Royal KPN N.V.

Investor Presentation • Oct 25, 2019

INVESTOR PRESENTATION

Oct-Dec 2019

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 in the Integrated Annual Report 2018. 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. The figures shown in this financial report are based on continuing operations and were rounded in accordance with standard business principles. As a result, totals indicated may not be equal to the precis sum of the individual figures.

Financial information is based on KPN's interpretation of IFRS as adopted by the European Union as disclosed in the Integrated Annual Report 2018 and do not take into account the impact of future IFRS standards or interpretations. Note that certain definitions used by KPN in this report deviate from the literal definition thereof and should not be considered in isolation or as a substitute for analyses of the results as reported und adopted by the European Union. KPN defines revenues as the total of revenues and other income. Adjusted revenues are derived from revenues (including other income) and are adjusted for the impact of incidentals. KPN defines EBITDA as operating result before depreciation (including impairments) of PP&E and amortization (including impairments) of intangible assets. Adjusted EBITDA after leases ('adjusted EBITDA AL') are derived from EBITDA and are adjusted for the impact of restructuring costs and incidentals ('adjusted') and for lease costs, including depreciation of right-of-use assets and interest on lease liabilities ('after leases' or 'AL'). KPN Gross Debt as the nominal value of interest-bearing financial liabilities representing the net repayment obligations in Euro, excluding derivatives, related collateral, and leases, taking into account 50% of the nominal va the hybrid capital instruments. In its Leverage Ratio, KPN defines Net Debt as Gross Debt less net cash and short-term investments, divided by 12 month rolling adjusted EBITDA AL excluding major changes in the composition of the Group (acquisitions and disposals). The Lease adjusted leverage ratio is calculated as Net Debt including lease liabilities divided by 12 month rolling adjusted EBITDA excluding major changes in the composition of the Group (acquisitions and disposals). Free Cash Flow (FCF) is defined as cash flow from continuing operating activities plus proceeds from real estate, minus capital expenditures (Capex), being expenditure on PP&E and software and adjusted for repayments of lease liabilities.

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, referenc 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 numbe concerning future events and are subject to uncertainties and other factors, many of which are outside KPN's control that could cause actual results to differ materially from such statements. A number of these factors are described (not exhaustively) in the Integrated Annual Report 2018. All forward-looking statements and ambitions stated in this financial report that refer to a growth or decline, refer to such growth or decline relative to situation per 31 December 2018, unless stated otherwise.

Comparative figures regarding IFRS 16 and amendment IAS 12

The impact of the adoption of IFRS 16 is unaudited and may be subject to change until the publication of KPN's Financial Statements 2019.

STRATEGY
2019-2021

Summary presentation Capital Markets Day 28 November 2018

ORGANIC SUSTAIN ValueLE GROWT Wolume. Lean operating
model.

The ecosystem is evolving: key enabling technologies

HYBRID NETWORKS & PLATFORMS

mature and dynamic

The Dutch telecom market:

Leading broadband performance in Europe

Average 4G throughput of 42Mbps

98% of population has at least 100Mbps capable broadband connection

One of the most competitive markets

$\gg$ Fixed access regulation

Revenue growth: Europe: +0.4% Netherlands -2.2%

The best converged smart infrastructure.

Focus on profitable growth segments.

Acceleration of simplification and
digitalization.

The best converged smart infrastructure

Fiber roll-out acceleration

+1 million FttH households by end 2021

Full mobile network Moving to All-IP modernization

100% 5G ready by end 2021

Stable Capex envelope: substantial shift in mix

Building the digital highway of the Netherlands the benefits of fiber to society

FUTURE PROOF TECHNOLOGY 10 GIGABIT NETWORK AND MUCH MORE

Strong improvement FttH return profile

Lower roll-out spend due to reduced average costs per home passed

Better utilization rate supported by data driven smart regional approach

Payback period reduced by ~50%

Strong commercial benefits'

$+15%$	+€6	-34%	$+9opt$
	ARPU	Churn	Broadband market share

1 Q3 2018, >200Mbps households vs. < 200Mbps households 2 KPN brand, source: Kantar TNS 2019 - 2021 vs. 2012

Acceleration of simplification & digitalization

From 20 to 2 converged IT stacks

From 5 core networks to 1

Simplified end-to-end organization

$\sim$ $\epsilon$ 350 million 2019-2021 new net opex savings program¹

1 Indirect opex after leases adjusted for the impact of restructuring costs and incidentals

Business segment strategy 2019 - 2021

Vision

#1 business service provider in the Netherlands:

A premium connectivity leader, offering undisputed quality in terms of service, experience & security

Mission

We create value to our customers with technology that enables them to run their business safely anytime, anywhere.

VALUES

Premium

Best smart converged infrastructure to provide high-quality connectivity

Trusted

Best-in-class, secure & smartly bundled services for exceptional customer experience

Personal

Optimally serve customers by understanding their needs and providing best-fitted propositions

Business go-to-market strategy smartly positioned solutions for every customer

Transformation of operating platform KPN EEN

Example lifetime value

Repricing at migration Reduced cost to serve Up and cross-sell services Reduced churn

1 Traditional fixed voice and legacy broadband 14 2 Management estimate

STRATEGIC FOCUS 2019-2021

Network. Operations & IT

The best converged smart infrastructure.

Fnable innovative technologies.

Accelerate simplification of operating model.

Consumer

Best household access and customer experience.

Growing converged base

and product penetration.

Focus on delivering value. Business

Converged simplified product portfolio.

Transformation of operating platform.

Lean and digital operations.

Convergence & value focus driving revenue stabilization.

New multi-year sustainable opex reduction supports organic Adj. EBITDA AL growth.

Stable Capex envelope: substantial shift in the mix.

Organic sustainable Adj. EBITDA and FCF growth contributing to progressive dividend and deleveraging.

Convergence & value focus

driving revenue stabilization

Grow base and value of converged households

Business

Accelerate growth in convergence

Selective growth in IT

Value over volume

Grow WBA/VULA

Maintain disciplined strategy

Acceleration of simplification Digitalization & virtualization

opex reductions

Rationalization and simplification of portfolio.

End-to-end digitalization and automation frontend and back-end.

All-IP network and virtualization.

IT landscape rationalization.

Stable Capex envelope € 1.1bn per annum in 2019-2021

$|T/T|$ Other $-2%$ $2%$ $-30\%$ -50% 2019-2021 $-40%$ 2016-2018 $~1 - 35\%$ $-23%$ $~18\%$ Commercial Access

Substantial shift in the mix enabling higher investments in access

Committed to solid financial profile

Solid investment grade credit profile

MOODY'S	Baa3 / Stable
S&P Global Ratings	BBB / Stable
FitchRatings	BBB / Stable

Optimized balance sheet position

Medium-term leverage

Net debt (excl. all leases) / Adjusted EBITDA AL

$n_{\rm b}$ $n_{\rm b}$ PESOLE

25 October 2019

Highlights Q3 2019

Strong cost management

Net indirect opex savings $\epsilon$ 37m

$\epsilon$ 103m YTD 2019

Smart converged infrastructure

Successful

5G test

$\sim$ 70k FttH homes passed YTD

Recognized for sustainability efforts

2 most sustainable telco worldwide

Dow Jones Sustainability Index

$\triangle$

The best converged smart infrastructure.

Focus on profitable growth segments.

Acceleration of simplification and
digitalization.

Update: accelerated fiber roll-out strategy

Further ramping up capacity

Connecting more and more homes

Using latest technology

60 projects up and running $~10k$ homes passed YTD ~1Gbps First live G-PON connection with customers

Update: mobile network modernization first sites upgraded in The Hague area

Typical current site

• 4 frequency bands
• 2x2 MIMO

1Gbps backhaul

2 antennas

Not 5G ready

~150 site configurations

$~\text{-}80\%$ Ftts

Typical modernized site

• 6-8 frequency bands
• 4x4 or higher order MIMO
• 10Gbps backhaul
• 1 antenna
• 5G ready
• 3 site configurations
• $\sim$ 95% Ftts

$\bigcirc$

Best household access and customer experience.

Growing converged base and product penetration.

Focus on delivering value.

Introduced a new converged proposition: KPN Hussel targeting higher Customer Lifetime Value

Fully flexible household proposition: complete freedom to mix & match services

One converged customer journey

Introducing new benefits including unlimited mobile data and kids SIM

ONE-STOP-SHOP: BROADBAND + MOBILE + TV + ENTERTAINMENT

Customer experience & recognition record-high Consumer NPS

1 2018 restated as a result of recalibration of relative weights of underlying businesses, source: Kantar TNS

-
2 Source: Brand Finance
3 Category Telecoms, source: Retailer of the Year (Q&A)

Consumer convergence in the quarter

Households

$+5k$ converged 1,404k total converged households

Postpaid

$+15k$ converged base 2,246k total converged SIMs

SIM cards

1.60 SIMs per Q3 2018: 1.53

49% converged customers 62% converged 03 2018: 45%

Q3 2018: 56%

73% converged Q3 2018: 68%

Consumer Fixed in the quarter

Broadband base¹

Fixed ARPU

Fixed revenues

$-17k$

Impacted by brand strategy

$\epsilon$ 48 $^{+5.4\%}$

Price increase effective from 1 June 2019

Flat_y-on-y

Bundled services • Traditional voice + Digitenne $\blacklozenge$

1 Corrected for migrations to and new customers of small business propositions (7k)

Consumer Mobile in the quarter

Growing postpaid base KPN brand

Postpaid ARPU stable q-on-q

Mobile service revenues

$+36$ $\overline{\phantom{a}}$ $\phantom{a}$ $\phantom{a}$ $\phantom{a}$ $\phantom{a}$ $\phantom{a}$ $\phantom{a}$ $\phantom{a}$ $\phantom{a}$ $\phantom{a}$ $\phantom{a}$ $\phantom{a}$ $\phantom{a}$ $\phantom{a}$ $\phantom{a}$ $\phantom{a}$ $\phantom{a}$ $\phantom{a}$ $\phantom{a}$ $\phantom{a}$ $\phantom{a}$ $\phantom{a}$ $\phantom{a}$ $\phantom{$ Q2 2019: +17k

$-3k$ customer base all brands

€ 17 Q3 2018: €18

$-6.3\%$ y-on-y

$\epsilon$ 194m Q3 2018: € 210m

$-7.6\%$ y-on-y

Business revenue trend in the quarter

continues to be impacted by strategic actions

Adjusted revenues y-on-y growth trend

	Q3 2019
Communication Services	$-8.9%$
Mobile service revenues	$-77\%$
$I \circ T$	74%
Broadband & Network Services	$-18%$
Fixed Voice	$-21%$
Other	$-17%$
IT Services (a.o. security, cloud, workspace)	1.2%
Professional Services & Consultancy	9.3%
Total revenue	$-3.6%$

Revenue y-on-y trend Q3 2019 considerably

impacted by migrations & 'value over volume'¹

1 Based on management estimates

Migrations from legacy portfolio

SME customers

LE customers

Small business portfolio

68% SME base

Q2 2019: 59%

45% LE base

Q2 2019: 33%

35% converged

02 2019: 34%

100% mid-2020

100% in 2020

$+7k$ net adds in 03.2019

1 Migrated from traditional fixed voice and legacy broadband services

Financial highlights Q3 2019

Adjusted revenues

Adjusted EBITDA after leases

Free Cash Flow

(excl. TEFD dividend)

€ 1,372m

$-1.8\%$ y-on-y

$\epsilon$ 599m

$+2.9\%$ y-on-y

$\epsilon$ 226m

$-2.2\%$ y-on-y

Q3 2018: € 1.398m

Q3 2018: € 582m

$0.32018 \cdot \in 231m$

Financial performance Q3 and YTD 2019 key P&L metrics

$\notin$ m	Q3 2018	Q3 2019	$\Delta$ y-on-y	YTD 2018	YTD 2019	$\Delta$ y-on-y
Consumer	748	731	$-2.2%$	2.230	2,182	$-2.1\%$
Business	520	502	$-3.6\%$	1,589	1,514	-4.7%
Wholesale	157	166	5.2%	465	482	3.6%
Other	$-28$	$-26$	-4.6%	-81	-85	4.6%
Adjusted revenues	1,398	1,372	$-1.8%$	4,202	4,093	$-2.6%$
Adjusted direct costs 1	330	328	$-0.7%$	978	939	$-3.9\%$
Adjusted indirect costs after leases	486	446	$-8.3%$	1,505	1,398	$-7.1\%$
Adjusted EBITDA after leases	582	599	2.9%	1,720	1,756	2.1%
Reported
EBITDA	588	808	37%	1,782	1,980	11%
EBIT	202	429	$>100\%$	635	839	32%
Net profit	94	314	>100%	338	530	57%

Adjusted revenues declined y-on-y

Solid growth Adjusted EBITDA AL

supported by simplification and digitalization

Indirect opex savings program on track

$\epsilon$ 103m net savings YTD

FCF Q3 and YTD 2019

YTD mainly impacted by change in working capital

$\notin$ m	Q3 2018	Q3 2019	$\Delta$ y-on-y		YTD 2018 YTD 2019	$\Delta$ y-on-y
Adjusted EBITDA after leases	582	599	2.9%	1,720	1,756	2.1%
Interest lease liabilities	8		$-11%$	25	22	$-12%$
Depreciation right-of-use asset	37	34	$-7.6\%$	111	104	$-5.8\%$
Restructuring	-39	$-23$	$-42%$	$-74$	-93	25%
Incidentals 1,2		190	n.m.		190	n.m.
EBITDA	588	808	37%	1,782	1,980	11%
Interest paid / received	-85	$-97$	14%	$-262$	$-265$	$1.3\%$
Tax paid / received			n.m.	$-25$	$-7$	$-71\%$
Change in provisions 2	27	-36	n.m.	36	$-32$	n.m.
Change in working capital	-16	8	n.m.	-98	$-157$	60%
Other movements (incl. TEFD dividend) 1		$-170$	n.m.	44	$-146$	n.m.
Net CF from operating activities	515	513	$-0.3%$	1,477	1,372	$-7.1%$
Capex	$-257$	$-262$	2.2%	$-737$	$-793$	7.6%
Proceeds from real estate			n.m.	5		$-100%$
Repayments of lease liabilities	$-27$	$-25$	$-7.2\%$	$-116$	$-114$	$-1.7\%$
Free cash flow	231	226	$-2.2%$	628	466	$-26%$
TEFD dividend			n.m.	54	24	-56%
Free cash flow (excl. TEFD dividend)	231	226	$-2.2%$	574	442	$-23%$

1 Q3 2019 and YTD 2019 incl. € 171m book profit from the sale of NLDC

₹9 2 03 2019 and YTD 2019 incl. € 20m release of revenue related provisions

FCF development YTD 2019

1 Incl. € 171m book profit from the sale of NLDC in Q3 2019

2 Incl. € 20m release of revenue related provisions in Q3 2019 $40$

3 Incl. repayments of lease liabilities

Solid financial position

Q3 2019 leverage ratio

Outlook 2019 and 2019 - 2021 ambitions

organic sustainable growth

	Outlook 2019	$2019 - 2021$ ambitions
Adjusted EBITDA AL	Slightly growing compared with 2018	Organic growth
Capex	$\epsilon$ 1.1bn	Stable at $\epsilon$ 1.1bn annually
FCF (excl. TEFD dividend)	At least $\in$ 700m 1	Three-year mid-single digit $CAGR2$ driven by EBITDA AL growth
Regular DPS	€ 12.5 cents	Progressive dividend, supported by FCF

1 Previous outlook "Incidentally lower FCF compared with 2018 due to front-end loaded restructuring charges and adverse phasing of working capital" 42 2 Three-year CAGR calculated from the end of 2018 to the end of 2021

ORGANIC SUSTAIN Value E GROWT Wolume. Lean operating
model.

INFORMATION PACK

CSR New converged proposition Tax KPI overview Debt portfolio Treatment of hybrid bonds Fixed infrastructure Spectrum

Doing business in a sustainable manner

Leading position in benchmarks

MEMRER OF Dow Jones Sustainability Indices

In Collaboration with RobecoSAM

Achievements in Q3 2019

Reuse & KPN introduces improved and more recycle economical TV receiver with recycled plastic

Awards KPN again in top 3 most sustainable telecom companies in the world (DJSI)

Reputation ranking

companies RepTrak Pulse 2019

1 Industry adjusted, source: Reputation institute

New converged proposition set-up FMC benefits on Mobile and/or Entertainment

	Broadband 1 Mobile 2			$\Box V^s$		Entertainment ®
Speed	$\epsilon$ / month		Data €/month	Options	$\epsilon$ / month	e.g.
		Kids SIM $16B$ $7.50 \frac{2^{nd} \text{ SIM}}{\text{only}}$
50 Mbps 42.50		OGB	-10	1STB	-10	Spotify
100 Mbps	47.50	2GB	- 15		4K 2.50	Fox Sports
200 Mbps	50	5GB	17.50	Recording 5		Film 1
500 Mbps	55	10GB	22.50	$>1$ STB	5 each, incl 5 recording
Tech desk	5	20GB	- 24			$\epsilon$ 5 FMC benefit on one entertainment option
		$Il$ $Il$ $Il$ $Il$ $Il$ $Il$ $Il$ $Il$ $Il$ $Il$ $Il$ $Il$ $Il$ $Il$ $Il$ $Il$ $Il$ $Il$ $Il$ $Il$

1 Internet-only pricing; expert customer service desk available +€ 5/m

1. Kid SIM and Unlimited only available as converged customer; pricing incl. convergence discount (€ 5/m on bundles of 0-10GB, € 7.50/m on 20GB); double mobile data FMC benefit removed
   3 Incl. 65 channels, replay, on-dema

only

4 Free TV channels FMC benefit removed

Example new propositions: KPN Hussel

1 Previous proposition includes mobile 10GB+4GB

2 Previous proposition includes mobile 10GB+4GB+2x 0GB+100min/text

3 Previous proposition includes mobile 4x100GB

Tax Q3 and YTD 2019

		Cash flow P&L
Regions $(\epsilon$ m)	Q3 2018	Q3 2019	YTD 2018	YTD 2019		Q3 2018	Q3 2019		YTD 2018 YTD 2019
The Netherlands	$-23$	$-42$	$-91$	$-103$		$\overline{\phantom{a}}$	$\qquad \qquad -$	$-25$	$-7$
Other	$-3\overline{3}$	$\overline{\phantom{a}}$	$-5$	$\overline{\phantom{m}}$		$-1$	$\overline{\phantom{m}}$	$-3$	$\hspace{0.1mm}-\hspace{0.1mm}$
Total reported tax	$-26$	$-42$	-96	$-103$		-1		$-28$	-7
Of which discontinued operations	$-3$	$\hspace{0.1mm}-\hspace{0.1mm}$	$-5$	$\overline{\phantom{m}}$		$-1$	$\overline{\phantom{m}}$	$-3$	$\sim$
Reported tax from continuing operations	$-23$	42	$-91$	$-103$		$\sim$		$-25$	-7
Effective tax rate continuing operations	20.2%	11.7%	21.3%	16.2%

The effective tax rate for Q3 2019 was mainly influenced by the participation exemption and the Innovation Box facility

Without one-off effects' the effective tax rate would have been ~23% in Q3 2019

For 2019, the effective tax rate is expected to be ~23%, excluding one-off effects¹

1 Among others, tax law changes, settlements with tax authorities, impairments, revaluations

KPI overview

Consumer fixed

	Q3 2018	Q3 2019
Household base (k)
F-M households	1,325	1.404
Fixed-only households	2,139	1.877
Total households	3,464	3,281
F-M penetration broadband base	45%	49%
Bundled	2,551	2,518
Not-bundled (BB-only)	388	361
Not-bundled (PSTN & Digitenne)	525	402
Total households	3,464	3,281
Net adds (k)
Broadband	-8	$-24$
IPTV	10	$-2$
Fixed ARPU $(\epsilon)$	45	48

Consumer mobile

	Q3 2018	Q3 2019
Postpaid base (k)
F-M postpaid customers	2.032	2.246
Mobile-only postpaid customers	1,598	1,357
Total postpaid base	3,630	3,602
F-M penetration postpaid base	56%	62%
Net adds (k)
Postpaid	$-14$	$-3$
Prepaid	-39	-48
Postpaid ARPU $(\epsilon)$	18	17
Wireless service revenues $(\epsilon m)$	210	194

Business

		Q3 2018 Q3 2019
Customer base (k)
Mobile	1,863	1,819
Traditional Fixed voice	310	193
VoIP	532	606
Broadband	287	315
ARPU (€)
Mobile	22	21
Traditional Fixed voice	49	50
VoIP	11	11
Broadband	73	69

Debt portfolio

1 Based on the nominal value of interest-bearing liabilities after swap to EUR, including GBP 400m hybrid bond and USD 600m hybrid bond

2 Foreign currency amounts hedged into EUR
3 Excludes bank overdrafts $50$

Treatment of hybrid bonds

KPN & credit rating agencies

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 $\mathbf{u}$
• Independent of IFRS classification п.
• In line with treatment by credit rating agencies ٠

IFRS

GBP and USD tranche have 60 years specified maturity, accounted for as financial liability

Coupon payments treated as regular bond coupon, hence expensed $\blacksquare$ through P&L, included in FCF

Tranche		Nominal KPN net debt	Maturity	Rates (swapped) 1 IFRS principal		IFRS coupon
GBP 0.4bn 6.875% € 460m			$\epsilon$ 230m 60 years (1st-call Mar-2020)	6.777%	Liability	Interest paid (incl. in FCF)
USD 0.6bn 7.000% € 465m			$\epsilon$ 233m 60 years (1st-call Mar-2023)	6.344%	Liability	Interest paid (incl. in FCF)
Total	€ 925m	$\epsilon$ 463m

1 USD tranche has semi-annual coupon payments (March / September); GBP tranche has annual coupon payments in March

Fixed infrastructure

Spectrum in the Netherlands

800MHz (Paired)	T-Mob $2*10$	VodZig $2*10$	KPN $2*10$					$2*30$
900MHz (Paired)	VodZig $2*10$	KPN $2*10$	T-Mob $2*15$					$2*35$
$1.8$ GHz (Paired)	KPN $2*20$		VodZig $2*20$				T-Mob $2*30$	$2*70$
$2.1$ GHz (Paired)	VodZig $2*14.6$		KPN $2*14.8$	T-Mob $2*10$	KPN $2*5$	VodZig $2*5$	T-Mob $2*10$	$2*59.4$
$2.6$ GHz (Unpaired)		T-Mob 25			KPN 30		T-Mob $5 -$	$1*60$
$2.6$ GHz (Paired)		VodZig $2*30$		T-Mob $2*5$	KPN $2*10$		T-Mob $2*20$	$2*65$
Total	KPN 169.6MHz		VodZig 179.2MHz				T-Mob 230MHz	578.8MHz

T-Mobile including Tele2

KPN Investor Relations de ir.kpn.com