Royal KPN N.V. — Earnings Release 2016

Feb 1, 2017

Fourth Quarter and Annual Results 2016

1 February 2017

Safe harbor

Alternative performance measures and management estimates

This financial report contains a number of alternative performance measures (non-GAAP figures) to provide readers with additional financial information that is regularly reviewed by management, such as EBITDA and Free Cash Flow ('FCF'). These non-GAAP figures should not be viewed as a substitute for KPN's GAAP figures and are not uniformly defined by all companies including KPN's peers. Numerical reconciliations are included in KPN's quarterly factsheets and will be included in the Integrated Annual Report 2016. KPN's management considers these non-GAAP figures, combined with GAAP performance measures and in conjunction with each other, most appropriate to measure the performance of the Group and its segments. The non-GAAP figures are used by management for planning, reporting (internal and external) and incentive purposes. KPN's main alternative performance measures are listed below.

KPN defines EBITDA as operating result before depreciation (including impairments) of PP&E and amortization (including impairments) of intangible assets. Note that KPN's definition of EBITDA deviates from the literal definition of earnings before interest, taxes, depreciation and amortization and should not be considered in isolation or as a substitute for analyses of the results as reported under IFRS as adopted by the European Union. In the Net Debt / EBITDA ratio, KPN defines Net Debt as the nominal value of interest bearing financial liabilities excluding derivatives and related collateral, representing the net repayment obligations in Euro, taking into account 50% of the nominal value of the hybrid capital instruments, less net cash and short-term investments, and defines EBITDA as a 12 month rolling total excluding restructuring costs, incidentals and major changes in the composition of the Group (acquisitions and disposals). Free Cash Flow is defined as cash flow from continuing operating activities plus proceeds from real estate, minus capital expenditures (Capex), being expenditures on PP&E and software. Operating free cash flow is defined as adjusted EBITDA minus Capex. Revenues are defined as the total of revenues and other income unless indicated otherwise. Adjusted revenues and adjusted EBITDA are derived from revenues (including other income) and EBITDA, respectively, and are adjusted for the impact of restructuring costs and incidentals. The term service revenues refers to wireless service revenues.

All market share information in this financial report is based on management estimates based on externally available information, unless indicated otherwise. For ^a full overview on KPN's non-financial information, reference is made to KPN's quarterly factsheets available on ir.kpn.com

Forward-looking statements

Certain statements contained in this financial report constitute forward-looking statements. These statements may include, without limitation, statements concerning future results of operations, the impact of regulatory initiatives on KPN's operations, KPN's and its joint ventures' share of new and existing markets, general industry and macro-economic trends and KPN's performance relative thereto and statements preceded by, followed by or including the words "believes", "expects", "anticipates", "will", "may", "could", "should", "intends", "estimate", "plan", "goal", "target", "aim" or similar expressions.

These forward-looking statements rely on ^a number of assumptions concerning future events and are subject to uncertainties and other factors, many of which are outside KPN's control that could cause actual results to differ materially from such statements and speak only as of the date they are made. A number of these factors are described (not exhaustively) in the Integrated Annual Report 2015.

Highlights Q4 and 2016

Services & Innovation

• Addressable convergence base expanded by adding XS4ALL
• Strong improvement customer satisfaction in Business
• Successful introduction VoLTE
• FttH/FttC coverage at ~78% of households

• 1 Sustainable Datacenter award (EMEA)1

Operational Financial2

• Focus on value and convergence in Consumer paying off
• Increasing penetration of fixedmobile bundles
  • 37% of broadband base
  • 43% of postpaid base
• 18k IPTV net adds
• 2k broadband net adds
• 19k postpaid net adds, driven by the high value KPN brand
• Accelerated migrations to integrated solutions in Business
• 27k multi play net adds (mainly SME)
• Strengthening customer relations, but impacting revenues
• Less customized work y-on-y

€ m	Q 4 '1 6	'1 6 F Y
A d j. r e v e n u e s	1, 7 0 4	6, 7 8 0
% y -o n- y	2. 3 % -	3. 4 % -
d j. A N L r e v e n u e s	9 1, 5 1	6, 0 2 6
% y -o n- y	9 % 1. -	2. 4 % -
j. A d E B I T D A	6 0 6	2, 4 2 8
% y -o n- y	4. % 1	0. 4 %
j. A d E B I T D A N L	6 0 2	2, 4 1 1
% -o n- y y	% 6. 2	% 1. 3
F C F 3 ( l. T E F D d iv i d d ) ex c e n	3 7 0	6 8 3
% y -o n- y	6 6 %	2 4 %

• Intended regular dividend of € 10ct per share in respect of 2016
• € 6.7ct final dividend expected in April 2017

First wave Simplification program finalized: ~€ 460m run-rate savings realized4

• 1 Source: Datacenter Dynamics
• 2 All figures based on continuing operations, unless stated otherwise
• 3 Q4 '16 excludes € 11m positive impact from cash optimization from bond tender in September; FY '16 excludes € 52m negative impact from cash optimization actions
• 4 End Q4 '16 vs. end Q4 '13

Delivering on strategic vision

Simplify, Grow, Innovate

Continued growth of fixed-mobile bundles in Consumer

Clear benefits from convergence strategy

37%

1

+

6

-34%

FY '16

Continued value focus in Consumer mobile

Strategic focus on KPN brand drives Customer Lifetime Value

Postpaid net adds

…and Customer Lifetime ValueCLV illustrates focus on KPN brand

TV focus point in household centered strategy

Highest quality of service through differentiated functionalities and leading network

1 For nationwide operators, source: Dutch Consumers' Association (Consumentenbond), January 2017

8Q4 and FY 2016 Results | Grow in TV |

Migrations to integrated solutions strengthen business customer relations

Revenue challenges in Business remain

Business revenue growth drivers

		Q 4 '1 6 d j t d a u s e t h y -o n- y g r o w	Q 4 '1 6 % f t t l d j t d o o a a u s e r e v e n u e s	F Y '1 6 d j t d a u s e t h y -o n- y g r o w	F Y '1 6 % f t t l d j t d o o a a u s e r e v e n u e s
	B i t t l u s n e s s o a	9. 2 % -		7. 6 % -
	S i l l i l n g e p a y w r e e s s	9. 4 % -	2 2 %	1 3 % -	2 3 %
y l E n M i a S M	T d i t i l f i d r a o n a x e	2 2 % -	1 6 %	1 9 % -	1 7 %
	M l t i l u p a y	2 7 %	5. 8 %	2 7 %	5. 2 %
e t a r y o l n p i	t k i N & I T e w o r s e r v c e s	% 1 1 -	2 2 %	0 % 1 -	2 2 %
r a o M C & E L	i i C t d l t s o m e s o o n s u z u	% 1 5. 8 -	% 2 6	% 1 2. 7 -	% 2 4
	N i e s e r c e s w v	1 3. 3 %	5. 4 %	1 2 7 %	5. 4 %

SME: migrations to multi play accelerating

Mobile-only and traditional fixed impacted by accelerated migrations to integrated solutions

1 Q4 '15 includes pro forma 201k multi play seats (of which 19k mobile and 182k fixed voice lines) following acquisition remaining shares RoutIT per Q2 '16

LE & Corporate: migrations to integrated solutions and new technologies

Strengthening business market portfolio and infrastructure

Leading infrastructure and strengthened market positioning

Operational excellence to improve business customer experience

Business organization streamlined further

Revenue trend1 The Netherlands improving in Q4

1 All figures based on continuing operations, unless stated otherwise

2 Excl. tax benefit

14Q4 and FY 2016 Results | Financial performance |

Adjusted EBITDA1 The Netherlands improving

• 1 All figures based on continuing operations, unless stated otherwise
• 2 The presented categories show adjusted numbers and differ from the opex breakdown as presented in KPN's Integrated Annual Report 2015

Strong progress in reducing spend levels The Netherlands1

Simplification drives quality improvements at reduced spend levels

1 All figures based on continuing operations, unless stated otherwise

2 The presented categories show adjusted numbers and differ from the opex breakdown as presented in KPN's Integrated Annual Report 2015

Continue towards flexible and simplified network and operating model

Starting second wave of Simplification program

Further quality improvements to lead to additional savings

Second wave of Simplification program to yield >€ 300m in run-rate savings

Simplification program run-rate opex and Capex savings

Creating a flexible and simplified integrated network

Improving quality of service and preparing for virtualization

Decentralize, bringing services closer to customers

Next generation access available for majority of households

Vplus delivering highest stable speeds without changing network architecure1 FttH/FttC coverage at ~78% of households

KPN is ahead of the Capex curve

Capex projects 2017

• Investments in second wave Simplification program
• Further strengthening core network and mobile network capacity
• Continued hybrid access roll-out in Business and selected Consumer areas

1031057619.7%20.8%~1.15bn1.2bn 220251981.3bn284286Customer drivenSimplification Mobile accessOther1 € m

Capex lower y-on-y

2016

519

2017

Fixed

2015

Free cash flow1 growth

1 All figures based on continuing operations, unless stated otherwise

2 Adjusted EBITDA minus Capex

3 Excluding TEFD dividend; FY '16 excludes € 52m negative impact from cash optimization, consisting of € 40m working capital impact related to reduced payment terms and € 12m additional interest related to the bond tender completed in September

Solid financial position

Lower gross debt y-on-y Debt portfolio

• Net debt € 0.3bn lower vs. Q3 '16
• Mainly a result of cash generation in Q4 '16
• Net debt € 0.3bn higher vs. Q4 '15
• Q4 '15 included € 805m proceeds from sale of ~5% TEFD, ~70% distributed to KPN shareholders in June 2016
• Average coupon senior bonds 4.1% (Q4 '15: 5.1%)
• € 720m bond redemption on 17 January 2017
• Financed from available cash
• Coupon of 4.75%
• € 34m cash interest savings in 2018

Financial flexibility

Additional financial flexibility via 15.5% stake in Telefónica Deutschland

1 Gross debt defined as the nominal value of interest bearing financial liabilities, excluding derivatives and related collateral, representing the net repayment obligations in Euro, taking into account 50% of the nominal value of the hybrid capital instruments

Outlook 2017

Outlook 2017

• Adjusted EBITDA in line with 2016
• Including ~€ 40-50m roaming regulation impact
• Capex ~€ 1.15bn
• Free cash flow (excl. TEFD dividend) growing1
• Additional cash flow via expected dividend from 15.5% stake in Telefónica Deutschland

Shareholder remuneration

• Intended DPS of € 11ct in respect of 2017
• Intention to grow regular DPS in line with FCF growth profile thereafter
• Intention to pass-through TEFD dividend
• Excess cash could be utilized for
• Operational / financial flexibility
• (Small) in-country M&A
• Shareholder remuneration

Q4 2016 – Information Pack

For further information please contact

KPN Investor Relations+31 70 44 60986ir@kpn.com ir.kpn.com

Contents

KPN ADR Program

• CSR strategy
• Group results overview
• Group KPI overview
• Debt overview
• Spectrum
• Fixed infrastructure
• Telefónica Deutschland stake

KPN ADR program

KPN has a sponsored Level 1 ADR program

B l b t i k o o m e r g c e r	K K P N Y
d i l t f T r a n g p a o r m	O t h t ( O C ) T v e r- e- c o u n e r
C S U I P	8 0 6 4 2 0 7 1 5
R t i a o	1 A D R 1 O d i S h : r n a r a r e y
i b k D t e p o s a r y a n	h k C i D t B T t A e u s c e a n r u s o m p a n y m e r c a s
D i t b k t t e p o s a r a n c o n a c y	J t h M t o n a a n o n a n a r o
i A D R b k h l l	2 2 2 0 9 0 0 ( k ) 1 1 5 1 N Y + e w o r
r o e r e p n e	4 4 2 0 4 6 0 0 ( d ) 7 5 7 5 L + o n o n
i E- l m a	@ d d b. a r c o m
A D R b i t w e s e	d d b. w w w a r. c o m
i t b k 's l l t d i D e p o s a r y a n o c a c u s o a n	t h k, t d D B A e u s c e a n m s e r a m

Contents

KPN ADR Program

CSR strategy

• Group results overview
• Group KPI overview
• Debt overview
• Spectrum
• Fixed infrastructure
• Telefónica Deutschland stake

Corporate Social Responsibility Strategy

Secure connectivity 73% 2vs. 69% end 2014Engaged employees 77% vs. 70% end 2014Energy reduced18% vs. 2010Recognition 2015Successful CSR strategy Social and environmental achievements ¹

#1 Sustainable Datacenter award (EMEA) by Datacenter Dynamics

• 5 in Workplace Pride Global Benchmark

• KPN sponsors exhibition 'Mad about Surrealism' at museum Boijmans & van Beuningen
• KPN awarded Sponsor of the year award

Contents

• KPN ADR Program
• CSR strategy
• Group results overview
• Group KPI overview
• Debt overview
• Spectrum
• Fixed infrastructure
• Telefónica Deutschland stake

Group results Q4 '16 (continuing operations)

( ) € m	Q 4 '1 6	Q 3 '1 6	Q 4 '1 5	% -o n- y y
R e e n e s v u	1, 7 2 3	1, 7 1 8	1, 7 4 5	% -1 3
A d j t d u s e r e v e n u e s	1, 7 0 4	1, 7 1 1	1, 7 4 5	2. 3 % -
O t i ( l. ) D & A p e r a n g e x p e n s e s e x c	0 9 1, 7	0 3 1, 5	6 1, 1 7	6. 0 % -
E B I T D A	6 2 6	6 6 5	5 7 8	8. 3 %
A d j t d E B I T D A u s e	6 0 6	6 6 2	5 8 2	4. 1 %
i i D t e p r e c a o n	2 5 4	2 5 1	2 8 2	% 9. 9 -
i i A t t m o r a o n z	1 2 6	1 2 2	1 3 6	% -7 4
i O t p e r a n g e p e n s e s x	1, 4 7 7	1, 4 2 6	1, 5 8 5	6. 8 % -
O i f i t t p e r a n g p r o	2 4 6	2 9 2	6 0 1	4 % 5
N t f i t e n a n c e c o s s	9 9 -	2 4 6 -	1 2 7	n. m
S h f f i t f i t d j i t t a r e o p r o o a s s o c a e s a n o n v e n u r e s	1 -	1	1	n. m
f i f P t b t r o e o r e a e s x	1 4 6	4 7	2 8 8	4 9 % -
I t n c o m e a x	3 1 -	2 -	3 4 -	8. 8 % -
f i t f t t P r o a e r a x e s	1 1 5	4 5	2 4 5	% 5 5 -

Group results FY '16 (continuing operations)

( € ) m	F Y '1 6	F Y '1 5	% y -o n- y
R e v e n u e s	6, 8 0 6	7, 0 0 8	2. 9 % -
d j t d A u s e r e v e n u e s	6, 8 0 7	0 8 7, 1	3. 4 % -
O i ( l. ) t D & A p e r a n g e x p e n s e s e x c	4, 3 7 7	4, 6 8 4	% 6. 6 -
E B I T D A	2, 4 2 9	2, 3 2 4	4. 5 %
d j t d A E B I T D A u s e	2, 4 2 8	2, 4 9 1	0. 4 %
D i t i e p r e c a o n	1, 0 0 8	1, 1 0 5	8. 8 % -
A t i t i m o r z a o n	5 3 7	5 1 1	5. 1 %
O t i p e r a n g e x p e n s e s	5, 9 2 2	6, 3 0 0	6. 0 % -
i f i O t t p e r a n g p r o	8 8 4	7 0 8	2 5 %
t f i t N e n a n c e c o s s	4 1 7 -	0 1 5 -	0 0 % 1 >
S h f f i f i d j i t t t t a r e o p r o o a s s o c a e s a n o n v e n u r e s	1 -	2	n. m
P f i t b f t r o e o r e a x e s	4 6 6	6 0 5	2 3 % -
I t n c o m e a x	9 6 -	8 1 -	% 1 9
f i f P t t t r o a e r a e s x	3 7 0	5 2 4	% 2 9 -

Group cash flow Q4 '16 (continuing operations)

( ) € m	Q 4 '1 6	Q 4 '1 5	% -o n- y y
E B I T D A	6 2 6	5 7 8	8. 3 %
i i I t t d / d n e r e s p a r e c e e v	6 1 -	7 1 -	% -1 4
T i d / i d a x p a r e c e v e	6	3 1	8 1 % -
C h i i i 1 a n g e n p r o v s o n s	9 -1	4 3 -	6 % -5
1 C h i k i i t l a n g e n w o r n g c a p a	1 2 7	8 1	5 7 %
O h t t e r m o v e m e n s	2 -	1	n. m
t h f l f t i t i i t i N e c a s o w r o m o p e r a n g a c v e s	6 7 7	5 7 7	% 1 7
C a p e x	2 9 8 -	3 5 5 -	-1 6 %
d f l t t P r o c e e s r o m r e a e s a e	2	1	0 0 % 1
h f l F r e e c a s o w	3 8 1	2 2 3	% 7 1
C t l h b i d o u p o n o n p e r p e u a y r	-	-	n. m

Group cash flow FY '16 (continuing operations)

( € ) m	F Y '1 6	F Y '1 5	% y -o n- y
E B I T D A	2, 4 2 9	2, 3 2 4	% 4. 5
I t t i d / i d n e r e s p a r e c e v e	4 6 0 -	4 8 5 -	-5 2 %
i d / i d T a x p a r e c e v e	0 5	8 1	0 0 % 1 >
1 C h i i i a n g e n p r o v s o n s	6 8 -	4 4 -	5 5 %
1 C h i k i i l t a n g e n w o r n g c a p a	2 -1 1	3 0	n. m
O t h t e r m o e m e n s v	9 4	1 5 3	3 9 % -
f f i i i i N t h l t t t e c a s o r o m o p e r a n g a c e s w v	1, 9 2 4	1, 9 9 6	3. 6 % -
C a p e x	9 3 1, 1 -	3 0 0 1, -	8. 2 % -
f P d l t t r o c e e s r o m r e a e s a e	1 0	2	% 1 0 0 >
F h f l r e e c a s o w	7 4 1	6 9 8	6. 2 %
i C t l h b d o u p o n o n p e r p e u a y r	6 7 -	6 7 -	% 0. 0

Financials by segment

The Netherlands

18012467.9%Q4 '1568.9%Q4 '1613018669.9%Q3 '16127187Wholesale

Network, Operations & IT

Adjusted revenues (€ m) Adjusted EBITDA (€ m) Adjusted EBITDA margin

36Q4 and FY 2016 Results | Information Pack | Group results overview |

Dutch wireless disclosure

i ( ) S € e r v c e r e v e n u e s m	Q 4 '1 6	Q 4 '1 5	% -o n- y y	F Y '1 6	F Y '1 5	% y -o n- y
C o n s u m e r	2 9 9	2 8 4	3 % 5.	1, 1 7 8	1, 1 6 0	1. 6 %
i 1 B s n e s s u	1 6 2	1 7 6	% 8. 0 -	6 8 7	7 1 1	4. 6 % -
2 O t h e r	4 0	3 8	5. 3 %	6 1 5	4 1 5	3 % 1.
h t h l d K P N T N e e e r a n s	0 5 1	4 9 8	0. 6 %	2, 0 1 2	2, 0 2 5	% 0. 6 -

S C / S C b i b ( € ) A R p e r s u s c r e r	Q 4 '1 6	Q 4 '1 5	% y -o n- y
3 C ( t i d ) o n s u m e r p o s p a	2 8 1	2 1 1	3. 3 %
i ( i i ) B b l l l S M E u s n e s s m o e o n y m a n y –	1 7 7	1 9 9	% -1 1

1 Includes mobile-only (mainly SME) service revenues and partial allocation of Multi play (mainly SME) and Customized

solutions (mainly LE & Corporate) revenues to mobile service revenues

2 Includes amongst others Wholesale mobile service revenues and visitor roaming

3 Including handset subsidies, commissions and SIM costs

Tax Q4 '16

	P	& L	C h f l a s o w
i ( ) R € e g o n s m	Q 4 '1 6	Q 4 '1 5	Q 4 '1 6	Q 4 '1 5
T h N t h l d e e e r a n s	3 1 -	3 4 -	6	3 1
i B l e g m u	-	2 8 -	-	-
O t h e r	-	-	-	-
T t l t d t o a r e p o r e a x	3 1 -	6 2 -	6	3 1
O f h i h d i t i d t i c s c o n n e o p e r a o n s w u	-	2 8 -	-	-
R t d t f t i i t i e p o r e a x r o m c o n n u n g o p e r a o n s	3 1 -	3 4 -	6	3 1
f f i i i i E t t t t t e c e a r a e c o n n n g o p e r a o n s v x u	% 2 1. 1	% 1 1. 8

• The effective tax rate for Q4 '16 is influenced by one-off effects and a change of the mix of profits and losses in the various countries
• Without one-off effects, in Q4'16 the effective tax rate would have been ~22%
• The effective tax rate Q4 '15 was 11.8%, mainly due to recognition of liquidation losses
• For the 2017-2018 period, the effective tax rate, excluding one-off effects1, is expected to be ~21%

Tax FY '16

		P L &		f C h l a s o w
i ( ) R € e g o n s m	F Y '1 6	F Y '1 5	F Y '1 6	F Y '1 5
T h N t h l d e e e r a n s	9 1 -	7 6 -	5 2	2 2
B l i e g u m	3	2 6 -	-	1
O t h e r	5 -	5 -	2 -	4 -
T t l t d t o a r e p o r e a x	9 3 -	1 0 7 -	5 0	1 9
O f h i h d i t i d t i w c s c o n n u e o p e r a o n s	3	2 6 -	-	1
t d t f t i i t i R e p o r e a x r o m c o n n u n g o p e r a o n s	9 6 -	8 1 -	0 5	8 1
E f f t i t t t i i t i e c v e a x r a e c o n n u n g o p e r a o n s	2 0. 6 %	1 3. 4 %

The effective tax rate FY '16 was 20.6%

• The effective tax rate is influenced by one-off effects and a change of the mix of profits and losses in the various countries. Without one-off effects, the effective tax rate would have been ~22% in FY 2016
• The effective tax rate FY '15 was 13.4%, mainly due to reversals related to previous years and recognition of liquidation losses
• For the 2017-2018 period, the effective tax rate, excluding one-off effects1, is expected to be ~21%

Contents

• KPN ADR Program
• CSR strategy
• Group results overview
• Group KPI overview
• Debt overview
• Spectrum
• Fixed infrastructure
• Telefónica Deutschland stake

Consumer

Fixed-Mobile KPIs

Fixed-Mobile household development Fixed-Mobile postpaid development

Consumer (cont'd)

Residential KPIs

42¹ Source: Telecompaper Q4 and FY ²⁰¹⁶ Results | Information Pack | Group KPI overview |

Consumer (cont'd)

Business

Total Business mobile customer base (k)

1 Including migration of 32k Dekatel customers per Q3 '16, following acquisition of Dekatel

2 Includes mobile-only (mainly SME) service revenues and partial allocation of Multi play (mainly SME) and Customized solutions (mainly LE & Corporate) revenues to mobile service revenues

3 Including migration of 201k RoutIT multi play seats per Q2 '16, following acquisition remaining shares RoutIT

28958Q4 '1636316Q3 '1635Q4 '1545Multi play seats (k) ARPU per multi play seat (€)

44Q4 and FY 2016 Results | Information Pack | Group KPI overview |

Contents

• KPN ADR Program
• CSR strategy
• Group results overview
• Group KPI overview
• Debt overview
• Spectrum
• Fixed infrastructure
• Telefónica Deutschland stake

Debt portfolio

Hybrid bonds 22%Global bonds8%Other2%Euro bonds68%Breakdown nominal debt1 (total € 9.0bn) Nominal debt by currency

0.81.10.10.6 0.6 0.40.6 0.6 0.7 1.00.5 0.5 '20 '21 '22 '23 '24 '26 '28 '29 '32 '25 '30 0.9'190.6'17 '18 USD hybrid (1st call) GBP EUR hybrid (1st call) GBP hybrid (1st call) USD EUR Bond redemption profile (€ bn) Fixed vs. floating interest

Q4 and FY ²⁰¹⁶ Results ^| Information Pack ^| Debt overview ^{| 1} Based on the nominal value of interest bearing liabilities after swap to EUR, including € 1.1bn hybrid bond, GBP 400m hybrid bond and USD 600m hybrid bond

• 2 Foreign currency amounts hedged into EUR
• 3 Excludes bank overdrafts

Treatment of hybrid bonds

KPN & Credit rating agencies IFRS

• Each tranche of the hybrid bonds is recognized as 50% equity and 50% debt by the rating agencies
• Definition of KPN net debt includes: '[…], taking into account 50% of the nominal value of any hybrid capital instrument'
• Hybrid bonds are part of KPN's bond portfolio
• Independent of IFRS classification

• In line with treatment by credit rating agencies

• EUR tranche is a perpetual, accounted for as equity

• Coupon payments treated as equity distribution, hence not expensed through P&L, not included in FCF, but in financing cash flow1,2
• GBP and USD tranche have 60 years specified maturity, accounted for as financial liability
• Coupon payments treated as regular bond coupon, hence expensed through P&L, included in FCF

h T r a n c e	i l N o m n a	t d b t K P N n e e	t i t M a u r y	1 t ( d ) R a e s s w a p p e	S i i l I F R p r n c p a	S I F R c o u p o n
% E U R 1. 1 b 6. 1 2 5 n	€ 1, 1 0 0 m	€ 5 5 0 m	P t l e r p e u a ( l l 5. 5 ) n o n- c a	% 6. 1 2 5	i E t q u y	2 F i i h f l n a n c n g c a s o w ( t i l. i F C F ) n o n c n
G B P 0. 4 b 6. 8 7 5 % n	€ 4 6 0 m	€ 2 3 0 m	6 0 s ( y e a r l l ) 7 n o n- c a	6. 7 7 7 %	L i b i l i t a y	t t i d I n e r e s p a ( i l. i C ) F F n c n
S 0. 6 b 0 0 0 % U D 7. n	€ 4 6 5 m	€ 2 3 3 m	6 0 y e a r s ( l l 1 0 ) n o n- c a	6. 3 4 4 %	i b i l i L t a y	I t t i d n e r e s p a ( i l. i F C F ) n c n
l T t o a	€ 2, 0 2 5 m	€ 0 3 1, 1 m

1 EUR tranche had short first coupon payment (0.5 years was payable in September 2013), annual coupon payments in September thereafter; USD tranche has semi-annual coupon payments (March / September); GBP tranche has annual coupon payments in March

2 Cash flow item 'Paid coupon perpetual hybrid bonds'

Contents

• KPN ADR Program
• CSR strategy
• Group results overview
• Group KPI overview
• Debt overview

Spectrum

• Fixed infrastructure
• Telefónica Deutschland stake

Contents

• KPN ADR Program
• CSR strategy
• Group results overview
• Group KPI overview
• Debt overview
• Spectrum
• Fixed infrastructure
• Telefónica Deutschland stake

Fixed infrastructure

Contents

• KPN ADR Program
• CSR strategy
• Group results overview
• Group KPI overview
• Debt overview
• Spectrum
• Fixed infrastructure
• Telefónica Deutschland stake

Telefónica Deutschland stake

Accounting treatment

Balance sheet

• Stake included as financial asset1
• Fair value of KPN's stake based on Telefónica Deutschland's share price and adjusted quarterly
• Fair value movements recorded in other comprehensive income
• Significant or prolonged value decreases booked as an impairment through the P&L within net finance costs

P&L

• Dividends received reported as finance income within net finance costs
• Upon sale of (part of) the stake, all related capital gains or losses recognized through the P&L as financial income
• Significant or prolonged value decreases booked as an impairment through the P&L within net finance costs

Cash flow statement

Dividends received part of operating cash flow and free cash flow as dividends received

Tax

• Dividends, not qualifying as specific capital repayments, received and/or capital gains realized (proceeds above tax book value) on KPN's stake are subject to Dutch corporate income tax
• Deferred tax asset can be utilized to offset income related to KPN's stake