327,000 a 9.7% increase from one year ago. This was a.o. driven by activated cards for the Road User Charging product.

Enterprise direct margin

The 2018 direct margin grew by EUR 8 million or 0.8% to EUR 962 million. This resulted from the direct margin contribution from Mobile Services, Advanced Business Services and ICT, including the support from acquired ICT companies. The growth in these areas more than offset the ongoing margin erosion for Fixed Voice. The 2018 direct margin as a percentage of revenue was 68.0%, down 0.2ppt from a year ago, reflecting a changing revenue mix from higher direct margin legacy revenue to higher workforce-driven ICT revenue.

Wholesale

For its Wholesale operations, Proximus posted EUR 201 million revenue in 2018, a 2.7% decline compared to 2017 which benefitted from a corrective impact in the first quarter following the annulment by the Brussels Appeal Court of the new Fixed Termination Rates. Apart from this impact, the Wholesale revenues remained fairly stable. The revenue increase of higher roaming volumes in 2018 was offset by a decline in traditional wholesale activities.

In view of the steep increase in roaming-out traffic following the Roam-like-at-Home regulation, Proximus negotiated downwards its wholesale roaming rates in the Group's interest. While this benefitted the direct margin of the Consumer and Enterprise segments, it lowered the revenue and margin of Proximus' Wholesale business. For 2018, the Wholesale segment margin totaled EUR 165 million, a 5.8% decline from the high comparable base of 2017, impacted by the annulment of the Fixed Termination rates.

Revenue

BICS operates in the international communications market, which is highly competitive and faces the transition from Voice to Data usage. In a volatile Voice market, BICS carried a fairly stable 24.5 billion Voice minutes in 2018, 0.3% more than in 2017.

This was however on a less favorable revenue destination mix, leading to a 6.4% decline in BICS' Voice revenue. In contrast, messaging volumes carried by BICS rose steeply, more than doubling compared to the prior year (+110.7%).

This was driven by boosting A2P volumes, including the solid contribution of TeleSign, accelerating BICS' strategic ambitions in this growing market. This led to a solid revenue growth for non-Voice by 28.8%, reaching EUR 408 million in 2018.

In aggregate, BICS closed the year 2018 with revenue of EUR 1,347 million, 2.0% up from the prior year.

BICS revenue (M€)

BICS revenue facing ongoing transition from Voice to Data usage

Direct margin

For 2018, BICS achieved a direct margin growth of 13.5%, reaching EUR 317 million. This represents 23.6% of revenue, a 2.4pp improvement from one year ago.

Despite the pressure on Voice revenue, BICS managed to grow its Voice direct margin by 9.6%, benefitting from TeleSign's authentication services.

BICS' non-Voice direct margin was up by 16.6% benefitting from the BICS-TeleSign combination, with strong growth in SMS A2P volumes and the realization of direct cost synergies.

BICS direct margin (M€)

Non Voice

Non Voice revenue (M€) Non-Voice volumes in million messages

TeleSign accelerating BICS'ambitions in the A2P market

Segment result

The segment result of BICS amounted to EUR 154 million, a 7.7% increase compared to the previous year, driven by the consolidation of TeleSign. The direct margin increase was partly offset by higher expenses, up by EUR 27 million, with TeleSign expenses driving this increase.

In 2018, the segment margin as percentage of revenue progressed to 11.4%.

BICS segment result (M€)

A2P: Applications-to -person

Advanced Business Services: new solutions offered aside from traditional Telecom and ICT, such as Road User Charging, converging solutions, Big Data and smart mobility solutions.

Annualized full churn rate of X-play: a cancellation of a household is only taken into account when the household cancels all its plays.

Annualized Mobile churn rate: the total annualized number of SIM cards disconnected from the Proximus Mobile network (including the total number of port-outs due to Mobile number portability) during the given period, divided by the average number of customers for that same period.

ARPH: Average underlying revenue per household (including Small Offices).

Average Mobile data usage: we provide a split of 4G and blended (implying all networks – 2G, 3G and 4G).

The average usage in our report is calculated by dividing the total data usage of the last month of the quarter by the number of data users in the last month of the quarter.

ARPU: Average Revenue per Unit (i.e. per voice line, per broadband line, per mobile card…).

Blended Mobile ARPU: total Mobile Voice and Mobile data revenues (inbound and outbound), of both Prepaid and Postpaid customers, divided by the average number of active Prepaid and Postpaid customers for that period, divided by the number of months of that same period. This also includes MVNOs but excludes M2M.

Broadband access channels: ADSL, VDSL and Fiber lines. For Consumer this also contains the Belgian residential lines of Scarlet.

Broadband ARPU: total Internet underlying revenue, excluding activation and installation fees, divided by the average number of Internet lines for the period considered, divided by the number of months in that same period.

BICS: international carrier activities, a joint venture of Proximus, Swisscom and MTN in which Proximus owns 57.6% .

Capex: this corresponds to the acquisitions of intangible assets and property, plant and equipment.

Consumer: addressing the residential and small businesses (less than 10 employees) market, including Customer Operations Unit.

Cost of Sales: the costs of materials and charges related to revenues.

Direct margin: the result of cost of sales subtracted from the revenues, expressed in absolute value or in % of revenues.

Domestic: defined as the Proximus Group excluding BICS.

EBITDA: Earnings Before Interest, Taxes, Depreciations and Amortization; corresponds to Revenue minus Cost of sales, workforce and nonworkforce expenses.

EBIT: Earnings Before Interest & Taxes; corresponds to EBITDA minus depreciations and amortizations.

Enterprise: segment addressing the professional market including small businesses with more than 10 employees.

Fixed Voice access channels: PSTN, ISDN and IP lines. For Enterprise specifically, this also contains the number of Business Trunking lines (solution for the integration of Voice and Data traffic on one single Data network).

Fixed Voice ARPU: total Voice underlying revenue, excluding activation-related revenue, divided by the average number of Voice access channels for the period considered, divided by the number of months in that same period.

FCF: Free Cash Flow. This is cash flow before financing activities.

ICT: Information and Communications Technology (ICT) is an extended term for information technology (IT) which stresses the role of unified communications and the integration of telecommunications (telephone lines and wireless signals), computers as well as necessary enterprise software, middleware, storage, and audio-visual systems, which enable users to access, store, transmit, and manipulate information. Proximus' ICT solutions include, but are not limited to, Security, Cloud, "Network & Unified Communication", "Enterprise Mobility Management" and "Servicing and Sourcing".

Incidental: adjustments for material(**) items including gains or losses on the disposal of consolidated companies, fines and penalties imposed by competition authorities or by the regulator, costs of employee restructuring programs, the effect of settlements of postemployment benefit plans with impacts for the beneficiaries and other items that are outside the scope of usual business operations. These other items include divestments of consolidated activities, gains and losses on disposal of buildings, transaction costs related to M&A (acquisitions, mergers, divestments etc.), deferred M&A purchase price, pre-identified one-shot projects (such as rebranding costs), changes of accounting treatments (such as the application of IFRIC 21), financial impacts of litigation files, fines and penalties, financial impact of law changes (one-off impact relative to previous years), recognition of previously unrecognized assets and impairment losses.

(**) The materiality threshold is met when exceeding individually EUR 5 million. No materiality threshold is defined for costs of employee restructuring programs, the effect of settlements of post-employment benefit plans with impacts for the beneficiaries, divestments of consolidated companies, gains and losses on disposal of buildings and M&A-related transaction costs. No threshold is used for adjustments in a subsequent quarter of the same year if the threshold was met in a previous quarter.

Mobile customers: Voice and Data cards as well as Machine-to-Machine, but excluding all free Data cards. Active Prepaid customers are customers who have made or received at least one call and/or sent or received at least one SMS message in the last three months. A M2M card is considered active if at least one Data connection has been made in the last month. Postpaid customers paying a monthly subscription are per default active.

Mobile ARPU: Monthly ARPU is equal to total Mobile Voice and Mobile Data revenues (inbound and outbound, visitor roaming excluded), divided by the average number of Active Mobile Voice and Data customers for that period, divided by the number of months of that same period. This also includes MVNO's but excludes M2M.

Multi-play household (including Small Offices): two or more Plays, not necessarily in a Pack.

Net debt: refers to the total interest-bearing debt (short term + long term) minus cash and cash equivalents.

Non- Workforce expenses: all operating expenses excluding workforce expenses, and excluding depreciation and amortization and non-recurring expenses.

Play: a subscription to either Fixed Voice, Fixed Internet, dTV or Mobile Postpaid (paying Mobile cards). A 4-Play customer subscribes to all four services.

Revenue-Generating Unit (RGU): for example, a household with Fixed Internet and 2 Mobile Postpaid cards is considered as a 2-Play household with 3 RGUs.

Reported Revenues: this corresponds to the TOTAL INCOME.

TV ARPU: includes only customer-related underlying revenue and takes into account promotional offers, excluding activation and installation fees, divided by the number of households with Proximus or Scarlet TV.

Underlying: refers to adjusted Revenue and EBITDA (Total Income and Operating Income before Depreciation and Amortization) for incidentals in order to properly assess the ongoing business performance.

Wholesale: Proximus' unit addressing the telecom wholesale market including other telecom operators (incl. MVNO) and ISP's.

Workforce expenses: Expenses related to own employees (personnel expenses and pensions) as well as to external employees. For subsidiaries, Workforce expenses include internal personnel expenses and pensions only.

X-Play: the sum of single play (1-play) and multiplay (2-play + 3-play + 4-play).

Taking risks is inherent to doing business and successfully managing risks delivers return to Proximus stakeholders. Proximus 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. Effective risk management is a key success factor for realizing our objectives. The motivation of risk management is not only to safeguard the Group's assets and financial strength but also to protect Proximus' reputation. A structured risk management process allows management to take risks in a controlled manner. Financial risk management objectives and policies are reported in Note 31 of the consolidated financial statements, published on the Proximus website. Risks related to important ongoing claims and judicial procedures are reported in Note 33 of these statements. The enterprise and financial reporting 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 Proximus might be facing.

Proximus' Enterprise Risk Management (ERM) is a structured and consistent framework for assessing, responding to and reporting on risks that could affect the achievement of Proximus' strategic development objectives. The Group's ERM covers the spectrum of business risks ("potential adverse events") and uncertainties that Proximus could encounter. It seeks to maximize value for shareholders by aligning risk management with the corporate strategy. It does so by assessing emerging risk (e.g. from regulation, new technologies on the market) and developing mitigating strategies in line with its risk tolerance.

Proximus ERM framework has been reviewed and updated in 2017 in order to be aligned with the market best practices. This risk assessment and evaluation takes place as an integral part of Proximus' annual strategic planning cycle. All relevant risks and opportunities are prioritized in terms of impact and likelihood, considering quantitative and/or qualitative aspects. The bottom up identification and prioritization process is supported by a self-assessment template and validation sessions. The resulting report on major risks and uncertainties is then reviewed by the Executive Committee, the CEO and the Audit and Compliance Committee. The main findings are communicated to the Board of Directors. Among the risks identified last ERM exercise, the following risk categories were prioritized (in the following order):

Competitive market dynamics
Businessmodel and servicing evolution
Employee skills and motivation
Customer experience
Human Resource cost flexibility

Competitive market dynamics

Proximus' business is primarily focused on Belgium, a small country with a few large telecom players, among which Proximus is the incumbent. e.g. mobile data, security, IOT, smart mobility, API platforms), maturing (e.g. smartphones), saturated (e.g. Fixed Internet, postpaid mobile) or even declining (e.g. prepaid mobile, enterprise voice, fixed voice) markets.

The market is in constant evolution, with competitive dynamics (e.g. frequent new product launches, competitors entering new segments of the market) at play that might impact market value goingforward. Specifically, the market structure could change significantly with the possible entry of a new mobile operator on the market, supported by favourable conditions set in the upcoming spectrum auction. Sector federation Agoria estimates that the possible arrival of a 4th mobile entrant could impact the total Mobile market in Belgium with a reduction of 6000-8000 jobs and a reduced sector contribution to the state of € 200 M – € 350 M.

Substitution by OTT services of fixed line services (e.g. by apps and social media like Skype, Facebook, WhatsApp, etc.) and TV content could put further pressure on revenues and margins as these over the top services are further gaining ground.

As a result of its long-term strategy and continued network investments (Fiber, VDSL/Vectoring, 4G/4G+) Proximus has been consistently improving its multi-play value propositions by putting more customers on the latest technologies, keeping the lead in mobile innovation, structurally improving customer service, partnering with content and OTT players to offer a broad portfolio of content (Sports, Netflix, families & kids with e.g. Studio 100 agreement) , developing an omnichannel strategy and improving digital customer interfaces,..

Proximus has built up an advantageous and solid competitive position providing the company with other levers than just price, reducing the risk to churn and price disruption exposure.

Proximus also successfully launched a new mobile offer targeted at the millenial segment, Epic, with a specifically designed offer to meet the mobile needs of these customers.

Proximus is also responding through a convergent and bundled approach and by offering new services and opting for an aggregator model, putting at disposal the best content to its customers (e.g. Netflix).

The price-sensitive segment, which has continued to rise in 2018 as more consumers seek 'no frills' offers at a lower price, is successfully addressed via its subsidiary Scarlet. The latter offers attractively priced mobile and triple-play products.

In the corporate large-company market, the scattered competitive landscape drives price competition, which might further impact revenue and margins. Here also, Proximus intends to respond to increasing competition by strengthening its voicedata-IT convergence strategy, leveraging unmatched sales reach, broad portfolio and expertise. Proximus has developed specific solutions to accompany our customers in the transition to both local and cloud-based communication services, and leveraging our various assets to offer simple, reliable and technologically advanced solutions to meet their communication needs.

Furthermore, Proximus also seeks to answer new customer business needs through solutions combining core assets with innovation like IoT, Cloud, Security and big data, which will help preserving the value.

The wholesale telecoms market has registered a further decline in volumes with a flattening pricing decrease in legacy communications (voice, P2P SMS) while being under the continuous and increased pressure from VoIP communications (WhatsApp, iMessage, Skype, etc.). Although in 2018 BICS has registered high-volume growth in LTE signalling, IPX, Capacity or 2G/3G roaming, there is a fierce competition in growing markets, mostly due to the decline of traditional communications, the technology evolution and huge pressure on tariffs and termination rates.

On traditional voice services BICS has managed to maintain its volumes in line with last year's results and to further strengthen its market share in voice transport.

While the traditional wholesale business is highly volatile and commoditized, BICS has maintained its position in the global communications market as one of the top international voice carriers and providers of mobile data services, thereby transporting about 25% of the world's roaming traffic.

Last year BICS has acquired TeleSign, a leading USbased CPaaS (communication platform as a service)

Business model and servicing evolution

Proximus' business model and financial performance have been and will be impacted by (disruptive) technologies, such as SD-WAN, 5G and OTT (overthe-top) services. Proximus' response to new technologies and market developments and its ability to introduce new competitive products or services, meaningful to its customers, will be essential to its performance and profitability in the long run.

For ultra-broadband fibre-based connectivity, Proximus operates a local marketing approach, joining forces of our sales and the one of technical forces and of local partners for its fibre deployment project.

Employee skills and motivation

In the digital era, knowledge workers are a competitive asset if they have the right skills and mind-set. Proximus could face a shortage of skilled resources in very specific domains like security, digital front-ends, data science, agile IT,…This shortage could hamper the realization of our #shift to digital and customer-centric strategy and delay some of our ambitions in innovation. Besides, there is a need for upgraded skills in customer-facing and in other functions to become digital oriented.

This is why the company is putting so much attention on training programs, internal mobility, hiring of young graduates from relevant fields and employer branding.

company founded on security, to accelerate its diversification strategy into new market segments and further consolidate its presence in the Americas.

During 2018, this proved to be the right diversification strategy as TeleSign managed to more than double its own EBIDTA while competing with players that follow a different financial logic (high revenue growth but negative cash flows).

Proximus also continues to develop capabilities to support business customers in their digital transformation with its industry-tailored support and convergent products combining connectivity, hybrid cloud and managed security solutions. Proximus continuously explores ways to diversify revenues streams outside the classical connectivity business. Examples include our rapidly growing IoT business (including adjacent services) and our smart mobility services (via B-Mobile subsidiary among others). In those adjacent domains Proximus explores new partnership models and considers inorganic growth paths.

In this matter, it is also essential for Proximus to adapt her way of working to the needs and requirements of the new generation – "the millennials" - and manage all talents within an inclusive multigenerational environment.

Considering the imperative to align skills vs. customer & business needs, Proximus has taken the necessary steps to identify which skills are critical to face tomorrow's challenges and to know, develop and share each other's talents to have the right talent at the right place. Proximus also continues investing in leadership, collaborative work environment, digitalization, development to stimulate a company culture that nurtures a growth mindset, new ways of working, and our five company values being digital mindset, customer centricity, accountability, collaboration and agility.

Customer experience

For Proximus, delivering a superior customer experience is a core strategic mission – but also an ongoing risk domain, considering:

the fast evolution of market expectations
the large & complex offer of product & services
the process /legacy IT application complexity

Proximus is committed to meet its brand Promise 'Always close' by transforming into a digital first service provider while delivering superior customer experience: a consistent and intuitive experience across interactions, high quality and stable network, easy-to-use products and services, a good recommendation index and low effort on all interactions in all customer journeys.

Proximus' strategy holds a key focus on 'customer experience' which is materialized through key transformational initiatives like end-to-end journey evolution and Voice of the Customers and business as usual activities. With these, we ambition to:

ensure products & services are designed to match customer expectations before launching
maximize usage satisfaction of products and services with focus on in-home and inoffice experience

Human resource cost flexibility

design or redesign end-to-end customer journeys, ensuring a personalized and effortless interaction with the Proximus brand
create and maintain a continuous dialogue with our customers to engage with them and evolve towards a real customer centric company
react more quickly when we did not deliver a first-time right experience or even proactively address an issue before customer notices it

A few examples of what has already been achieved:

massive upgrading of customers to latest technology
'Happy House' visits to improve inhome experience
'Safety nets' for customers at risk via 360° multiskilled transversal teams
Multi-objective calls and e-mails to proactively address customers at risks
Improvement of our digital channels & tools: 'MyProximus' app redesign, new 'Home optimizer' app, etc.
Launch of the new WiFi-booster to improve WiFi coverage in home
Re-design of customer journeys

(whether internal or outsourced, expensed or capitalized). Expressed as a ratio of turnover, Proximus total cost of workforce still lies well above the average of international peers and main competitors, even if progress is steadily made over the past years.

Moreover, Belgium applies automatic inflation-based salary increases, leading to higher costs, not only of Proximus' own employees but also of the outsourced workforce, with the outsourcing companies being subject to the indexation as well.

At Proximus Group level, about one in four employees is statutory. The application of HR rules as defined during successive Collective Agreements is quite strict and doesn't allow as high flexibility as competition. This restricts Proximus' ability to improve efficiency and increase flexibility to levels comparable to those of its competitors.

In 2018 the next wave of the voluntary early leave plan that was agreed by the unions in 2016 has left the company.

But in the future, major efforts will be needed to increase organizational flexibility and agility.

That's why we intend to accelerate our transformation in the next three years, to become an increasingly digital company, agile and efficient organization.

Operational risk relates to risks arising from systems, processes, people and external events that affect the operation of Proximus businesses. It includes product life cycle and execution; product safety and performance; information management, data protection and cyber security; business continuity; supply chain; and other risks, including human resources and reputation. Depending on the nature of the risk involved and the particular business or function affected, Proximus is using a wide variety of risk mitigation strategies, including adverse scenario stress tests, back up/business continuity plans, business process reviews, and insurance. Proximus' operational risk measurement and management relies on the AMA (Advanced Measurement Approach) methodology. A dedicated "as-if" adverse scenario risk register has been developed in order to make stress tests relevant.

First, Proximus will continue to adapt and simplify the organizational structure in order to evolve towards a high-performance organization and as such transforming the way we work.

Besides, different initiatives (drastic simplification and/or automation of Proximus' products, services, processes and systems) would optimize and safeguard the balance between workforce and workload (both in numbers and competencies). The objective would be to adapt workforce cost and HR rules to Proximus future needs, to remain competitive and be able to evolve with customers' needs.

With this respect, discussions with unions are aimed to on one hand adapt workforce to workload and on the other hand simplify the current social model, to enhance functional & geographical mobility, increase HR flexibility and further optimize in- and outsourcing balance. This would improve our productivity, flexibility and agility on the market.

Proximus is covered by extended general and professional liability, property damage and business interruption insurance as well as by a dedicated cyber security insurance program. Nevertheless, those insurance programs may not provide indemnification if the traditional insurance exclusions (nonaccidental event) should apply.

The most prominent examples of operational risk factors are stipulated below:

Resilience & business continuity
Legacy network infrastructure
Security ( confidentiality, integrity, availability)
Sourcing & supply chain reliability
Data protection & privacy

Business Continuity

Interruptions to our ICT and telecom infrastructure that supports our businesses (including those provided by third party vendors such as power suppliers) could seriously impact our revenues, our liabilities and our brand reputation.

Therefore, building and ensuring resilience of our products and services is and remains a top priority. We are convinced that our business continuity plans will keep our company up and running through interruptions of any kind: power failures, IT system crashes, natural disasters, supply chain problems and more.

For each critical business function, business continuity plans have been developed in order to:

identify and prevent risks where possible
prepare for risks that we can't control

• respond and recover if an incident or crisis occurs

Per critical product & services, relevant Maximum Tolerable Period of Disruption (MTPOD) have been defined in line with the sales business unit's requirements.

Proximus is closely following the international standards best practices guidelines. The level of preparedness (relevant KPIs and score cards) is submitted annually to the Audit & Compliance Committee.

In case of a major adverse event, Proximus has put in place and is continuously testing a crisis management process called PERT (Proximus Emergency Response Team).

Cyber Security

Increased global cyber security vulnerabilities, threats and more sophisticated and targeted cyber related attacks pose a risk to the security of Proximus as well as its customers', partners', suppliers' and third-party service providers' products, systems and networks. The confidentiality, availability and integrity of Proximus and its customers' data are also at risk. We are taking the necessary actions & investments to mitigate those risks by employing a number of measures, including employee training, monitoring testing, and maintenance of protective systems and contingency plans.

Legacy network infrastructure

The systems need to talk to each other over a connected information highway that can deliver information at high speed and without distortion. There is no doubt that in the coming years there will be a continuing demand for ever-increasing quantities of data at ever-increasing speeds. There is a widely held belief that the increased use of wireless and fiber optic technology will render copper wire obsolete.

The problems with services over copper are speed, reliability and value for money. All too often, legacy systems are costly to operate and maintain.

Copper has been around for decades and has far outlived any guarantee period. Outages on the lines will

become more frequent.

Considering those elements, Proximus was in 2004 the first operator in Europe to start building a national Fiber to the home network. And today, Proximus is among the world's top five operators for the proportion of Fiber in its VDSL network with over 21,000 kilometres of optical fiber connecting its street cabinets.

In the last 2 years, Proximus has accelerated the rollout of Fiber on its fixed network thanks to its 'Fiber for Belgium' € 3 Bio investment plan over 10 years.

The initiatives from utility players, such as Fluvius, to invest in a parallel Fiber network, risk to have an impact on the business case of the Proximus Fiber investments.

Sourcing & Supply chain

Proximus depends on key suppliers and vendors to provide equipment needed to operate its business.

Supply chain risk management (SCRM) is defined as "the implementation of strategies to manage both every day and exceptional risks along the supply chain, based on continuous risk assessment with the objective of reducing vulnerability and ensuring continuity".

The following actions have been taken into account in order to keep an acceptable supply chain risk level:

Data protection & privacy

Data protection laws exist to strike a balance between the rights of individuals to privacy and the ability of organizations to use data for business purposes. Keeping personal data confidential, private, safe and secure is for Proximus a top priority.

General Data Protection Regulation (GDPR) 's unification of data protection standards across the European Union has raised the privacy bar on personal data by requiring organizations to locate, understand its purpose and appropriately secure it.

Top critical suppliers or their sub-suppliers under constant watch
Stock management
Consideration of alternative sourcing arrangements
Business interruption / contingency plans
Risk assessments and Audits
Awareness campaigns and training programs
Strict follow up of critical suppliers' contractual liability & Service level Agreement (SLA) clauses
Data protection & privacy

Being committed to protect personal data and privacy, we took a series of actions such as appointing a Data Protection Officer (DPO), development of a structure for consent management, security screening and corrective measures for our IT applications.

We also implemented a Privacy Control Framework to provide assurance on the fact that personal data is managed as intended, is accurate, protected by default and by design and that our organization is compliant with applicable laws and regulations and able to demonstrate this.

In 2018, the Risk Management & Compliance Committee (RMC) has held 4 sessions. The related decisions have been reported to EXCO & the Audit & Compliance Committee. RMC meetings give opportunity to review files where decisions have to be taken by finding the balance between risk taking and cost in line with the Group risk appetite.

Proximus internal audit function is– in line with the European best practices requirements – an integral part of the Internal Risk Management and Control System and provides assurance to the Audit and Compliance Committee concerning the "in control status" of the Proximus Group segments/units/ entities and processes. Internal Audit provides to both the Audit and Compliance Committee and Proximus Management analyses, appraisals, recommendations, counsel, and information:

1. Therefore, internal audit objectives using the COSO and other professional standards are to ensure: 1. The effectiveness & adequacy of internal controls.
1. The operational effectiveness (doing it right) and/or efficiency (doing it well).

The RMC objectives are: 1. To oversee the company's most critical enterprise & operational risks and how management is monitoring and mitigating those risks. 2. To enhance pending/open internal Audit action points remaining open for more than 6 months.

A disciplined approach to risk is key in a fast-moving technological and competitive environment, in order to ensure that we only accept risk for which Proximus is adequately compensated (risk/return optimisation).

1. The compliance with laws, regulations and policies.
1. The reliability & the accuracy of the information provided.

Internal Audit helps Proximus to accomplish those objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes. Internal Audit conducts its activities in a manner based on a continuous evaluation of perceived business risks, and has full and unrestricted access to all activities, documents/records, properties and staff. The Chief Auditor has a reporting line to the Chairman of the audit Committee. Quarterly Audit activity reports are submitted and discussed with the Audit and Compliance Committee.

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.

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 adaptation 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 General Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS)). Changes are

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).

identified and the impact on the Proximus financial reporting is proactively analyzed.

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 analyzed. Emphasis is on the development of preventive controls and setting up reporting tools that enable a posteriori controls. On a regular base, the Audit & Compliance Committee (A&CC) and the Executive Committee are informed about new upcoming financial reporting standards and their potential impact on the Proximus' financials.

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. The outcome of the analysis is reflected in the corresponding financial statements in accordance with the applicable framework.

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 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 Proximus and its major affiliates, a very detailed closing calendar is established, which includes in detail cross-divisional preparatory meetings, deadlines for 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 analyzed and confirmed. Specific attention is given to reasonableness tests, where financial information is being analyzed 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.

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

Proximus has set up an internal control system based on the COSO model, i.e. the integrated internal control and enterprise risk management framework published by the Committee of Sponsoring Organisation of the Treadway Commission ("COSO") for the first time in 1992 and updated in May 2013. This COSO methodology is based on five areas: the control environment, risk analysis, control activities, information & communication and monitoring.

Organization of internal control

In accordance with the bylaws, Proximus has an Audit & Compliance Committee (A&CC) (see caption 'Independence and expertise in the accounting and audit domain of at least one member of the Audit and Compliance Committee'). Its 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 Proximus, (iii) the Proximus' internal audit function and its efficiency, (iv) the quality, integrity and legal control of the Proximus statutory and

Proximus 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, Proximus organizes a continuous review and follow-up of all the components of its internal controls and risk management systems to ensure they remain adequate.

Proximus 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, Proximus has organized its internal control and risk management systems over its financial reporting in order to ensure this objective is met.

the consolidated financial statements, 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) Proximus compliance with legal and regulatory requirements, (vii) the compliance within the organization with the Proximus' Code of Conduct and the Dealing Code.

The A&CC meets at least once every quarter.

Ethics

The Board of Directors has approved a Corporate Governance Charter and a Code of Conduct "A Socially Responsible Company". All employees must perform their daily activities and their business objectives according to the strictest ethical standards and principles, using the Group values (Collaboration, Agility and Accountability) as guiding principle.

The Code "A Socially Responsible Company", which is available on www.proximus.com, sets out the above-mentioned principles, and aims to inspire each employee in his or her daily behavior 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, Proximus in general, and the Finance department in particular, has a tradition of a high importance to compliance and a strict adherence to a timely and qualitative reporting.

Policies and procedures

The principles and the rules in the Code "A Socially Responsible Company" are further elaborated in the different internal policies and procedures. These Group policies and procedures are available on the Proximus 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.

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 Proximus 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.

Roles & responsibilities

Proximus' 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 team of the Corporate Accounting department assumes this accounting responsibility for the mother company Proximus 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.

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.

Skills & expertise

Adequate staffing is a matter to which Proximus 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 Proximus 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 training session on Proximus new business products & services.

Major risks and uncertainties are reported in the caption 'Most important risks and uncertainties'.

Mitigating factors and control measures are reported in the caption 'Most important risks and uncertainties'.

Financial reporting IT systems

The accounting records of Proximus 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.

Effective Internal communication

Most of the accounting records 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.

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 Proximus group level, the consolidated results are split per segment. 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 analyzed and satisfactorily explained.

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

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, Proximus' 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.
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 Proximus 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 Proximus 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.

Enabling a better digital life

We enable a better digital life by building a futureproof infrastructure with high-quality networks and digital platforms, as well as through innovative solutions and services that address societal challenges. We believe in open innovation and co-create in digital ecosystems with the academic world,start-ups and scale-ups.

Future-proof digital infrastructure

The success of Belgium's digital future depends on future-proof connectivity.

Being connected is part of every person's and every company's daily life. At home, at work and on the go. That's why we massively deploy future-proof infrastructure.

Since 2014, Proximus has been investing around €1 billion annually in its telecom infrastructure and fixed and mobile networks.

This makes us the biggest investor in digital infrastructure in Belgium.

We pay particular attention to developing a safer digital society. We provide cybersecurity solutions and services to our residential, enterprise and public customers and build trust in digital through data privacy and awareness initiatives. We are also a proud founding partner of the Cybersecurity Coalition.

We are investing €3 billion over 10 years to accelerate the roll-out of Fiber, connecting a majority of businesses and bringing Fiber to all centers of cities and communes. And with the further deployment of 4.5G we are preparing the road to 5G in 2020.

KPI	Result 2018	Result 2017
4G indoor coverage (1)	99.5% (2)	98.1%
4G outdoor coverage (3)	99.9%	99.8%
Fixed Internet: 30Mbps coverage	92% (4)	86%
Combined Average VDSL & ADSL speed	72.6 Mbps	68 Mbps
Vectoring coverage in Belgium	88.6%	83%

[1] The indoor coverage refers to the coverage of 4G inside of buildings.

[2] The 2018 figure is based on a Q4 measurement campaign performed by an external agency Commsquare . (from 07/11 to 28/11/2018 in the main cities and on the main roads).

[3] The outdoor coverage refers to the coverage of 4G outside of buildings15/02/2019

[4] This includes copper & fiber homes passed15/02/2019

Fixed network

Fiber enables low-latency and stable high-speed connectivity, today reaching up to 1Gbps up- and download speeds, and tomorrow even up to 10Gbps, making its roll-out one of our key investments for a digital economy and society. Today we commercially offer a download speed of up to 220Mbps, which can be boosted to 400Mbps.

In 2018, we were rolling out fiber in nine Belgian cities (an increase of two compared with the end of 2017), bringing our fiber roll out to cruising speed thanks to our industrialization efforts.

For business customers, we proactively roll-out fiber in zones with high business densities, like industrial zones and business parks and offer ondemand fiber connectivity to any business customer who requests it. Our coverage within the business and corporate market segments also saw a strong increase. By the end of 2018, 48% of companies (compared to 17% in 2017) located in industrial zones could benefit from fiber.

In 2019, we have planned to double our fiber footprint and start deployment in seven new cities.

And we will finalize the deployment in industrial zonings as we reach our targeted coverage.

In parallel to the deployment, we will especially focus on digitizing our activities and optimizing the experience we deliver our customers, from the first contact they have with Fiber up to the aftersales service. Our ambition is to increase the level of proactivity in our servicing approach in order to further delight our customers.

While we believe Fiber to be the network of the future, Proximus continues to maintain and upgrade the copper infrastructure to ensure a high-quality customer experience for all.

In 2018, we further increased the speed with the continued roll-out of vectoring technology reaching 88,6% coverage and by migrating customers from ADSL to VDSL (+30k customers in 2018) offering higher speed and improved stability.

Mobile network

consumers with a stable high-speed network both inside and outside their home.

In 2019, we plan to further explore 5G capabilities and continue extending 4,5G to offer an excellent experience to our customers.

White zones

While white and rural zones are less economically attractive, we aim to connect everyone everywhere by using new technologies and coinvesting with public authorities. The main Belgian operators each promised to invest €20 million over three years (from 2017 to 2019) in Wallonia to improve the coverage of these zones.

We continue to deploy new ROPs to offer highspeed fixed broadband services and digital TV with High Definition quality. Our aim is to offer outdoor 4G mobile coverage to the entire population of the defined white zones and we will continue launching innovative projects to further improve fixed and mobile network quality.

Digital innovation

smart logistics and smart health. Together, we not only create more impact and address societal and environmental challenges, we also open up a new world of digital opportunities that improve the lives and work of people.

KPI	Result 2018	Result 2017
Active M2M cards	1.3Mio	1.2 Mio
ICT revenues (national + international)	561 Mio	509.2 Mio
Number of projects with universities/education institutes	39	N.A.

Academic partnerships

If we want to succeed in tomorrow's digital economy, we need open innovation. That's why we collaborate with major universities and their talent hubs.

It's a win-win partnership: we gain access to innovative designs and perspectives from academics, and they gain access to our infrastructure and resources to scale up their ideas. Together, we'll shape our future.

Proximus has worked with universities for many years and this collaboration has gradually intensified.

We have research projects at ULB/UCL, KUL, and VUB where Proximus participates in the Advisory Boards that steer these research projects. Proximus also actively participates in funded RD&I projects with universities, such as with KUL and ULB.

Furthermore, we envisage cooperating even more closely on aligning training courses with the fastevolving labor market and bringing the corporate and university worlds closer together.

We also signed a strategic partnership with IMEC in 2018 on societal challenges such as Smart Cities and Artificial Intelligence.

In 2019, we want to rethink our strategic approach and structure and refine our collaboration with the education and academic ecosystem.

Support start-up and scale-up communities

Belgium has a huge network of young companies, start-ups and scale-ups. We want to be a motor of innovation and a catalyst of new Belgian companies.

InPost

Co.Station

Proximus has been a shareholder of Co.Station since 2017. Co.Station is a Belgian community that unites some 1,500 entrepreneurs, start-ups, scale-ups, corporates, investors and influencers.

Besides Brussels and Ghent, an additional location opened in Charleroi. Co.Station was granted the By sharing our know-how, resources and infrastructure in collaborative partnerships, we can increase innovation and grow our digital economy.

Through our IMEC partnership, the iStart start-up portfolio has been scanned to map Proximus' business challenges. Selected candidates will pitch their solutions in front of the Proximus team.

Going forward, we intend to involve and join forces with Belgian corporates from other industries in our calls-for-innovation.

management of Antwerp's IoT House, The Beacon, in 2018.

We supported various events around IoT, GDPR, Blockchain, and social innovation, all aimed at a wide entrepreneurial community in Brussels, Ghent, and Charleroi. We have also supported

the spirit of open innovation.

Local innovation support

MIC, B-Hive and Co.Station are our three main innovation partnerships, but we also support ad hoc initiatives to foster agility and speed in innovation.

+90 start-ups and scale-ups representing +500

Belgium has an important ecosystem of FinTech start-ups and companies that we are proud to

Proximus is a founding partner of B-Hive, a European FinTech platform promoting collaborative innovation between major banks, insurers and market infrastructure to develop

In 2017, Proximus joined the Microsoft Innovation Center (MIC) Belgium, a public-private partnership with the Walloon Region and Microsoft, as a

MIC focuses on entrepreneurship through coaching sessions and networking works closely with the developer community to enhance technical skills, organize events, provide training and certifications, and provides access to the latest IT hardware. The objective is to encourage the adoption of new technologies such as IoT, Data and AR/VR that will facilitate the next wave of innovation and to accompany enterprises in their digital transformation. The IoT Lab – a first joint step taken in 2018 – provides an environment to prepare for the digital future in

innovative solutions for financial markets.

Microsoft Innovation Center

structural partner.

workers as Co.Station residents.

FinTech

support.

In 2019 we will include our customers in the Co.Station community.

We invested in early-stage FinTech start-up in Luxembourg and also envision expanding our FinTech activities via our affiliate Telindus.

In 2018, jointly with MIC, we also promoted digital innovation. A great example is the launch of the new "Hack in the Woods" festival of code, bringing together developers and professionals around societal goals.

2019 will be a pivotal year for the Microsoft Innovation Center with the launch of new initiatives, bringing more cutting-edge technologies such as AI and Machine Learning to enterprises.

In the future, we will continue advancing on the road of open innovation.

Innovations addressing societal challenges

Think of a digital future in which Belgium leads the way!

Some examples:

Smart Industry

To become more efficient, Bombardier had to optimize the movement of materials between

sites across Europe. This is now possible thanks to a smart solution connecting racks in each location.

Smart Utilities

To enable new digitally-driven services, Fluvius will connect more than 800,000 gas and electricity meters in Flanders in the coming five years using our IoT networks.

Smart Retail

Using Proximus Analytics, shopping malls collect data on attendance and location attractiveness.

Smart Logistics

Some of our logistics sites are managed in collaboration with H.Essers. On those sites, we need real-time positioning (within a precision range of 1m) of our trailers to optimize yard

management processes. By connecting each trailer to the parking spot, H.Essers managed to increase visibility, eliminate useless search time and optimize onsite routing.

Smart Buildings

Smart Building solutions offer tremendous opportunities in terms of energy efficiency, waste management and occupancy. In this area, we embed intelligence into new buildings in domains such as hospitality, workspace optimization, energy and floor efficiency and safety and security.

In 2018, we also started developing a solution stack to support smart venues to offer a more complete customer experience. A first example is the renovation of the entire Tour & Taxis site in Brussels, with event halls, offices, living units, shopping zones, and more, integrated into one customer journey.

Smart Energy

With GoodPlanet, we have set goals to reach and install our sensors in more than 400 schools in 2019.

Smart Cities

Smart mobility

Mobility is an important driver in the economic, environmental and overall well-being evolution of a country. There is still plenty of room for improvement in Belgium and neighboring countries.

Our affiliate Be-Mobile, one of the leading Smart Mobility companies, is already facilitating this. A key element of Be-Mobile's solutions is creating ecosystems that connect all stakeholders such as commuters, governments, road operators, automotive and fleet owners.

administrations. We are already doing this in Louvain-La-Neuve at the Living Live Lab and in Antwerp with IMEC in the City of Things project. These initiatives allow local citizens to connect with city officials to voice their needs, address traffic congestion, security and waste management.

Furthermore, Be-Mobile developed an intermodal route planner for the city of Antwerp to encourage a modal shift by helping commuters optimize their journeys. Finally, Be-Mobile grew its heavy vehicle road user charging or tolling business and is helping policy makers to analyze a Belgian road user charging solution for passenger cars, which is believed to be a crucial step towards effective mobility management and achieving a better balance between mobility capacity and demand.

Digital trust

Today's digital world offers many opportunities but also new types of threat. Trust is a prerequisite for people and company to embrace the many opportunities of digital and enable the digital future. As a leading digital company, we are actively involved in driving digital awareness initiatives.

educate our stakeholders on the value and howto of cybersecurity through training and partnerships.

KPI	Result 2018	Result 2017
International certifications related to privacy and cybersecurity	6	6

The Proximus CSIRT is the central incident response team of the Proximus Group. Its mission is to provide information and assistance to reduce the risks of cybersecurity incidents as well as respond effectively to such incidents when they occur.

Cyber safe

Within our company

We aim to be the frontrunner in how we protect and transform our company in the face of today's and tomorrow's cyber challenges. We see cybersecurity as an enabler of digital transformation.

Over the last four years, Proximus has invested €43 million in our Corporate Cyber Security Program with the aim of making our company more cyber resilient and to offer best-in-class secured services and networks to our customers.

Our corporate Cyber Security Incident Response Team (CSIRT) continuously monitors security alerts and coordinates the response to cyber threats. In 2018, our CSIRT handled 2,087 incidents (versus 2,204 in 2017). No incident had a major business impact. Proximus CSIRT is internationally recognized as the only certified team in Belgium through the Trusted Introducer and is part of the European platform ETIS and global community FIRST.

For our customers

In addition, we offer solutions to protect companies' data, networks and servers.

Our Security Operations Center monitors more than 2,000 million events daily, alerting customers in case of incidents. This number is increasing because the number of events and customers keep growing. Since 2016, we have been offering "CSIRT as–a-service", leveraging our internal expertise to help our customers solve incidents. Privileged account management, controlling access to IT systems and data are becoming crucial given the rise in cloud In 2017, Proximus successfully overcame the global cyberattacks WannaCry and NotPetya thanks to the prevention measures and the fast detection and response.

applications and privacy regulations. We also successfully launched this solution internally and with key enterprise customers in 2018.

For everyone

Additionally, we are actively exchanging information about observed threats and attacks on a national and European level via the ETIS platform.

Cybersecurity education

For Belgium to become a digital leader, citizens need to have trust in digital. We want people to enjoy the online world and know how to behave safely when using it.

Educating our employees

Keeping the cyber environment safe starts from the inside, which is why we continuously educate our employees on responsible behavior to protect company information and customer data.

The 2018 Security Week, organized for the fifth consecutive year, reached 1,237 employees and offered a vast awareness program including new digital ways of working, physical security, privacy and GDPR, our customer security solutions, We help them by sharing our security knowledge and educating them on the value and how-to of cybersecurity.

phishing detection and prevention, and child safety online in collaboration with Child Focus. For the first time in 2018, we organized an internal "capture the flag" contest - an online game where employees could test their cyber skills through hands-on exercises.

Educating the business world & society

We also educate and raise awareness among companies, organizations and the general public.

For our customers

We organize the biannual Proximus Cyber Security Convention, where we bring customers up to speed on the latest trends.

Our Proximus Corporate University (PCU) also provided security education programs for

For Belgian citizens

In 2018, Child Focus reviewed its pedagogical approach in order to improve the impact of the program in coming years.

customers in 2018, including Network Security Explored, Hacking and Intrusion Detection, HEXID Assault, Wireshark, DaVinsi labs, Blockchain and Security Awareness, reaching 75 companies (47 from the public sector).

Drawing from the real-life experiences of the children, the latter will discover in workshops how to behave when surfing on the internet and interacting on social media.

In 2018, Proximus handled 72 requests from law enforcement authorities to block access to websites.

Proximus is also constantly looking for new ways to prevent child pornography on its hosting infrastructure. In order to protect our customers from fraud, like phishing via fake Proximus websites, the Proximus CSIRT is closely monitoring any attempts to attack our customers – and is usually able to take down phishing websites in a matter of hours after the attacks were launched.

Ensuring data privacy

We have also put in place infrastructure that spots data breaches to keep our network secure. Because we want to make sure data stays safe, always.

To ensure all our employees are aware of EU and Belgian privacy legislation, we organized dedicated GDPR training, reaching 93% of our workforce in 2018.

In 2018, Proximus continued its GDPR implementation project started in 2017. Our objective was to ensure compliance with GDPR without disruptions to Proximus data flow and business operations. More than 150 persons were directly involved in the project and approximately to reskilling employees and job seekers to be ready for the jobs of tomorrow.

500 others were involved in surveys, questionnaires, assessments, etc.

We also implemented a Privacy Control Framework to provide assurance on the fact that personal data is managed as intended, is accurate is protected by default and by design and that our organization is compliant with applicable laws and regulations and able to demonstrate this.

Proximus has an Audit & Compliance Committee which consists of five non-executive directors, the majority of whom must be independent. In line with its charter, it is chaired by an independent director.

A majority of the members of the Audit & Compliance Committee have extensive expertise in accounting and audit. The Chairman of the Audit & Compliance Committee, Mr. Guido J.M.

Demuynck, holds a degree in Applied Economics. Mrs. Catherine Vandenborre holds a degree in Business Economics as well as degrees in Tax and Financial Risk Management. Mr. Paul Van de Perre holds a Master's degree in Economics and several postgraduate degrees. The Chairman and the majority of the members exercised several board or executive mandates in large Belgian or international companies.

The statement on other non-financial information is included in a separate report which is annexed to this Management Report.

Proximus believes that a diverse workforce, through employees' unique capabilities, experiences and all other characteristics unrelated to someone's abilities, will help to reach a more diverse marketplace and will create sustainable business.

It is also important to reflect the diversity of our customers and markets in our workforce.

Therefore, Proximus has a Charter on diversity and equal rights, which applies to all employees of the Proximus Group.

With this policy Proximus wants to enable conditions, where these differences are recognized and respected, and where all employees are given equal opportunities.

For Proximus, diversity and equality mean:

Treating all applicants and employees equally, based only on relevant competencies and objective criteria.
Creating an open and welcoming work environment that encourages contributions from people of all backgrounds and experiences.
Promoting a mind-set of respect and openness throughout all levels of the organisation and treating all employees fairly and equally.
Demonstrating behaviour free from any form of racism, intolerance, discrimination, harassment or other attitude that could negatively affect the dignity of men and women at the workplace.

• Incorporating diversity in all aspects of the way we do business without any form of intolerance.

Within Proximus specific teams are in charge of monitoring the compliance with the Charter and of taking the correct measures in case of noncompliance.

Proximus is particularly conscious about the importance of diversity at all levels of the organisation and concentrates on recruiting employees with an inclusion and growth mindset. Once they are part of the company, we ensure that they are the best ambassadors of our company values by including a part on our inclusion program and philosophy in our welcome days as well as in all related trainings for team leaders, experts, trainees,…

With regards to gender diversity, this approach is also reflected in the female representation at the different levels of our company:

43% of the Board of Directors
25% of the Executive Committee
21% of the members of the Leadership Team
31% of all employees' population

Proximus Group also has a very diverse workforce in terms of culture with 58 nationalities.

Proximus supports internal and external diversity network activities and initiatives such as the AfroPean network (APN) and WinC (women network). We have a Diamond Sponsorship in the organisation "Women on Board". Our CEO participates in events regarding women at the top and signed the "Pledge", a European Business Leaders' commitment to Inclusion & Diversity. Proximus also ensures ad hoc presence to external events such as "Yes she can", "Digital4Her" and "She loves to code" in order to encourage young girls to choose for engineering studies and a technical career.

optimally present and feel supported, motivated and engaged at work.

Proximus is founding partner of "Experience@Work". Thanks to this company, experienced talents from organisations can be deployed in other organisations which are looking for specific experience and/or talent.

Proximus' mission consists in opening up a world of digital opportunities so people live better and work smarter. This also means that we have to earn and keep the trust of our customers, our employees, our suppliers, our shareholders, our partners and the company as a whole.

Successful business must go hand in hand with honest and ethical behaviour.

Each employee has a crucial role to play in this matter. This is the reason why the Code of Conduct is in place, representing our corporate culture and values.

This Code of Conduct reflects the fundamental principles and rules which are the foundations of our engagement to be a socially responsible company. The Code of Conduct applies to everyone: Board Directors, managers and all employees. Although the Code of Conduct cannot directly be imposed to our business partners, we seek to always work with partners respecting the same ethical standards.

Proximus expects its employees to respect the Code of Conduct and use it as a reference in their day-to-day way of working.

Human rights

Working conditions

Proximus is committed to creating working conditions which promote fair employment practices and where ethical conduct is recognized and valued. We maintain a professional workplace with an inclusive working environment, and we are committed to respecting Belgian legislation and the International Labour Organisation's (ILO) fundamental conventions.

Disclosures related to rights, commitments and contingencies are reported in note 33 of the consolidated financial statements.

Disclosures related to the use of financial instruments are reported in note 31 of the consolidated financial statements.

Circumstances which may considerably impact the development of the Group are reported in the sections " Risk Management " and " Internal Control " of this management report.

Disclosures related to treasury shares are reported in note 17 of the consolidated financial statements.

REPORT BY THE BOARD OF DIRECTORS TO THE ANNUAL GENERAL MEETING OF SHAREHOLDERS ON 17 APRIL 2019 ON THE ANNUAL ACCOUNTS OF PROXIMUS PLC UNDER PUBLIC LAW AS AT 31 DECEMBER 2018

Dear Shareholders,

We are pleased to report on the operations of the 2018 financial year and to submit for your approval, the annual accounts per 31 December 2018.

Comments on the annual accounts

Balance sheet

Intangible assets decreased by € 349 million to € 2,715 million mainly as a consequence of the amortization of the goodwill from the 2010 merger by absorption and the impairment of an EBU fulfillment software (€ 22 million), partly offset by important investments in IT assets and broadcasting rights.

The net book value of the "plant, machinery and equipment" increased by € 74 million to € 2,587 million, as investments exceeded the depreciation cost of 2018 which was although impacted by the declining depreciation method used for 2018 investments. On the one hand, there are the extensive investments in enhancing the fixed network with the ongoing roll-out of fiber, on the other hand investments are made in the mobile network to maintain the mobile leadership in the Belgian market.

The participating interests in affiliated enterprises increased with €43 million to € 9,245 million mainly as the consequence of the capital increase of Telindus-ISIT bv, a Dutch based subsidiary, and the acquisition of Codit, a Belgium-headquarted IT services company.

The inventory increased with € 6 million up to € 118 million.

The amounts receivable within one year decreased by € 110 million to € 547 million mainly as a consequence of a good working capital management.

The cash and cash equivalent are approximately € 7 million higher end of December of 2018 at € 45 million compared to December 2017.

The equity decreases by € 62 million mainly due to the Net Income being lower than the distributed profit.

The provisions for liabilities and charges decreased by € 44 million mainly as a consequence of payments for the voluntary early leave plan that started mid 2016.

The increase of amounts payable after one year results mainly from the new € 400 million loan from the European Investment Bank entered into in March 2018 and due in 2028.

The decrease of the current portion of amounts payable after more than one year falling due within one year mainly results from the maturity of the € 405 millions unsubordinated debenture early 2018.

Per 31 December 2018, the current liabilities exceed the current assets. However, Proximus benefits from different sources of financing, such as the use of readily available excess cash within the Group, the issuance of short term notes under

its commercial paper program, the use of existing credit facilities and/or the use of its existing Euro Medium Term Notes program.

Income statement

2018 operating income amounts decreased from € 4,489 million to € 4,460 million. The turnover decreased by € 49 million partially offset by the increase in own construction capitalized with € 13 million and the increase of work and contracts in progress with 11 million. The 2017 non recurring operating income (€ 8 million) relates to income recognized with respect to the compensation mechanism for statutory retirees foreseen in the transfer of the obligation of legal pensions to the Belgian State in 2003. Following a change in law as from 2018, ), as from 2018, the obligation to off-set stopped for the Belgian State.

The amount of operating charges increased with € 73 million up to € 4,141 million. The depreciation and amortization increased with € 62 million, the other operating charges with 15 million and the non recurring operating charges with € 24 million partly offset by a decrease of the personnel expenses for € 23 million.

The increase of depreciation and amortization mainly results from an increasing asset base and the application of degressive depreciation on investments of the year 2018.

The increase of non recurring operating charges is mainly the consequence of the impairment of an fulfillment software for the Entreprise Business Unit (€ 22 million).

As a result, the operating profit decreased by € 102 million down to € 319 million.

The net financial income increased with € 188 million up to € 241 million mainly due to higher dividends received partly offset by higher amounts written off on own shares.

The 2018 earnings before income tax amount to € 560 million (vs. € 475 million in 2017).

Corporate income taxes decreased by € 31 million up to € 110 million as 2018 benefitted from lower tax rates and higher non taxable income.

As a consequence the profit of the year before appropriation of the result amounted to € 451 million compared to € 335 million for 2017.

Appropriation of the account

We propose the following appropriation (in €):

		2018
Profit of the financial year to be appropriated	+	451,153,877,43	EUR
Accumulated profits	+	130,230,237.97	EUR
Profit to be appropriated	=	581,384,115.4	EUR
Transfers from capital and reserves	+	250,137,209.51	EUR
Transfers to capital and reserves	-	1,259,054,00	EUR
Profit to be distributed (Dividends)	-	484,602,858.38	EUR
Other beneficiaries (personnel)	-	28,003,503.37	EUR
Profit to be carried forw ard	=	317,655,909.16	EUR

On December 7th 2018 an interim dividend of € 161.4 million has been paid.

Right and commitments not included in the balance sheet

Proximus has the right to issue Commercial Paper for a total of € 1,000 million, of which € 231 million was issued end 2018, and the right to issue Euro Medium Term Notes for a total of € 3,500 million, of which € 2,250 million was issued as of end 2018.

The Group has adopted a risk philosophy that is aimed at maximizing business success and shareholder value by effectively balancing risk and reward. Effective risk management is a key success factor for realizing our objectives. The motivation of risk management is not only to safeguard the Group's assets and financial strength but also to protect Proximus' reputation. A structured risk management process allows management to take risks in a controlled manner. Financial risk management objectives and policies are reported in Note 31 of the consolidated financial statements, published on the Proximus website. Risks related to important ongoing claims and judicial procedures are reported in Note 33 of these statements. The enterprise and financial reporting 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 Proximus might be facing.

Enterprise-wide risks

Proximus' Enterprise Risk Management (ERM) is a structured and consistent framework for assessing, responding to and reporting on risks that could affect the achievement of Proximus' strategic development objectives. The Group's ERM covers the spectrum of business risks ("potential adverse events") and uncertainties that Proximus could encounter. It seeks to maximize value for shareholders by aligning risk management with the corporate strategy. It does so by assessing emerging risk (e.g. from regulation, new technologies on the market) and developing mitigating strategies in line with its risk tolerance.

Competitive market dynamics
Business model and servicing evolution
Employee skills and motivation
Customer experience
Human Resource cost flexibility

Competitive market dynamics

Proximus' business is primarily focused on Belgium, a small country with a few large telecom players, among which Proximus is the incumbent. Proximus is operating in growing (e.g. mobile data, security, IOT, smart mobility, API platforms), maturing (e.g. smartphones), saturated (e.g. Fixed Internet, postpaid mobile) or even declining (e.g. prepaid mobile, enterprise voice, fixed voice) markets.

The market is in constant evolution, with competitive dynamics (e.g. frequent new product launches, competitors entering new segments of the market) at play that might impact market value going-forward. Specifically, the market structure could change significantly with the possible entry of a new mobile operator on the market, supported by favourable conditions set in the upcoming spectrum auction. Sector federation Agoria estimates that the possible arrival of a 4th mobile entrant could impact the total Mobile market in Belgium with a reduction of 6000-8000 jobs and a reduced sector contribution to the state of € 200 million – € 350 million.

Business model and servicing evolution

Proximus' business model and financial performance have been and will be impacted by (disruptive) technologies, such as SD-WAN, 5G advantageous and solid competitive position providing the company with other levers than just price, reducing the risk to churn and price disruption exposure. Proximus also successfully launched a new mobile offer targeted at the millenial segment, Epic, with a specifically designed offer to meet the mobile needs of these customers.

In the corporate large-company market, the scattered competitive landscape drives price competition, which might further impact revenue and margins.

Here also, Proximus intends to respond to increasing competition by strengthening its voicedata-IT convergence strategy, leveraging unmatched sales reach, broad portfolio and expertise. Proximus has developed specific solutions to accompany our customers in the transition to both local and cloud-based communication services, and leveraging our various assets to offer simple, reliable and technologically advanced solutions to meet their communication needs. Furthermore, Proximus also seeks to answer new customer business needs through solutions combining core assets with innovation like IoT, Cloud, Security and big data, which will help preserving the value.

and OTT (over-the-top) services. Proximus' response to new technologies and market developments and its ability to introduce new

competitive products or services, meaningful to its customers, will be essential to its performance and profitability in the long run.

Proximus also continues to develop capabilities to support business customers in their digital

Employee skills and motivation

This is why the company is putting so much attention on training programs, internal mobility, hiring of young graduates from relevant fields and employer branding.

In this matter, it is also essential for Proximus to adapt her way of working to the needs and

transformation with its industry-tailored support and convergent products combining connectivity, hybrid cloud and managed security solutions.

Proximus continuously explores ways to diversify revenues streams outside the classical connectivity business. Examples include our rapidly growing IoT business (including adjacent services) and our smart mobility services (via B-Mobile subsidiary among others). In those adjacent domains Proximus explores new partnership models and considers inorganic growth paths.

requirements of the new generation – "the millennials" - and manage all talents within an inclusive multigenerational environment.

Customer experience

For Proximus, delivering a superior customer experience is a core strategic mission – but also an ongoing risk domain, considering :

the fast evolution of market expectations
the large & complex offer of product & services
the process / legacy IT application complexity

ensure products & services are designed to match customer expectations before launching
maximize usage satisfaction of products and services with focus on in-home and in-office experience
design or redesign end-to-end customer journeys, ensuring a personalized and effortless interaction with the Proximus brand
create and maintain a continuous dialogue with our customers to engage with them and evolve towards a real customer centric company
Human resource cost flexibility

Even though Proximus is back on the path of growth since 2015, strong competition, the impact of regulation and fast market evolution require to further reduce costs in order to remain competitive and preserve EBITDA. A significant part of Proximus' expenses is still driven by the cost of the workforce (whether internal or outsourced, expensed or capitalized). Expressed as a ratio of turnover, Proximus total cost of workforce still lies well above the average of international peers and main competitors, even if progress is steadily made over the past years.

Moreover, Belgium applies automatic inflationbased salary increases, leading to higher costs, not only of Proximus' own employees but also of the outsourced workforce, with the outsourcing companies being subject to the indexation as well.

At Proximus Group level, about one in four employees is statutory. The application of HR rules as defined during successive Collective Agreements is quite strict and doesn't allow as high flexibility as competition. This restricts Proximus' • react more quickly when we did not deliver a first-time right experience or even proactively address an issue before customer notices it

A few examples of what has already been achieved:

massive upgrading of customers to latest technology
'Happy House' visits to improve inhome experience
'Safety nets' for customers at risk via 360° multiskilled transversal teams
Multi-objective calls and e-mails to proactively address customers at risks
Improvement of our digital channels & tools: 'MyProximus' app redesign, new 'Home optimizer' app, etc.
Launch of the new WiFi-booster to improve WiFi coverage in home
Re-design of customer journey

ability to improve efficiency and increase flexibility to levels comparable to those of its competitors.

In 2018 the next wave of the voluntary early leave plan that was agreed by the unions in 2016 has left the company.

But in the future, major efforts will be needed to increase organizational flexibility and agility.

That's why we intend to accelerate our transformation in the next three years, to become an increasingly digital company, agile and efficient organization.

First, Proximus will continue to adapt and simplify the organizational structure in order to evolve towards a high-performance organization and as such transforming the way we work.

Operational risks

Operational risk relates to risks arising from systems, processes, people and external events that affect the operation of Proximus businesses. It includes product life cycle and execution; product safety and performance; information management, data protection and cyber security; business continuity; supply chain; and other risks, including human resources and reputation. Depending on the nature of the risk involved and the particular business or function affected, Proximus is using a wide variety of risk mitigation strategies, including adverse scenario stress tests, back up/business continuity plans, business process reviews, and insurance. Proximus' operational risk measurement and management relies on the AMA (Advanced Measurement Approach) methodology. A dedicated "as-if" adverse scenario risk register has been developed in order to make stress tests relevant.

Business Continuity

The most prominent examples of operational risk factors are stipulated below:

Resilience & business continuity
Legacy network infrastructure
Security ( confidentiality, integrity, availability)
Sourcing & supply chain reliability
Data protection & privacy

For each critical business function, business continuity plans have been developed in order to :

identify and prevent risks where possible
prepare for risks that we can't control
respond and recover if an incident or crisis occurs

Per critical product & services, relevant Maximum Tolerable Period of Disruption (MTPOD) have been defined in line with the sales business unit's requirements.

In case of a major adverse event, Proximus has put in place and is continuously testing a crisis management process called PERT (Proximus Emergency Response Team).

Cyber Security

Legacy network infrastructure

The systems need to talk to each other over a connected information highway that can deliver information at high speed and without distortion. There is no doubt that in the coming years there will be a continuing demand for ever-increasing quantities of data at ever-increasing speeds. There is a widely held belief that the increased use of wireless and fiber optic technology will render copper wire obsolete.

The problems with services over copper are speed, reliability and value for money. All too often, legacy systems are costly to operate and maintain. Copper has been around for decades and has far out-lived any guarantee period. Outages on the lines will become more frequent.

In the last 2 years, Proximus has accelerated the roll-out of Fiber on its fixed network thanks to its 'Fiber for Belgium' € 3 Bio investment plan over 10 years. The initiatives from utility players, such as Fluvius, to invest in a parallel Fiber network, risk to have an impact on the business case of the Proximus Fiber investments.

Sourcing & Supply chain

Proximus depends on key suppliers and vendors to provide equipment needed to operate its business.

Supply chain risk management (SCRM) is defined as "the implementation of strategies to manage both every day and exceptional risks along the supply chain, based on continuous risk assessment with the objective of reducing vulnerability and ensuring continuity".

The following actions have been taken into account in order to keep an acceptable supply chain risk level:

Data protection & privacy

Top critical suppliers or their subsuppliers under constant watch
Stock management
Consideration of alternative sourcing arrangements
Business interruption / contingency plans
Risk assessments and Audits
Awareness campaigns and training programs
Strict follow up of critical suppliers' contractual liability & Service level Agreement (SLA) clauses
Data protection & privacy

Risk Management & Compliance Committee

A disciplined approach to risk is key in a fastmoving technological and competitive environment, in order to ensure that we only accept risk for which Proximus is adequately compensated (risk/return optimisation).

Internal Audit

1. Therefore, internal audit objectives using the COSO and other professional standards are to ensure: 1. The effectiveness & adequacy of internal controls.
1. The operational effectiveness (doing it right) and/or efficiency (doing it well).
1. The compliance with laws, regulations and policies.
1. The reliability & the accuracy of the information provided.

Financial reporting risks

New transactions and evolving accounting standards

identified and the impact on the Proximus financial reporting is proactively analyzed.

Changes in tax law and regulations

Financial statement closing process

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

Proximus launched its #shifttodigital strategy, accelerating its transformation to remain relevant on the Belgian market and to secure the company's future. Proximus intends to change its way of working, become more flexible and lean, renew its employees competencies in the digital domain and adjust its cost structure to better conform to market standards. On 10 January 2019, Proximus announced its intention to reduce further the number of employees by approximately 1900 people in the next 3 years in line with the planned workload reduction and at the same time to recruit

1250 new employees with specific skills. Immediately after this date, the information and consultation phase with Unions started, as part of the social dialogue.

On 27th February 2019, Proximus entered into an agreement with an institutional investor to issue a new EUR 100 million private placement note starting 8th March 2019 and maturing in September 2031 with an annual fixed coupon of 1.75%.

Circumstances that can significantly influence the development of Proximus are listed in caption 'Most important risks and uncertainties'.

Enabling a better digital life

We enable a better digital life by building a futureproof infrastructure with high-quality networks and digital platforms, as well as through innovative solutions and services that address societal challenges. We believe in open innovation and cocreate in digital ecosystems with the academic world,start-ups and scale-ups.

Future-proof digital infrastructure

Our networks enable people and companies to access the opportunities of the digital world. As the main national player in telecom, our engagement is to ensure that every citizen has access to highquality fixed and mobile connectivity, no matter where they live or where they go.

KPI	Result 2018	Result 2017
4G indoor coverage (1)	99.5% (2)	98.1%
4G outdoor coverage (3)	99.9%(2)	99.8%
Fixed Internet: 30Mbps coverage	92% (4)	86%
Combined Average VDSL & ADSL speed	72.6 Mbps	68 Mbps
Vectoring coverage in Belgium	88.6%	83%

(1) The indoor coverage refers to the coverage of 4G inside of buildings.

(2) The 2018 figure is based on a Q4 measurement campaign performed by an external agency Commsquare

(from 07/11 to 28/11/2018 in the main cities and on the main roads). (3) The outdoor coverage refers to the coverage of 4G outside of buildings15/02/2019

(4) This includes copper & fiber homes passed15/02/2019

Fixed network

In 2018, we were rolling out fiber in nine Belgian cities (an increase of two compared with the end of 2017), bringing our fiber roll out to cruising speed thanks to our industrialization efforts.

a strong increase. By the end of 2018, 48% of companies (compared to 17% in 2017) located in industrial zones could benefit from fiber.

In 2019, we have planned to double our fiber footprint and start deployment in seven new cities. And we will finalize the deployment in industrial zonings as we reach our targeted coverage. In parallel to the deployment, we will especially focus on digitizing our activities and optimizing the experience we deliver our customers, from the first contact they have with Fiber up to the after-sales service. Our ambition is to increase the level of proactivity in our servicing approach in order to further delight our customers.

While we believe Fiber to be the network of the future, Proximus continues to maintain and

upgrade the copper infrastructure to ensure a high-quality customer experience for all.

Mobile network

with a stable high-speed network both inside and outside their home.

In 2019, we plan to further explore 5G capabilities and continue extending 4,5G to offer an excellent experience to our customers.

White zones

Digital innovation

Open innovation and supporting new ecosystems are key to unleashing the digital future. We partner with universities, start-ups, scale-ups and other key players that drive innovation in Belgium, working amongst others on security and IoT solutions such as smart energy, smart mobility, smart logistics and smart health. Together, we not only create more impact and address societal and environmental challenges, we also open up a new

world of digital opportunities that improve the lives and work of people.

Academic partnerships

If we want to succeed in tomorrow's digital economy, we need open innovation. That's why we collaborate with major universities and their talent hubs.

Proximus has worked with universities for many years and this collaboration has gradually intensified.

Proximus supports academic research by providing relevant business input to ensure that research programs stay closely aligned to business demand. In addition, we can provide access to resources and infrastructure. We have research projects at ULB/UCL, KUL, and VUB where Proximus participates in the Advisory Boards that steer these research projects. Proximus also actively participates in funded RD&I projects with universities, such as with KUL and ULB.

Furthermore, we envisage cooperating even more closely on aligning training courses with the fastevolving labor market and bringing the corporate and university worlds closer together.

We also signed a strategic partnership with IMEC in 2018 on societal challenges such as Smart Cities and Artificial Intelligence.

In 2019, we want to rethink our strategic approach and structure and refine our collaboration with the education and academic ecosystem.

Support start-up and scale-up communities

Belgium has a huge network of young companies, start-ups and scale-ups. We want to be a motor of innovation and a catalyst of new Belgian companies.

InPost

Through our IMEC partnership, the iStart start-up portfolio has been scanned to map Proximus' business challenges. Selected candidates will pitch their solutions in front of the Proximus team.

Co.Station

We supported various events around IoT, GDPR, Blockchain, and social innovation, all aimed at a

FinTech

Belgium has an important ecosystem of FinTech start-ups and companies that we are proud to support.

In these "calls-for-innovation", start-ups compete for selection to further co-create with Proximus. In 2018, we focused on the speech-to-text challenges of dialectal languages.

By sharing our know-how, resources and infrastructure in collaborative partnerships, we can increase innovation and grow our digital economy.

Going forward, we intend to involve and join forces with Belgian corporates from other industries in our calls-for-innovation.

wide entrepreneurial community in Brussels, Ghent, and Charleroi.

We have also supported +90 start-ups and scaleups representing +500 workers as Co.Station residents.

In 2019 we will include our customers in the Co.Station community.

We invested in early-stage FinTech start-up in Luxembourg and also envision expanding our FinTech activities via our affiliate Telindus.

Microsoft Innovation Center

In 2017, Proximus joined the Microsoft Innovation Center (MIC) Belgium, a public-private partnership with the Walloon Region and Microsoft, as a structural partner.

2019 will be a pivotal year for the Microsoft Innovation Center with the launch of new initiatives, bringing more cutting-edge technologies such as AI and Machine Learning to enterprises.

Local innovation support

MIC, B-Hive and Co.Station are our three main innovation partnerships, but we also support ad hoc initiatives to foster agility and speed in innovation.

In the future, we will continue advancing on the road of open innovation.

Innovations addressing societal challenges

Think of a digital future in which Belgium leads the way!

Some examples :

Smart Industry

To become more efficient, Bombardier had to optimize the movement of materials between sites across Europe. This is now possible thanks to a smart solution connecting racks in each location.

Smart Utilities

To enable new digitally-driven services, Fluvius will connect more than 800,000 gas and electricity meters in Flanders in the coming five years using our IoT networks.

Smart Retail

Using Proximus Analytics, shopping malls collect data on attendance and location attractiveness.

Smart Logistics

Some of our logistics sites are managed in collaboration with H.Essers. On those sites, we need real-time positioning (within a precision range of 1m) of our trailers to optimize yard management

Smart Buildings

We collaborated with IPARC (International Platform for Art Research & Conservation, SME of the year in 2018) on the integration of new technologies in art conservation. The IoT solution processes. By connecting each trailer to the parking spot, H.Essers managed to increase visibility, eliminate useless search time and optimize onsite routing.

we developed, Smart Care, monitors the environmental conditions of artworks.

In 2018, we also started developing a solution stack to support smart venues to offer a more complete customer experience. A first example is the renovation of the entire Tour & Taxis site in Brussels, with event halls, offices, living units, shopping zones, and more, integrated into one customer journey.

Smart Energy

check the evolution and compare consumption patterns with other schools.

With GoodPlanet, we have set goals to reach and install our sensors in more than 400 schools in 2019.

Smart Cities

co-design their city, in collaboration with city administrations. We are already doing this in Louvain-La-Neuve at the Living Live Lab and in Antwerp with IMEC in the City of Things project. These initiatives allow local citizens to connect with city officials to voice their needs, address traffic congestion, security and waste management.

Smart mobility

inter-modal route planner for the city of Antwerp to encourage a modal shift by helping commuters optimize their journeys. Finally, Be-Mobile grew its heavy vehicle road user charging or tolling business and is helping policy makers to analyze a Belgian road user charging solution for passenger cars, which is believed to be a crucial step towards effective mobility management and achieving a better balance between mobility capacity and demand.

Digital trust

Today's digital world offers many opportunities but also new types of threat. Trust is a prerequisite for people and companie to embrace the many opportunities of digital and enable the digital future. As a leading digital company, we are actively involved in driving digital awareness initiatives.

KPI	Result 2018	Result 2017
International certifications related to privacy and cybersecurity	6	6

Cyber safe

We place cybersecurity at the core of our business: we make important investments to secure our infrastructure and protect it against attacks. We also offer our clients solutions to protect

themselves and continuously train our employees, so they are up-to-date with the latest security practices.

Within our company

We aim to be the frontrunner in how we protect and transform our company in the face of today's and tomorrow's cyber challenges. We see cybersecurity as an enabler of digital transformation. Over the last four years, Proximus has invested €43 million in our Corporate Cyber Security Program with the aim of making our company more cyber resilient and to offer best-inclass secured services and networks to our customers.

Our corporate Cyber Security Incident Response Team (CSIRT¹ ) continuously monitors security alerts and coordinates the response to cyber threats. In 2018, our CSIRT handled 2,087 incidents (versus 2,204 in 2017). No incident had a major business impact. Proximus CSIRT is internationally recognized as the only certified team in Belgium through the Trusted Introducer and is part of the European platform ETIS and global community FIRST. In 2017, Proximus successfully overcame the global cyberattacks

¹ The Proximus CSIRT is the central incident response team of the Proximus Group. Its mission is to provide information and assistance to reduce the risks of cybersecurity incidents as well as respond effectively to such incidents when they occur.

WannaCry and NotPetya thanks to the prevention measures and the fast detection and response.

For our customers

We offer our customers best-in-class security solutions and expertise. Our partnership with Norton offers residential customers a multi-device security solution at a reduced price. We supply a vast range of security services to companies: analysis and diagnostics, monitoring and surveillance, reporting and interventions.

In addition, we offer solutions to protect companies' data, networks and servers.

For everyone

regulations. We also successfully launched this solution internally and with key enterprise customers in 2018.

and attacks on a national and European level via the ETIS platform.

Cybersecurity education

For Belgium to become a digital leader, citizens need to have trust in digital. We want people to enjoy the online world and know how to behave

Educating our employees

Keeping the cyber environment safe starts from the inside, which is why we continuously educate our employees on responsible behavior to protect company information and customer data.

Educating the business world & society

We also educate and raise awareness among companies, organizations and the general public.

For our customers

We organize the biannual Proximus Cyber Security Convention, where we bring customers up to speed on the latest trends. Our Proximus Corporate University (PCU) also provided security education programs for customers in 2018, including Network Security Explored, Hacking and Intrusion Detection, HEXID Assault, Wireshark, DaVinsi labs, Blockchain and Security Awareness, reaching 75 companies (47 from the public sector).

safely when using it. We help them by sharing our security knowledge and educating them on the value and how-to of cybersecurity.

For Belgian citizens

Ensuring data privacy

We have also put in place infrastructure that spots data breaches to keep our network secure. Because we want to make sure data stays safe, always.

To ensure all our employees are aware of EU and Belgian privacy legislation, we organized dedicated GDPR training, reaching 93% of our workforce in 2018.

A majority of the members of the Audit & Compliance Committee have extensive expertise in accounting and audit. The Chairman of the Audit & Compliance Committee, Mr. Guido J.M. Demuynck, holds a degree in Applied Economics. Mrs. Catherine Vandenborre holds a degree in Business Economics as well as degrees in Tax and Financial Risk Management. Mr. Paul Van de Perre holds a Master's degree in Economics and several postgraduate degrees. The Chairman and the majority of the members exercised several board or executive mandates in large Belgian or international companies.

Proximus governance model

The key features of Proximus' governance model are :

a Board of Directors, which defines Proximus' general policy & strategy and supervises operational management
an Audit & Compliance Committee, a Nomination & Remuneration Committee, and a Transformation & Innovation Committee (formerly Strategic & Business Development Committee) created by the Board within its structure
a Chief Executive Officer (CEO) who takes primary responsibility for operational management including, but not limited to, day-to-day management;
an Executive Committee which assists the CEO in the exercise of her duties

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

We not only follow the law but want to ensure every one of our collaborators is aware of the behaviours to follow and avoid. Therefore, Proximus adopted its new Code of Conduct in 2016, applicable to all employees. Until now, 93% of Proximus employees followed a mandatory training on the application of the principles of the Code of Conduct. On top of this, we have various internal policies to make sure our employees conduct their business ethically.

The 2009 Belgian Corporate Governance Code states that the term of a board mandate should not exceed maximum four years. However, the mandates of the Directors who were appointed by the Belgian State in the past expire after six years as prescribed by the former article 18, paragraph 3, of the 1991 Law. As from 2016, all Directors are appointed for a term of four years.

The 2009 Belgian Corporate Governance Code states that the Board of Directors appoints its Chairman. The current Chairman was appointed by the Belgian State by Royal Decree deliberated in the Council of Ministers in accordance with the former article 18, paragraph 5, of the 1991 Law. The next Chairman will be appointed by the Board of Directors amongst its members.

Most important characteristics of the internal control and riskmanagement systems

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

Proximus' 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. Proximus 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, Proximus organizes a continuous review and follow-up of all the components of its internal controls and risk management systems to ensure they remain adequate.

Proximus 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 Belgian Generally Accepted Accounting Principles (BGAAP). Therefore,

Control environment

Organization of internal control

Ethics

The Code "A Socially Responsible Company", which is available on www.proximus.com, sets out

Policies and procedures

Proximus has organized its internal control and risk management systems over its financial reporting in order to ensure this objective is met.

Proximus statutory and the consolidated financial statements, 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) Proximus compliance with legal and regulatory requirements, (vii) the compliance within the organization with the Proximus' Code of Conduct and the Dealing Code.

The A&CC meets at least once every quarter.

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, Proximus in general, and the Finance department in particular, has a tradition of a high importance to compliance and a strict adherence to a timely and qualitative reporting.

Roles & responsibilities

The team of the Corporate Accounting department assumes this accounting responsibility for the mother company Proximus 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, postemployment 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 Proximus Group is done 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.

Skills & expertise

For financial reporting purposes, a specific training 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 training session on Proximus new business products & services.

Risk analysis

Major risks and uncertainties are reported in the caption 'Most important risks and uncertainties.'

Risk mitigating factors and control measures

Mitigating factors and control measures are reported in the caption 'Most important risks and uncertainties'.

Information and communication

Financial reporting IT systems

Effective Internal communication

Most of the accounting records are kept under IFRS as well as local GAAP. In general, financial information delivered to management and used for budgeting, forecasting and controlling activities

Reporting and validation of the financial results

is established under IFRS. A common financial language used throughout the organization positively contributes to an effective and efficient communication.

historical figures, as well as budget-actual and forecast-actual analysis. Validation requires (absences of) variances to be analyzed and satisfactorily explained.

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

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, Proximus' 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.
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 Proximus 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 Proximus 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.

Composition and functioning of the governing bodies and their committees

Board of Directors

Since the modified 1991 Law and the changes to the bylaws in April 2016, the following principles will apply:

All Directors are appointed by the Shareholders' Meeting with 50% + one vote, upon proposal by the Board from those candidates withheld by the Nomination & Remuneration Committee.
Any shareholder holding at least 25% has the right to propose a number of Directors proportionate to its shareholding.
All Directors other than the CEO and those appointed through the aforementioned nomination right are independent. In any case there must be three independent Directors according to the criteria of article 526ter of the Belgian Company Code and of the Belgian Corporate Governance Code.
The Board is composed of maximum fourteen members.
Directors are appointed for a maximum term of four years. Mandates are renewable but there is a maximum term of in total twelve years for independent Directors.

Proximus is proud of a substantial female representation on its Board of Directors. This composition and the complementary expertise and skills of all Directors create a dynamic which benefits the good management of the company.

Composition of the Board of Directors :

On 18 April 2018 Mrs. Agnès Touraine and Mrs. Catherine Vandenborre were reappointed as independent directors for a new term of four years.

Members of the Board of Directors appointed by the Belgian State under the previous version of the 1991 Law:

Name	Age	Position	Term
Stefaan De Clerck	67	Chairman	2013 – 2019
Dominique Leroy	54	Chief Executive Officer	2014 – 2020
Karel De Gucht	65	Director	2015 – 2021
Martine Durez	68	Director	1994 – 2019
Laurent Levaux	63	Director	2013 - 2019
Isabelle Santens	59	Director	2013 - 2019
Paul Van de Perre	66	Director	1994 - 2019

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

Name	Age	Position	Term
Pierre Demuelenaere	60	Independent director	2011 - 2021
Guido J.M. Demuynck	68	Independent director	2007 - 2019
Martin De Prycker	64	Independent director	2015 - 2019

Tanuja Randery	52	Independent director	2016 - 2020
Agnès Touraine	64	Independent director	2014 - 2022

Catherine Vandenborre	48	Independent director	2014 - 2022
Luc Van den hove	59	Independent director	2016 - 2020

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 holds five regularly scheduled meetings annually. The Board of Directors also yearly discusses and evaluates the strategic longterm plan in an extra meeting. 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 stipulates, 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. Files on important decisions are prepared by standing or ad hoc Board

Committees with significant representation of nonexecutive, independent directors within the meaning of Article 526ter of the Belgian Company Code.

In February 2014, the Board decided to give a broader interpretation to the notion "conflict of interest". Besides the legal clauses applicable to Proximus, the extra-legal obligations included in the Charter of the Board of directors stipulate that directors commit to avoid any appearance of conflict of interest by, amongst other, but not limitative:

• Not exercising any position, mission or activity in a private or public-sector body that, as important part of its business, offers for profit telecommunications services or goods in Belgium or in any country in which Proximus realizes at least 5 % of its turnover

• Not exercising any position, mission or activity on behalf of a direct or indirect competitor of Proximus or of one of its affiliates

Committees of the Board of Directors

Proximus has an Audit & Compliance Committee, a Nomination & Remuneration Committee and a Transformation & Innovation Committee (formerly Strategic & Business Development Committee).

Messrs. Guido remuneration .M. Demuynck (Chairman), Stefaan De Clerck, Pierre Demuelenaere, Paul Van de Perre and Mrs. Catherine Vandenborre are the members of the Audit & Compliance Committee.

Related Party Transactions

• Not to assist, remunerated or not, any party in its contract negotiations with or procedures against Proximus or one of its affiliates

Messrs. Stefaan De Clerck (Chairman), Pierre Demuelenaere, Guido J.M. Demuynck, Martin De Prycker and Mrs. Martine Durez are the members of the Nomination & Remuneration Committee.

Messrs. Stefaan De Clerck (Chairman), Karel De Gucht, Martin De Prycker, Luc Van den hove, Mrs. Tanuja Randery and Mrs. Agnès Touraine, are the members of the Transformation & Innovation Committee.

Proximus has contractual relationships and provides also telephony, Internet, digital and/or ICT services to many of the companies in which Board members have an executive or nonexecutive mandate. These transactions take place in the ordinary course of business and at arm's length.

Evaluation of the Board

At the end of 2016, the Board of Directors started an external Board evaluation together with Guberna. The Board members were invited to answer an extensive questionnaire, followed by an interview between Guberna and each individual Board member. The Board members were asked their opinion on corporate governance at Proximus, the functioning of the Board and of the committees. Guberna concluded in 2017 that the assessment was overall positive and identified as main strengths a well-balanced composition of the Board, the high quality of information flow to the Board, a Board culture stimulating the decisionmaking in the interest of the company and an excellent leadership by the Board's chair.

As a result of the evaluation, the Board reflected on the role of the 'Strategic & Business Development Committee' and decided to change this as of 2018 into a 'Transformation & Innovation Committee', which is a permanent committee of the Board, discussing those selected files of diverse nature that need preparatory reflection and need to mature before being brought to the Board for decision. This Committee will be convened at the request of the Chairman or the Board whenever required by the interest of the company.

Executive Committee

The members of the Proximus Executive Committee, other than Mrs. Dominique Leroy, the CEO, are Mrs. Sandrine Dufour, Messrs. Guillaume Boutin, Dirk Lybaert, Geert Standaert, Renaud Tilmans, Jan Van Acoleyen and Bart Van Den Meersche.

delegation was published in the appendices to the Belgian Official gazette on 23 May 2018.

The Board of Directors will examine in 2019 how to prepare its renewed composition taking into account the new legal framework.

Proximus has appointed members of the Executive Committee and of its staff to exercise mandates in companies, groups and organisms in which it has participations and is involved. Such mandates are not remunerated. A list of the persons concerned is given in section 'Mandates exercised in companies in which Proximus participates' of this report.

In accordance with article 3 of the Law of 3 September 2017 on the disclosure of non-financial and diversity information by certain large companies and groups, Proximus' diversity policy, its purpose and results are described below.

The statement on other non-financial information is included in a separate report which is annexed to this Management Report

Strategic orientation about diversity & inclusion

Therefore, Proximus has a Charter on diversity and equal rights, which applies to all employees of the Proximus Group.

• Treating all applicants and employees equally, based only on relevant competencies and objective criteria.

Creating an open and welcoming work environment that encourages contributions from people of all backgrounds and experiences.
Promoting a mind-set of respect and openness throughout all levels of the organisation and treating all employees fairly and equally.
Demonstrating behaviour free from any form of racism, intolerance, discrimination, harassment or other attitude that could negatively affect the dignity of men and women at the workplace.
Incorporating diversity in all aspects of the way we do business without any form of intolerance.

Within Proximus specific teams are in charge of monitoring the compliance with the Charter and of taking the correct measures in case of noncompliance.

Diversity & inclusion in our leadership and employees communities

While taking care of putting in place well-balanced and talented mixed teams, Proximus reinforces its capacity for innovation and fosters its learning culture, the satisfaction of its employees and their creativity towards the future challenges of a digital world.

With regards to gender diversity, this approach is also reflected in the female representation at the different levels of our company:

43% of the Board of Directors
25% of the Executive Committee
21% of the members of the Leadership Team
31% of all employees' population

Proximus Group also has a very diverse workforce in terms of culture with 58 nationalities.

Creation of a culture that allows to reconcile activities during the different life phases

Proximus wants to create conditions to allow its personnel to reconcile the different aspects of their professional and private life during their different life phases by offering opportunities for internal job change and development opportunities, homeworking, part-time schedules, home child care, … These measures allow our our employees to work in a safe, inspiring and inclusive workplace with equal opportunities for everyone, allowing

them to combine their personal and professional lives in order to be optimally present and feel supported, motivated and engaged at work.

Diversity as part of Proximus code of conduct

directly be imposed to our business partners, we seek to always work with partners respecting the same ethical standards.

Proximus expects its employees to respect the Code of Conduct and use it as a reference in their day-to-day way of working.

Human rights

Working conditions

Proximus recognizes and respects the right to freedom of association and the right to collective bargaining within national laws and regulations.

Our Code of Conduct, values and behaviour are inspired by fundamental principles such as those of the Universal Declaration of Human Rights, the European Convention on Human Rights and the United Nations Convention on the Rights of the Child.

We will not contract child labour or any form of forced or compulsory labour as defined by ILO fundamental conventions. Moreover, we are opposed to discriminatory practices and do our utmost to promote equality, diversity and inclusion in all employment practices.

Remuneration of the members of the Board of Directors

Directors' remuneration policy

The CEO, Mrs. Dominique Leroy, who is the only executive Director, is not remunerated for the exercise of her mandate as member of the Board of Directors and of the Committees, nor for any other mandate within the Group subsidiaries Boards of Director.

The remuneration policy of the non-executive Directors foresees an annual fixed compensation of EUR 50,000 for the Chairman of the Board of Directors and of EUR 25,000 for the other members of the Board of Directors. All members of the Board of Directors have the right to an attendance fee of EUR 5,000 per attended meeting of the Board of Directors. This fee is doubled for the Chairman. Attendance fees of EUR 2,500 are foreseen for each member of an advisory committee of the Board of Directors. For the Chairman of the respective advisory committee, these attendance fees are doubled.

These amounts, defined in 2004, have remained unchanged since then and are not subject to indexation.

The members also receive EUR 2,000 per year for communication costs. For the Chairman of the Board of Directors, the communication costs are also doubled.

These remunerations are granted on an annual basis pro rata temporis of the duration of the mandate during the year in question and are paid semi-annually.

Overview of Directors' Remuneration

The total amount of the remunerations granted in 2018 to all the members of the Board of Directors, Chairman included, is amounting to gross EUR 1,000,499.

The individual Directors' gross amounts paid out to the Directors in 2018, based on their activities and attendance to Board and Committee meetings, is presented in the following table.

These amounts have been granted based on seven Board meetings, one being an extraordinary and remunerated Board meeting, and eleven Committee meetings.

Activities report and attendance to Board and Committee meetings

Name	Board (total 7*)	ACC (total 5)	NRC (total 4)	SBDC (total 2)	Total yearly gross remuneration**
Stefaan De Clerck	7/7	5/5	4/4	2/2	166,499 €
Dominique Leroy	7/7			2/2	0 €
Karel De Gucht	7/7			2/2	64,500 €
Pierre Demuelenaere	7/7	5/5	4/4		84,500 €
Guido Demuynck	7/7	5/5	4/4		97,000 €
Martin De Prycker	7/7		4/4	2/2	74,500 €
Martine Durez	7/7		4/4		72,000 €
Laurent Levaux	4/7				47,000 €
Tanuja Randery	7/7			2/2	64,500 €
Isabelle Santens	7/7				62,000 €
Agnès Touraine	7/7			2/2	64,500 €
Catherine Vandenborre	6/7	5/5			69,500 €
Luc Van den hove	6/7			2/2	59,500 €
Paul Van de Perre	7/7	5/5			74,500 €

ACC: Audit & Compliance Committee; NRC: Nomination & Remuneration Committee; TIC: Transformation & Innovation Committee (previously called Strategic & Business Development Committee)

* Extraordinary remunerated Board meeting on 6/6/2018

** TIC meeting of 6/6/2018 not remunerated

*** Total remuneration

- gross amounts on a yearly basis

- for all members of the Board, this amount includes the telecom advantage

- for the Chairman of the Board, this amount also includes the benefit in kind related to the private use of a company car:

Global reward policy and principles

Because of our history as a public-service company, there are some differences in our dynamics and structure, compared to the private sector. This has a considerable influence on how our remuneration policy has evolved. Our Human Resources department has 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 harmonized policies between civil servants and contractual employees.

To accomplish our company goals within a highly and fast changing competitive global telecom market, we need qualified, talented and engaged employees working in close cooperation in a high performance culture. To foster this culture, it is critical to have a market attractive Global Rewards Program for both the Executive Committee members and all other members of the Top Management, as well as for the entire workforce.

The main objectives of our Global Rewards Program are:

To drive performance that generates longterm profitable growth
To stimulate empowerment that reinforces the business strategy and desired culture
To offer a fair and equitable remuneration to our staff (both to civil servants and to the contractual employees), and competitive on the market
To recognize and reward high performance and the promotion of the company values and culture
To link pay to both individual performance and the overall success of our company
To enable our company 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

Our company also maintains -and modernisespowerful public sector instruments, such as worklife benefits (e.g. sick child care, hospitalisation,…) and social assistance. It is the responsibility of our 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, we have won several awards for the continuous efforts of our company to create a balanced working environment for its staff.

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

Executive Remuneration

Procedure for drafting of the remuneration policy and defining of the remuneration level of the members of the Executive Committee

level of performance and promote the company values.

Like the rest of the top management of our company, the members of the Executive Committee benefit from dedicated reward programs which focus on the principles of our strategy to consistently reward high performance of individuals and of the company. A significant part of their total remuneration is variable, based on stringent quantitative and qualitative performance criteria, and is driven by our company's objectives in terms of performance and growth. This way, our company wants to encourage its executives to deliver a long-term, sustainable profitable growth, in line with our Group's strategy and the expectations of our shareholders.

The market positioning of these remuneration packages is reviewed on a regular basis by benchmarking the remuneration of the members of our Executive Committee against both the BEL 20 companies (financial sector excluded) and a set of peer companies in the European Telecommunications and ICT sector. This analysis aims to ensure that the global remuneration of each member of the Executive Committee remains adequate, fair and in line with market practices and consistent with the evolution of both his/her responsibilities and the market situation of the Proximus Group in terms of size, scope of activities and financial results.

To distinguish ourselves from other employers, our company seeks to excel in the total package offered, by providing not only a cash remuneration but also numerous other benefits.

All the amounts mentioned in this report are gross amounts before employer's social contribution.

Executive Committee's remuneration structure

The remuneration of the members of the Executive Committee is built upon the following components :

Basic remuneration
Short-term variable remuneration
Long-term variable remuneration
Group insurance premiums and other benefits

Relative importance of various components of the on-target remuneration before employer's social contribution (end 2018)

As mentioned later in this report, the long-term variable remuneration for the Executive Committee members others than the Chief Executive Officer is allocated through a long-term incentives plan consisting of a long-term Performance Value Plan which has been adopted by our company in 2013. The design of this Performance Value Plan has been reviewed. As from the 2019 grant, in order to better reflect the Group's achievements, additional company driven performance criteria will be added to the Total Shareholder Return (see under "long-term variable remuneration"), which is the only performance criterion of the current plan. These additional performance criteria will consist of the Group free cash flow and the reputation index.

No other substantial change of the remuneration policy is expected for the coming two years.

Basic remuneration

Year-to-year variations in the amounts are mainly resulting from the 2% index of October 2018 (former one was in July) and from the fact that there has been no Chief Consumer Market Officer during six months in 2017.

Short-term variable remuneration

Short-term variable remuneration components

Our short-term variable remuneration system has been designed to support the strategy and the values of our Group and to enhance a performance-based management culture.

Our company indeed considers close collaboration of all employees to be imperative, all efforts need to be focused and aligned towards Group success.

Basic remuneration in kEUR before employer social contribution

* It should be noted that in 2017 there was no active Chief Consumer Market Officer for 6 months, while in 2018 Guillaume Boutin acted for a full year.

Group performance - Key Performance Indicators (KPIs)

These performance indicators include financial indicators as well as non-financial indicators at Group level.

The performance indicators at Group level are as follows:

the business cash flow
the number of new customers in voice, fix, internet and TV businesses, as well as churn reduction
the Simplification and the Customer Experience, measuring our progresses versus our ambition in these domains

• the "employee engagement index", measuring on a yearly basis our employees' engagement, agility and strategic alignment

The achievement of these KPI's are regularly followed-up and communicated. Operational cash flows are based on audited reported financial figures that are adjusted to obtain 'underlying' financial figures after exclusion of 'incidentals'. Non-financial indicators are measured by internal and external agencies specialized in market and customer intelligence, of which the processes are audited on a regular basis.

The result at Group level is based on a predefined formula taking these key performance indicators into consideration according to a predefined weight per indicator.

Individual performance

Short-term variable remuneration allocation

The Chief Executive Officer receives a target shortterm variable remuneration amounting to gross 150.000 EUR. This amount is subject to the index applicable to Proximus. For the other members of the Executive Committee, the target short-term variable remuneration is expressed in a percentage of the basic remuneration.

As explained above, the short term variable remuneration is allocated by the Board of Directors upon proposal of the Nomination & Remuneration Committee. The amount effectively allocated to the Chief Executive Officer and to the other members of the Executive Committee varies according to the Group results and to the evaluation of the individual performances by the Board of Directors.

In case of objectives realisation at 100%, the Chief Executive Officer or the other member of the Executive Committee gets 100% of his short-term variable remuneration target amount.

In case of sustained excellent performance at Group and individual level, the short-term variable remuneration can go above the 100% of the target amount, with a cap at 200%, according to a linear allocation curve. Conversely, this percentage can drop down to 0% in case of severe underachievement.

In 2018, a deferred short-term variable remuneration, for the performance indicators related to the 2015 and 2016 years has been allocated to the CEO on top of a direct short-term variable remuneration, for the performance indicators related to 2017.

The total short-term variable remuneration effectively allocated in 2018 to the other members of the Executive Committee (2017 performance year) amounts to gross EUR 1,110,745.

Short-term variable remuneration in kEUR before employer social contribution.

Chief Executive Officer :
- Impact of the index of July 2017 and of the variations in the Group KPI results over the last 3 performance years.
Members of the Executive Committee others than the CEO:
- Impact of the index of July 2017 and of the KPI results which slightly increased for performance year 2017 compared to performance year 2016.

Long-term variable remuneration

The Chief Executive Officer is not eligible to longterm variable remuneration.

The other members of the Executive Committee receive a long-term variable remuneration expressed as a percentage of the annual basic remuneration. This percentage is the same as the percentage of their short-term variable remuneration. The long-term variable remuneration is allocated to the other members of the Executive Committee by the Board of Directors upon recommendations of the Nomination &

Long-term Performance Value Plan

Our Performance Value Plan is based on a balance between the individual and the Group performances.

Remuneration Committee.

Various factors are considered for the decisions taken by the Board of Directors in terms of effective allocation, such as the retention of talents, the individual performance evaluations or/and the Group results. This allocation is made through long term incentives plan, currently consisting of a long-term Performance Value Plan which has been adopted by our company since 2013.

Peer companies currently included in the basket

• BT

Deutsche Telekom
OTE
KPN KON
Orange
Swisscom
Telecom Italia

The design of this Performance Value Plan has been reviewed further to a benchmark analysis, aimed at a better alignment on market practices and more particularly on the practices of the other European telecommunications companies. As from the 2019 grant, in order to better reflect the Group's achievements, additional company driven performance criteria will be added to the Total Shareholder Return (see below), which is the only performance criterion of the current plan. These additional performance criteria will consist of the

• Telefonica

Telenor
Telia Company

Group free cash flow and the reputation index.

The CEO, is not eligible to long-term variable remuneration. As a consequence, no long- term variable remuneration has been granted to her since her nomination. The total long-term variable remuneration effectively granted to the members of the Executive Committee others than the CEO was amounting to gross EUR 1,005,000 EUR in 2017 and to gross EUR 1,025,000 EUR in 2018.

Long-term variable remuneration in kEUR before employer social contribution

Former long-term variable remuneration plan: Stock Options Plan

Stock options have been granted to the senior executives from 2004 until 2012, members of the Executive Committee included.

Only one member of the Executive Committee still holds stock options, as shown in the table below. Neither the other members of the Executive Committee nor the CEO hold any more stock options.

In 2017 and 2018, the CEO and the other members of the Executive Committee did not receive any Proximus shares nor Proximus stock options.

Overview of the stock options still held by the members of the Executive Committee

		Bart VAN DEN MEERSCHE
STOCK OPTIONS
on January 1st, 2018		15.000
Exercised	Number	0
in 2018	Year of grant	-
Lapsed	Number
in 2018	Year of grant
Forfeited	Number
in 2018	Year of grant
on December 31, 2018		15,000

The CEO and the other members of the Executive Committee do not hold stock options anymore.

Group insurance premiums and other benefits

Group insurance premiums

Other benefits

Our Group wants to stimulate its executives by offering a portfolio of benefits and advantages that are competitive in the market place and consistent with the Group's culture. The CEO and the other members of the Executive Committee receive benefits on top of their remuneration, including They also benefit from other group insurances in line with market practices, such as life and invalidity insurances.

medical insurance, the use of a company car, welfare benefits and other benefits in kind. Comparative assessments are regularly made on these benefits which are adapted according to the common market practices.

General overview

It should be noted that the global remuneration has been affected by the index of October 2018, by the variations in terms of Group KPI results over the last performance year and by the nomination of a new Chief Consumer Market Officer mid 2017.

Remuneration overview of the members of the Executive Committee

REMUNERATION	CEO		Other members of the Executive Committee
	2017	2018	2017	2018
Basic remuneration	515,108 €	522,810 €	2,253,540 €	2,466,946 €*
Direct short-term variable remuneration	108,020 €	111,585 €	1,105,537 €	1,110,745 €
Deferred short-term variable remuneration	119,175 €	113,710 €	0 €	0 €
Long-Term variable remuneration	0 €	0 €	1,005,000 €	1,025,000 €
Retirement and post-employment benefits	181,243 €	180,003 €	516,193 €	494,319 €
Other benefits	13,357 €	12,438 €	108,433 €	124,172 €
SUBTOTAL (excl. employer's social contribution)	936,903 €	940,546 €	4,988,703 €	5,221,182 €
Termination benefits	0 €	0 €	0 €	0 €
TOTAL (excl. employer's social contribution)	936,903 €	940,546 €	4,988,703 €	5,221,182 €

* It should be noted that in 2017 there was no active Chief Consumer Market Officer for 6 months, while in 2018 Guillaume Boutin acted for a full year.

All these amounts are gross amounts before employer's social contribution.

Main provisions of the contractual relationships

Contractual agreement related to the mandate of the CEO

In January 2014, Mrs. Dominique Leroy has started her six-year mandate as CEO. She has a contract as a self-employed executive and is thus not subject to employers' social security charges.

The CEO is bound by a non-competition clause, prohibiting her for 12 months after leaving the Group from working for a competitor of our company in Belgium and in those countries where the Group generates at least 5% of its consolidated revenues. If activated by our company, she would receive an amount equal to one year's base salary as compensation. The CEO is also bound by exclusivity and confidentiality obligations and is liable for respecting the company codes and policies, like the Code of Conduct and the Dealing Code.

If the CEO mandate is revoked before the end of the six-year term, our company will pay her a contractual termination indemnity equal to one year's base salary.

Main contractual terms of the other Executive Committee members

All other members of the Executive Committee, who are all 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. If activated by our company, they would receive an amount equal to six months' base salary as compensation.

They have a contractual termination clause which foresees an indemnity of one year's remuneration.

A general policy on conflict of interest applies within the company. It prohibits the possession of financial interests that may affect personal judgment or professional tasks to the detriment of the Proximus Group.

In accordance with article 523 of the Belgian Company Code, Mrs. D. Leroy, CEO, declared during the Board of Directors of 1 March 2018 to have a conflict of interest in connection with her performance evaluation for 2017, item on the agenda of that Board meeting.

In accordance with article 523 of the Belgian Company Code, the minutes of this meeting are included below.

"In accordance with article 523 of the Belgian Companies Code, the CEO, Mrs D. Leroy, informs the Board and the external auditor having a conflict of interest in connection with her performance evaluation for 2017. The Board takes note of this conflict of interest and will include the necessary statement in the management report of Proximus relating to the year 2018. The CEO leaves the meeting.

Performance of the CEO in 2017

Upon the Committee's recommendation, the Board :

decides that the percentage of 200% reflects at best the individual performance of the CEO for the Performance Year 2017.
confirms its assessment for the performance 2015-2016 and 2014- 2016.
determines the total pay-out of the short term incentive in 2018 for the CEO as follows: 50% of the result 2017 + 25 % of the result in 2016 + 25 % of the result 2015, i.e., in total 225.294 EUR.

This closes the item on the conflict of interest".

Mandates exercised in companies in which Proximus participates

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

Participations	Members on 31/12/2018
PROXIMUS GROUP SERVICES S.A.	S. Dufour G. Kerremans L. Kervyn de Meerendré H. Wampers
PROXIMUS OPAL S.A.	O. Moumal D. Lybaert
BELGACOM INTERNATIONAL CARRIER SERVICES (BICS) S.A.	D. Leroy S. Dufour D. Lybaert M. Gatta J. Van Acoleyen D. Kurgan
CONNECTIMMO S.A.	J. Joos S. De Clerck S. Dufour P. Delcoigne
TANGO S.A.	S. Dufour G. Hoffmann R. Tilmans J. Van Acoleyen B. Van Den Meersche G. Boutin
TELINDUS S.A. (Luxembourg)	S. Dufour G. Hoffmann M. Lindemans A. Meyers B. Van Den Meersche B. Watteeuw J-F. Willame
TELINDUS-ISIT BV	G. Degezelle P. Van Der Perren B. Watteeuw
SKYNET iMOTION ACTIVITIES S.A.	P. Verdingh
BELGIAN MOBILE ID S.A.	B. Van Den Meersche

PXS RE S.A.	L. Kervyn de Meerendré O. Moumal A. Meyers
BE-MOBILE S.A.	D. Leroy S. Dufour B. Van Den Meersche
PROXIMUS SpearIT S.A.	S. Bovy G. Hoffmann B. Van Den Meersche P. Van Der Perren D. Van Eynde B. Watteeuw
PROXIMUS ICT-EXPERT COMMUNITY (PIEC) S.C.R.L.	K. De Man (permanent representative of Proximus SpearIT S.A.) S. Bovy (permament representative of Proximus Opal S.A.) B. Watteeuw (permanent representative of Proximus S.A.) D. Van Eynde (permanent representative of Telindus S.A. Luxembourg)
CLEARMEDIA S.A.	B. Watteeuw S. Bovy D. Van Eynde O. Malherbe S. Huijbrechts
SCARLET BELGIUM S.A.	G. Boutin J. Casteele O. Crucq C. Deltenre V. Licoppe S. Röckmann K. Vandeweyer
DAVINSI LABS S.A.	C. Crous B. Watteeuw P. Van Der Perren
Unbrace SPRL	S. Huijbrechts O. Malherbe B. Watteeuw
Codit Holding SPRL	B. Watteeuw G. Degezelle P. Van Der Perren
Tessares S.A.	M. Gatta C. Grandjean
Co-Station SA	V. Hebbelynck J. Sonck

The only exception to the non-remunerated mandates of management in companies in which Proximus participates, is hereby disclosed in accordance with the article 4 of the law of 3 September 2017 regarding a.o. the non-financial information. The remunerated board mandate is the following:

- 2018 Remuneration of Mrs. Françoise Roels as board member of Skynet iMotion Activities SA: 12,000 EUR.

Branches

The branch in the Grand Duchy of Luxembourg was established in 2002 and is as of 17 December 2015 responsible for the management of the Luxembourg subsidiaries and the implementation of the group strategy in Luxembourg.

The Strategic Committee established at the level of the branch manages the Luxembourg

Use of financial instruments

Proximus 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, Proximus selectively enters into derivatives to manage the related risk exposures.

Proximus manages its exposure to changes in interest rates and its overall cost of financing by occasionally using 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.

subsidiaries and supervises the implementation of the Fit-for Growth strategy in Luxembourg.

Following the successful merger between Tango SA and Telindus SA on 1 January 2019, the Strategic Committee, having fulfilled its objective, has been discontinued and the branch has been closed on the same date.

Proximus' 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, Proximus uses derivatives, mainly forward foreign exchange contracts and occasionally currency options.

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

Members of the Joint Auditors

The mandate of Deloitte Statutory Auditors SCRL, Gateway Building, Luchthaven Brussel Nationaal 1J, 1930 Zaventem, represented by Mr. Michel Denayer and of CDP Petit & Co SPRL represented by Mr. Damien Petit, for the statutory audit

mandate of Proximus S.A. will expire at the Annual General Meeting of 2022.

Mr. Jan Debucquoy has been appointed on 1 April 2015. The mandate of Mr. Pierre Rion has been renewed on 10 February 2016.

Auditor responsible for certifications of the consolidated accounts of Proximus Group

The mandate of Deloitte Statutory Auditors SCRL represented by Mr. Michel Denayer and Mr. Nico Houthaeve for the consolidated audit mandate of Proximus S.A. of public law will expire at the annual general meeting of 2019.

Stefaan De Clerck
Chairman of the Board of Directors

					9 EUR
NATE	ا Filed date	Nr	ם	U.	D.

CONSOLIDATED ACCOUNTS IN IFRS AND OTHER
DOCUMENTS TO BE FILED ACCORDING THE COMPANY
LAW.

	NAME OF THE CONSOLIDATING ENTERPRISE OR THE CONSORTIUM (1)(2) : PROXIMUS ��
	Legal form: Société anonyme de droit public
	Address: Boulevard de Roi Albert II
	Postal Code: 1030
Country: Belgium
	Register of Legal Persons (RLP) – Office of the commercial court at Brussels n° 587163 ………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Internetaddress (3): http://www.proximus.com

CONSOLIDATED ACCOUNTS IN MILLIONS OF EUR (4)	Company number BE 0202.239.951
Submitted for the General Meeting of	17/04/2019
Concerning the financial year covering the period of	01/01/2018 31/12/2018 அப
Preceding period from	01/01/2017 31/12/2017 au
The amounts of the preceding period are / are not identical to those which have been previously published (1)
Are enclosed with these consolidated accounts	- the audit report on the consolidated accounts
Name of the Belgian subsidiary which filed the annual accounts (Article 113, § 2,4°a of Company law) :	IN CASE THE CONSOLIDATED ACCOUNTS OF A FOREIGN COMPANY ARE FILED BY A BELGIAN SUBSIDIARY.
	Company number of the Belgian subsidiary which files the annual accounts :
	Total number of pages files Number of pages of the standard form not being filed as they don't apply :
	Signature Signature (name and position) (name and position) De Clerck Stefaan Leroy Dominique Chief Executive Officer Chairman of/the Board of Directors
(1) Delete as appropriate. (2) A consortium shall complete Statement IV (page CONSO 9) (3) Optional disclosure

-

Consolidated Balance Sheet 2
Consolidated income statement 3
Consolidated statement of other comprehensive income 4
Consolidated Cash Flow Statement5
Consolidated statement of changes in equity7
Notes to the consolidated financial statements8
Note 1. Corporate information8
Note 2. Significant accounting policies 9
Note 3. Goodwill 25
Note 4. Intangible assets with finite useful life 28
Note 5. Property, plant and equipment30
Note 6. Contract cost (IFRS 15)31
Note 7. Investments in subsidiaries, joint ventures and associates32
Note 8. Equity investments 40
Note 9. Income taxes40
Note 10. Assets and liabilities for pensions, other post-employment benefits and termination benefits43
Note 11. Other non-current assets 49
Note 12. Inventories 50
Note 13. Trade receivables and contract assets 50
Note 14. Other current assets 52
Note 15. Investments 52
Note 16. Cash and cash equivalents 52
Note 17. Equity 52
Note 18. Interest-bearing liabilities54
Note 19. Provisions57
Note 20. Other non-current payables 58
Note 21. Other current payables and contract liabilities58
Note 22. Net revenue 59
Note 23. Other operating income 59
Note 24. Costs of materials and services related to revenue 60
Note 25. Workforce expenses 60
Note 26. Non-Workforce expenses61
Note 27. Depreciation and amortization61
Note 28. Net finance cost62
Note 29. Earnings per share 62
Note 30. Dividends paid and proposed63
Note 31. Additional disclosures on financial instruments 64
Note 32. Related party disclosures 74
Note 33. Rights, commitments and contingent liabilities77
Note 34. Share-based Payment 80
Note 35. Relationship with the auditors 82
Note 36. Segment reporting82
Note 37. Recent IFRS pronouncements 84
Note 38. Post balance sheet events85

Consolidated Balance Sheet

(EUR million)	Note	As of 31 December			As of 1 January As of 31 December
ASSETS				2017 IAS 18 2018 IAS 18 2018-IFRS 15	2018-IFRS 15
NON-CURRENT ASSETS		6,735	6,752	6,842	6,850
Goodwill	3	2,431	2,466	2,431	2,470
Intangible assets with finite useful life	4	1,233	1,154	1,233	1,154
Property, plant and equipment	5	2,976	3,054	2,976	3,054
Contract costs	6	0	0	120	116
Investments in associates	7	3	3	3	3
Equity investments	8	8	0	8	0
Deferred income tax assets	9	2 7	3 5	15	12
Pension assets	9	0	0	0	0
Other non-current assets	11	56	40	56	40
CURRENT ASSETS		1,793	1,739	1,871	1,822
Inventories	12	123	129	123	129
Trade receivables	13	1,111	1,042	1,111	1,042
Contract assets	13	0	0	7 8	83
Current tax assets	9	83	6 8	83	6 8
Other current assets	14	137	155	137	155
Investments	15	5	4	5	4
Cash and cash equivalents	16	333	340	333	340
TOTAL ASSETS		8,527	8,490	8,713	8,671

LIABILITIES AND EQUITY	Note
EQUITY	1 7	3,013	3,012	3,153	3,153
Shareholders' equity	1 7	2,857	2,862	2,997	3,005
Issued capital		1,000	1,000	1,000	1,000
Reserves		-454	-469	-454	-469
Retained earnings		2,310	2,331	2,451	2,474
Non-Controlling interests	1 7	156	150	156	148
NON-CURRENT LIABILITIES		2,789	3,151	2,834	3,181
Interest-bearing liabilities	18	1,860	2,263	1,860	2,263
Liability for pensions, other post-employment benefits and termination benefits	10	515	553	515	553
Provisions	19	140	142	140	142
Deferred income tax liabilities	9	7 2	6 1	117	9 1
Other non-current payables	2 0	202	132	202	132
CURRENT LIABILITIES		2,725	2,328	2,726	2,338
Interest-bearing liabilities	18	570	234	570	234
Trade payables		1,415	1,361	1,415	1,361
Contract liabilities	2 1	0	0	9 8	109
Tax payables	9	112	56	112	56
Other current payables	2 1	628	677	532	578
TOTAL LIABILITIES AND EQUITY		8,527	8,490	8,713	8,671

Consolidated Income Statement

		Year ended 31 December
		2017	2018	2018
(EUR million)	Note	IAS 18	IAS 18	IFRS 15
Net revenue	2 2	5,739	5,761	5,764

Other operating income	2 3	6 3	6 5	6 5
Non-recurring income	2 4	0	0	0
Total income		5,802	5,826	5,829
Costs of materials and services related to revenue	2 4	-2,166	-2,122	-2,126
Workforce expenses (1)	2 5	-1,248	-1,245	-1,245
Non-workforce expenses (1)	2 6	-615	-663	-663
Non-recurring expenses (1)	2 8
Total operating expenses before depreciation and amortization		-4,030	-4,030	-4,034
Operating income before depreciation and amortization		1,772	1,796	1,794
Depreciation and amortization	2 7	-963	-1,016	-1,016
Operating income		809	780	778
Finance income		6	9	9
Finance costs		-76	-64	-64
Net finance costs	2 8	-70	-56	-56
Share of loss on associates		- 2	- 1	- 1
Income before taxes		738	723	721
Tax expense	9	-185	-194	-191
Net income		552	529	530
Attributable to:	17
Equity holders of the parent (Group share)		522	506	508
Non-controlling interests		3 0	2 3	2 2
Basic earnings per share (in EUR)	2 9	1.62	1.57	1.58
Diluted earnings per share (in EUR)	2 9	1.62	1.57	1.58
Weighted average nb of outstanding ordinary shares	2 9	322,777,440	322,649,917	322,649,917
Weighted average nb of outstanding ordinary shares for diluted earnings per share	2 9	322,954,411	322,735,379	322,735,379

(1) restated for 2017: split between workforce-non workforce has been aligned for all subsidiaries, with the total unchanged at group's level.

The 2017 figures have been restated accordingly, with for the full year 2017 EUR 30 million moving from non-workforce to workforce expenses.

Consolidated Statement of Other Comprehensive Income

(EUR million) Note 2017 IAS 18 2018 IAS 18 2018 IFRS15 Net income 552 529 530 Other comprehensive income: Items that may be reclassified to profit and loss Exchange differences on translation of foreign operations - 6 11 11 Available-for-sale investments: Valuation gain/(loss) taken to equity Transfer to profit or loss on sale Cash flow hedges: Gain/(Loss) taken to equity - 7 6 6 Transfer to profit or loss for the period 0 - 1 - 1 Transfer related to the TeleSign combination 7.4 12 0 0 Other 0 - 1 - 1 Total before related tax effects - 1 1 5 1 5 Related tax effects Related tax effects Available-for-sale investments: Valuation gain/(loss) taken to equity Cash flow hedges: Loss taken to equity - 2 - 1 - 1 Transfer to profit or loss for the period 0 0 0 Income tax relating to items that may be reclassified - 2 - 1 - 1 Other (describe) Total of items that may be reclassified to profit and loss - net of related tax effects - 3 1 4 1 4 Items that will not be reclassified to profit and loss Change in the fair value of equity instruments 0 - 5 - 5 Total of items that will not be reclassified to profit and loss Remeasurement of defined benefit obligations 13 -35 -35 1 0 Total of items that will not be reclassified to profit and loss 1 3 -40 -40 Total before related tax effects 1 3 -40 -40 Related tax effects Remeasurement of defined benefit obligations - 4 8 8 1 0 Change in the fair value through OCI 0 0 0 Adjustment resulting from change in Belgian tax rate -10 0 0 9 Income tax relating to items that will not be reclassified -14 8 8 Related tax effects Items that will not be reclassified to profit and loss - net of related tax effects - 1 -32 -32 Total comprehensive income 549 510 511 Attributable to: Equity holders of the parent 521 484 487 Non-controlling interests 2 8 2 5 2 4	Year ended 31 December

Consolidated Cash Flow Statement

	Year ended 31 December
(EUR million)	Note			2017 IAS 18 2018-IAS 18 2018-IFRS 15&9
Cash flow from operating activities Net income		552	529	531
Adjustments for:
Depreciation and amortization on intangible assets and property, plant and equipment	4/5	963	1,016	1,016
Increase of impairment on intangible assets and property, plant and equipment	3/4/5	2	2 3	2 3
Decrease of provisions	19	- 4	- 4	- 4
Deferred tax income	9	-47	-13	-16

Increase of impairment on participating interests		2	0	0
Loss from investments accounted for using the equity method	7	2	1	1
Fair value adjustments on financial instruments	3 1	3	0	0
Loans amortization	3 1	2	2	2
Gain on disposal of consolidated companies	7	- 1	0	0
Gain on disposal of other participating interests and enterprises accounted for using the equity method	2 8	0	0	0
Gain on disposal of Intangible assets and property, plant and equipment		-22	-22	-22
Other non-cash movements		0	- 1	- 1
Dividends received from non consolidated companies		0	0
Exchange difference on contributed companies		0	0
(Gain)/loss on disposal of other participating interests		0	0
Operating cash flow before working capital changes		1,452	1,532	1,530
Decrease / (increase) in inventories		2	- 5	- 5
Decrease in trade receivables		52	9 5	9 5
Decrease in contract costs		0	0	4
Increase in contract assets		0	0	- 5
(Increase) / decrease in current income tax assets		-41	15	15
(Increase) / decrease in other current assets		- 7	3	3
Increase in other non current assets		0	0	0
Decrease in trade payables		-58	-30	-30
Increase in contract liabilities		0	0	5
Increase / (decrease) in income tax payables		47	-58	-58
Increase / (decrease) in other current payables		- 3	6	3
Increase in net liability for pensions, other post-employment benefits and termination benefits	10	3 7	0	0
Decrease in other non-current payables and provisions		-10	0	0
Increase in working capital, net of acquisitions and disposals of subsidiaries		1 8	2 6	2 8
Net cash flow provided by operating activities (1)		1,470	1,558	1,558
Cash flow from investing activities
Cash paid for acquisitions of intangible assets and property, plant and equipment	4/5	-989	-1,099	-1,099
Cash paid for acquisitions of other participating interests		- 2	- 3	- 3
Cash paid for acquisition of consolidated companies, net of cash acquired	7	-221	-51	-51
Dividends received from non-consolidated companies		0	1	1
Cash received from / (paid for) sales of consolidated companies, net of cash disposed of	6	0	0	0
Cash received from sales of intangible assets and property, plant and equipment		3 6	3 7	3 7
Cash received from sales of other participating interests and enterprises accounted for using the
equity method

Net cash received from other non-current assets		- 1	8	8
Net cash used in investing activities		-1,177	-1,107	-1,107

(EUR million)	Note		Year ended 31 December	2017 IAS 18 2018-IAS 18 2018-IFRS 15&9
Cash flow from financing activities
Dividends paid to shareholders	3 0	-488	-485	-485
Dividends paid to non-controlling interests	17	-32	-28	-28
Net sale of treasury shares		0	4	4
Net sale of investments		1	1	1
Decrease of shareholders' equity		- 1	- 3	- 3
Cash received from cash flow hedge instrument related to long term debt		4	8	8
Issuance of long term debt	18.3	502	399	399
Repayment of long term debt	18.3	- 1	-408	-408
Issuance of short term debt	18.3	-242	6 8	6 8
Net cash used in financing activities		-256	-444	-444
Net increase of cash and cash equivalents		3 6	7	7
Cash and cash equivalents at 1 January		297	333	333
Cash and cash equivalents at 31 December	15	333	340	340
(1) Net cash flow from operating activities includes the following cash movements :
Interest paid		-49	-55	-55
Interest received		1	2	2
Income taxes paid		-227	-249	-249

Consolidated Statement of Changes in Equity

(EUR million)	Issued capital	Treasury shares	Restricted reserve	Equity instruments and hedge reserve	Other remeasure ment reserve	Foreign currency translation	Stock Compen sation	Retained Earnings	Share'rs' Equity	Non controlling interests	Total Equity
Balance at 31 December 2016	1,000	-430	100	2	-127	0	5	2,270	2,819	162	2,981
Total comprehensive income	0	0	0	4	- 1	- 4	0	522	521	2 8	549
Dividends to shareholders (relating to 2016)	0	0	0	0	0	0	0	-323	-323	0	-323
Interim dividends to shareholders (relating to 2017)	0	0	0	0	0	0	0	-161	-161	0	-161
Dividends of subsidiaries to non-controlling interests	0	0	0	0	0	0	0	0	0	-32	-32
Business combination	0	0	0	0	0	0	0	2	2	- 2	0
Treasury shares
Exercise of stock options	0	0	0	0	0	0	0	- 1	- 1	0	- 1
Sale of treasury shares	0	- 9	0	0	0	0	0	0	- 9	0	- 9
Stock options
Exercise of stock options	0	9	0	0	0	0	- 1	1	9	0	9
Total transactions with equity holders	0	0	0	0	0	0	- 1	-482	-483	-34	-517
Balance at 31 December 2017 (IAS 18)	1,000	-431	100	5	-128	- 4	4	2,310	2,857	156	3,013
Total comprehensive income	0	0	0	1	-27	6	0	504	484	2 5	510
Dividends to shareholders (relating to 2017)	0	0	0	0	0	0	0	-323	-323	0	-323
Interim dividends to shareholders (relating to 2018)	0	0	0	0	0	0	0	-161	-161	0	-161
Dividends of subsidiaries to non-controlling interests	0	0	0	0	0	0	0	0	0	-28	-28
Business combination	0	0	0	0	0	0	0	3	3	- 3	0
Treasury shares
Sale of treasury shares	0		3 0	0	0	0	0	- 3	0	0	0
Stock options
Exercise of stock options	0		1 0	0	0	0	0	0	1	0	1
Total transactions with equity holders	0	4	0	0	0	0	0	-483	-479	-32	-511
Balance at 31 December 2018 (IAS 18)	1,000	-427	100	6	-155	3	4	2,331	2,862	150	3,012
Balance at 31 December 2017 (IAS 18)	1,000	-431	100	5	-128	- 4	4	2,310	2,857	156	3,013
Transition to IFRS 15	0	0	0	0	0	0	0	144	144	0	144
Transition to IFRS 9	0	0	0	0	0	0	0	- 3	- 3	0	- 3
Balance at 1 January 2018 (IFRS 15)	1,000	-431	100	5	-128	- 4	4	2,451	2,997	156	3,153
Total comprehensive income	0	0	0	1	-27	6	0	506	487	2 4	511
Dividends to shareholders (relating to 2017)	0	0	0	0	0	0	0	-323	-323	0	-323
Interim dividends to shareholders (relating to 2018)								-161	-161	0	-161
Dividends of subsidiaries to non-controlling interests	0	0	0	0	0	0	0	0	0	-28	-28
Business combination	0	0	0	0	0	0	0	3	3	- 3	0
Treasury shares
Sale of treasury shares	0		3 0	0	0	0	0	- 3	0	0	0
Stock options
Exercise of stock options	0		1 0	0	0	0	0	0	1	0	1
Total transactions with equity holders	0	4	0	0	0	0	0	-483	-479	-32	-511
Balance at 31 December 2018 (IFRS 15)	1,000	-427	100	6	-155	3	4	2,474	3,005	148	3,153

Notes to the consolidated financial statements

Note 1. Corporate information

The consolidated financial statements at 31 December 2018 were authorized for issue by the Board of Directors on 28th February 2019. They comprise the financial statements of Proximus SA, its subsidiaries as well as the Group's interest in associates and joint ventures accounted for under the equity method (hereafter "the Group").

Proximus SA is a "Limited Liability Company of Public Law" registered in Belgium. The transformation of Proximus SA from "Autonomous State Company" into a "Limited Liability Company of Public Law" was implemented by the Royal Decree of 16 December 1994. Proximus SA headquarters are located at Boulevard du Roi Albert II, 27 1030 Brussels, Belgium. The company's name change took place in 2015.

The Board of Directors, the Chief Executive Officer and the Executive Committee assess the performance and allocate resources based on the customer-oriented organization structured around the following reportable operating segments.

The Consumer Business Unit (CBU) sells voice products and services, internet and television, both on fixed and mobile networks, to residential customers and small offices as well as ICT-services mainly on the Belgian market and provides related customer operations.
The Enterprise Business Unit (EBU) sells ICT and Telecom services and products to medium and corporate enterprises. These ICT solutions, including telephone services, are marketed mainly under the Proximus, and Telindus brands, on both the Belgian and international markets;
Wholesale unit (WU) sells services to other telecom and cable operators;
International Carrier Services (ICS) is responsible for international carrier activities;
The Technology Unit (TEC) centralizes all the network and IT services and costs (excluding costs related to customer operations and to the service delivery of ICT solutions), and provides services to CBU, EBU and WU;
Staff and Support (S&S) brings together all the horizontal functions (human resources, finance, legal, strategy and corporate communication), internal services and real estate that support the Group's activities.

The number of employees of the Group (in full time equivalents) amounted to 13,391 at 31 December 2017 and 13,385 at 31 December 2018.

For the year 2017, the average headcount of the Group was 162 management personnel, 11,830 employees and 1,187 workers. For the year 2018, the average headcount of the Group was 165 management personnel, 11,976 employees and 1,020 workers.

Note 2. Significant accounting policies

Basis of preparation

The accompanying consolidated financial statements as of 31 December 2018 and for the year then ended have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted for use in the European Union. The Group did not early adopt any IASB standards or interpretations.

Changes in accounting policies

The Group does not anticipate the application of standards and interpretations. The accounting policies applied are consistent with those of the previous financial years except that the Group applied the new or revised IFRS standards and interpretations as adopted by the European Union that became mandatory on 1 January 2018 and that are detailed as follows:

New standards:

IFRS 9 Financial instruments;
IFRS 15 Revenue from contracts with customers;
IFRIC 22 (Foreign Currency Transactions and Advance Consideration);

Amendments to standards:

Amendments to IFRS 2 (Classification and Measurement of Share Based Payments");
Annual improvements to IFRS's (2014-2016 cycle) concerning IFRS 1 and IAS 28;
Amendments to IAS 40 (Transfer of investment property);
Amendments to IFRS 4 (Applying IFRS 9 Financial instruments with IFRS 4 Insurance contracts).

The adoption of these new and amended standards has limited impacts on the financial statements of the Group except for adoption of IFRS 9 and IFRS 15.

For the transition to IFRS 15 and IFRS 9 the Group decided to apply the cumulative catch-up method for transition i.e. applying the new standards retrospectively with the cumulative effect of initial application recognized on 1 January 2018 in the opening balance sheet. For IFRS 15, the retrospective application applies to those contracts not completed at the date of initial application. The Group opted as a practical expedient according to IFRS 15 for not restating retrospectively the contracts for all contract modifications that occurred before the date of initial application.

The impacts from adoption of these new standards are as follows:

(EUR million)	Adjustment from initial application on Opening Balance Sheet
IFRS 15
Contract assets	83
Contract costs	120
Contract Liabilities	- 2
Deferred tax on initial application	-59
IFRS 9
Loss allowance on contract assets (IFRS 15)	- 5
Deferred tax on initial application	1
Total	140

(*) Evolution arising from new financial assets recognized in current year, net of those derecognized upon settlement

IFRS 15 Adjustments

Under IAS 18, revenue from sale arrangements with multiple deliverables was allocated based on the relative fair values. When an amount allocated to a delivered component was contingent upon delivery of additional components or meeting specified performance conditions, the amount allocated to that delivered component was limited to the non-contingent amount (the so called "cash cap").

Whereas, under IFRS 15, the total consideration with respect to a contract is allocated to all products and services based on their relative stand-alone selling prices. The amounts allocated are not limited to the not contingent part. This results in a reallocation of a portion of revenue from service revenue to revenue from sales of goods, which is recognized when the control of the goods is transferred to the customer and leading to the creation of contract assets.

Previously, commissions paid to acquire contracts were expensed as incurred. Under IFRS 15, commissions to acquire postpaid contracts are considered as incremental costs to obtain a contract and deferred as contract costs.

IFRS 15 requires also reclassification of some items previously presented in deferred income to contract liabilities. Contract liabilities are netted of with contract assets on contract by contract basis.

IFRS 9 Adjustments

2017 financial statements were established based on the IAS39 standard. The related accounting policies are described in the 2017 financial statements.

In the context of the first application of IFRS 9, the Group identified the following changes:

Participating interests in non-quoted companies, previously recognized at cost less impairment, are measured at fair value and classified on a case by case basis either as fair value through other comprehensive income (FVTOCI) or fair value through income statement (FVTPL). This accounting policy change had no impact on the value of these financial assets on the opening balance sheet.
The application of the expected credit loss model on the contract asset recognized in application of IFRS 15, although not financial instruments, resulted in a negative impact on retained earnings of EUR 3 million (net of taxes) as per 1 January 2018. This is a specific requirement of IFRS 9.

The Group made use of the exemption allowing it not to restate comparative information for prior periods with respect to the classification and measurement changes.

The following table shows the original classification under IAS 39 and the new classification under IFRS 9:

Financial assets / liabilities	Original classification under	New classification under IFRS 9
Equity Financial asset (case by case)	"At cost less impairment"	FVTOCI/FVTPL
Derivatives held-for-trading	FVTPL	FVTPL
Derivatives in hedge relationship	Hedge accounting	Hedge accounting
Trade/other receivables	Amortized cost	Amortized cost
Unsubordinated debentures not in a hedge relationship	Amortized cost	Amortized cost
Accounts payable	Amortized cost	Amortized cost
Financial liability related to Put options	FVTPL	FVTPL

For more information, please refer to note 31.4.

Alternative Performance Measures

The Group uses so called "Alternative Performance Measures" ("APM") in the financial statements and notes. An APM is a financial measure of historical or future financial performance, financial position or cash flows, other than a financial measure defined in the applicable financial reporting framework (IFRS). A glossary describing these is included in the section "Management Discussion" of the Consolidated Management Report. They are consistently used over time and when a change is needed, comparable information is restated.

Basis of consolidation

Note 7 lists the Group's subsidiaries, joint ventures and associates.

Subsidiaries are those entities controlled by the Group. Control exists when the Group has the power over the investee, is exposed or has rights to variable returns from its involvement with the investee and has the ability to use its power to affect its returns.

Consolidation of a subsidiary begins from the date on which the Group obtains control over the subsidiary and ceases when the Group loses control over the subsidiary. Intercompany balances and transactions and resulting unrealized profits or losses between Group companies are eliminated in full in consolidation. When necessary, accounting policies of subsidiaries are adjusted to ensure that the consolidated financial statements are prepared using uniform accounting policies.

Changes in Group's ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transaction. Any difference between the amount by which noncontrolling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to owners of the Company.

Joint ventures are joint arrangements whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control over an arrangement, which exists only when decisions about relevant activities require unanimous consent of the parties sharing control. Joint ventures are incorporated in these consolidated financial statements using the equity method.

Associated companies are companies in which the Group has a significant influence, defined as an investee in which Proximus has the power to participate in its financial and operating policy decisions (but not to control the investee). These investments are also accounted for using the equity method.

Under the equity method, the investments held in associates or joint venture are initially recognized at cost and the carrying amount is subsequently adjusted to recognize the Group's share in the profit or losses or other comprehensive income of the associate or joint venture as from the date of acquisition. These investments and the equity share of results for the period are shown in the balance sheet and income statement as respectively, investments in associates and joint ventures, and share in the result of the associates and joint ventures.

The Group discontinues the use of the equity method from the date when the investment ceases to be an associate or a joint venture, or when the investment is classified as held for sale. When the Group retains an interest in the former associate or joint venture the retained interest is a financial asset, the Group measures the retained interest at fair value at that date and the fair value is regarded as its fair value on initial recognition in accordance with IFRS 9. The difference between, on the one hand the carrying amount of the associate or joint venture at the date the use of the equity method is discontinued and on the other hand the fair value of any retained interest and any proceeds of disposing of part of the interest in the associate or joint venture is included in the determination of the gain or loss on disposal of the associate or joint venture.

The Group continues to use the equity method when an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate. There is no remeasurement to fair value upon such changes in ownership interests

Business Combinations

Acquisitions of businesses are accounted using the acquisition method. The consideration transferred is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued in exchange for control of the acquiree. Acquisition related costs are recognized in profit or loss as incurred.

At acquisition date, the identifiable assets acquired, and the liabilities assumed are recognized at their fair value at that date. This includes fair valuing the unrecognized assets and liabilities in the balance sheet of the acquire, which concerns mainly customer bases and trade names.

Non-controlling interests may be initially measured either at fair value or at the proportionate share of the recognized amounts of the acquiree' s identifiable net assets. The choice of the measurement principle is made on a transaction by transaction basis.

Judgments and estimates

In preparing the consolidated financial statements, management is required to make judgments and estimates that affect amounts included in the financial statements.

Judgments and estimates that are made at each reporting date reflect conditions that existed at those dates (e.g. market prices, interest rates and foreign exchange rates). Although these estimates are based on management's best knowledge of current events and actions that the Group may undertake, actual results may differ from those estimates.

Critical judgements in applying the Group accounting policies

The following are the critical judgements, apart from those involving estimations (which are presented separately below), that the directors have made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognized in financial statements.

Revenue recognition under IFRS 15

Under IFRS 15, the transaction price is allocated to the identified performance obligations in the contract based on their relative standalone selling prices. Judgement is required in determining the stand-alone price and the transaction price considering the contract duration.

• Determination of the contract duration

To define the duration of its contracts the Group considered the contractual period in which the parties to the contract have present enforceable rights and obligations. A contract has a duration when it includes a substantive termination payment. The duration runs until the termination payment is not due anymore. If there is no substantive termination payment clause, the Group concluded that the contract has no duration (i.e. open-ended contracts).

• Determination of the stand-alone selling price

In situations where the stand-alone selling price is not directly observable, the Group assesses it using all information (including market conditions, Proximus-specific factors and information about the customer or class of customer) that is reasonably available to it. This situation occurs mainly in the context of combined offers with subsidized devices, for which a cost-plus approach method is applied to one of the components.

Discounts granted because a customer entered into a contract, are allocated to all performance obligations triggering the granting of the discount.

• Identification of performance obligations

Identification of the performance obligations requires judgment and in-depth understanding of the promises in the contract and how they interact with each other.

Functional currency of the Group entities

The individual financial statements of each Group entity are prepared in the currency of the primary economic environment in which the entity operates. Management judgment is used to determine which functional currency most faithfully represents the economic effects of its underlying transactions, events and conditions. The current assessment of management about the functional currency of TeleSign is US Dollar.

Control in BICS

Note 7 describes that BICS is a subsidiary of the Group held with 57.6% of the shares and 57.6% of the voting rights to the company shareholders' meeting.

The shareholders agreement with BICS foresees decision-making rules and a deadlock procedure in force as from 1 January 2010. Thanks to these rules and procedures, the Group concluded in the past that it controlled BICS. This conclusion remains valid when applying IFRS 10 "Consolidated Financial Statements" (effective on 1 January 2014), even when taking into account potential barriers to exercise control on BICS.

Key sources of estimation uncertainty

Claims and contingent liabilities (see note 33)

Related to claims and contingencies, judgment is necessary in assessing the existence of an obligation resulting from a past event, in assessing the probability of an economic outflow, and in quantifying the probable outflow of economic resources. This judgment is reviewed when new information becomes available and with support of outside experts advises.

Income tax

On January 11, 2016, the European Commission announced its decision to consider Belgian tax rulings granted to multinationals with regard to "Excess Profit" as illegal state aid. BICS has applied such tax ruling for the period 2010-2014. BICS has paid the deemed aid recovery assessments. Furthermore, both BICS and the Belgian State filed an appeal against the decision of the European Commission before the European Court. Management assesses that the position as recognized in these financial statements reflects the best estimate of the probable final outcome.

Recoverable amount of cash generating units including goodwill

In the context of the impairment test, the key assumptions that are used for estimating the recoverable amounts of cash generating units to which goodwill is allocated are discussed in note 3 (Goodwill).

Actuarial assumptions related to the measurement of employee benefit obligations and plan assets

The Group holds several employee benefit plans such as pension plans, other post-employment plans and termination plans. In the context of the determination of the obligation, the plan asset and the net periodic cost, the key assumptions that are used are discussed in note 10 (Assets and liabilities for pensions, other post-employment benefits and termination benefits).

Fair value adjustments for business combinations

In accordance with IFRS 3 Business Combinations, the Group measures the identifiable assets acquired and (contingent) liabilities assumed in a business combination at fair value. Fair value adjustments are based on external appraisals or valuation models, e.g. intangible assets which were not recognized by the acquired business. All these valuation methods rely on various assumptions such as estimated future cash flows, remaining useful economic life, etc… Further details are provided in note 7.4.

Foreign currency translation

Foreign currency transactions are recognized in functional currency on initial recognition, at the foreign exchange rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency of the entity at the balance sheet date using the exchange rate at that date. Net exchange differences on the translation of monetary assets and liabilities are classified in "non-workforce expenses" in the income statement in the period in which they arise.

Foreign operations

Some foreign subsidiaries and joint-ventures operating in non-EURO countries are considered as foreign operations that are integral to the operations of the reporting enterprise. Therefore, monetary assets and liabilities are translated using the exchange rate at balance sheet date, non-monetary assets and liabilities are translated at the historical exchange rate, except for non-monetary items that are measured at fair value in the domestic currency and that are translated at the exchange rate when the fair value was determined.

Revenue and expenses of these entities are translated at the weighted average exchange rate. The resulting exchange differences are classified in "non-workforce expenses" in the income statement.

For other foreign subsidiaries and joint-ventures operating in non-EURO countries, assets and liabilities are translated using the exchange rate at balance sheet date. Revenue and expenses of these entities are translated at the weighted average exchange rate. The resulting exchange differences are taken directly to a separate component of equity. On disposal of such entity, the deferred cumulative amount recognized in equity relating to that particular foreign operation is recognized in the income statement.

Goodwill

Goodwill represents the excess of the sum of the consideration transferred, the amount of non-controlling interests, if any, and the fair value of the previously held interest, if any, over the net fair value of identifiable assets, liabilities and contingent liabilities acquired in business combination. When the Group obtains control, the previously held interest in the acquiree, if any, is re-measured to fair value through the income statement.

When the net fair value, after reassessment, of identifiable assets, liabilities and contingent liabilities acquired in a business combination exceeds the sum of the consideration transferred, the amount of non-controlling interests, if any, and the fair value of the previously held interest, if any, this excess is immediately recognized in income statement as a bargain purchase gain.

Changes in a contingent consideration included in the consideration transferred are adjusted against goodwill when they arise during the provisional purchase price allocation period and when they relate to facts and circumstances existing at acquisition date. In other cases, depending if the contingent consideration is classified as equity or not, changes are taken into equity or in the income statement.

Acquisition costs are expensed, and non-controlling interests are measured at acquisition date either at their value or at their proportionate interest in the identifiable assets and liabilities of the acquiree, on a transactionby-transaction basis.

Goodwill is stated at cost and not amortized but subject to an annual impairment test at the level of the cash generating unit to which it relates and whenever there is an indicator that the cash generating unit to which the goodwill has been allocated may be impaired. An impairment loss recognized for goodwill is never reversed in subsequent periods, even if there are indications that the impairment loss may no longer exist or may have decreased.

Goodwill is expressed in the currency of the subsidiary to which it relates and is translated to EUR using the year end exchange rate.

Intangible assets with finite useful life

Intangible assets consist primarily of the Global System for Mobile communication ("GSM") license, the Universal Mobile Telecommunication System ("UMTS") license, 4G licenses, customer bases, patents and trade names acquired in business combinations, internally developed software and other intangible assets such as football rights and broadcasting rights and externally developed software.

The Group capitalizes certain costs incurred in connection with developing or purchasing software for internal use when they are identifiable, when the Group controls the asset and when future economic benefits from the asset are probable. Software costs are included in internally generated and other intangible assets and are amortized over three to five years.

Intangible assets with finite life acquired separately are measured on initial recognition at cost. Only the fixed portion of the consideration is capitalized, except for intangible assets acquired with different pricing structure over time. For these assets both the fixed as the estimated variable consideration is capitalized at acquisition date. When the carrying amount of the financial liability is subsequently re-measured the cost of the asset is adjusted. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition.

Intangible assets with finite useful life are stated at cost less accumulated amortization and impairment losses. The residual value of such intangible assets is assumed to be zero.

Customer bases and trade names acquired in business combinations are straight-line amortized over their estimated useful life (3 to 20 years). Except when the use of an asset is limited in time, for contractual reasons or reflecting the management intention on the use of the asset, the duration of an asset's useful life is set at acquisition date, for each asset individually, in such a way that the expected cumulated discounted cash flows generated by the concerned asset over its useful life represent approximately 90% of the total cumulated discounted cash flows expected from the asset.

GSM, UMTS and 4 G licenses, other intangible assets and internally generated assets with finite useful life are amortized on a straight-line basis over their estimated useful life. Amortization commences when the intangible asset is ready for its intended use. The licenses' useful lives are fixed by Royal Decree and they range from 5 to 20 years.

The useful lives are assigned as follows:

	Useful life (years)
GSM, UMTS, 4G and other network licenses	Over the license period
GSM (2G)	5 to 6
UMTS (3G)	16
LTE (4G)	15
800 Mhz (4G)	20
Customer bases, trade names, patents	3 to 20
and software acquired in a business combination
Software	5
Rights to use, football and broadcasting rights	Over the contract period (usually from 2 to 5)

The amortization period and the amortization method for an intangible asset with finite useful life are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortization period or method, as appropriate, and treated as changes in accounting estimates.

Property, plant and equipment

Property, plant and equipment including assets rented to third parties are presented according to their nature and are stated at cost less accumulated depreciation and accumulated impairment losses. The cost of additions and substantial improvements to property, plant and equipment is capitalized. The cost of maintenance and repairs of property, plant and equipment is charged to operating expenses when it does not extend the life of the asset or does not significantly increase its capacity to generate revenue. The cost of an item of property, plant and equipment includes the costs of its dismantlement, removal or restoration, the obligation for which the Group incurs as a consequence of installing the item.

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the year the asset is derecognized.

Depreciation of an asset begins when the asset is ready for its intended use. Depreciation is calculated using the straight-line method over the estimated useful life of the asset.

The useful lives are assigned as follows:

	Useful life (years)
Land and buildings
Land	Indefinite
Buildings and building equipment	22 to 33
Facilities in buildings	3 to 10
Leasehold improvement and advertising equipment	3 to 10
Technical and network equipment
Cables and ducts	15 to 20
Switches	8 to 10
Transmission	6 to 8
Radio Access Network	6 to 7
Mobile sites and site facility equipment	5 to 10
Equipment installed at client premises	2 to 8
Data and other network equipment	2 to 15
Furniture and vehicles
Furniture and office equipment	3 to 10
Vehicles	5 to 10

The asset's residual values, useful life and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end.

Costs of material, workforce and non-workforce expenses are shown net of work performed by the enterprise that is capitalized in respect of the construction of property, plant and equipment.

Borrowing costs are capitalized if they are directly attributable to the acquisition, construction or production of a qualifying asset.

Contract costs

Contracts costs were expensed as incurred under IAS 18.

Under IFRS 15, contract costs eligible for capitalization as incremental costs of obtaining a contract comprise commission paid to dealers relating to postpaid contracts. Contract costs are recognized as non-current assets as the economic benefits from these assets are expected to be received in the period longer than twelve months.

All other commissions are expensed when incurred. Contract costs relating to postpaid contracts are deferred on a systematic basis that is consistent with the transfer to the customer of the services, being the time, at which related revenue is recognized. The group adopted a portfolio approach for the contract costs. Contract costs relating related to the CBU segment are deferred over three years and for the EBU segment five years.

Impairment of non-financial assets

The Group reviews the carrying value of its non-financial assets at each balance sheet date for any indication of impairment.

The Group compares at least once a year the carrying value with the estimated recoverable amount of intangible assets under construction and cash generating units including goodwill. The Group performs this annual impairment test during the fourth quarter of each year.

An impairment loss is recognized when the carrying value of the asset or cash generating unit exceeds the estimated recoverable amount, being the higher of the asset's or cash generating unit's fair value less costs to sell and its value in use for the Group.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash generating unit.

Impairment losses on goodwill, intangible assets and property, plant and equipment are recorded in operating expenses. An assessment is made at each balance sheet date as to determine whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognized. If that is the case, impairment losses in respect of assets other than goodwill are reversed in order to increase the carrying amount of the asset to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the income statement in operating expenses.

Deferred taxation

Deferred taxation is provided for all temporary differences between the carrying amount of assets and liabilities in the consolidated balance sheet and their respective taxation bases.

Deferred tax assets associated to deductible temporary differences and unused tax losses carried forward are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary difference or the unused tax losses can be utilized.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Unrecognized deferred income tax assets are reassessed at each balance sheet date and are recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset will be realized, or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

Changes in deferred tax assets and liabilities are recognized in the income statement except to the extent that they relate to items recognized directly in equity, in which case the tax effect is also recognized directly in equity.

Pensions, other post-employment benefits and termination benefits

The Group operates several defined benefit pension plans to which the contributions are made through separately managed funds. The Group also agreed to provide additional post-employment benefits to certain employees. The cost of providing benefits under the plans is determined separately for each plan using the projected credit unit actuarial valuation method. Actuarial gains and losses are recognized through Other Comprehensive Income (equity). Any past service cost and gain or loss on settlement is recognized in income statement when they occur.

When applying the IAS 19 revised, the Group decided to classify the periodic cost in operating and financing activities for their respective components.

The Group also operates several defined contribution plans. For plans with guaranteed minimum return management applied the 'Projected Unit Credit 'method.

The discount rate used to calculate the present value of the plans reflects the market yields on high-quality corporate bonds. To determine the underfunding this is compared to the plan assets.

The Group operates several restructuring programs that involve termination benefits or other forms of additional compensation. Voluntary termination benefits to encourage employees to leave service are recognized when employees accept the offer of those benefits. Involuntary termination benefits are recognized when the Group has communicated its plan of termination to the affected employees and the plan meets specified criteria.

Benefits conditional on future service being provided do not quality as termination benefits but as long-term employee benefits. The liability for those benefits is recognized over the period of the future service.

The actuarial gains and losses on the liabilities for restructuring programs are recognized in the income statement when incurred.

Short-term and long-term employee benefits

The cost of all short-term and long-term employee benefits, such as salaries, employee entitlements to leave pay, bonuses, medical aid and other contributions, are recognized during the period in which the employee renders the related service. The Group recognizes those costs only when it has a present legal or constructive obligation to make such payment and a reliable estimate of the liability can be made.

Financial instruments

Classification

The Group classifies its financial assets in the following categories:

At fair value through profit and loss ("FVTPL"); or
At fair value through other comprehensive income ("FVTOCI"); or
At amortized cost.

The Group classifies its financial liabilities in the following categories:

At fair value through profit and loss ("FVTPL"); or
At amortized cost.

Financial assets

The Group determines the classification of the financial assets at initial recognition. The classification is driven by the Group's business model for managing the financial assets ('hold to collect', 'hold to collect and sell' and 'other') and their contractual cash flow characteristics (Solely payments of Principal and Interest "SPPI" test i.e. whether contractual cash flows are solely payments of principal and interest on the principal amount outstanding).

If a non-equity financial asset fails the SPPI test, the Group classifies it at Fair Value Through Profit or Loss (FVTPL). If it passes the SPPI test, it will either be classified at amortized cost if the 'hold to collect' business model test is met, or at Fair Value Through Other Comprehensive Income (FVTOCI) if the 'hold to collect and sell' business model test is met.

For equity financial assets other than interests in subsidiaries, associates and joint ventures, the Group makes at initial recognition an irrevocable election (on an instrument-by-instrument basis) to designate them as at FVTOCI or FVTPL.

The equity investments held for trading are always designated at FVTPL.

Financial liabilities

Financial liabilities are measured at amortized cost, unless they are required to be measured at FVTPL (such as instruments held for trading or derivatives) or the Group has opted to measure them at FVTPL.

Measurement

Financial assets at FVTOCI

Investments in equity instruments designated at FVTOCI are initially recognized at fair value plus directly attributable transaction costs. Subsequently they are measured at fair value, with gains and losses arising from changes in fair value recognized in other comprehensive income, with no subsequent recycling to the income statement.

Accumulated remeasurements on disposal or settlements of equity instruments carried at FVOCI are reclassified from OCI to retained earnings.

The Group holds no other investment measured at FVTOCI.

Dividend income is recognized in the income statement.

Financial assets and liabilities at amortized cost.

Financial assets, other than trade receivables, and liabilities at amortized cost are initially recognized at fair value plus or minus directly attributable transaction costs. Trade receivables are measured at their transaction price if the trade receivables do not contain a significant financing component.

These financial instruments are subsequently carried at amortized cost using the effective interest rate method less any impairment, if applicable.

Financial assets and liabilities at FVTPL

Financial assets and liabilities carried at FVTPL are initially recorded at fair value and transaction costs are expensed. Realized and unrealized gains and losses arising from changes in the fair value of the financial assets and liabilities are included in the consolidated net (loss) income in the period in which they arise.

The Group has not designated financial liabilities at FVTPL (FV option). Derivatives are measured at FVTPL.

Expected credit losses

The Group applies the forward-looking expected credit loss (ECL) model.

The ECL model considers all losses that result from all possible default events over the expected life of the financial instrument (life-time expected credit losses) or that result from possible default events over the next 12 months (12-month expected credit losses), depending on whether the credit risk of the financial asset has increased significantly since initial recognition or not (the general ECL model).

Proximus recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized costs. Same treatment is applied to contract assets resulting from the application of IFRS 15 and lease receivables, even though these are not classified as financial assets.

At each reporting date, the Company measures the loss allowance for these assets.

The Group has limited trade receivables with financing component. The Group applies a simplified method and measures the loss allowance at an amount equal to the lifetime expected credit losses, for all trade receivables, whether assessed on an individual or collective basis, considering all reasonable and supportable information, including information that is forward-looking.

For CBU and EBU receivables, the payment delays compared to the contractual due dates and the status of the legal actions taken to recover the receivables due are the main information considered to assess whether credit risk has increased significantly since initial recognition. A provision matrix is used.

For the ICS segment, the Group considers past experience and reasonable and supportable information about future expectations to define provision rates on an individual rate" base.

In particular, following indicators are used:

an actual or expected significant deterioration of the customer's external (if available) or internal credit rating;
significant deterioration of the country risk in which the customer is active;
existing or forecast adverse changes in business, financial or economic conditions that are expected to cause a significant decrease in the debtor's ability to meet its debt obligations;
an actual or expected significant deterioration in the operating results of the debtor;
an actual or expected significant adverse change in the regulatory, economic, or technological environment of the debtor that results in a significant decrease in the debtor's ability to meet its debt obligations.

The same methodology is applied for contract assets.

For financial assets at amortized costs, contract assets and lease receivables, allowances and impairment are recognized in profit or loss.

The Group writes off a financial asset when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation or has entered into bankruptcy proceedings, or in the case of trade receivables, when the amounts are over two years past due, whichever occurs sooner. Financial assets written off may still be subject to enforcement activities under the Group's recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognized in profit or loss.

Criteria for initial recognition and for de-recognition of financial assets and liabilities

Financial assets and liabilities are initially recognized when the Group becomes party to the contractual terms of the instruments. "Regular way" ("spot") purchases and sales of financial assets are accounted for at their settlement dates.

Financial assets (or a portion thereof) are derecognized only when the contractual rights to cash flows from the financial assets expire. For equity investments, the accumulated remeasurements to fair value in other comprehensive income are reclassified to retained earnings on de-recognition.

Financial liabilities (or a portion thereof) are de-recognized when the obligation specified in the contract is discharged, cancelled or expires. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognized in the income statement.

Fair value of financial instruments

The following methods and assumptions are used to estimate the fair value of financial instruments:

For equity investments in quoted companies and mutual funds, the fair value is their quoted price;
Investments in non-quoted companies are measured at Fair value. Fair value is estimated by reference to recent sale transactions on the shares of these non-quoted companies and, in the absence of such transactions, by using different valuation techniques such as discounted future cash flow models and multiples methods.
For long-term debts carrying a floating interest rate, the amortized cost is assumed to approximate fair value;
For long-term debts carrying a fixed interest rate, the fair value is determined based on the market

value when available or otherwise based on the discounted future cash flows;

• For derivatives, fair values are estimated by either considering their quoted price on an active market, and if not available by using different valuation techniques, in particular the discounting of future cash flows.

Criteria for offsetting financial assets and liabilities

Where a legally enforceable right of offset currently exists for recognized financial assets and liabilities, and Proximus has the intention to settle the liability and realize the asset simultaneously, or to settle on a net basis, all amounts in the statement of financial position are offset.

Trade receivables

Trade receivables are shown on the balance sheet are initially recognized at contract price and subsequently at amortized costs (SPPI model applies) less the allowance for expected credit losses.

Cash and cash equivalents

Cash and cash equivalents include cash, current bank accounts and term accounts with a maturity on acquisition of less than three months. These assets are highly liquid, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

Cash and cash equivalents are carried at amortized cost.

Interest-bearing liabilities

All loans and borrowings are initially recognized at their cost which generally corresponds to the fair value of the consideration received (net of issuance costs associated with the borrowings).

After initial recognition, debts are measured at amortized cost using the effective interest rate method, with amortization of discounts or premiums through the income statement.

Derivatives

On transition to IFRS 9 on 1 January 2018 the Group has chosen to continue applying the hedge accounting requirements of IAS 39 instead of applying the new requirements in IFRS 9 for 2018.

The Group does not hold or issue derivative financial instruments for trading purposes but some of its derivative contracts do not meet the criteria set by IAS 39 to be subject to hedge accounting and are therefore treated as derivatives held-for-trading, with changes in fair value recorded in the income statement.

The Group makes use of derivatives such as IRCS, forward foreign exchange contracts and currency options to reduce its risks associated with foreign currency fluctuations on underlying assets, liabilities and anticipated transactions. The derivatives are carried at fair value under the captions other assets (non-current and current), interest-bearing liabilities (non-current and current) and other payables (non-current and current).

An IRCS is used to reduce the Group exposure to interest rate and foreign currency fluctuations on a longterm debt denominated in JPY. The Group does not apply hedge accounting for this derivative.

This long-term debt expressed in JPY includes an embedded derivative. Such derivative is separated from its host contract and carried at fair value with changes in fair value recognized in the income statement. The markto-market effects on this derivative are offset by those on the IRCS.

The group used interest rate swaps to mitigate the risk of Interest rate variations between the hedge inception date and the issuance date of highly probable fixed rate long-term debts. The effective portion of changes in the fair value of hedging instruments that are designated in a cash flow hedge is recognized in other comprehensive income and gradually reclassified to profit or loss in the same period as the hedged item.

During 2017 the Group entered into a derivative foreign exchange forward contract in a hedge accounting relationship, as to economically hedge against exposure to changes in the US dollar exchange rate of the purchase consideration in dollar of the TeleSign business combination. The changes in fair value of the portion of such derivative that qualified for hedge accounting under IFRS rules was allocated as part of the consideration paid. The changes in fair value of the portion that did not qualify for hedge accounting was reported as finance cost in the profit and loss.

As from September 2011, the Group started contracting derivatives (forward foreign exchange contracts) to hedge its exposure to currency fluctuations for highly probable forecasted transactions. The Group applies cash flow hedge accounting; the effective portion of the gains and losses on the hedging instrument is recognized via other comprehensive income until the hedged item occurs. If the hedged transaction leads to the recognition of an asset, the carrying amount of the asset at the time of initial recognition incorporates the amount previously recognized via other comprehensive income. The ineffective portion of a cash flow hedge is always recognized in profit or loss.

The other forward exchange contracts do not qualify for hedge accounting and are consequently carried at fair value, with changes in fair value recognized in the income statement through financial result except when the underlying is recognized in the balance sheet and relates to costs recorded in operating income or to capitalized expenditures. In this case, changes in fair value are recognized in the income statement through operating income.

Net gains and losses on financial instruments

Dividends, interest income and interest charges arising from financial instruments are posted to the finance income (costs).

Remeasurements of financial instruments carried at FVTPL are accounted for as finance income (costs) when the instruments relate to financing activities.

Remeasurements of the financial instruments carried at FVTPL that relate to operating or investing activities (other than mentioned above), are accounted for as other operating income (expenses).

Accumulated remeasurements of equity instruments carried at FVOCI are reclassified from OCI to retained earnings.

Net gains and losses on derivatives used to manage foreign currency exposure on operating activities that do not qualify for hedge accounting under IAS 39 are recorded as operating expenses.

Net gains and losses resulting from fair value measurement of derivatives used to manage interest rate exposure on interest-bearing liabilities that do not qualify for hedge accounting under IAS 39 are recorded in finance income/(costs).

Contract assets

Contract assets result from the application of IFRS 15.

A contract asset is the Group's right to consideration in exchange for goods or services that it has already transferred to a customer and arise essentially in the context of contracts containing mobile and fix joint offer with a subsidized handset and services to be delivered over 24 months. The assets are classified as current as they are expected to be realized as part of the Group normal operating cycle.

When a contract for which a contract asset was recognized is terminated anticipatively by the customer, the net amount resulting from the contract settlement is recognized as device revenue. The compensation for the device corresponds to the unamortized part of the device when the contract is terminated.

Contract assets is a conditional right recognized on the balance sheet at cost less loss allowance, as defined on the life time expected credit loss model.

Inventories

Inventories are stated at the lower of cost and net realizable value.

Cost is determined based on the weighted average cost method except for IT equipment (FIFO method) and goods purchased for resale as part of specific construction contracts (individual purchase price).

For inventory intended to be sold in joint offers, calculation of net realizable value takes into account the future margin expected from the telecommunications services in the joint offer, with which the item of inventory is offered.

For construction contracts, the percentage of completion method is applied. The stage of completion is measured by reference to the amount of contract costs incurred for work performed at balance sheet date in proportion to the estimated total costs for the contract. Contract cost includes all expenditures directly related to the specific contract and an allocation of fixed and variable overheads incurred in connection with contract activities based on normal operating capacity.

Lease agreements with suppliers

Leases of assets through which all the risks and the benefits of ownership of the asset are substantially transferred to the Group are classified as finance lease. Finance leases are recognized as assets and liabilities (interest-bearing liabilities) at amounts equal to the lower of the fair value of the leased asset and the present value of the minimum lease payments at inception of the lease. Amortization and impairment testing for depreciable leased assets, is the same as for depreciable assets that are owned. Lease payments are apportioned between the outstanding liability and finance charges so as to achieve a constant periodic rate of interest on the remaining balance of the liability.

Leases of assets through which all the risks and the benefits of ownership of the asset are substantially retained by the leasing company are classified as operating lease. Payments under operating leases are recognized as an expense in the income statement on a straight-line basis over the lease term.

Provisions

Provisions are recognized when the Group has a present legal or constructive obligation resulting from past events, for which it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made. A past event is deemed to give rise to a present obligation if, taking into account the available evidence, it is more likely than not that a present obligation exists at the balance sheet date. The amount recognized as provision is the best estimate of the expenditure required to settle the present obligation at the end of the reporting period. Provisions are discounted where the effect of the time value of money is material. The unwinding is recognized via the finance expense.

Certain assets and improvements that are situated on property owned by third parties must eventually be dismantled, and the property must be restored to its original condition. The estimated costs associated with dismantling and restorations are recorded under property, plant and equipment and depreciated over the useful life of the asset. The total estimated cost required for dismantling and restoration, discounted to its present value, is recorded under provisions. Where discounting is used, the increase in the provision due to the passage in time is recognized in financial expense in the income statement.

Assets and associated liabilities classified as held for sale

The Group classifies assets (or disposal group) as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through a continuing use. This condition is met when the asset (or disposal group) is available for immediate sale in its present condition, the sale is highly probable and expected to occur within one year. Assets and associated liabilities held for sale (or disposal group) are recorded at the lower of their carrying value or fair value less costs to sell,and are classified as current assets.

Share based payment

Equity and cash settled share-based payments to employees are measured at the fair value of the instrument at the grant date taking into account the terms and conditions upon which the rights are granted, and by using a valuation technique that is consistent with generally accepted valuation methodologies for pricing financial instruments, and that incorporates all factors and assumptions that knowledgeable, willing market participants would consider in setting the price.

For equity settled arrangement the fair value is recognized in workforce expenses over their vesting period, together with an increase of the caption "stock compensation" of the shareholders' equity for the equity part and an increase of a dividend liability for the dividend part. When the share options give right to dividends declared after granting the options, the fair value of this right is re-measured regularly.

For cash settled arrangement the fair value is recognized in workforce expenses over their vesting period together with an increase in the liabilities. The liabilities are regularly re-measured to reflect the evolution of the fair values.

Contract liabilities

The application of IFRS 15 led to the recognition of contract liabilities, which comprise the Group's obligation to transfer goods or services to a customer for which the Group has received consideration or the amount is due.

Some of these contract liabilities were classified previously either as other amounts payable or result from a difference in timing of revenue recognition generated by the application of IFRS 15.

Revenue

Proximus assesses at contract inception the goods or services promised in a contract with a customer and identifies as Performance obligation each promise to transfer to the customer either a good or service (or a bundle of) that is distinct, either a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer.

Performance obligations are identified when following criterial are met

Capable of being distinct: the customer can benefit from the goods and services on its own or together with other resources readily available to the customer
Distinct within the context of the contract: a promise within the context of the contract is distinct from other promises in the contract if Proximus considers that it fulfills its contractual obligations by delivering the concerned promise independently from the others. Promises in a context of a contract are not distinct within the context of the contract when their nature is to be transferred in combination with other promises.

Following promises can be performance obligations, depending on their natures and interdependencies with the other promises in the contract:

Traffic and data usage services; revenue is recognized on usage
TV services: revenue is recognized over the contractual term
Maintenance services: recognized over the contractual term
Sale of equipment: revenue is recognized when the customer obtains control over the equipment
Rent of equipment: rental revenue is recognized over the contractual period
Setup/installation/activation fees: are recognized when delivered
License of intellectual property: revenue recognized when transferred to the customer.

When these promises are not distinct, the Group combines them with other promises in the arrangement until the combined promises form a promise that is distinct (i.e. a performance obligation). Timing of revenue recognition for a Performance Obligation is based on the pattern of transfer to the customer of the predominant promise in that bundle.

When the "series guidance" applies i.e. when goods and services are distinct and substantially the same, the Group considers them as one Performance obligation. Each pricing plan – postpaid and prepaid (mobile voice, fix voice, internet, TV) is therefore considered as single performance obligation.

When contracts include different performance obligations that are not substantially the same, the transaction price is allocated to the different performance obligations of the arrangements based on their relative standalone selling prices. When contracts include customer options (i.e. unilateral rights granted to the customer) to acquire additional goods or services with a discount, including sales incentives, customer award points, contract renewal options or other discounts on future goods or services, revenue is allocated to these options when they provide the customer with a material right i.e. an unilateral right for the customer to obtain an advantage because he enters the contract.

When another party is involved in providing goods or services to a customer, the Group assesses for each performance obligation whether the nature of its promise is to provide the specified goods or services itself (ie the Group is a principal) or to arrange for those goods or services to be provided by the other party (ie the Group is an agent). When the Group acts as agent only the commission is recognized in revenue.

Operating expenses

The costs of materials and services related to revenues include the costs for purchases of materials and services directly related to revenue.

Work force expenses are expenses related to own employees (personnel expenses and pensions) as well as to external employees.

Operating expenses are reported net of work performed by the Group, which is capitalized. They are reported by nature.

Incremental costs to obtain a contract are deferred on a straight-line basis over 3 years for contract belonging to the CBU segment and 5 years for contracts belonging to the EBU segment.

Note 3. Goodwill

(EUR million)	Goodwill
As of 1 January 2017	2,279
Acquisition of TeleSign Holding Inc	151
Effect of movements in foreign exchange	- 4
Acquisition of Davinsi Labs BVBA and Unbrace BVBA	6
As of 31 December 2017	2,431
Acquisitions of ION IP, UMBRIO, CODIT, MediaMobile and price adjustment for TeleSign Holding INC	3 8
Effect of movements in foreign exchange	3
Finalisation of purchase price allocation	- 2
As of 31 december 2018	2,470

The goodwill increased by EUR 39 million to EUR 2,470 million in 2018 as a result of the acquisitions of Umbrio, CODIT, ION IP and MediaMobile (see note 7.4) as well as the impact of translation from foreign currencies and the finalization of the purchase price allocation of TeleSign.

Goodwill is tested for impairment at the level of operating segments as the performance, financial position (including goodwill) and capital expenditures within the Group are being monitored at operating segment level.

For the purpose of impairment testing, goodwill acquired in a business combination is, at acquisition date,

allocated to each of the Group operating segments that is expected to benefit from the business combination. Therefore, this allocation is based on the nature of the acquired customers and activities.

At 31 December 2018, all businesses acquired were fully allocated to one single operating segment, except for the goodwill resulting from the acquisition of non-controlling interests in 2007 in Belgacom Mobile, which was allocated to the Consumer Business Unit and the Enterprise Business Unit on basis of their relative value in use for the Group at 31 December 2007.

The carrying amount of the goodwill is allocated to the operating segments as follows:

	As of 31 December
(EUR million)	2017	2018
Consumer Business Unit	1,303	1,303
Enterprise Business Unit	730	767
International Carrier Services	398	401
Total	2,431	2,470

The recoverable amount at segment level was based on the value in use estimated through a discounted free cash flow model. The key variables used in determining the value in use are:

The operating income before depreciation and amortization (except for the International Carrier Services segment for which the direct margin is more important);
The capital expenditures;
The long-term growth rate;
The post-tax weighted average cost of capital;
The mark-up rate to be applied on staff and support services, should Proximus Group organize a full and at arm's length transfer pricing between the segments;
The expected rate of return on TEC capital employed (1) , allowing the determination of TEC network related costs to be invoiced to the other segments, should Proximus Group organize a full and at arm's length transfer pricing between the segments.

CBU and EBU operating income before depreciation and amortization is highly sensitive to the following operational parameters: number of customers by type of service (TV, fix….), traffic (if applicable) and net ARPU by customer for each type of service. The value attached to each of these operational parameters is the result of an internal process, conducted in each segment and at group level, by confronting data from the market, market perspectives, and the strategies Proximus intends to implement in order to be adequately prepared for upcoming challenges.

The value in use calculations are based on the Three-Year Plan (2019 to 2021), as presented by management to the Board of Director and adjusted for events that are not allowed for consideration under IFRS. Subsequent years were extrapolated based on a growth rate comprised between 0% and 1.3% in 2018 and 2017 for the operating segment.

The free cash flows considered for calculating the value in use are estimated for the concerned assets in their current condition and exclude the cash inflows and outflows that are expected to arise from any future restructuring to which the Group is not yet committed and from improving or enhancing the assets performance. Free cash flows of each segment were discounted with the Group post-tax weighted average cost of capital (ICS excluded) of 5.3% in 2018 and 2017, with the exception of the ICS segment for which a specific post-tax weighted average cost of capital of 8.0% in 2018 and 8.1% in 2017 was used, its activities being deemed different enough from those of the rest of the Group to justify a specific calculation. The pretax weighted average cost of capital, derived from the post-tax weighted average cost of capital via an iterative method, was comprised between 6.6% and 8.9% in 2017 and between 6.7% and 8.8% in 2018 The Group reviews annually the growth rate and the weighted average cost of capital in the light of the market economics.

(1): Return on capital employed corresponds to the adjusted pre-tax Weighted Average Cost of Capital

The calculated weighted average costs of capital at Group level and for the ICS segment are based on the relative weight of their capital structure components and include a risk premium specific to their inherent risks.

None of the goodwill was impaired at 31 December 2018. Sensitivity analysis for all segments demonstrates that in case of a reasonable change in one of the key assumptions, their values in use still exceed their net carrying values.

Note 4. Intangible assets with finite useful life

(EUR million)	GSM and UMTS licences	Intangibles acquired in a business combination	TV rights	Other intan-gible assets	Total
Cost
As of 1 January 2017	681	797	230	2.084	3.792
Additions	0	0	185	6 6	431
Acquisition of subsidiary	0	85	0	0	85
Internally generated assets	0	0	0	180	0
Derecognition	0	0	-129	-35	-164
Reclassifications	0	0	0	4	4
Foreign exchange adjustment	0	-3	0	0	-3
As of 31 December 2017	681	879	286	2.299	4.145
Additions	0	0	71	83	153
Acquisition of subsidiary	0	29	0	8	36
Internally generated assets	0	0	0	185	185
Derecognition	0	0	-54	-176	-229
Reclassifications	0	0	0	-23	-24
Effect of movements in foreign exchange	0	4	0	0	4
As of 31 December 2018	681	911	303	2.375	4.270
Accumulated amortization and impairment
As of 1 January 2017	-463	-518	-148	-1.563	-2.692
Amortization charge for the year	-32	-56	-93	-201	-382
Impairment charge	0	0	0	-1	-1
Derecognition	0	0	129	34	164
As of 31 December 2017	-495	-574	-113	-1.730	-2.912
Amortization charge for the year	-32	-67	-110	-223	-431
Impairment charge	0	0	0	-22	-22
Acquisition of subsidiary	0	0	0	-6	-6
Derecognition	0	0	54	176	229
Reclassifications	0	0	0	27	27
As of 31 December 2018	-527	-641	-169	-1.779	-3.116
Carrying amount as of 31 December 2017	185	305	174	569	1.233
Carrying amount as of 31 December 2018	153	270	134	596	1.154

The GSM and UMTS licenses acquisition value include the costs related to the Global System for Mobile communication ("GSM") and Universal Mobile Telecommunication System ("UMTS").

The Group possesses the following licenses:

Year of acquisition	Description	Acquisition value (EUR million)	Net book value	Period	Payment method	Start of Amortization
1995	900 MHz spectrum	223	0	1995 - 2010	completed	08/04/1995
1998	ILT 2238	2	0	1998 -	completed	01/01/1998
1998	ILT	0	0	1998 -	completed	10/12/1998
2010	900 MHz spectrum	7 4	0	2010 - 2015	completed	08/04/2010
2015	900 MHz spectrum	7 5	2 8	2015 - 2021	over the period	08/04/2015
2001	UMTS	150	18	2001 - 2021	completed	01/06/2004
2011	4G	2 0	11	2012 - 2027	completed	01/07/2012
2013	800 Mhz spectrum	120	89	2013 - 2033	over the period	30/11/2013
2014	900 MHz spectrum	16	6	2015 - 2021	over the period	27/11/2015
	Total	681	153

Internally generated assets mainly relate to development expenditures for internally developed software (mainly billing an ordering related). The aggregate amount of research expensed for this internally generated software during 2018 amounts to EUR 27 million.

Intangible assets acquired in a business combination relate to customer bases, trade names and patents recognized mainly as a result of the purchase price allocation performed when the Group acquired control over BICS and TeleSign (see note 7.4).

In 2018 the Group acquired TV rights for an amount of EUR 71 million mainly including broadcasting rights.

Other intangible additions (EUR 83 million) include mainly software development and software licenses.

The professional market IT landscape within Proximus has been reassessed as part of the ongoing transformation program. The outcome envisions an approach that integrates more with the mass market IT stack to leverage recent investments and to ensure coherence between the mass market and professional market from a customer and operational point of view. This has resulted in a move towards aligning the ordering, provisioning and billing chain between the two IT chains. As a consequence, a full impairment (Euro 22 million) on the related assets was recorded in Non-work force expenses in 2018 and those assets have been derecognized.

Note 5. Property, plant and equipment

(EUR million)	Technical and network equipment	Other tangible assets	Assets under construction	Total
Cost
As of 1 January 2017	11,459	398	1 1	12,487
Additions	620	19	13	662
Acquisition of subsidiary	0	4	0	4
Derecognition	-1,247	-40	0	-1,319
Reclassifications	10	0	-14	- 4
As of 31 December 2017	10,843	380	9	11,830
Additions	646	15	12	681
Acquisition of subsidiary	1	2	1	3
Derecognition	-279	-35	0	-362
Reclassifications	3	- 2	- 6	- 5
As of 31 December 2018	11,214	361	1 6	12,147
Accumulated depreciation and impairment
As of 1 January 2017	-8,913	-342	0	-9,577
Depreciation charge for the year	-536	-22	0	-581
Acquisition of subsidiary	- 1	0	0	- 2
Derecognition	1,246	3 8	0	1,307
Reclassifications	- 1	0	0	0
As of 31 December 2017	-8,205	-325	0	-8,853
Depreciation charge for the year	-540	-23	0	-585
Acquisition of subsidiary	- 1	- 2	0	- 2
Impairment charge	0	0	0	- 1
Derecognition	278	3 3	0	347
Reclassifications	0	2	0	1
As of 31 December 2018	-8,468	-316	0	-9,093
Carrying amount as of 31 December 2017	2,638	5 6	9	2,976
Carrying amount as of 31 December 2018	2,746	4 5	1 6	3,054

The investments reflect the Group strategy to invest extensively in order to always better serve its customers. The Group mainly invested in its mobile leadership and in its fixed networks with the further rollout of Fiber to the business and the start of the fiber-to-the-home roll-out.

Derecognition of technical and network equipment mainly relates to radio equipment and data network equipment.

In 2018, the Group sold administrative and technical buildings and realised a gain on disposal of these buildings of EUR 22 million.

Note 6. Contract cost (IFRS 15)

In adopting IFRS 15, the Group recognized an asset in relation to commissions paid to dealer for the acquisition of post-paid contracts. These costs directly relate to contracts, are incurred only because the Group entered into contracts and are expected to be recovered.

For commissions related to the acquisition of mobile prepaid customers, the Group applied the practical expedient provided for in IFRS 15, allowing to expense as incurred incremental costs to obtain a contract if otherwise would have been deferred over one year or less.

These costs had been expensed as incurred until 2017.

The asset is deferred on a straight-line basis over 3 years for contracts belonging to CBU segment and 5 years for EBU segment. The deferral of these costs is recognized according to their nature being 'cost of material and services related to revenue'.

Movements on contract costs are as follows:

Balance at 31 December 2017 (IAS 18)	0
Balance at 1 January 2018 (IFRS 15)	120
Normal evolution	-73
New contract assets	6 9
Balance at 31 Dec 2018 IFRS 15 116

The portion of the balance as at December 31, 2018 of the contract costs deferred less than one year and deferred more than one year are as follows:

(EUR million)	As of 31 December 2018 - IFRS 15
Contract costs	116
Deferred within 12 months	59
Deferred beyond 12 months	57

Note 7. Investments in subsidiaries, joint ventures and associates

Note 7.1. Investments in subsidiaries

The consolidated financial statements include the financial statements of Proximus SA and the subsidiaries listed in the following table:

Belgium Jan-00 Proximus SA under Public Law Bld du Roi Albert II 27 Mother company 1030 Bruxelles VAT BE 0202.239.951 Proximus Group Services SA Bld du Roi Albert II 27 Belgium 100% 100% 1030 Bruxelles VAT BE 0466.917.220 PXS Re Rue de Merl 74 Luxemburg 100% 100% 2146 Luxembourg Connectimmo SA Bld du Roi Albert II 27 Belgium 100% 100% 1030 Bruxelles VAT BE 0477.931.965 Skynet iMotion Activities SA Rue Carli 2 Belgium 100% 100% 1140 Evere VAT BE 0875.092.626 Tango SA Rue de Luxembourg 177 Luxemburg 100% 100% 8077 Bertrange Telindus - ISIT BV Krommewetering 7 Nederland 100% 100% 3543 AP UTRECHT Telindus SA Route d'Arlon 81– 83 Luxemburg 100% 100% 8009 Strassen Telectronics SA 2 Rue des Mines Luxemburg 100% 100% 4244 Esch sur Alzette Beim Weissenkreuz SA Route d'Arlon 81– 83 Luxemburg 100% 100% 8009 Strassen Proximus Spearit NV Koning Albert II laan 27 Belgium 100% 100% 1030 Brussels VAT BE 0826.942.915 Proximus ICT - Expert Ferdinand Allenstraat 38 Belgium 81% 81% Community CVBA 3290 Diest VAT BE 0841.396.905 Proximus Opal SA Bld du Roi Albert II 27 Belgium 100% 100% 1030 Bruxelles VAT BE 0861.585.672 Be-Mobile SA Kardinaal Mercierlaan 1A Belgium 61% 61% 9090 Melle (3)(6) VAT BE 0881.959.533 Be-Mobile Tech NV Kardinaal Mercierlaan 1A Belgium 61% 61% 9090 Melle (5) VAT BE 0884.443.228 Flow NV Kardinaal Mercierlaan 1A Belgium 61% - 9090 Melle (5) VAT BE 0897.466.269 Flitsmeister BV Koningsschot 45 - Postbus 114 Nederland 61% 61% 3900 AC Veenendaal Be-Mobile Ltda Rua Joaquim Floriano 243 - Conjunto 113 Brazil 61% 0% CEP 04534-010 San Paulo (5)(7) Scarlet Belgium NV Carlistraat 2 Belgium 100% 100% 1140 Evere VAT BE 0447.976.484	Name	Registered office	Country of incorporation	2017	2018

Name	Registered office	Country of incorporation	2017	2018
Clearmedia NV	Zagerijstraat 11	Belgium	100%	100%
	2960 Brecht
	VAT BE 0831.425.897
Davinsi Labs NV	Borsbeeksebrug 28/2verd	Belgium	100%	100%
	2600 Antwerpen
	VAT BE 0550.853.793
Unbrace Bvba	Zagerijstraat 11	Belgium	100%	100%
	2960 Brecht	(2)
	VAT BE 0867.696.771
Belgacom International Carrier Services Mauritius Ltd	Chancery House 5th floor , Lislet, Geoffrey Street	Mauritius	58%	58%
	Port Louis 1112-07	(1)
Belgacom International Carrier Services SA	Rue Lebeau 4	Belgium	58%	58%
	1000 Brussels
	VAT BE 0866.977.981	(1)
Belgacom International Carrier Services Deutschland GMBH	Taunusanlage 11	Germany	58%	58%
	60329 Frankfurt am Main	(1)

Belgacom International Carrier	Great Bridgewaterstreet 70	United Kingdom	58%	58%
Services UK Ltd
Belgacom International Carrier	M1 5ES Manchester Wilhelminakade 91	(1) The Netherlands	58%	58%
Services Nederland BV
	3072 AP Rotterdam	(1)
Belgacom International Carrier Services North America Inc	Corporation trust center - 1209 Orange street	United States	58%	58%
	USA - 19801 Willington Delaware	(1)
Belgacom International Carrier Services Asia Pte Ltd	16, Collyer Quay # 30.02	Singapore	58%	58%
	Singapore 049318	(1)
Belgacom International Carrier Services (Portugal) SA	Avenida da Republica, 50, 10th floor	Portugal	58%	58%
	1069-211 Lisboa	(1)
Belgacom International Carrier Services Italia Srl	Via della Moscova 3	Italy	58%	58%
	20121 Milano	(1)
Belgacom International Carrier	Calle Salvatierra, 4, 2c	Spain	58%	58%
Services Spain SL	28034 Madrid	(1)
Belgacom International Carrier	Papiermühlestrasse 73	Switzerland	58%	58%
Services Switzerland AG	3014 Bern	(1)
Belgacom International Carrier	Wildpretmarkt 2-4	Austria	58%	58%
Services Austria GMBH
	1010 Wien	(1)
Belgacom International Carrier Services Sweden AB	Drottninggatan 30	Sweden	58%	58%
	411-14 Goteborg	(1)
Belgacom International Carrier Services JAPAN KK	#409 Raffine Higashi Ginza, 4-14	Japan	58%	58%
	Tsukiji 4 - Chome - Chuo-ku
	Tokyo 104-00	(1)
Belgacom International Carrier Services China Ltd	Hopewell Centre - level 54 183, Queen's road East	China	58%	58%
	Hong Kong	(1)
Belgacom International Carrier	Box GP 821	Ghana	58%	58%
Services Ghana Ltd
	Accra	(1)

Name	Registered office	Country of incorporation	2017	2018
Belgacom International Carrier	Dubai Internet City	United Arab.	58%	58%
Services Dubai FZ-LLC		Emirates
	Premises 306 - Floor 03- Building 02 -PO box 502307 Dubai	(1)
Belgacom International Carrier Services South Africa Proprietary	The promenade shop 202 D - Victoria Road	South Africa	58%	58%
Ltd	Camps Bay 8005	(1)
Belgacom International Carrier	LR-N° 204861, 1st Floor Block A	Kenya	58%	58%
Services Kenya Ltd	Nairobi Business Park-Ngong Road
	PO BOX 10643 - 00100 Nairobi	(1)
Belgacom International Carrier	Rue du Colonel Moll 3	France	58%	58%
Services France SAS	75017 Paris	(1)
TeleSign Holdings Agents, Inc	160 Greentree Dr., Ste.101	United Kingdom	58%	58%
	Dover, DE 19904	(1) '(2) '(6)
TeleSign Corporation	13274 Fiji Way , Suite 600	United States	58%	58%

	Marina del Rey, CA 90292	(1) '(2) '(6)
TeleSign UK	4th Floor	United Kingdom	58%	58%
	210 High Holborn
	London WC1V 7DL	(1) '(2) '(6)
TeleSign Mobile Ltd	4th Floor 210 High Holborn	United Kingdom	58%	58%
	London WC1V 7DL	(1) '(2) '(6)
TeleSign Doo	Tresnjinog cveta 1	Serbia	58%	58%
	11070 Novi Beograd	(1) '(2) '(6)
TeleSign Netherlands B.V.	4th Floor	United Kingdom	58%	58%
	210 High Holborn
TeleSign Singapore Pte. Ltd.	London WC1V 7DL 1 Robinson Road, #17-00	(1) '(2) '(6) Singapore	58%	58%
	AIA Tower
	Singapore (048542)	(1) '(2) '(6)
TeleSign Australia Pty Ltd	FDK Laurence Varney	Australia	58%	58%
	Level 12 222 Pitt Street
	Sidney NSW 2000	(1) '(2) '(6)
TeleSign Japan KK	Oak Minami Azabu Building 2F 3-19-23 Minami Azabu	Japan	58%	0%
	Minato-ku, Tokyo 106-0047	(1) '(2) '(6)
TeleSign (Beijing) Technology	15/F, Office Building A, Parkview Green,	P.R. China	58%	58%
Co., Ltd.	9 Dongdaqiao Road, Chaoyang District	(1) '(2) '(6)
	Beijing 100020
TeleSign Hong Kong Ltd	5/F., Heng Shan Centre,	Hong Kong	58%	58%
	145 Queen's Road East, Wanchai, Hong Kong	(1) '(2) '(6)
Codit Holding BVBA	Gaston Crommenlaan 14, box 301	Belgium	-	100%
	9050 Ledeberg	(4)
	VAT BE 662.946.401
Codit BVBA	Gaston Crommenlaan 14, box 301	Belgium	-	100%
	9050 Ledeberg	(4)
	VAT BE 0471.349.823
Codit Switzerland AG	Schaffhauserstrasse 374 8050 Zurich	Switzerland (4)	-	100%
	VAT CHE-335.776.516
Codit Integration Ltd.	Landmark House, Station Road	United Kingdom	-	100%
	RG27 9HA Hook (Hampshire)	(4)
	VAT GB 241.5781.10
Codit Managed Services BVBA	Gaston Commenlaan 14, box 301	Belgium	-	100%
	9050 Ledeberg VAT BE 0835.734.875	(4)
CODIT Mare Limited	International House, Mdina Road	Malta	-	100%
	Mriehel, Birkirkara	(4)
	C55412

Name	Registered office	Country of 2017 incorporation		2018
Codit Nederland B.V	Atoomweg 350,	The Netherlands	-	100%
	3542AB Utrecht	(4)
Votijnit Lda. (Codit Portugal)	Praça Duque de Saldanha 20	Portugal	-	100%
	1° Dtio.Lisbon	(4)
	NIPC 510.595.251
Codit Software Limited	International House, Mdina Road	Malta	-	100%
	Mriehel, Birkirkara	(4)
	C64225
Codit France S.A.S.	Rue de la Michodière 4	France	-	100%
	75002 Paris	(4)
	VAT FR 0478.300.189
AXON Olympus	Atoomweg 350	The Netherlands	-	100%
	3542AB Utrecht	(4)
	6171872
UMBRiO Holding BV	Patrijsweg 74	The Netherlands	-	100%
	NL-2289 EX Rijswijk	(4)

UMBRiO BV	Patrijsweg 74	The Netherlands	-	100%
	NL-2289 EX Rijswijk	(4)
UMBRiO Consulting BV	Patrijsweg 74	The Netherlands	-	100%
	NL-2289 EX Rijswijk	(4)
UMBRiO University BV	Patrijsweg 74	The Netherlands	-	100%
	NL-2289 EX Rijswijk	(4)
MEDIAMOBILE S.A.	Rue Camille Desmoulins 41	France	-	100%
	F-92130 Issy Les Moulineaux	(4)
Mediamobile Nordic OY	Äyritie 8B	Finland	-	100%
	01510 Vantaa, Finland	(4)
	FI 23364202
ION-IP	Vendelier 2C	The Netherlands	-	100%
	NL-3905 PA Veenendaal	(4)

(1) Entity of BICS Group

(2) Entity acquired in 2017

(3) Previously named Mobile For

(4) Entity acquired in 2018

(5) Entity mergerd with Be-Mobile TECH

(6) See note 7.4

(7) Entity liquidated in 2017

Note 7.2. Details of non-wholly owned subsidiaries that have material non-controlling interests

Only BICS and its subsidiaries have material non-controlling interests.

Name of subsidiary	Place of incorporation and principal place of business	Proportion of ownership interests and voting rights held by non controlling interests As of 31 December		Profit allocated to non controlling interests As of 31 December		Accumulated non controlling interests As of 31 December
		2017	2018	2017	2018	2017	2018
BICS (segment)	Belgium	42%	42%	2 8	2 0	156	149
Total				2 8	2 0	156	149
Summarized financial information in respect of each of the Group's subsidiaries that has material non-controlling interests BICS (segment)
Current assets		617	671
Non-current assets		830	752
Current liabilities		590	614
Non-current liabilities		237	205
Equity attributable to owners of the company		620	604
Revenue (total)		1,320	1,347
Expenses (operating)		-1,181	-1,195
Profit for the year		6 6	47
Profit attributable to owners of the company		38	27
Profit attributable to the non-controlling interests		28	20
Dividends paid to non-controlling interests		32	28
Net cash inflow from operating activities		83	141
Net cash outflow from investing activities		-247	-30
Net cash inflow / (outflow) from financing activities		7 0	-68
Net cash inflow / (outflow)		-95	44

Detail of non-wholly owned subsidiaries of the Group that have material non-controlling interests

BICS shareholder agreement foresees protective rights for the non-controlling interests (see note 2).

The Group granted the Be-Mobile Group (composed of Be-Mobile, Be-Mobile Tech, Flitsmeister and MediaMobile) non-controlling interests with put options on their shares. Similarly, the Group was granted call options on these non-controlling shares. These options can be exercised under the same conditions and for the same price. As a result, the Group recognizes a financial liability to these shareholders. This financial liability is classified at FVTPL.

Note 7.3. Investments in associates

The Group had a significant influence in the following company:

Name	Registered office	Country of incorporation	Group's participating interests
			2017	2018
Belgian Mobile ID SA/NV	Sinter-Goedeleplein 5 1000 Brussel VAT BE 541.659.084	Belgium	19%	15%
Synductis C.V.B.A	Brusselsesteenweg 199 9090 Melle VAT BE 502.445.845	Belgium	17%	17%
Experience@work C.V.B.A	Minderbroedersgang 12 2800 Mechelen VAT BE 627.819.632	Belgium	33%	33%
Tessares SA/NV	Avenue Jean Monnet 1 1348 Ottignies-Louvain-la-Neuve VAT BE 600.810.278	Belgium	23%	23%
Co.station Belgium NV	Sinter-Goedeleplein 5 1000 Brussel VAT BE 599,786,434	Belgium	20%	20%

Per 31 December 2018 the aggregate information on all individually immaterial associates is as follow

(EUR million)	2017	2018
Carrying amount	3	3
Loss of continuing operations	-2	-1

Note 7.4. Acquisitions and disposal of subsidiaries, joint ventures and associates

Acquisitions in 2018

In 2018, Proximus Group has acquired ION-IP, Umbrio, CODIT and MediaMobile.

On March 26, 2018, the Group entered into a purchase agreement to acquire 100% of the shares of ION-IP B.V. The company operates as a Managed Infrastructure Security and Application Performance Provider that supplies integrated solutions to business customers.

On May 31, 2018, the Group entered into a purchase agreement to acquire 100% of the shares of Umbrio Holding B.V. Umbrio is specialized in implementing IT Operation Management platforms providing: consulting and implementation services within the domain of IT Operations and Business Analytics and Application Delivery Management on the basis of the Splunk platform.

On July 12, 2018, the Group entered into a purchase agreement to acquire 100% of the shares of CODIT HOLDING BVBA. CODIT focusses on Application Integration based on Microsoft technologies and is active in 7 countries: Belgium, Netherlands, France, Switzerland, United Kingdom, Portugal and Malta.

On November 15, 2018, the Group entered into a purchase agreement to acquire 100% of the shares of MediaMobile SA (French Société Anonyme). Main activity is to sell its RTTI licenses to Automotive and PND Manufacturers.

The acquisition price paid for those entities amounts to EUR 55 million and has led, after provisional purchase price allocation, to a goodwill of EUR 38 million. A contingent consideration of maximum EUR 11 million, of which EUR 4 million has been paid on an escrow account, is subject to further conditions and will become due upon realization of those conditions. Cash acquired at acquisition date from those companies amounts to EUR 5 million.

Furthermore, contingent payments which are considered as compensation for post-combination services, are recognized as post-combination remuneration expense and are not included in the consideration paid and thus not in the goodwill. These contingent payments are recognized linearly over the vesting period as long as it is probable that the employment KPI (and performance conditions, if any) will be met. Total amount of those compensations relating to the acquisitions of 2018 amounts to EUR 16 million of which EUR 6 million has been paid on an escrow account.

Acquisition costs expensed amounted to EUR 1 million.

The provisional purchase price allocation of the entities has led to the recognition of following intangibles assets:

Brand name: EUR 18 million
Customer relationship: EUR 8 million

For MediaMobile, the purchase price allocation is provisional and, based on a preliminary estimation of the duration of the period over which the entity has enforceable obligations to deliver its services, a contract liability of EUR 6 million has been recognized, for IFRS 15 purposes.

There are no other fair value adjustments performed other than the recognition of the intangible assets and the alignment of the revenue recognition criteria for MediaMobile, as the carrying values, as noted below, represent the fair value (and related deferred taxes).

Intangibles	26

Non current fixed assets	1
Deferred income tax assets	1
Trade receivables	10
Other current assets	6
Investments and cash and cash equivalents	5
Total assets	5 0
Non-current interest-bearing liabilities	-4
Deferred income tax liabilities	-7
Trade payables	-5
Income tax payables	-2
Contract liability	-5
Other current payables	-10
Total non-controlling interests and liabilities	-33
Net assets acquired	1 7
Consideration	5 5
Goodwill arising on acquisition	3 8

Acquisitions in 2017

In 2018, the purchase price allocation of TeleSign has been completed.

Per end of October 2017, Proximus' subsidiary BICS acquired 100% of TeleSign a United States company active in the provision of authentication and mobile identity services to internet and digital service providers, for USD 230 million on a cash and debt free basis, upwards adjusted for 1 million in 2018.

Part of the consideration was deposited on escrow accounts which is recognized in current assets (see note 11). The unreleased part of the escrow accounts is recognized as liability towards the sellers (see note 20). Both the receivable and payable are included in the cash flow statement of 2017 in the cash paid for the acquisition of consolidated companies net of cash acquired.

At the signing of the deal, the Group entered into a derivative foreign exchange forward contract in a hedge accounting relationship, in order to hedge against exposure to changes in the US dollar exchange rate for the purchase consideration between signing and closing. Although this derivative was considered to be an economic hedge, a portion of such derivative could not qualify for hedge accounting under IFRS rules. The cumulative negative mark-to-market for the qualifying part of the hedge recognized in other comprehensive income amounted to EUR 12 million. This was allocated as part of the consideration paid. The not qualifying portion was recognized in financial result in 2017.

The transaction resulted in EUR 151 million as per 31 October 2017 goodwill mainly as the result from the premiums paid for synergies expected to be achieved.

The purchase price allocation has been finalized in 2018, resulting in a goodwill of EUR 149 million which is a decrease of EUR 5 million which is mainly the result of the recognition of a deferred tax asset of EUR 6 million for losses carried forward as well as further update on provision of about EUR (1) MEUR.

(EUR million)	Fair value recognised on acquisition
Intangibles	85
Non current fixed assets	3
Deferred income tax assets	8
Trade receivables	14
Other current assets	4
Investments and cash and cash equivalents	9
Total assets	123
Provisions and contingent liabilities	-6
Deferred income tax liabilities	-28
Trade payables	-8
Other current payables	-2
Total non-controlling interests and liabilities	-44
Net assets acquired	7 9
Consideration	225
Goodwill arising on acquisition	146
Translation difference	3
Goodwill as per 31 December 2018	149
The consideration is detailed as follows:
Cash paid to shareholders	225
Consideration	225
The cash outflow on acquisition is as follows:
Consideration paid	225
Net cash acquired of the subsidiary	-9
Net cash outflow	215

Note 8. Equity investments

Other participating interests comprise the following interests:

	As of 31 December
(EUR million)	2017	2018
Unlisted shares	8	0
HomeSend SCRL/CVBA	7	0
Other unlisted shares	1	0
Total	8	0

At 31 December 2017 and 2018, the other participating interests included almost exclusively shares in equity of non-consolidated and non-quoted entities, in a start-up phase.

These interests that were previously recognized at cost less impairment are, under IFRS 9, measured at fair value and classified on a case by case basis either at FVTOCI or FVTPL. The Group elected to classify all instruments at transition at FVTOCI as these equity instruments were not held for a purpose of trading but acquired with a long-term strategic view and not with the purpose to realize gains. No dividend was granted by those investments during 2018. The application of IFRS 9 did not generate any remeasurement.The participating interest in HomeSend was sold in 2018 and the accumulated remeasurement recognized in other comprehensive income (EUR 3 million) were reclassified to retained earnings.

Note 9. Income taxes

Gross deferred income tax assets / (liabilities) relate to the

	As of 31 December
(EUR million)	2017 IAS 18	2018 IAS 18	2018 IFRS 15
Accelerated depreciation for tax purposes	- 6	-16	-16
Fair value adjustments on acquisition	-69	-60	-60
Statutory provisons not retained under IFRS	- 4	- 5	- 5
Remeasurement of financial instruments to fair value	- 2	- 1	- 1
Deferred taxation on sales of property, plant and equipment	- 6	- 8	- 8
Other	0	- 2	-55
Gross deferred income tax liabilities	-87	-93	-145

Fair value adjustment on fixed assets	19	17	17
Asset for post-employment, termination and other benefits	6	2 6	2 6
Tax losses carry forward	0	5	5
Provisions for liabilities and charges	17	18	18
Other	- 1	1	1
Gross deferred income tax assets	4 2	6 6	6 6
Net deferred income tax assets / (liabilities), when grouped per taxable entity, are as follows :
Net deferred income tax liability	-72	-61	-91
Net deferred income tax asset	2 7	3 5	1 2

The movements in 2018 of the deferred tax position are as follows

(EUR million)	Note
As of 1 January - IAS 18		-45
Increase as the result of the purchase price allocation	7.4	-1
Decrease recognized through other comprehensive income		8
Decrease recognized in income statement		12
As of 31 December - IAS 18		-26

As of 1 January - IFRS 15		-102
Increase as the result of the purchase price allocation		-1
Decrease recognized through other comprehensive income		8
Decrease recognized in income statement		17
As of 31 December - IFRS 15		-79

The movements in 2017 of the deferred tax position are as follows

(EUR million)	Note
As of 1 January		-50
Increase as the result of the purchase price allocation	7.4	-25
Increase recognized through other comprehensive income		-16
Decrease recognized in income statement		47
As of 31 December		-45

The 2018 deferred tax gain in the income statement under IAS 18 is mainly related to the early leave plans and fair value adjustments on fixed assets.

The cost for the early leave plan was fully expensed in the 2016 statutory statements of Proximus SA established under Belgian GAAP whereas in IFRS the cost is recognized over the service period.

The deferred income tax assets on fair value adjustment of fixed assets relate mainly to the elimination of the gain resulting from the intercompany sale at fair value of certain fixed assets.

The deferred tax gains are partly offset by the liability recognized as a consequence of the reversal of the annual declining depreciation method applied by Proximus SA in BGAAP on the tangible assets and broadcasting intangible assets acquired in 2018.

Deferred tax assets have not been recognized in respect of the losses of subsidiaries that have been lossmaking for several years. Cumulative tax losses carried forward and tax deductions available for such companies amounted to EUR 56 million at 31 December 2018 (EUR 61 million in 2017) of which EUR 53 million has no expiration date and EUR 3 million has an expiration date after 2020.

In the income statement, deferred tax income/ (expense)

	Year ended 31 December
(EUR million)	2017 IAS 18	2018 IAS 18	2018 IFRS 15
Accelerated depreciation for tax purposes	1	-10	-10
Fair value adjustments on acquisition	3 8	15	15
Remeasurement of financial instruments to fair value	1	2	2
Deferred taxation on sales of property, plant and equipment	2	- 2	- 2
Fair value adjustment on fixed assets	-12	- 2	- 2
Asset for post-employment, termination and other benefits	2 8	11	11
Tax losses carried forward	0	- 1	- 1
Capital losses on investments in subsidiaries	- 1	0	0
Contract assets and contract cost	0	0	3
Other	-11	0	0
Deferred tax expense of the year	4 7	1 2	1 5

The consolidated income statement includes the following tax

		As of 31 December
(EUR million)	2017 IAS 18	2018 IAS 18	2018 IFRS 15
Current income tax
Current income tax expense	-262	-214	-214
Adjustments in respect of current income tax of previous periods	3 0	8	8
Deferred income tax
Effect of reduction in income tax rates on closing balance of deferred income tax	2 0	- 1	- 3
Expense resulting from changes in temporary differences	2 7	13	19
Income tax expense reported in consolidated income statement	-185	194	191

The reconciliation of income tax expense applicable to income before taxes at the statutory income tax rate to income tax expense at the group's effective income tax rate for each of the two years ended is as follows:

	As of 31 December
(EUR million)	2017 IAS 18	2018 IAS 18	2018 IFRS 15
Income before taxes	738	723	721
At Belgian statutory income tax rate of 33.99%	251	0	0
At Belgian statutory income tax rate of 29.58%	0	214	213
Lower income tax rates of other countries	- 2	- 2	- 2
Effect of reduction in income tax rates on closing balance of deferred income tax -20		- 1	- 3
Non-taxable income from subsidiaries	-38	-27	-27
Non-deductible expenditures for income tax purposes	17	15	15
Other	-22	- 6	- 6
Income tax expense	185	194	191
Effective income tax rate	25.14%	26.80%	26.44%

The 2018 effective income tax rate under IAS 18 amounts to 26.80 % which is higher compared to the effective income tax rate of 25.14% in 2017. The higher income tax expense is mainly due to the new notional interest deduction regime in Belgium significantly reducing its impact, the lower positive outcome on previous year tax audit corrections and the absence of a 2018 positive impact of the Belgian and US corporate income tax reforms. These items are not fully compensated by the lower income tax rates.

The non-taxable income from subsidiaries mainly relates to the application of general principles of tax law such as the patent income deduction applicable in Belgium.

The 2018 non-deductible expenditures for income tax purposes primarily relate to various expenses that are disallowed for tax purposes.

The caption "other" include mainly R&D tax incentives and prior year tax adjustments.

Note 10. Assets and liabilities for pensions, other post-employment benefits and termination benefits

The Group has several plans that are summarized below:

	As of 31 December
(EUR million)	2017(1)	2018(1)
Termination benefits and additional compensations in respect of restructuring programs	188	192
Defined benefit plans for complementary pension plans (net liability)	29	65
Post-employment benefits other than pensions	350	347
Net liability recognized in the balance sheet	568	605

(1) The net liablity in the balance sheet amounts to EUR 52 and EUR 53 mio as current portion and non-current portion of EUR 552 and EUR 515 mio respectively for 2018 and 2017.

The calculation of the liability is based on the assumptions established at the balance sheet date. The assumptions for the various plans have been determined based on both macro-economic factors and the specific terms of each plan relating to the duration and the beneficiary population.

The discount rate used for the valuation of pension plans, other post-employment benefit plans and termination benefits is based on the yield of Eurozone high quality corporate bonds with a duration matching the duration of such plans.

Note 10.1. Termination benefits and additional compensations in respect of restructuring programs

Termination benefits and additional compensations included in this chapter relate to employee restructuring programs. No plan assets are accumulated for these benefits.

In 2007, the Group implemented a voluntary external mobility program to the Belgian State for its statutory employees and a program for unfit statutory employees. Under the terms of this plan, the Group will pay benefits until retirement date of the participant.

In 2016, the Group implemented a voluntary leave program allowing for early termination from the age of 60 (or 58 for a small group). Under the terms of this plan, the Group will pay benefits until the earliest retirement date of the participant.

The part of the plan conditional to future service being provided is recognized over that period of future service.

Any subsequent re-measurement of the liability for termination benefits and additional compensations is recognized immediately in the income statement.

The funded status of the plans for termination benefits and additional compensations is as follows :

	As of 31 December
(EUR million)	2017	2018
Defined Benefit Obligation	188	192
Benefit obligation in excess of plan assets	188	192

The movement in the net liability recognized in the balance sheet is as follows :

	As of 31 December
	2017	2018
At the beginning of the year	149	189
Total expense for the period	6 9	41
Actual employer contribution	-30	-39
At the end of the year	188	192

The liability for termination benefits and additional compensations was determined using the following assumptions:

		As of 31 December
(EUR million)	2017	2018
Discount rate	0.00%	0.00%
Future price inflation	2.00%	2.00%

Sensitivity analysis

An increase or decrease of 0.5% in the effective discount rate involves a fluctuation of the liability by approximately EUR 2 million.

For benefits which are conditional to future services we refer to note 28.

The Group expects to pay an amount of EUR 51 million for termination benefits and additional compensations in 2019. The payments in 2018 amounted to EUR 39 million.

Note 10.2. Defined contribution and benefit plans for complementary pensions

Defined benefits plans

Proximus SA and some of its Belgian subsidiaries offer defined benefit pension plans for their employees. These plans provide pension benefits, expressed as a lump sum, for services as of 1 January 1997 at the earliest. They provide benefits based on salary and years of service. They are financed through the Proximus Pension Fund, a legally separate entity created in 1998 for that purpose.

The financing method is intended to finance the current value of future pension obligations (defined benefit obligation – DBO) relating to the years of service already rendered in the company and taking into account future salary increase. The financing method is derived from calculations under IAS 19. The annual contribution is equal to the sum of the service cost, the net financial cost (interest cost on DBO minus the expected return on assets) and the amortization of the difference between the assets and the DBO exceeding 10% of the higher of the DBO or the assets.

At 31 December 2017 and 2018, the assets of the Pension Fund exceed the minimum required by the pension regulator, being the technical provision. The technical provision represents the amount needed to guarantee the short-term and long-term equilibrium of the Pension Fund. It is constituted of the vested rights increased with an additional buffer amount in order to guarantee the long-term durability of the pension financing. The vested rights represent the current value of the accumulated benefits relating to years of service already rendered in the company and based on current salaries. They are calculated in accordance with the pension regulation and applicable law regarding actuarial assumptions.

As for most of defined benefit plans, the pension cost can be impacted (positively or negatively) by parameters such as interest rates, future salary increase and inflation. These risks are not unusual for defined benefit plans.

For the complementary defined benefit pension plan, actuarial valuations are carried out at 31 December by external independent actuaries. The present value and the current service cost and past service cost, are measured using the projected unit credit method.

The funded status of the pension plans is as follows :

	As of 31 December
(EUR million)	2017	2018
Defined Benefit Obligation	614	670
Plan assets at fair value	-585	-604
Deficit	2 9	6 5

The components recognized in the income statement and other comprehensive income are as follows :

	Year ended 31 December
(EUR million)	2017	2018
Current service cost - employer	44	47
Past service cost recognized	1	0
Recognized in the income statement	4 6	4 7
Remeasurements
Actuarial losses arising from experience adjustments	4	11
Actuarial losses related to return on assets, excluding interest income	-18	2 5
Recognized in other comprehensive income	-13	3 5
Total	3 2	8 2

The components of the expense recognized in the income statement are as follows :

		Year ended 31 December
(EUR million)	2017	2018
Current service cost - employer	44	47
Interest cost	10	11
Expected return on plan assets	-10	-11
Past service cost recognized	1	0
Expense recognized in the income statement	4 6	4 7

The movement in the net liability recognized in the balance sheet is as follows :

	Year ended 31 December
(EUR million)	2017	2018
At the beginning of the year	43	2 9
Expense for the period recognized in the income statement	46	47
Remeasurement recognized in other comprehensive income	-14	3 6
Actual employer contribution	-46	-47
Net deficit	2 9	6 5

Change in plan assets :

	As of 31 December
(EUR million)	2017	2018
At the beginning of the year	522	585
Interest income	10	11
Return on assets, excluding interest income	18	-25
Actual employer contribution	46	47
Benefits payments and expenses	-10	-13
At the end of the year	585	604

Change in the defined benefit obligation :

	As of 31 December
(EUR million)	2017	2018
At the beginning of the year	565	614
Service cost	44	47
Interest cost	10	11
Past service cost - vested benefits	1	0
Benefits payments and expenses	-10	-13
Actuarial losses	4	11
At the end of the year	614	670

The pension liability was determined using the following assumptions :

		As of 31 December
(EUR million)	2017	2018
Discount rate	1.80%	1.80%
Future price inflation	2.00%	2.00%
Nominal future salary increase	3.10% - 3.50%	3.10% - 3.50%
Nominal future baremic salary increase	3.00%- 3.15%	3.00%- 3.15%
Mortality		BE Prospective IA/BE BE Prospective IA/BE

The pension liability is determined based on the entity's best estimate of the financial and demographic assumptions which are reviewed on an annual basis.

The duration of the obligation is 15.56 years.

Sensitivity analysis

Significant actuarial assumptions for the determination of the defined benefit plans obligations are discount rate, inflation and real salary increase. The sensitivity analysis has been determined based on reasonably possible changes of the respective assumptions, while holding the other assumptions constant.

If the discount rate increases (or decreases) by 1%, the estimated impact on the defined benefit obligation would be a decrease (or increase) by around 15% to 19%.

If the inflation rate increases (or decreases) by 0.25%, the defined benefit obligation would increase (or decrease) by around 3% to 4%. If the real salary increases (decreases) by 0.25%, the defined benefit obligation would increase (decrease) by around 7%.

The assets of the pension plans are detailed as follows:

	As of 31 December
(EUR million)	2017	2018
Equity instruments	46.7%	42.4%
Debt instruments	37.5%	40.0%
Convertible bonds	7.6%	6.8%
Other (property, infrastructure, Private equity funds, insurance deposits)	8.2%	10.9%
The actual return on plan assets is as follows:
	As of 31 December
(EUR million)	2017	2018
Actual return on plan assets	2 8	-14

The investment strategy of the Pension Fund is defined to optimize the return on investment within strict limits of risk control and taking into account the profile of the pension obligations. The relatively long duration of the pension obligations (15.56 years) allows to allocate a reasonable portion of its portfolio to equities. Over the last five years, the pension fund has significantly increased the diversification of its investment portfolio across asset classes, regions and currencies in order to reduce the overall risk and improve the expected return.

At the end of 2018 the portfolio was invested by about 42.4% in listed equities (in Europe, US and Emerging Markets), about 40.0% in fixed income (government bonds, corporate bonds, and senior loans) and about 6.8% in convertible bonds (World ex US), the remaining part being invested in European infrastructure, global private equity, European non-listed real estate and cash. The actual implementation of the investments is outsourced to specialized asset managers.

Nearly all investments are done via mutual investment funds. Direct investments amount for less than 1% of the assets. Equity instruments, debt instruments and convertible bonds have quoted prices in active markets. The other assets, amounting for 10.9 % of the portfolio are not quoted. The Pension Fund does not directly invest in Proximus shares or bonds, but it is not excluded that some Proximus shares or bonds are included in some of the mutual investment funds in which we invest.

The Pension Fund wants to promote the concept of corporate social responsibility among its asset managers. It has therefore drawn up a "Memorandum on Corporate Social Responsibility" defining its policy in this area, in order to encourage them to take these aspects into account in their management decisions.

The Group expects to contribute an amount of EUR 49 million to the Proximus Pension Fund in 2019.

In addition to the defined benefit plan described here above the Group operates two defined benefit plans with a limited amplitude. They present a net asset of EUR 1 million resulting from a DBO of EUR 7 and plan assets of EUR 8 million.

Defined contribution plans

The Group has some plans based on contributions for qualifying employees.

For the plans operated abroad, the Group does not guarantee a minimum return on the contribution.

For those operated in Belgian a guaranteed return is provided.

All plans (operated in Belgian and abroad open and closed) are not material at Group level and do not present any net liability material for the Group.

Note 10.3. Post-employment benefits other than pensions

Historically, the Group grants to its retirees post-employment benefits other than pensions in the form of socio-cultural aid premium and other social benefits including a subsidized hospitalization plan. There are no plan assets for such benefits.

The subsidy to the hospitalization plan is based on an indexed fixed amount per beneficiary.

The funded status of the plans is as follows :

	As of 31 December
(EUR million)	2017	2018
Defined Benefit Obligation	350	347
Plan assets at fair value	0	0
Net liability recognized in the balance sheet	350	347

The components recognized in the income statement and other comprehensive income are as follows :

	Year ended 31 December
(EUR million)	2017	2018
Current service cost - employer	5	4
Interest cost	5	5
Recognized in the income statement	1 0	1 0
Remeasurements
Effect of experience adjustments	1	1
Recognized in other comprehensive income	1	1
Total	1 1	1 1

The movement in the net liability recognized in the balance sheet is as follows :

		As of 31 December
(EUR million)	2017	2018
At the beginning of the year	352	350
Expense for the period recognized in the income statement	10	10
Remeasurement recognized in other comprehensive income	1	1
Actual employer contribution	-13	-13
At the end of the year	350	347

The liability for post-employment benefits other than pensions was determined using following assumptions :

		As of 31 December
	2017	2018
Discount rate	1.60%	1.60%
Future cost trend (index included)	2.00%	2.00%
Mortality	BE Prospective IA/BE BE Prospective IA/BE

The liability for post-employment benefits other than pensions is determined based on the entity's best estimate of the financial and demographic assumptions which are reviewed on an annual basis. The duration of the obligation is 14.37 years.

Sensitivity analysis

Significant actuarial assumptions for the determination of the defined benefit plans obligations are discount rate, inflation, future cost trend and mortality. The sensitivity analysis has been performed based on reasonably possible changes of the respective assumptions, while holding the other assumptions constant.

If the discount rate increases (or decreases) by 1%, the defined benefit obligation would decrease (or increase) by around 13% to 16%.

If the future cost trend increases (or decreases) by 1%, the defined benefit obligation would increase (or decrease) by around 13% to 16%.

If a 1-year age correction would be applied to the mortality tables, the defined benefit obligation would change by around 4%.

The Group expects to contribute an amount of EUR 15 million to these plans in 2019.

Note 10.4. Other liabilities

The Group participates in a State Defined Benefit plan. On 31 December 2003, Proximus transferred to the Belgian State its legal pension obligation for its statutory employees and their survivors to the Belgian State. The transfer of the statutory pension liability to the Belgian State in 2003 was coupled with an increased employer social security contribution for civil servants as from 2004 and included an annual compensation mechanism to off-set certain future increases or decreases in the Belgian State's obligations as a result of actions taken by Proximus. Following a change in law (Program Law of 25 December 2017), as from 2018, the obligation to off-set stopped for the Belgian State.

Note 11. Other non-current assets

	As of 31 December
(EUR million)	Note	2017	2018
Other derivatives	33.1	5	5
Other financial assets
Other financial assets at amortized cost		51	3 4
Total		5 6	4 0

The decrease in other non-current assets relates to the transfer of the escrow account opened in the context of the TeleSign business combination of EUR 19 million from non-current assets (in 2017) to current assets (in 2018).

Note 12. Inventories

	As of 31 December
(EUR million)	2017	2018
Raw materials, consumables and spare parts	3 3	3 4
Work in progress and finished goods	17	2 6
Goods purchased for resale	7 3	6 9
Total	123	129

Inventory is reported net of allowances for obsolescence.

Note 13. Trade receivables and contract assets

13.1 Trade receivables

	As of 31 December
(EUR million)	2017	2018
Trade receivables	1,111	1,042
Trade receivables - gross amount	1,222	1,149
Loss allowance	-111	-107

Trade receivables are amounts due by customers for goods sold or services performed in the ordinary course of business. Most trade receivables are non-interest bearing and are usually on 30-90 days terms. Terms are somewhat longer for the receivables of the International Carrier Services segment (ICS), since major part of its trade receivables relates to other Telco operators. Given the bilateral nature of ICS business, netting practice is very common, but this process can be quite long. The related netting agreements are not legally enforceable.

For non-ICS business, the netting payment is also applied with some other telecom operators.

Trade receivables are recognized initially, when they are originated, at contract price. The group holds the trade receivables with the objective to collect the contractual cash flows and measures them subsequently at amortized cost using the effective interest method.

For the years presented, no trade receivables were pledged as collaterals. In 2018, Proximus Group received bank and parent guarantees of EUR 6 million (in 2017, EUR 7 million) as securities for the payment of outstanding invoices.

13.2 Contract assets (IFRS15)

	As of 1st January	As of 31 December
(EUR million)	2018 IFRS 15	2018 IFRS 15
Contract assets gross	8 3	8 8
Settled after 12 month of the reporting period	0	6 4
Settled within 12 month of the reporting period	0	2 4
Loss allowance	-5	-5
Contract assets net	7 8	8 3

The evolution of the gross amount of the contract assets during the year, can be explained as follow
Balance at 1 Jan 2018 IFRS 15	8 3
Decrease in contract assets relating to existing contracts in the opening balance	-88
Normal evolution	-77
Anticipated termination	-11
New contract assets	9 3
Balance at 31 Dec 2018 IFRS 15	8 8

13.3 Loss allowance on trade receivables and contract assets

The group applies the IFRS 9 simplified approach for measuring the expected credit losses. This approach uses a lifetime expected loss allowance for all trade receivables and contract assets. To measure the expected credit losses, trade receivables and contract assets of CBU and EBU segments have been grouped based on shared credit risk characteristics and the days past due. The contract assets relate to a right to consideration in exchange of goods and services that have already transferred and have substantially the same risk characteristics as the trade receivables for the same types of contracts. The group has therefore concluded that the expected loss rates for trade receivables of the CBU and EBU segments are a reasonable approximation of the loss rates for the contract assets. These expected loss rates correspond to historical credit losses experienced. The historical loss rates are adjusted to reflect current and forward looking information on macroeconomic factors affecting the ability of the customers to settle the receivables.

For the ICS segment expected credit losses for trade receivables have been determined on individual basis considering different factors determining a credit scoring such as micro and macro-economic criteria as well as credit rating, country risk, customer history, possible compensation in order to net the risk and other internal and external sources.

As of 31 December Gross Net	Past due
(EUR million)	receivables / contract assets	Loss allowance amount	carrying	Not past due	< 30 days	30-60 days	60-90 days	90-180 days	180- 360 days	> 360 days
Trade receivables
2016	1,268	-118	1,149	762	84	57	41	7 4	48	84
2017	1,222	-111	1,111	657	134	55	40	6 1	7 1	9 3
2018	1,149	-107	1,042	616	128	46	3 8	6 3	50	101
2018 % loss allowance on trade receivables			9 %	1%	2 %	3 %	4%	12%	16%	43%
The loss allowance on contract assets was as follow :
Contract assets	9 3	- 5	88	88
2018 % loss allowance on contract asset			5%	5%

The analysis of trade receivables that were past due is as follows:

The closing loss allowances for trade receivables and contract assets as at 31 December 2018 reconciles to the opening loss allowances as follows:

The evolution of the allowance for doubtful debtors is as
(EUR million)	Trade receivable	Contract costs	Total
31 December 2017 under IAS 39	-111	0	-111
Amounts restated through retained earnings	0	- 5	- 5
Opening loss allowance per 1/1/2018 under IFRS 9	-111	- 5	-116
Increase in loss allowance through income statement	-28	0	-28
Receivables written off as uncollectible	3 2	0	3 2
As of 31 December 2018	-107	- 5	-112

The evolution of the allowance for doubtful debtors is as

Note 14. Other current assets

		As of 31 December
(EUR million)	Note	2017	2018
VAT receivables		2 2	11
Derivatives	31.1	2	0
Prepaid expenses		9 5	9 6
Other receivables		3 6	46
Total		122	155

Note 15. Investments

	As of 31 December
(EUR million)	Note	2017	2018
Term account at amortized costs	31.4	5	4
Total		5	4

Investments include deposits with an original maturity greater than three months but less than one year.

Note 16. Cash and cash equivalents

		As of 31 December
(EUR million)	Note	2017	2018
Term account at amortized costs	31.4	2 8	40
Cash at bank and in hand	31.4	305	300
Total		333	340

Short-term deposits are made for periods varying between one day and three months, depending on the immediate cash requirements of the Group, and earn or pay interest at the respective short-term deposit rates. Interest rates applied on cash with banks are floating as corresponding to the daily bank deposit rates.

The cash and cash equivalents are held with banks and financial institutions counterparties with a high longterm credit rating between A- and A+ with a minimum of A-. Therefore, the expected credit loss on cash and cash equivalents is deemed immaterial.

Note 17. Equity

Note 17.1 Shareholders' equity

At 31 December 2018, the share capital of Proximus SA amounted to EUR 1 billion (fully paid up), represented by 338,025,135 shares, with no par value and all having the same rights, provided such rights are not suspended or cancelled in the case of treasury shares. The Board of Directors of Proximus SA is entitled to increase the capital for a maximum amount of EUR 200 million.

The Company may acquire its own shares and transfer the shares thus acquired in accordance with the provisions of the Commercial Companies Code. The Board of Directors is empowered by article 13 of the Articles of Association to acquire the maximum number of own shares permitted by law. The price paid for these shares must not be more than five percent above the highest closing price in the thirty-day trading period preceding the transaction nor more than ten percent below the lowest closing price in that same thirty-day period. Said authorization is granted for a period of five years as of 16 April 2014.

Distribution of retained earnings of Proximus SA, the parent company, is limited by a restricted reserve built up in prior years in accordance with Belgian Company Law up to 10% of Proximus' issued capital.

Proximus SA has a statutory obligation to distribute 5% of the parent company income before taxes to its employees. In the accompanying consolidated financial statements, this profit distribution is accounted for as workforce expenses.

In December 2015, a new law was adopted by the Belgian Parliament with the purpose of modernizing the 1991 Law reforming certain economic public companies, especially by the flexibility of certain organizational constraints in order to create a level playing field with competing companies, by aligning the corporate governance to the normal rules for listed companies in Belgium and by defining the framework for the government to decrease their participation below 50%. The General Shareholders Meeting of 2016 decided to change the bylaws in order to incorporate the amendments made to the 1991 Law.

On 31 December 2018, the number of treasury shares amounts to 15,321,318 of which 1,199,036 entitled to dividend rights and 14,122,282 without dividend rights. Dividends allocated to treasury shares entitled to dividend rights are accounted for under the caption "Reserves not available for distribution" in the statutory financial statements of Proximus SA.

In 2018 and 2017, the Group sold respectively 14,431 and 6,263 treasury shares to its senior management for less than EUR 1 million under share purchase plans at a discount of 16.70% (see note 34).

During the years 2018 and 2017, employees exercised respectively 38,397 and 308,623 share options. In order to honor its obligation in respect of these exercises, Proximus used treasury shares (see note 34).

	2017	2018
As of 1 January	338,025,135	338,025,135
As of 31 December	338,025,135	338,025,135
Number of treasury shares:	2017	2018
As of 1 January	15,388,032	15,386,146
Sale under a discounted share purchase plan	-6,263	-14,431
Acquisition / (sale) of treasury shares	313,000	-12,000
Exercice of stock option	-308,623	-38,397
As of 31 December	15,386,146	15,321,318

In 2018 and 2017, no share options were granted by the Group to its key management and senior management

Note 17.2 Non-controlling interests

Non-controlling interests include the 42.4% of the minority shareholders (Swisscom and MTN Dubai) into BICS as from 1 January 2010.

The Group granted Be-Mobile Group non-controlling interests with put options on their shares. As a result, a gross liability is recognized for the expected exercise price of the put option and is remeasured at FVTPL.

Note 18. Interest-bearing liabilities

Note 18.1 Non-current interest-bearing liabilities

		As of 31 December
(EUR million)	Note	2017	2018
Unsubordinated debentures		1,850	1,852
Leasing and similar obligations		6	4
Credit institutions		0	403
Derivatives held for trading	31.1	4	4
Total		1,860	2,263

The move to IFRS 9 did not lead to financial liabilities reclassifications from amortised costs.

In March 2018, the European Investment Bank (EIB) granted Proximus S.A. a EUR 400 million loan for the further roll-out and upgrading of its fixed broadband infrastructure in Belgium. The loan has a duration of 10 years.

All long-term debt is unsecured. During 2017 and 2018 there have been no defaults or breaches on loans payables.

Over the two years presented, an interest rate and currency swaps (IRCS) was used to manage the currency and interest rate exposure on the JPY unsubordinated debentures. The swaps enabled the Group to transform the interest rate on these debentures which are fully hedged economically, from a fixed interest rate to a floating interest rate. and converting the remaining liability in JPY into fixed rate liability in EUR (see note 31).

Unsubordinated debentures in EUR and in JPY are issued by Proximus SA. The capital is repayable in full on the maturity date.

Non-current interest-bearing liabilities as of 31 December 2018 are summarised as follows:

	Carrying amount	Nominal amount	Measurement under IAS 39	Maturity date	Interest payment / repriceable	Interest rate payable	Effective interest rate
	(EUR million)	(EUR million)			(b)
Unsubordinated debentures
Floating rate borrowings
JPY (a)	12	11	Amortized cost	Dec-26	Semi annually	-0.42%	-0.42%
Fixed rate borrowings
EUR	150	150	Amortized cost	Mar-28	Annually	3.19%	3.22%
EUR	100	100	Amortized cost	May-23	Annually	2.26%	2.29%
EUR	597	600	Amortized cost	Apr-24	Annually	2.38%	2.46%
EUR	495	500	Amortized cost	Oct-25	Annually	1.88%	2.05%
EUR	499	500	Amortized cost	Mar-22	Annually	0.50%	0.34%
Leasing and similar obligations
EUR	4	4	Amortized cost	2022	Quarterly	3.75%	3.75%
Credit institutions
Fixed rate borrowings
EUR	400	400	Amortized cost	Mar-28	Annually	1.23%	1.04%
EUR	3	0	Amortized cost	Oct-23	Monthly	0.60%	0.60%
Derivatives
Derivatives held-for-trading	4	0	Fair value
Total	2,263	2,265

(a) converted into a floating rate borrowing in EUR via currency interest rate swap

(b) for floating rate borrowings, interest rate is the one prevailing at the last repricing date before 31 December 2018

Non-current interest-bearing liabilities as of 31 December 2017 are summarised as follows:

	Carrying amount Nominal amount		Measurement under IAS 39	Maturity date	Interest payment / repriceable	Interest rate payable	Effective interest rate
	(EUR million)	(EUR million)			(b)
Unsubordinated debentures
Floating rate borrowings
JPY (a)	12	11	Amortized cost	Dec-26	Semi annually	-0.22%	-0.22%
Fixed rate borrowings
EUR	150	150	Amortized cost	Mar-28	Annually	3.19%	3.22%
EUR	100	100	Amortized cost	May-23	Annually	2.26%	2.29%
EUR	597	600	Amortized cost	Apr-24	Annually	2.38%	2.46%
EUR	494	500	Amortized cost	Oct-25	Annually	1.88%	2.05%
EUR	498	500	Amortized cost	Mar-22	Annually	0.50%	0.34%
Leasing and similar obligations
EUR	6	6	Amortized cost	2021	Quarterly	3.75%	3.75%
Derivatives
Derivatives held-for-trading	4	0	Fair value
Total	1,860	1,867

(a) converted into a floating rate borrowing in EUR via currency interest rate swap

(b) for floating rate borrowings, interest rate is the one prevailing at the last repricing date before 31 December 2017

Note 18.2 Current interest-bearing liabilities

			As of 31 December
(EUR million)	Note	2017	2018
Current portion of amounts payable > 1
year
Unsubordinated debentures		405	0
Leasing and similar obligations		2	2
Credit institutions		0	1
Other financial debts
Other loans		164	232
Total		570	234
In February 2018 the Group repaid the maturing bond of EUR 405 million. The table below details the current portion of the unsubordinated debentures maturing within one year.
Current interest-bearing liabilities as of 31 December 2018 are summarised as follows:

	Carrying amount	Nominal amount	Measurement under IAS 39	Maturity date	Interest payment / repriceable	Interest rate payable	Effective interest rate
	(EUR million)	(EUR million)
Current portion of interest-bearing-liabilities > 1 year
Leasing and similar obligations Fixed rate borrowings EUR	2	2	Amortized cost	2021	Kwartaal	3.75%	3.75%
Credit institutions Fixed rate borrowings
EUR	1	1	Amortized cost		Maandelijks	0.60%	0.60%
Total	3	3

Current interest-bearing liabilities as of 31 December 2017 are summarised as follows:

	Carrying amount Nominal amount		Measurement under IAS 39	Maturity date	Interest payment / repriceable	Interest rate payable	Effective interest rate
	(EUR million)	(EUR million)
Current portion of interest-bearing-liabilities > 1 year
Unsubordinated debentures
Fixed rate borrowings
EUR	405	405	Amortized cost	Feb-18	Annually	3.88%	4.05%
Leasing and similar obligations
Fixed rate borrowings
EUR	2	2	Amortized cost	2021	Quarterly	3.75%	3.75%
Total	407	407

Note 18.3 Information about the Group financing activities related to interest bearing liabilities

	As of 31 December	Cash Flows	Non-cash changes			As of 31 December
In Eur million	2017		Business combination	Fair value changes	Amortiz ation	2018
Long-term
Unsubordinated debentures	1,850	0	0	0	2	1,852
Leasing and similar obligations	6	- 2	0	0	0	4
Credit institutions	0	399	4	0	0	403
Derivatives held for trading	4	0	0	1	0	4
Current portion of amounts payable > one year
Unsubordinated debentures	405	-405	0	0	0	0
Leasing and similar obligations	2	0	0	0	0	2
Credit institutions held to maturity	0	0	0	0	0	1
Other financial debts
Credit institutions	0	- 1	1	0	0	0
Other loans	164	6 8	0	0	0	232
Total liabilities from financing activities	2,430	5 9	5	1	2	2,497

Note 19. Provisions

(EUR million)	Workers' accidents	Litigation	Illness days	Other risks	Total
As of 1 January 2016	3 2	2 5	3 1	5 5	144
Utilisations	2	3	0	6	11
Withdrawals	- 2	- 3	0	- 4	- 9
Unwinding	0	- 2	- 2	- 1	- 6
As of 31 December 2017	3 2	2 4	2 8	5 6	140
Additions	2	3	0	19	2 4
Utilisations	- 2	- 1	0	- 9	-12
Withdrawals	0	- 4	- 1	- 3	- 9
As of 31 December 2018	3 1	2 2	2 7	6 3	142

The provision for workers' accidents relates to compensation that Proximus SA could pay to members of personnel injured (including professional illness) when performing their job and on their way to work. Until 31 December 2002, according to the law of 1967 (public sector) on labour accidents, compensation was funded and paid directly by Proximus. This provision (annuities part) is based on actuarial data including mortality tables, compensation ratios, interest rates and other factors defined by the law of 1967 and calculated with the support of a professional insurer. Taking into account the mortality table, it is expected that most of these costs will be paid out until 2062.

As from 1 January 2003, contractual employees are subject to the law of 1971 (private sector) and statutory employees remain subject to the law of 1967 (public sector). For both the contractual and statutory employees, Proximus is covered as from 1 January 2003 by insurance policies for workers' accidents and therefore will not directly pay members of personnel.

The provision for litigation represents management's best estimate for probable losses due to pending litigation where the Group has been sued by a third party or is subject to a judicial or tax dispute. The expected timing of the related cash outflows depends on the progress and duration of the underlying judicial procedures.

The provision for illness days represents management's best estimate of probable charges related to the granting by Proximus of accumulating non-vesting illness days to its statutory employees. In 2016 this provision decreased as a consequence of the voluntary early leave plan.

The provision for other obligations per end of 2018 mainly includes the expected costs for dismantling and restoration of mobile antenna - environmental risks and sundry risks. It is expected that most of these costs will be paid during the period 2019-2048. The provision for restoration costs is estimated at current prices and discounted using a discount rate that varies between 0% and 4%, depending on the expected timing to settle the obligation.

Note 20. Other non-current payables

	As of 31 December
(EUR million)	2017	2018
Other non-current payables -trade	177	126
Other non-current payables- non trade	2 6	6
Total	202	132

Non-current payables-trade include licenses (see note 4), broadcasting and content rights payable over the part of the contract duration that is more than one year (mostly less than 3 years) and escrow accounts opened in the context of business combination for more than one year.

Non-current payable-non trade decreased as a result of the transfer of the escrow account opened in the context of the TeleSign business combination of EUR 19 million from non-current payables in 2017 to current payables in 2018 (see notes 7.4 and 11).

Note 21. Other current payables and contract liabilities

			As of 31 December
(EUR million)		2017	2018 IAS 18	2018 IFRS 15
VAT payables		8	8	8
Payables to employees		9 7	9 9	9 9
Accrual for holiday pay		83	86	86
Accrual for social security contributions		52	49	49
Advances received on contracts		8	9	9
Other taxes		7 9	9 3	9 3
Deferred income		146	153	54
Other derivatives	31.1	1	0	0
Accrued expenses		16	2 6	2 6
Other debts (1)		138	152	152
Subtotal Other current payables		628	677	578
Contract Liability		0	0	109
Total		628	677	687

(1) includes short term part of the liabilities for pensions, post employment and termination benefits (EUR 52 million for 2018 and EUR 53 million for 2017)

Deferred income under IAS 18 mainly included prepaid telecommunication and ICT services. In the framework of the application of IFRS 15, these prepaid amounts have been reclassified to the contract liabilities.

Contract liabilities comprise the Group's obligation to transfer goods or services in the future to a customer for which the Group has received consideration from the customer or the amount is due. The opening balance of contract liabilities as per 1 January 2018 amounted to million 98 EUR.

Note 22. Net revenue

Net revenue corresponds to the revenue from contracts with customers. The group derives revenue from the transfer of goods and services over time and at a point in time as follows:

	Year ended 31 December
(EUR million)	2017	2018 IAS 18	2018 IFRS 15
Revenue recognized at one point in time	528	530	612
Revenue recognized over time	5,211	5,231	5,152
Total	5,739	5,761	5,764

The disaggregation of revenue in disclosed in the consolidated management report under section management comment.

The following table includes revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the reporting date:

		Expected timing of recognition
(EUR million)	2019	2020	> 2020
Transaction price allocated to performance obligations that are unsatisfied at reporting date	217	5 2	1 3

These figures include the revenue that will be recognized for Media Mobile, based on a preliminary estimation of the duration of the period over which the entity has enforceable obligations to deliver its services.

Note 23. Other operating income

	Year ended 31 December
(EUR million)	2017	2018
Gain on disposal of intangible assets and property, plant and equipment	2 4	2 2
Gain on disposal of consolidated companies	1	0
Other income	3 8	43
Total	6 3	6 5

The Group realized a gain on disposal of fixed assets of EUR 24 million in 2017 and EUR 22 million in 2018. The cash received from disposals amounts to EUR 37 million in 2018.

Other income includes compensation for network damages (EUR 9 million in 2018 and EUR 8 million in 2017) as well as employee and third-party contributions for sundry services.

Note 24. Costs of materials and services related to revenue

	Year ended 31 December
(EUR million)	2016	2018 IAS 18	2018 IFRS 15
Purchases of materials	478	477	477
Purchases of services	1,688	1,645	1,649
Total	2,166	2,122	2,126

Purchases of materials are shown net of work performed by the enterprise that is capitalized for an amount of EUR 53 million in 2018 and EUR 57 million in 2017.

Note 25. Workforce expenses

	Year ended 31 December
(EUR million)	2017	2018
Salaries and wages	685	705
Social security expenses	178	176
Pension costs	46	44
Post-employment benefits other than pensions and termination benefits	7 4	49
Other workforce expenses (1)	266	272
Total	1,248	1,245

(1) restated for 2017: split between workforce-non workforce has been aligned for all subsidiaries , with the total The 2017 figures have been restated accordingly, with for the full year 2017 EUR 30 million moving from non-

Workforce expenses are expenses related to own employees as well as to external working parties (included in other workforce expenses).

Salaries and wages and social security expenses are shown net of work performed by the enterprise that is capitalized for an amount of EUR 113 million in 2018 and EUR 125 million in 2017.

The post-employment benefits other than pensions and termination benefits include the impact of the voluntary early leave plan and collective agreement approved by the social partners and the Board of Directors on 27 April 2016 (2017 EUR 65 million and 2018 EUR 36 million). For employees for whom the plan had an immediate effect the cost was recognized immediately. For employees who have opted for the plan but are still remaining active, the cost is spread over their respective activity period, as from the second quarter of 2016.

The other workforce expenses include external work force and other costs relating to internal workforce (such as Meal vouchers, social activities, workers accident insurance, train tickets for actives).

The 2017 other workforce expenses include the positive impacts of the compensation mechanism (see note 10.4).

Note 26. Non-Workforce expenses

	Year ended 31 December
(EUR million)	2017	2018 IFRS 15
Rent expense	7 9	80
Service and capacity contracts and non lease components of renting contracts	3 2	42
Maintenance and utilities	176	166
Advertising and public relations	80	84
Administration, training, studies and fees	128	141
Telecommunications, postage costs and office equipment	3 8	3 8
Loss allowance	2 5	2 8
Taxes other than income taxes	2 7	48
Other Non-Workforce expenses (1)	3 0	3 7
Total	615	663

Taxes other than income tax: Tax on pylons

The European Court of Justice confirmed in two Proximus cases of December 2015 that a tax on pylons is not, per se, in contradiction with European law.

Proximus continues to file tax complaints and to launch legal proceedings with respect to tax on pylons tax bills received from municipalities and provinces in the three regions based on other arguments.

New evolutions in jurisprudence in 2018 led the Group to reassess the liabilities related to Taxes on Pylons for past litigations in 2018. This resulted in an increase of cost of 20 million. The position as recognized in these Financial Statements reflects management's best estimate of the probable final outcome.

Note 27. Depreciation and amortization

	Year ended 31 December
(EUR million)	2017	2018
Amortization of licenses and other intangible assets	382	431
Depreciation of property, plant and equipment	581	585
Total	963	1,016

Note 28. Net finance cost

	Year ended 31 December
(EUR million)	2017	2018
Finance income
Interest income on financial instruments
At amortized costs	4	6
Fair value adjustments of financial instruments
Not in a hedge relationship - FVTPL	2	1
Other finance income	1	2
Finance costs
Interests and debt charges on financial instruments at amortized costs
Unsubordinated debentures	-53	-40
Long term payables	- 3	- 2
Interests and debt charges on financial instruments at FVTOCI	- 4	0
Discounting charges
On provisions	0	- 2
On termination benefits	- 7	- 7
Impairment losses
On participating interests at FVTOCI (1)	- 2	0
Fair value adjustments of financial instruments
Not in a hedge relationship - FVTPL	- 5	- 3
Other finance costs	- 2	-10
Total	-70	-56

(1) this financial instrument was recognized at cost less impairment under IAS 39

Note 29. Earnings per share

Basic earnings per share are calculated by dividing the net income for the year attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share is calculated by dividing the net income for the year attributable to ordinary shareholders, by the weighted average number of ordinary shares outstanding during the year, both adjusted for the effects of dilutive potential ordinary shares.

The following table reflects the income and share data used in the computation of basic and diluted earnings per share.

	Year ended 31 December
(in millions, except per share amounts)	2017	2018
Net income attributable to ordinary shareholders (EUR)	522	508
Weighted average number of outstanding ordinary shares	322,777,440	322,649,917
Adjustment for share options	176,971	85,462
Weighted average number of outstanding ordinary shares for diluted earnings per share	322,954,411	322,735,379
Basic earnings per share (EUR)	1.62	1.58
Diluted earnings per share (EUR)	1.62	1.58

In 2018 and 2017, all stock options granted were dilutive and hence included in the calculation of diluted earnings per shares.

Note 30. Dividends paid and proposed

(in millions, except per share amounts)	2017	2018
Dividends on ordinary shares:
Proposed dividends (EUR million)	484	484
Number of outstanding shares with dividend rights	322,638,989	322,703,817
Dividend per share (EUR)	1.5	1.5
Interim dividend paid to the shareholders (EUR million)	161	161
Interim dividend per share (EUR)	0.50	0.50

The proposed dividends for 2017 have been effectively paid in April 2018. The interim dividends for 2018 have been paid in December 2018.

An amount of less than EUR 1 million was paid in 2018 in relation with the stock options exercised in 2018. This amount corresponds to the accumulated dividends attached to the exercised stock options since their granting.

Note 31. Additional disclosures on financial instruments

Note 31.1. Derivatives

The Group makes use of derivatives such as interest rate swaps (IRS), interest rate and currency swaps (IRCS), forward foreign exchange contracts and currency options.

(EUR million)	Note	2017	2018
Non-current assets
Derivatives held for trading	11	5	5
Current assets
Non-interest-bearing
Derivatives held-for-hedging	14	2	0
Total assets		7	5
Non-current liabilities
Interest-bearing
Derivatives held for trading	18	4	4
Current liabilities
Non-interest-bearing
Derivatives held for trading	2 1	1	0
Total liabilities		4	4

The tables below show the positive and negative fair value of derivatives, included in the balance sheet respectively as current/non-current assets or liabilities.

As of 31 December 2018	Fair value
(EUR million)	Asset	Liability
Interest rate and currency swaps	5	0
Interests and currency related - other derivatives	0	-4
Derivatives not qualifying for hedge accounting	6	- 5
Total	6	- 5
As of 31 December 2017	Fair value
(EUR million)	Asset	Liability
Interest rate swaps	2	0
Derivatives qualifying for hedge accounting	2	0
Interests and currency related - other derivatives	5	0
Forward foreign exchange contracts	0	- 4
Derivatives not qualifying for hedge accounting	5	- 4
Total	6	- 4

Interest rate and currency swaps (IRCS) are used to manage the currency and interest rate exposure on outstanding JPY 1.5 billion unsubordinated debentures (see note 18).

Forward foreign exchange contracts concerned mainly the forward purchase of USD against EUR for forecasted business transactions, all of which settling before year end 2018.

Note 31.2 Financial risk management objectives and policies

The Group's main financial instruments comprise unsubordinated debentures, trade receivables and trade payables. The main risks arising from the Group's use of financial instruments are interest rate risk, foreign currency risk, liquidity risk and credit risk.

All financial activities are subject to the principle of risk minimization. To achieve this, all matters related to funding, foreign exchange, interest rate and counterparty risk management are handled by a centralized Group Treasury department. Simulations are performed using different market (including worst case) scenarios with a view to estimating the effects of varying market conditions. All financial transactions and financial risk positions are managed and monitored in a centralized treasury management system.

Group Treasury operations are conducted within a framework of policies and guidelines approved by the Executive Committee and the Board of Directors. Group Treasury is responsible for implementing these policies. According to the policies, derivatives are used to hedge interest rate and currency exposures. Derivatives are used exclusively as hedging instruments, i.e., not for trading or other speculative purposes. Derivatives used by the Group mainly include forward exchange contracts, interest rate swaps and currency options.

The table below provides a reconciliation of changes in equity and statement of OCI by hedge type for 2018

(EUR million)	Note	Gain taken to equity	Transfer to profit or loss for the period

Interest rate swap instruments	OCI		- 6
Amortization of cumulated remeasurements of settled interest rate swap	OCI	1
Changes in other comprehensive income in relation with cash flow hedges		1	- 6

The Group's internal auditors regularly review the internal control environment at Group Treasury.

Interest rate risk

The Group's exposure to changing market interest rates primarily relates to its long-term financial obligations. Group Treasury manages exposure of the Group to changes in interest rates and the overall cost of financing by using a mix of fixed and variable rate debts, in accordance with the Group's financial risk management policies. The aim of such policies is to achieve an optimal balance between total cost of funding, risk minimization and avoidance of volatility in financial results, whilst taking into account market conditions and opportunities as well as overall business strategy.

The tables below summarize the non-current interest-bearing liabilities (including their current portions, excluding leasing and similar obligations) per currency, the interest rate and currency swap agreements (IRCS), and the net obligations of the Group at 31 December 2017 and 2018.

These tables do not consider the loans entered into by the Group subsidiaries, before their acquisition by the Group, for a carrying amount of € 4 million at 31Dec 2018.

					As of 31 December 2018
		Direct borrowing		IRCS agreements			Net obligations
	Notional amount	Weighted average interest rate (1)	Average time to maturity	Amount payable (receivable)	Weighted average interest rate (1)	Average time to maturity	Amount payable (receivable)	Weighted average interest rate (1)	Average time to maturity
	(EUR million)		(in years)	(EUR million)		(in years)	(EUR million)		(in years)
EUR
Fixed	2,250	1.73%	6				2,250	1.73%	6
Variable				11	-0.42%	8	11	-0.42%	8

JPY
Fixed	11	5.04%	8	-11	-5.04%	8
Variable
Total	2,261	1.75%	6	0			2,261	1.72%	6

(1) Weighted average interest rate taking into account last repriced interest rates for floating borrowings.

					As of 31 December 2017
		Direct borrowing		IRCS agreements			Net obligations
	Notional amount	Weighted average interest rate (1)	Average time to maturity	Amount payable (receivable)	Weighted average interest rate (1)	Average time to maturity	Amount payable (receivable)	Weighted average interest rate (1)	Average time to maturity
	(EUR million)		(in years)	(EUR million)		(in years)	(EUR million)		(in years)
EUR
Fixed	2,255	1.95%	5				2,255	1.95%	5
Variable				11	-0.46%	9	11	-0.46%	9
JPY
Fixed	11	5.04%	9	-11	-5.04%	9
Variable
Total	2,266	1.98%	5	0			2,266	1.94%	5

(1) Weighted average interest rate taking into account last repriced interest rates for floating borrowings.

On November 28, 2017 the Group entered into an interest rate swap to mitigate the risk of Interest rate variations between the hedge inception date and the issuance date of a highly probable fixed rate long-term debt of EUR 400 million, expected to be issued in the first quarter 2018 and which effectively materialized on March, 15th 2018, when the group entered into a ten year investment loan with the European Investment Bank. The effective portion of changes in the fair value of hedging instruments that are designated in a cash flow hedge was recognized in other comprehensive income and henceforth are gradually reclassified to profit or loss in the same period as the hedged item.

Foreign currency risk

The Group's main currency exposures result from its operating activities. Such exposure arises from sales or purchases by operating units in currencies other than euro. Transactions in currencies other than euro mainly occur in the International Carrier Services ("ICS") segment, even more so following the recent acquisition of TeleSign. Indeed, international carrier activities generate payments to and receipts from other telecommunications operators in various foreign currencies. Next to these, Proximus as well as a number of its affiliates also engage in international activities (ICT, roaming, capital and operating expenditure) giving rise to currency exposures.

Risks from foreign currencies are hedged to the extent that they are liable to influence the Group's cash flows. Foreign currency risks that do not influence the Group's cash flows (i.e., the risks resulting from the translation of assets and liabilities of foreign operations into the Group's reporting currency) as a rule are not hedged. However, the Group could envisage hedging such so-called translation differences should their potential impact become material to the Group's consolidated financial statements.

The typical financial instruments used to hedge foreign currency risk are forward foreign exchange contracts and currency options.

In 2017 and 2018, the Group only incurred currency exposures relative to its operating activities. Foreign currency transactions are recognized in functional currency on initial recognition at the foreign exchange rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at balance sheet date using the exchange rate at that date. The net exchange difference on the translation of these monetary assets and liabilities are recorded via the income statement. However, in a limited number of cases, hedge accounting has been applied, the effective portion of the gains and losses on the hedging instrument is recognized via other comprehensive income until the hedged item occurs. If the hedged transaction leads to the recognition of an asset, the carrying amount of the asset at the time of initial recognition incorporates the amount previously recognized via other comprehensive income. The ineffective portion of a cash flow hedge is always recognized in profit or loss.

The Group performed a sensitivity analysis on the exchange rates EUR/USD, EUR/SDR, EUR/GBP, and EUR/CHF, four currency pairs to which it is typically exposed in its operating activities, for the years 2017 and 2018.

Credit risk and significant concentrations of credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations.

Credit risk encompasses all forms of counterparty exposure, i.e. where counterparties may default on their obligations to Proximus in relation to lending, hedging, settlement and other financial activities.

The Group's maximum exposure to credit risk (not taking into account the value of any collateral or other security held) in the event the counterparties fail to perform their obligations in relation to each class of recognized financial assets, including derivatives with positive market value, is the carrying amount of those assets in the balance sheet and bank guarantees granted.

To reduce the credit risk in respect of financing activities and cash management of the Group, transactions are only entered into with leading financial institutions whose long-term credit ratings equal at least A- (S&P).

The group applies the IFRS 9 simplified approach for measuring the expected credit losses for trade receivables and contract assets, meaning the life time expected credit loss. The determination of this loss allowance might be at portfolio or individual level, depending on the assessed risk related to the customer.

Credit risk on operating activities with significant clients is managed and controlled on an individualized basis. When needed, the Group requests additional collaterals. These significant customers are however not material to the Group, since the client portfolio of the Group is mainly composed of a large number of small customers. Hence, credit risk and concentration of credit risk on trade receivables is limited. For amounts receivable from other telecommunication companies, the concentration of credit risk is also limited due to netting agreements (see note 13.3) with accounts payable to these companies, prepayment obligations, bank guarantees, parent guarantees and the use of credit limits obtained via credit insurance.

The Group is exposed to credit loss in the event of non-performance by counterparty on short-term bank deposits and financial derivatives (see note 31.1). However, the Group does not anticipate non-performance by any of these counterparties, seeing it only deals with prime financial institutions, makes very limited use of derivatives on debt instruments as shown in table 31.1, and, as a rule, only invests in highly liquid and shortterm securities (mainly cash and cash equivalents), for which, seen the excellent rating of the counterparts, the Group do not calculate loss allowances provisions.

Moreover, the Group monitors potential changes in credit risk on counterparties by tracking their external credit ratings on an ongoing basis as well as evolutions in its bank's credit default swap rates (a leading indicator often anticipating on future rating changes).

In addition, the Group is exposed to credit risk by occasionally granting non-recourse bank guarantees in favour of some of its institutional or governmental clients. At 31 December 2018, it had granted bank guarantees for an amount of EUR 54 million and EUR 52 million at 31 December 2017.

Finally, the Group has not pledged any financial assets, nor does it hold any collateral against any of its counterparties.

Liquidity risk

In accordance with the treasury policy, Group Treasury manages its overall cost of financing by using a mix of fixed and variable rate debts.

A liquidity reserve in the form of credit lines and cash is maintained to guarantee the solvency and financial flexibility of the Group at all times. For this purpose, Proximus entered into committed bilateral credit agreements with different maturities and into two separate and committed Syndicated Revolving Facilities for a total amount of EUR 700 million. For medium to long-term funding, the Group uses bonds and mediumterm notes. The maturity profile of the debt portfolio is spread over several years. Group Treasury frequently assesses its funding resources taking into account its own credit rating and general market conditions.

The table below summarizes the maturity profile of the Group's unsubordinated debentures as disclosed on note 18 at each reporting date. This maturity profile is based on contractual undiscounted interest payments and capital reimbursements and takes into account the impact on cash flows of interest rate derivatives used to convert fixed interest rate liabilities into floating interest rate liabilities and vice versa. For floating rate liabilities, interest rates used to determine cash outflows are the ones prevailing at their last price fixing date before reporting date (as of 31 December 2017 and 2018, respectively).

(EUR million)	2018	2019	2020	2021	2022	2022-2028
As of 31 December 2017
Capital	405	0	0	0	500	1,361
Interests	49	3 4	3 4	3 4	3 4	9 0
Total	454	3 4	3 4	3 4	534	1,451
As of 31 December 2018
Capital	0	1	1	1	501	1,762
Interests	0	3 9	3 9	3 9	3 9	119
Total	0	4 0	3 9	3 9	539	1,881

Bank credit facilities at 31 December 2018

In addition to the interest-bearing liabilities disclosed in notes 18.1 and 18.2, the Group is backed by long-term committed credit facilities of EUR 700 million. These facilities are provided by a diversified group of Belgian and international banks. As at 31 December 2018, there were no outstanding balances under any of these facilities. A total of EUR 700 million of credit lines was therefore available for drawdown as at 31 December 2018.

The Group also uses a EUR 3.5 billion Euro Medium-term Note ("EMTN") Program and a EUR 1 billion Commercial Paper ("CP") Program. As at 31 December 2018, there was an outstanding balance under the EMTN Program of EUR 1,850 million, whereas the CP Program showed a drawn and outstanding amount of EUR 231 million.

Note 31.3 Net financial position of the Group and capital management

The Group defines the net financial position as the net amount of investments, cash and cash equivalents minus any interest-bearing financial liabilities and related derivatives (including re-measurement to fair value). The net financial position does not include non-current trade payables.

(EUR million)	Note	2017	2018
Assets
Current investments (1)	14	5	4
Cash and cash equivalents (1)	15	333	340
Non-current derivatives	10	5	5
Liabilities
Non-current interest-bearing liabilities (1)	18	-1,860	-2,263
Current interest-bearing liabilities (1)	18	-570	-234
Net financial position		-2,088	-2,148

(1) after remeasurement to fair value, if applicable.

Non-current interest-bearing liabilities include non-current derivatives at fair value amounting to EUR 4 million in 2017 and EUR 4 million in 2018 (see note 18.1).

The purpose of the Group's capital management is to maintain net financial debt and equity ratios that allow for security of liquidity at all times via flexible access to capital markets, in order to be able to finance strategic projects and to offer an attractive remuneration to shareholders. Over the two years presented, the Group did not issue new shares or any other dilutive instruments.

Note 31.4 Categories of financial instruments

The Group occasionally uses interest rate (IRS) and/or currency swaps (IRCS) to manage the exposure to interest rate risk and to foreign currency risk on its non-current interest-bearing liabilities (see note 31.2).

The following tables present the Group's financial instruments per category defined under IAS 39, as well as gains and losses resulting from re-measurement to fair value. Based on market conditions at 31 December 2018, the fair value of the unsubordinated debentures, which are accounted for at amortized cost exceeds by EUR 107 million, or 5.0%, their carrying amount.

The fair values, calculated for each debenture separately, were obtained by discounting the cumulated cash outflows generated by each debenture with the interest rates at which the Group could borrow at 31 December 2018 for similar debentures with the same remaining maturities.

The tables below show the measurement categories under IAS 39 (for 2017) and the new measurement categories under IFRS 9 (for 2018) for each class of assets and financial liabilities, for 2017 and 2018:

As of 31 December 2018 (EUR million)	Note	Classification under IFRS 9 (1)	Carrying amount under IFRS 9	Fair value
ASSETS
Non-current assets
Other non-current assets
Other derivatives	3 1	FVTPL	5	5
Other financial assets		Amortized cost	11	11
Current assets
Trade receivables	13	Amortized cost	1,042	1,042
Interests bearing
Other receivables		Amortized cost	5	5
Non-intersts bearing
Other receivables		Amortized cost	2 4	2 4
Investments	15	Amortized cost	4	4
Cash and cash equivalents
Short-term deposits	16	Amortized cost	40	40
Cash at bank and in hand		Amortized cost	300	300
LIABILITIES
Non-current liabilities
Interest-bearing liabilities
Unsubordinated debentures not in a hedge relationship	18	Amortized cost	1,852	1,959
Credit institutions		Amortized cost	403	403
Other derivatives	3 1	FVTPL	4	4
Non interest-bearing liabilities
Other non-current payables	2 0	Amortized cost	132	132
Current liabilities
Interest-bearing liabilities, current portion
Credit institutions		Amortized cost	1	1
Interest-bearing liabilities
Other loans	18	Amortized cost	232	232
Trade payables		Amortized cost	1,361	1,361
Other current payables
Other debt		FVTPL	3 9	3 9
Other amounts payable		Amortized cost	305	305

(1) New categories according to IFRS 9 are as follows :

FVTPL: Financial assets/liabilities at fair value through profit and loss

FVTOCI: Financial assets at fair value through other comprehensive income

Amortized cost

As of 31 December 2017 (EUR million)	Note	Categories under IAS 39 (1)	Classification under IFRS 9 (01/01/2018)	Carrying amount	Fair value
ASSETS
Non-current assets
Other participating interests	8	AFS	FVTOCI	8	8
Other non-current assets
Other derivatives	31.1	FVTPL	FVTPL	5	5
Other financial assets		LaR	Amortized cost	2 5	2 5
Current assets
Trade receivables	13	LaR	Amortized cost	1,111	1,111
Other current assets
Derivatives held-for-hedging	31.1	HeAc	FVTOCI	2	2
Other receivables		N/A	Amortized cost	14	14
Investments	15	HTM	Amortized cost	5	5
Cash and cash equivalents
Short-term deposits	16	LaR	Amortized cost	333	333
LIABILITIES
Non-current liabilities
Interest-bearing liabilities
Unsubordinated debentures not in a hedge relationship	18	OFL	Amortized cost	1,850	1,989
Other derivatives	31.1	FVTPL	FVTPL	4	4
Non interest-bearing liabilities
Other non-current payables	2 0	OFL	Amortized cost	202	202
Current liabilities
Interest-bearing liabilities, current portion
Unsubordinated debentures not in a hedge relationship	18	OFL	Amortized cost	405	407
Interest-bearing liabilities
Other loans	18	OFL	Amortized cost	164	164
Trade payables		OFL	Amortized cost	1,415	1,415
Other current payables
Derivatives held for trading	31.1	FVTPL	FVTPL	1	1
Other debt		FVTPL	FVTPL	3 7	3 7
Other amounts payable		OFL	Amortized cost	289	289

(1) The categories according to IAS 39 are the following :

AFS: Available-for-sale financial assets

HTM: Financial assets held-to-maturity

LaR: Loans and Receivables financial assets

FVTPL: Financial assets/liabilities at fair value through profit and loss

OFL: Other financial liabilities

The Group did no designated at FVTPL financial instruments that would otherwise be FVTOCI or at amortized costs.

The Group did not reclassify, during the period, financial instruments from one category to another.

Note 31.5 Fair value of financial assets and liabilities

Financial instruments measured at fair value are disclosed in the table below according to the valuation technique used. The hierarchy between the techniques reflects the significance of the inputs used in making the measurements:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;

Level 2: valuation techniques for which all inputs which have a significant effect on the recorded fair value are observable for the asset or liability, either directly or indirectly;

Level 3: valuation techniques for which all inputs which have a significant effect on the recorded fair value are not based on observable market data.

The Group holds financial instruments classified in Level 1, 2 and 3. In 2016, the Group classified a new instrument in Level 3, which is not a transfer from another Level.

The valuation techniques for fair value measuring the Level 2 financial instruments are:

• Other derivatives in Level 2

Other derivatives include mainly the interest rate swaps (IRS, in 2015 only) and interest rate and currency swaps (IRCS) the Group entered into to reduce the interest rate and currency fluctuations on some of its long-term debentures. The fair values of these instruments are determined by discounting the expected contractual cash flows using interest rate curves in the corresponding currencies and currency exchange rates, all observable on active markets.

• Unsubordinated debentures

The unsubordinated debentures are recognized at amortized cost. Their fair values, calculated for each debenture separately, were obtained by discounting the interest rates at which the Group could borrow at 31 December 2018 for similar debentures with the same remaining maturities.

The financial instrument classified among the level 3 category is fair valued based on cash outflows in different scenarios, each one being weighted for its chance of occurrence. The weights are either based on statistical data that are very stable over time, either based on Proximus best estimate of the scenario occurrence. The instrument fair value is very depending but proportionate to changes in estimated cash outflows.

As of 31 December 2018		Classification under IFRS 9	Balance at 31	Fair values measurement at end of the reporting period using :
(EUR million)	Note	(1)	December 2018	Level 1	Level 2	Level 3
ASSETS
Non-current assets
Other non-current assets
Other derivatives	31.1	FVTPL	5		5
LIABILITIES
Non-current liabilities
Interest-bearing liabilities
Unsubordinated debentures except for their "non-closely related" embedded derivatives	18	Amortized cost	1,852		1,959
Credit institutions	18	Amortized cost	403		403
Non interest-bearing liabilities
Other derivatives	31.1	FVTPL	4		4
Current liabilities
Interest-bearing liabilities
Credit institutions	18	Amortized cost	1		1
Non interest-bearing liabilities
Other debt		FVTPL	3 9			3 9

(1) New categories according to IFRS 9 are as follows :

FVTPL: Financial assets/liabilities at fair value through profit and loss

FVTOCI: Financial assets at fair value through other comprehensive income

Amortized cost

As of 31 December 2017		Category according	Category	Balance at 31	Fair values measurement at end of the reporting period using :
(EUR million)	Note	to IAS 39 (1)	according to IFRS 9	December 2017	Level 1	Level 2	Level 3
ASSETS
Non-current assets
Other non-current assets
Other derivatives	31.1	FVTPL	FVTPL	5		5
Current assets
Non interest-bearing receivables
Derivatives held-for-hedging	31.1	HeAc	FVTOCI	2	2
LIABILITIES
Non-current liabilities
Interest-bearing liabilities
Unsubordinated debentures except for their "non-closely related" embedded derivatives	18	OFL	Amortized cost	1,850		1,989
Non interest-bearing liabilities
Other derivatives	33.1	FVTPL	FVTPL	4		4
Current liabilities
Interest-bearing liabilities
Unsubordinated debentures except for their "non-closely related" embedded derivatives	18	OFL	Amortized cost	405		407
Non interest-bearing liabilities
Derivatives held for trading	31.1	FVTPL	FVTPL	1	1
Other debt		FVTPL	FVTPL	3 7			3 7

(1) The categories according to IAS 39 are the following :

AFS: Available-for-sale financial assets

FVTPL: Financial assets/liabilities at fair value through profit and loss

OFL : Other financial liabilities

Note 32. Related party disclosures

Note 32.1. Consolidated companies

Subsidiaries, joint-ventures and associates are listed in note 7.

Commercial terms and market prices apply for the supply of goods and services between Group companies.

The transactions between Proximus SA and its subsidiaries, being related parties, are eliminated for the preparation of the consolidated financial statements. The transactions between Proximus SA and its subsidiaries are as follow:

Proximus SA transactions with its subsidiairies	Year ended 31 December
(EUR million)	2017 2018
Revenues	145	163
Costs of materials and services related to revenue	-122	-138
Net finance costs	-157 -152
Dividends received	268 491
	As of 31 December
Outstanding balances of Proximus SA with subsidiaries
(EUR million)	2017	2018
Trade receivables	2 5	3 0
Trade payables	-43	-39
Interest bearing receivables/liabilities	-9,438	-8,665

Note 32.2. Relationship with shareholders and other State-controlled enterprises.

The Belgian State is the majority shareholder of the Group, with a stake of 53.51%. The Group holds treasury shares for 4.53%. The remaining 41.95% are traded on the First Market of Euronext Brussels.

Relationship with the Belgian State

The Group supplies telecommunication services to the Belgian State and State-related entities. State related enterprises are those that are either State-controlled or State-jointly-controlled or State-influenced. All such transactions are made within normal customer/supplier relationships on terms and conditions that are not more favorable than those available to other customers and suppliers. The services provided to State-related enterprises do not represent a significant component of the Group's net revenue, meaning less than 5%.

Note 32.3. Relationship with key management personnel

The remuneration of the Board of Directors was decided by the General Shareholders' Meeting of 2004.

The principles of this remuneration remained applicable in 2018 and no substantial change of the policy is expected for the coming two years: it foresees an annual fixed compensation of EUR 50,000 for the Chairman of the Board of Directors and of EUR 25,000 for the other members of the Board of Directors, with the exception of the CEO. All members of the Board of Directors, with the exception of the CEO, have the right to an attendance fee of EUR 5,000 per attended meeting of the Board of Directors. This fee is doubled for the Chairman. Attendance fees of EUR 2,500 are foreseen for each member of an advisory committee of the Board of Directors, with the exception of the CEO. For the Chairman of the respective advisory committee, these attendance fees are doubled.

The members also receive EUR 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 Catherine Vandenborre and Mrs Sandrine Dufour are members of the Board of the Pension Fund. They do not receive any fees for these board mandates. For the execution of their Board mandates, the non-executive Directors do not receive any variable performance-based remuneration such as bonuses or long-term incentive plan, nor do they receive benefits linked to complementary pension plans or any other group insurance.

The total remuneration for the Directors amounted to EUR 1,080,244 for 2017 and to EUR 1,000,499 for 2018. The directors have not received any loan or advance from the Group.

	2017	2018
Board of Directors	8	7
Audit and Compliance Committee	5	5
Nomination and Remuneration Committee	4	4
Strategic and Business Development Committee	2	0
Transformation & Innovation Committee	0	2

The number of meetings of the Board of Directors and advising committees are detailed as follows:

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. Proximus 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.

These transactions take place in the ordinary course of business and are arm's length of nature.

For the year ended 31 December 2018, a total gross amount (long-term share-based payments and termination benefits included) of EUR 6,161,728 (before employer social security costs) was paid or granted in aggregate to the members of the Executive Committee, Chief Executive Officer included. In 2018, the members of the Executive Committee were Dominique Leroy, Sandrine Dufour, Jan Van Acoleyen, Dirk Lybaert, Geert Standaert, Renaud Tilmans, Bart Van Den Meersche and Guillaume Boutin.

For the year ended 31 December 2017, a total gross amount (long-term share-based payments and termination benefits included) of EUR 5,925,606 (before employer social security costs) was paid or granted in aggregate to the members of the Executive Committee, Chief Executive Officer included. In 2017, the members of the Executive Committee were Dominique Leroy, Sandrine Dufour, Jan Van Acoleyen, Dirk Lybaert, Geert Standaert, Renaud Tilmans, Bart Van Den Meersche, Phillip Vandervoort (2 months) and Guillaume Boutin (4,2 months).

These total amounts of key management compensation include the following components:

Short-term employee benefits: annual salary (base and short-term variable) as well as other shortterm employee benefits such as medical insurance, private use of management cars, meal vouchers, and excluding employer social security contributions paid on these benefits;
Post-employment benefits: insurance premiums paid by the Group in the name of members of the Executive Committee. The premiums cover mainly a post-retirement complementary pension plan;
Share-based payments: Performance Value based payments (long-term): gross amounts granted under the Performance Value Plan, which creates possible exercising rights as from May 2020 (granted in 2017) or May 2021 (granted in 2018), depending on the achievement of market conditions based on the company's Total Shareholder Return compared to a predefined group of other European telecom operators.

	Year ended 31 December
EUR*	2017	2018
Short-term employee benefits	4,223,170	4,462,406
Post-employment benefits	697,436	674,322
Share based payments	1,005,000	1,025,000
Total	5,925,606	6,161,728

* All these amounts are gross amounts before employer's social contribution

Note 32.4. Regulations

The telecommunications sector is regulated by European legislation, Belgian federal and regional legislation and by decisions of sectors specific regulators (the Belgian Institute for Postal services and Telecommunications, commonly referred to as the "BIPT/IBPT" and the regional regulators competent for media) or administrative bodies such as the Competition authorities.

Note 33. Rights, commitments and contingent liabilities

Operating lease commitments

The Group rents sites for its telecom infrastructure and leases buildings, technical and network equipment, as well as furniture and vehicles under operating leases with terms of one year or more. Rental expenses in respect of these operating leases amounted EUR 80 million in 2018 and EUR 79 million in 2017.

Future minimum rentals payable under the non-cancellable operating leases are as follows at 31 December 2018:
(EUR million)	< 1 year	From 1-3 years	From 3-5 years	More than 5 years	Total
Buildings	3 0	3 3	13	41	117
Sites	2 5	3 7	2 0	2 0	102
Technical and network equipment	6	6	1	0	13
Furniture	2 1	3 2	7	0	6 0
Furniture	1	1	1	0	3
Total	8 3	109	4 2	6 1	295

Future minimum rentals payable under the non-cancellable operating leases are as follows at 31 December 2018:

In the scope of its normal activities, the Group rents the equipment for its own use and needs. The Group is not involved in significant sublease contracts with customers. The rent contracts do not include contingent rent payable or other special features or restrictions.

Claims and legal proceedings

Our policies and procedures are designed to comply with all applicable laws, accounting and reporting requirements, regulations and tax requirements, including those imposed by foreign countries, the EU, as well as applicable labour laws.

The complexity of the legal and regulatory environment in which we operate and the related cost of compliance are both increasing due to additional requirements. Furthermore, foreign and supranational laws occasionally conflict with domestic laws. Failure to comply with the various laws and regulations as well as changes in laws and regulations or the manner in which they are interpreted or applied, may result in damage to our reputation, liability, fines and penalties, increased tax burden or cost of regulatory compliance and impacts of our financial statements.

The telecommunications industry and related service businesses are characterised by the existence of a large number of patents and trademarks. Litigation based on allegations of patent infringement or other violations of intellectual property rights is common. As the number of entrants into the market grows and the overlap of product functions increases, the possibility of an intellectual property infringement claim against Proximus increases.

Proximus is currently involved in various claims and legal proceedings, including those for which a provision has been made and those described below for which no or limited provisions have been accrued, in the jurisdictions in which it operates concerning matters arising in connection with the conduct of its business. These include also proceedings before the Belgian Institute for Postal services and Telecommunications ("BIPT"), appeals against decisions taken by the BIPT, and proceedings with the tax administrations.

Broadband/Broadcast Access Related Cases

Between 12 and 14 October 2010, the Belgian Directorate General of Competition started a dawn raid in Proximus's offices in Brussels. This investigation concerns allegations by Mobistar and KPN regarding the wholesale DSL services of which Proximus would have engaged in obstruction practices. This measure is without prejudice to the final outcome of the full investigation. Following the inspection, the Directorate General of Competition is to examine all the relevant elements of the case. Eventually the College of Competition Prosecutors may propose a decision to be adopted by the Competition Council. During this procedure, Proximus will be in a position to make its views heard. (This procedure may last several years.)

During the investigation of October 2010, a large numbers of documents were seized (electronic data such as a full copy of mail boxes and archives and other files). Proximus and the prosecutor of the Competition authority exchanged extensive views on the way to handle the seized data. Proximus wanted to be sure that the lawyers "legal privilege" (LPP) and the confidentiality of in house counsel advices are guaranteed. Moreover, Proximus sought to prevent the Competition authority from having access to (sensitive) data that were out of scope. Not being able to convince the prosecutor of its position, Proximus started two proceedings, one before the Brussels Court of Appeal and one before the President of the Competition Council, in order to have the communication to the investigation teams of LPP data and data out of scope suspended. On 5 March 2013, the Court of Appeal issued a positive judgment in this appeal procedure by which it ruled that investigators had no authority to seize documents containing advices of company lawyers and documents that are out of scope and that these documents should be removed/destroyed. To be noted that this is a decision on the procedure in itself and not on the merit of the case.

On 14 October 2013, the Competition authority launched a request for cassation against this decision. Proximus has joined this cassation procedure. Eventually, on 22 January 2015, the Supreme Court decided to confirm the Judgment of 5 March 2013, except for a restriction with regard to older documents, which was annulled. It is up to the Court of Appeal now to take a new decision on this restriction.

In March 2014, KPN has withdrawn its complaint; Mobistar remaining the sole complainant.

Mobile On-net cases related

In the proceedings following a complaint by KPN Group Belgium in 2005 with the Belgian Competition Authority the latter confirmed on 26 May 2009 one of the five charges of abuse of dominant position put forward by the Prosecutor on 22 April 2008, i.e. engaging in 2004-2005 in a "price-squeeze" on the professional market. The Belgian Competition Authority considered that the rates for calls be-tween Proximus customers ("on-net rates") were lower than the rates it charged competitors for routing a call from their own networks to that of Proximus (=termination rates), increased with a number of other costs deemed relevant. All other charges of the Prosecutor were rejected. The Competition Authority also imposed a fine of EUR 66 million on Proximus (former Belgacom Mobile) for abuse of a dominant position during the years 2004 and 2005. Proximus was obliged to pay the fine prior to 30 June 2009 and recognized this charge (net of existing provisions) as a non-recurring expense in the income statement of the second quarter 2009.

Proximus filed an appeal against the ruling of the Competition Authority with the Court of Appeal of Brussels, contesting a large number of elements of the ruling: amongst other the fact that the market impact was not examined. Also KPN Group Belgium and Mobistar filed an appeal against said ruling.

Following the settlement agreement dated 21 October 2015, the appeals of Base and Mobistar against the decision of the Belgian Competition Authority are withdrawn. Proximus will continue its appeal procedure against this decision.

In October 2009, seven parties (Telenet, KPN Group Belgium (former Base), KPN Belgium Business (Tele 2 Belgium), KPN BV (Sympac), BT, Verizon, Colt Telecom) filed an action against Belgacom mobile (currently Proximus and hereinafter indicated as Proximus) before the Commercial Court of Brussels formulating allegations that are similar to those in the case mentioned above (including Proximus-to-Proximus tariffs constitute an abuse of Proximus's alleged dominant position in the Bel-gian market), but for different periods depending on the claimant, in particular, in the 1999 up to now timeframe (claim for EUR 1 provisional and request for appointment of an expert to compute the precise damage). In November 2009 Mobistar filed another similar claim for the period 2004 and beyond. These cases have been postponed for an undefined period.

Following the settlements with Telenet, KPN, BASE Company and Orange, the only remaining claimants are BT, Verizon and Colt Telecom.

Tax proceedings

BICS received withholding tax assessments from the Indian tax authorities in relation to payments made by an Indian tax resident customer to BICS in the period 1 April 2007 to 31 March 2010. BICS filed appeals against the above assessments with the competent Indian Courts opposing the view of the Indian tax authorities that Indian withholding taxes are due on the payments. Furthermore, BICS is opposing the assessments in relation to the periods from 1 April 2008 to 31 March 2010 on procedural grounds. The amount of the contingent liability including late payment interest should not exceed 25 M EUR.

BICS has not paid the assessed amounts and has not recorded a tax provision. Management assesses that the position as recognized in these financial statements reflects the best estimate of the probable final outcome.

Capital expenditure commitments

At 31 December 2018, the Group has contracted commitments of EUR 188 million, mainly for the acquisition of intangible assets and technical and network equipment.

Other rights and commitments

At 31 December 2018, the Group has the following other rights and commitments:

The Group received guarantees for EUR 6 million from its customers to guarantee the payment of its trade receivables and guarantees for EUR 10 million from its suppliers to ensure the completion of contracts or works ordered by the Group. The Group granted guarantees for an amount of EUR 81 million (including the bank guarantees mentioned in note 31.2) to its customers and other third parties to guarantee, among others, the completion of contracts and works ordered by its clients and the payment of rental expenses related to buildings and sites for antenna installations.

In accordance with the law of 13 June 2005 on electronic communication, Proximus is entitled to claim compensation for the social tariffs that it has offered since 1 July 2005 as part of its universal service provision. For every operator offering social tariffs, the BIPT is required to assess whether or not there is a net cost and an unreasonable burden. In May 2014, the BIPT, together with an external consultant, started to analyze the net costs Proximus bore in providing the social discounts, which were offered over the period 2005-2012, the aim being to assess the possibility of there being an unreasonable burden on Proximus, and hence the possibility of a contribution being due by the operators liable to pay a contribution. On 1 April 2015, however, Proximus withdrew its request for compensation, referring to the legal opinion of 29 January 2015 of the Advocate General of the European Court of Justice, following the prejudicial question that the Belgian Constitutional Court submitted regarding the law of 10 June 2012 (case C-1/14), more precisely regarding the possibility of classifying mobile social tariffs as an element of the universal service. Proximus reserved its right to introduce a new request for compensation once the implications of the Court's decision would be clear. In a judgment of 11 July 2015, the European Court of Justice stated that mobile social tariffs cannot be financed by means of a compensation mechanism to which specific undertakings have to contribute.

In its judgment of 3 February 2016 (no. 15/2016), the Constitutional Court, taking into account the Judgment of the Court of Justice, indicated that since the Member States are free to consider mobile communication services (voice and internet) as additional mandatory services, the Legislator could impose the obligation on mobile operators to provide mobile tariff reductions to social subscribers. However, it specified that a financing mechanism for such services involving specific undertakings cannot be imposed. It is up to the Legislator to decide whether, for the provision of such services, compensation should be calculated by means of another mechanism which does not involve specific undertakings.

In its communication of 27 December 2017 regarding the monitoring van the universal service, the BIPT states the following: '(PXS translation)'Following this, the Constitutional Court has decided on 3 February 2016 that Belgium cannot oblige the telecom operators to grant social tariffs for mobile telephony and mobile internet. However, the government could decide to make the services accessible to the public as 'additional obligatory services', however without a possibility to have a financing from the sectorial compensation fund.' Given this reading of the BIPT, it has been decided not to grant any longer social tariffs on standalone mobile internet formulas. Social reductions on bundles for mobile internet are being maintained.

In 2015, the Minister competent for electronic communications announced a reform of the legal system of social tariffs, prioritizing a simplification of the current system as well as an evolution towards a system based on voluntary engagement. Proximus has focused its attention mainly on the proposal of suggestions for reform of the social tariffs. These should be incorporated in a 'miscellaneous provisions' law, but so far the Minister has not yet transformed his intention into a concrete draft law. The claim for compensation for the social tariffs has not been renewed.

Note 34. Share-based Payment

Discounted Share Purchase Plans

In 2017 and 2018, the Group launched Discounted Share Purchase Plans.

Under the 2017 and 2018 plans, Proximus sold respectively 6,263 and 14.431 shares to the senior management of the Group at a discount of 16.66% compared to the market price (discounted price for EUR 24.74 to 26.00 per share in 2017 and from EUR 19.18 to 23.12 in 2018). The cost of the discount is below EUR one million in 2017 and in 2018 and was recorded in the income statement as workforce expenses (see note 26).

Performance Value Plan

In 2013, 2014, 2015, 2016, 2017 and 2018, Proximus launched different tranches of the "Performance Value Plan" for its senior management. Under this Long-Term Performance Value Plan, the granted awards are conditional upon a blocked period of 3 years after which the Performance Values vest. The possible exercising rights are dependent on the achievement of market conditions based on Proximus' Total Shareholder Return compared to a group of peer companies.

After the vesting period rights can be exercised during four years. In case of voluntary leave during the vesting period, all the non-vested rights and the vested rights not exercised yet are forfeited. In case of involuntary leave (except for serious cause) or retirement the rights remain and continue to vest during the normal 3 year vesting period.

The Group determines the fair value of the arrangement at inception date and the cost is linearly spread over the vesting period with corresponding increase in equity for equity settled (currently not material) and liability for cash settled shared based payments.

For cash settled share-based payment the liability is periodically re-measured.

The fair value of the tranches 2013, 2014, 2015 was nihil per 31 December 2018 and those for 2016, 2017 and 2018 tranches respectively EUR 4 million, 3 million and 1 million. The annual charge of the 2013 and 2014 tranches was nihil and amounted to EUR 5 million for the other tranches. The calculation of simulated total shareholder return under the Monte Carlo model for the remaining time in the performance period for awards with market conditions included the following assumptions as of 31 December 2018:

		As of 31 December
	2017	2018
Weighted average risk free of return	-0.040%	0.070%
Expected volatility - company	15.35% - 19.44%	19.88% - 20.04%
Expected volatility - peer companies	11.42% - 75.90%	15.21% - 37.03%
Weighted average remaining measurement period	3.14	2.45

Employee Stock Option Plans

In 2012, Proximus launched a last yearly tranche of the Employee Stock Option Plan to the key management and senior management of the Group. The Plan rules were adapted early 2011 according to the Belgian legislation. Therefore as from 2011, the Group launched two different series: one for the Executive Committee, Chief Executive Officer included and one for the other key management and senior management.

As prescribed by IFRS 2 ("Share-based Payments"), the Group recognizes the fair value of the equity portion of the share options at inception date over their vesting period in accordance with the graded vesting method and periodic re-measurement of the liability component. Black&Scholes is used as option pricing model. The annual charge of the graded vesting including the liability component re-measurement is recognized as workforce expenses and amounts to EUR 0.2 million in 2017 and EUR 0.1 million in 2018.

The tranches granted from 2004 to 2012 are still open and have all vested by now. All the tranches except the 2004 tranche provide the beneficiaries with a right to the dividends declared after granting the options. The dividend liability amounted to EUR 2.7 million on 31 December 2017 and EUR 2.2 million on 31 December 2018 and is included under the caption "Other current payables'. The right to dividends granted to the beneficiaries of the tranches 2005-2012 corresponds to the contractual life of the tranches.

In 2009, the Group gave the opportunity to its option holders to voluntary extend the exercise period of all the former tranches (except the 2009 tranche) with 5 years, within the guidelines as established by the law.

For all the tranches except the 2004 tranche and the Executive Committee series of 2011 and 2012 tranches (as described below),

in case of voluntary leave of the employee, all unvested options forfeit except during the first year, for which the first third of the options vests immediately and must be exercised prior to the second anniversary following the termination date of the contract, as for all vested options;
in case of involuntary leave of the employee, except for serious cause, all
unvested options vest immediately and must be exercised prior to the second anniversary following the termination date of the contract or prior to the expiration date of the options whichever comes first, as for all vested options;
in case of involuntary leave of the employee for serious cause, all options forfeit immediately.

For the Executive Committee series of the 2011 and 2012 tranches:

in case of voluntary leave of the Executive Committee member during a period of three year following the grant 50% of the options immediately forfeit. If the voluntary leave takes place after that date, the options continue to vest according to the plan rules and regular vesting calendar. The exercise may only take place at the earliest on the first business day following the 3rd anniversary of the offer date. The exercise should take place prior to the 5th anniversary following the termination of the contract or prior to the expiration date of the options, whichever comes first, otherwise the options become forfeited;
in case of involuntary leave of the Executive Committee member, except for serious cause, the options will continue to vest according to the plan rules and regular vesting calendar. The exercise may only take place at the earliest on the first business day following the 3rd anniversary of the offer date. The exercise should take place prior to the 5th anniversary following the termination of the contract or the expiration date of the options, whichever comes first, otherwise the options become forfeited;
in case of involuntary leave of the Executive Committee member for serious cause, all options forfeit immediately.

The evolution of the stock option plans is as follows:

	Number of stock options (1)
	2006	2007	2008	2010	2011	2012	Total
Outstanding at 31 December 2017	9,357		23,005 39,681	0	34,793	80,553	187,389
Exercisable at 31 December 2017	9,357		23,005 39,681	0	34,793	80,553	187,389
Movements during the year 2018
Forfeited	-6,802	0	0	0	-3,175	0	-9,977
Exercised	-2,555	-3,524	0	0	-31,618	-700	-38,397
Total	-9,357	-3,524	0	0	-34,793	-700	-48,374
Outstanding at 31 December 2018	0		19,481 39,681	0	0	79,853	139,015
Exercisable at 31 December 2018	0		19,481 39,681	0	0	79,853	139,015
Exercise price	2 6	3 3	2 9	2 6	2 5	2 2

(1) plans of 2004,2005,2006,2009,2010 and 2011 expired

The volatility used for the remeasurement of the liability component has been estimated to 19%.

Note 35. Relationship with the auditors

The Group expensed for the Group's auditors during the year 2018 for an amount of EUR 1,557,021 for audit mandate and control missions and EUR 360,617 other missions.

This last amount is detailed as follows:

EUR	Auditor	Network of auditor
Audit mandate	1,028,234	435,495
Other Control Missions	50,320	42,972
Other missions	66,875	293,742
Total	1,145,429	772,209

Note 36. Segment reporting

The Board of Directors, the Chief Executive Officer and the Executive Committee assesses the performance and allocates resources of Proximus Group based on the client-oriented organization structured around the following reportable operating segments:

The Consumer Business Unit (CBU) sells voice products and services, internet and television, both on fixed and mobile networks, to residential customers, to self-employed persons and small companies, as well as ICT-services mainly on the Belgian market and provides related customer operations.
The Enterprise Business Unit (EBU) sells ICT services and products to medium enterprises and major companies. These ICT solutions, including telephone services, are marketed mainly under the Proximus and Telindus brands, on both the Belgian and international markets;
International Carrier Services (ICS) is responsible for international carrier activities;
Wholesale unit (WU) sells services to other telecom and cable operators;
The Technology unit (TEC) (centralizes all the network and IT services and costs (excluding costs related to customer operations and to the service delivery of ICT solutions), provides services to CBU, EBU and WU and sells these services to other telecom and cable operators;
Staff and Support (S&S) brings together all the horizontal functions (human resources, finance, legal,

strategy and corporate communication), internal services and real estate supporting the Group's activities.

No operating segments have been aggregated to form the above reportable operating segments.

The Group monitored the operating results of its reportable operating segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance was evaluated on the following basis:

Direct margin net of incidentals. The segment reporting below provides a reconciliation between underlying figures and those reported in the financial statements.
The capital expenditures.

Group financing (including finance expenses and finance income) and income taxes were managed on a group basis and are not allocated to operating segments.

The accounting policies of the operating segments are the same as the significant accounting policies of the Group. Segment results are therefore measured on a similar basis as the operating result in the consolidated financial statements but are disclosed excluding "incidentals". The Group defines "incidentals" as material items that are out of usual business operations.

Intercompany transactions between legal entities of the Group are invoiced on an arm's length basis.

	Year ended 31 December 2018
	Group Proximus					underlying by segment
(EUR million)	Reported under IFRS 1 5	IFRS 15 Adjustment	Reported under IAS 18 Incidental Underlying			BICS	Domestic (Group excl. BICS)	Consumer		Enterprise Wholesale	Others
Net revenue	5,764	- 3	5,761	0	5,761	1,346	4,415	2,875	1,410	201	-71
Other revenues	6 5	0	6 5	-21	43	0	43	2 3	5	1	15
TOTAL INCOME	5,829	- 3	5,826	-21	5,804	1,347	4,458	2,898	1,415	201	-57
COSTS OF MATERIALS AND SERVICES RELATED TO REVENUE	-2,126	4	-2,122	0	-2,122	-1,030	-1,092	-680	-453	-36	7 7
Direct margin	3,703	2	3,704	-21	3,683	317	3,366	2,218	962	165	2 1
Workforce expenses	-1,245	0	-1,245	46	-1,199	-91	-1,108
Non workforce expenses	-663	0	-663	45	-618	-73	-545
TOTAL OTHER OPERATING EXPENSES	-1,908	0	-1,908	9 2	-1,816	-164	-1,653
OPERATING INCOME before depreciation & amortization	1,794	2	1,796	7 0	1,866	154	1,713
Depreciation and amortization	-1,016	0	-1,016	0	-1,016	-91	-925
OPERATING INCOME	778	3	780	7 0	850	6 3	788
Net finance costs	-56	0	-56
Share of loss on associates	- 1	0	- 1
INCOME BEFORE TAXES	721	2	723
Tax expense	-191	- 3	-194
NET INCOME	530	- 1	529
Attribuate to:
Equity holders of the parent (Group share)	508	- 1	506
Non-controlling interests	2 2	0	2 3

Year ended 31 December 2018

(EUR million)	Group	Consumer Business Unit	Enterprise Business Unit	Service Delivery Engine & Wholesale	Staff & Support	International Carrier Services	Inter segment eliminations
Capital expenditure	1,019	137	3 4	779	3 4	3 5	0

	Year ended 31 December 2017
	Group Proximus	underlying by segment
(EUR million)	Reported under IAS 18	Incidental	Underlying	BICS	Domestic (Group excl. BICS)		Consumer Enterprise Wholesale		Others
Net revenue	5,739	0	5,739	1,318	4,420	2,889	1,394	206	-69
Other revenues	6 3	-24	3 9	2	3 7	2 0	6	0	11
TOTAL INCOME	5,802	-24	5,778	1,320	4,458	2,909	1,400	207	-58
COSTS OF MATERIALS AND SERVICES RELATED TO REVENUE	-2,166	0	-2,166	-1,041	-1,126	-720	-445	-32	7 1
Direct margin	3,636	-24	3,612	279	3,332	2,189	955	175	1 3
Workforce expenses (*)	-1,248	7 2	-1,176	-72	-1,104
Non workforce expenses (*)	-615	3	-612	-65	-548
TOTAL OPERATING EXPENSES	-1,863	7 5	-1,789	-137	-1,652
OPERATING INCOME before depreciation & amortization	1,772	5 1	1,823	143	1,680
Depreciation and amortization	-963	0	-963	-80	-883
OPERATING INCOME	809	5 1	860	6 3	797
Net finance costs	-70
Share of loss on associates	- 2
INCOME BEFORE TAXES	738
Tax expense	-185
NET INCOME	552
Attribuate to:
Equity holders of the parent (Group share)	522
Non-controlling interests	3 0

(*) Restated: split workforce-non workforce has been aligned at Group's level

	Year ended 31 December 2017
(EUR million)	Group	Consumer Business Unit	Enterprise Business Unit	Service Delivery Engine & Wholesale	Staff & Support	International Carrier Services	Inter segment eliminations
Capital expenditure	1,092	251	3 3	740	3 5	3 4	0

In respect of geographical areas, the Group realized EUR 4,042 million net revenue in Belgium in 2017 and EUR 4,020 million in 2018 (IFRS 15 basis) based on the country of the customer. The net revenue realized in other countries amounted to EUR 1,697 million in 2017 and EUR 1,744 million in 2018. More than 90% of the segment assets are located in Belgium.

Note 37. Recent IFRS pronouncements

The Group does not early adopt the standards or interpretations that are not yet effective at 31 December 2018.

The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group's financial statements are disclosed below. The Group intends to adopt these standards, if applicable, when they become effective.

This means that the Group did not apply the following standards or interpretations that are applicable for the Group as from 1 January 2019 or later:

Newly issued standards and Interpretations

Effective 1/1/2019 or later

Annual improvements to IFRS Standards 2015-2017 Cycle
IFRS 14 Regulatory Deferral Accounts
IFRS 16 Leases
IFRS 17 Insurance Contracts
Amendments to references to the Conceptual Framework in IFRS standards
Amendments to IFRS 3 Business Combinations
Amendments to IFRS 9 Prepayment Features with Negative Compensation
Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
Amendments to IAS 1 and IAS 8 Definition of Material
Amendments to IAS 19 Plan Amendment, Curtailment or Settlement
Amendments to IAS 28 Long-term interests in Associates and Joint Ventures
IFRIC 23 Uncertainty over Income Tax Treatments

The Group will continue investigating the possible impacts of the application of these new standards and interpretations on the Group's financial statements in the course of 2019.

The Group does not anticipate material impacts from the initial application of those IFRS except for IFRS 16.

IFRS 16- Leases

IFRS 16 was issued in 2016 and replaces IAS17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases – Incentives and SIC-27- Evaluating the Substance of Transactions Involving the Legal Form of a Lease. It becomes effective on 1 January 2019 with early application permitted. The Group will apply the standard from its mandatory application date of 1 January 2019.

IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases. Under the current standard IAS 17, the Group is required to classify its leases as either finance or operating leases. Under this new standard, lessees are required to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS 17. A right-of use- asset and a lease liability is to be recognized for all leases conveying the right to control the use of an identified asset for a period of time. Accordingly, the expenses relating to the use of the leased asset currently presented in operating expenses will be capitalized and depreciated. The discounting of lease liability will be periodically unwound into finance cost.

The Group plans to adopt the simplified transition approach with the cumulative effect of initially applying IFRS 16 recognized at the date of initial application being 1th January 2019 without restatement of year before adoption. The right-of-use assets will be measured at the amount of the lease liability at adoption.

The Group expects to recognize a right-of-use asset and lease liability of approximately million 290 EUR on 1 January 2019.

The Group's activities as a lessor are not significant and the Group does not expect any significant impact on the financial statements and considering that the classification into operating or finance lease remains applicable under IFRS 16.

Note 38. Post balance sheet events

Following post balance sheet events are occurred after 31 December 2018:

Proximus launched its #shifttodigital strategy, accelerating its transformation to remain relevant on the Belgian market and to secure the company's future. Proximus intends to change its way of working, become more flexible and lean, renew its employee's competencies in the digital domain and adjust its cost structure to better conform to market standards. On 10 January 2019, Proximus announced its intention to reduce further the number of employees by approximately 1900 people in the next 3 years in line with the planned workload reduction and at the same time to recruit 1.250 new employees with specific skills. Immediately after this date, the information and consultation phase with Unions started, as part of the social dialogue.

On January 11, 2016, the European Commission announced its decision to consider Belgian tax rulings granted to multinationals with regard to "Excess Profit" as illegal state aid. BICS has applied such tax ruling for the period 2010-2014. BICS has paid the deemed aid recovery assessments. Furthermore, both BICS and the Belgian State filed an appeal against the decision of the European Commission before the European Court. The EU General Court ruled in its decision of February 14, 2019 in favor of the Belgian state against the European Commission based on the argument that there is no "state aid scheme". The European Commission can file an appeal against the above decision with the European Court of Justice (ECJ) within 8 weeks as of the notification of the decision of the EU General Court.

To date, Management assesses that the position as recognized in these financial statements reflects the best estimate of the probable outcome. Depending on the actions of the European Commission following the above decision of the EU General Court (in particular whether or not the European Commission will file an appeal with the European Court of Justice), Management's position may need to be reassessed.

No other significant post balance sheet events are identified.

Proximus PLC under Belgian Public Law, Bd. du Roi Albert II 27 – 1030 Brussels – Belgium

AI assistant

Proximus SA — Annual Report 2018

3989_10-k_2019-03-15_dff351a3-67da-412d-ba4f-5071329c6740.PDF

Annual Report

Table of content

Creating an inclusive, safe, sustainable and prosperous digital Belgium 20

Governance and compliance, safeguarding long-term value 66

Non-financial reporting approach 2018

Proximus at a glance

Proximus at a glance

2018

Proximus wants to play a positive role

Dear reader,

Solid position in a highly competitive market

More customer oriented, agile and efficient organization

Dominique Leroy CEO

Solutions tailored to our customer needs

Building the best network infrastructure of the future

Stefaan De Clerck

Chairman

Transforming into an agile and flexible organization with digital savvy, engaged and empowered employees.

Sustainability and society matters

Preparing for a digital future

Dominique Leroy CEO

Stefaan De Clerck Chairman

Who we are & what we do

Belgium

Luxembourg

Netherlands

Global

We grew our ecosystem of digital transformation experts in all areas

Sustainability

Key Financial Highlights

Group underlying revenue +0.5%

Revenue by segment waterfall

Revenue

EBITDA (underlying, M€)

CAPEX

from 2017, including an increasing share of capex for Proximus' Fiber for Belgium project. The deployment of this future-proof network kicked off early 2017, with the rollout ongoing in 9 cities in 2018. Proximus

Key achievements 2018 Digital

Single best intervention

Fiber

14 agreements

Sustainable digital society

48%

Partnership with brand new 19 Coding School:

145,000 old mobile phones collected in schools since 2013

Delighting our customers

Mobile leadership

We further strengthened our leadership in IoT

We continued conquering the heart of our customers

Strategic acquisitions

Innovation projects together with partners

Simplification & efficiency

Launch of a unified receivables platform

New simplified bill

An agile way of working

#shifttodigital our new 3-year strategy

The world is changing faster than ever

Our renewed Sense of Purpose

By 2021 Proximus made a real shift to a truly customercentric digital company

Exciting ambitions for the next 3 years

Being relevant and attractive to customers

Shifting customer experience to digital-first customer journeys

Leading in convergent network experience: building our fiber network and providing best video experience in mobile

Reducing our costs by radical simplification and decommissioning of legacy products, networks and IT

Transforming into an agile and flexible organization with digital-savvy, engaged and empowered employees

A shift to digital with sustainability at its heart

Creating an inclusive, safe, sustainable and prosperous digital Belgium

Living and working in an ever fast changing society

Greener future

Smarter mobility

Digital human capital

A changing society

Grasping economic growth

A digital consumer

Digital trust

A fast-changing market environment for Proximus

Low growth and low pricing power in telco markets

How to remain relevant to customers

Proximus SA Annual Report 2018