DEN HAAG -- “We are pleased with KPN’s performance in 2009. Despite the generally difficult economic environment, we havecontinued to invest in our business. While revenues declined, our focus on EBITDA, free cash flow and market sharescontinued to pay off. Our Dutch Telco business maintained positive momentum starting in 2008 and generated strongEBITDA growth in 2009. Mobile International again outperformed competition and we expect it will continue to do so in2010. In the first two years of our ‘Back to Growth’ strategy, KPN has shown strong cash flow generation and we areconfirming our outlook for 2010. Our commitment to industry-leading shareholder returns is reflected in theannouncement today of a new EUR 1 bn buyback program for 2010. We believe our current strategy is the right one,not only for this year, but also for next year, and will lead to growth in EBITDA, FCF and dividend per share for 2011.”Ad Scheepbouwer, CEO KPN

Revenue trends

KPN Group revenues and other income for existing operations (excluding disposed operations at Getronics) weredown 6.9% y-on-y in Q4 2009 and down 3.5% y-on-y for the full-year 2009. This full-year decline was largely the resultof lower revenues and other income at iBasis (EUR 193m), Getronics’ existing business (EUR 110m), the impact ofregulatory tariff cuts for MTA and roaming and new Wholesale Price Cap (WPC) regulation (approximatelyEUR 290m) and the lower book gains on real estate disposals of EUR 76m. Within existing operations in theNetherlands, revenues and other income declined by 9.0% y-on-y in Q4 2009, or by 5.0% y-on-y for the full-year 2009,mainly from Getronics, iBasis and regulation. Revenues and other income at Mobile International decreased by 1.5%y-on-y in Q4 2009, with stable full-year 2009 revenues (FY 2009: 0.3%), including a negative impact from regulation ofapproximately EUR 100m. Within Mobile International, growth in revenues and other income in Belgium and Rest ofWorld were offset by a revenue decrease in Germany.

EBITDA trends

Starting mid 2008 and continuing through 2009, KPN has taken pre-emptive and corrective actions to mitigate theimpact of the economic downturn. The focus on EBITDA, free cash flow and market shares continued to deliver during2009. EBITDA for existing operations went up by 3.4% y-on-y in Q4 2009 and by 3.6% for FY 2009. In Q4 2009, theNetherlands showed a strong EBITDA increase of 4.2% for its existing business, supporting a full-year increase of1.6%. Substantial cost savings in all Segments contributed to the EBITDA increase and more than compensated forlower book gains on real estate disposals. EBITDA at Mobile International was up 1.3% in Q4 2009 and up 5.4% forFY 2009, mainly driven by Germany and a smaller contribution from Belgium.

EUR 2.4bn free cash flow in FY 2009

Full-year free cash flow amounted to EUR 2,446m (FY 2008: EUR 2,598m), in line with the outlook of ~EUR 2.4bn for2009. During 2009, KPN received tax refunds of ~EUR 109m relating to prior years. Furthermore, KPN benefitted fromthe temporary tax facility to pay VAT on a quarterly instead of a monthly basis (working capital effect of ~EUR 160m).These fiscal benefits compensated for lower proceeds from sale of real estate (2009: EUR 94m, 2008: EUR 180m)and EUR 88m additional pension contributions during 2009. Furthermore, KPN reported lower Capex (EUR 158m lessthan 2008). For a large part this is due to less Capex at Getronics (EUR 49m) and absence of handset lease Capex inGermany (EUR 64m), further supported by an increased focus on Return on Capital Employed (ROCE) of networkinvestments. The improvement in working capital decreased compared to 2008 as a result of a decrease in operatingexpenses and Capex, and was partly offset by structural improvements. During 2009, KPN fully compensated thereversal of the non-structural working capital improvement in Q4 2008 (EUR 150m).

KPN Telecom NV (NYSE: KPN)