"In 2020 hebben we een waardevolle bijdrage kunnen leveren aan mensen, huishoudens, bedrijven en overheidsinstanties door heel Nederland verbonden te houden. Tegelijkertijd hebben we in deze dynamische tijden onze financiële ambities kunnen realiseren. De wereldwijde pandemie heeft de manier waarop we leven en werken veranderd, op een manier die niemand vooraf had kunnen bedenken. Deze nieuwe realiteit onderstreept het vitale belang van een veerkrachtige digitale infrastructuur, waarin telco's een cruciale rol spelen. Onze netwerken hebben bewezen de aanzienlijke toename van verkeer goed te kunnen opvangen. We hebben onze manier van werken aangepast om onze klanten van dienst te kunnen zijn en ik ben al onze medewerkers dan ook dankbaar dat zij dit mogelijk hebben gemaakt.

In de loop van het jaar zagen we bemoedigende ontwikkelingen in de consumentenmarkt, met een groei van het aantal mobiele abonnees en een stabiliserend klantenbestand voor breedband, voornamelijk gedreven door glasvezel. Het geeft vertrouwen om te zien dat de groei van inkomsten uit glasvezel voor het eerst opweegt tegen de daling van de inkomsten uit koper.

Hoewel we in de zakelijke markt nog steeds te maken hebben met de gevolgen van corona, liggen we op schema om onze MKB- en grootzakelijke klanten te migreren naar een toekomstbestendige propositie en zien we groei in onze kernproducten: breedband en mobiel.

Dankzij ons open-netwerkbeleid blijven we een solide groei zien in het wholesale segment.

We zien wel een negatieve trend in de klanttevredenheid, in zowel de consumentenmarkt als de zakelijke markt, als gevolg van verschillende factoren. Dit heeft onze onverdeelde aandacht en we hebben aanvullende maatregelen genomen om het serviceniveau te waarborgen dat klanten verwachten van de kwaliteitsleider in Nederland.

Om ons fantastische netwerk verder te benutten en uit te breiden, versnellen we de uitrol van glasvezel. Dat is ook de kern van onze strategie om weer te gaan groeien. In 2020 hebben we 319.000 huishoudens aangesloten op ons glasvezelnetwerk en daarmee is nu meer dan een derde van de huishoudens in Nederland aangesloten op glasvezel van kpn. We hebben meer dan 2.800 mobiele sites gemoderniseerd en ik ben trots dat ons 5G-netwerk wordt erkend als het snelste en meest innovatieve van Nederland. We werden opnieuw door verschillende toonaangevende benchmarks erkend als een van de wereldwijde leiders voor onze duurzaamheidsinspanningen.

In de update van onze strategie ‘Versnellen om te groeien’, die we afgelopen november hebben gedeeld, hebben we de lat hoger gelegd. We hebben aangekondigd dat we de uitbreiding van ons glasvezelnetwerk gaan versnellen, naar een half miljoen extra huishoudens per jaar. Daarmee zullen we in 2023 de helft van het land bereiken met glasvezel. We streven naar groei en versterking van ons klantenbestand met een uitstekende digitale ervaring en gedifferentieerde diensten voor gezinnen en bedrijven. Om onze organisatie te stroomlijnen zullen we ons bedrijf verder vereenvoudigen en digitaliseren. Samen onderstrepen deze strategische prioriteiten onze ambitie om heel Nederland te verbinden met een duurzame toekomst, om zowel de omzet uit onze dienstverlening aan de massamarkt als de EBITDA te laten groeien én om een aantrekkelijk rendement aan onze aandeelhouders te bieden. Deze strategische ambities versterken het momentum van digitalisering in Nederland.’’

KPN reports robust Q4 results, delivers on FY 2020 outlook, and sees
encouraging trend in mass-market service revenues
• Delivered on FY 2020 outlook: adjusted EBITDA AL of € 2,320m (+1.4% y-on-y), FCF of € 765m (+6.6% y-on-y)
1
• Consumer seeing continued growth postpaid base, further stabilizing broadband base driven by fiber
• Awards for fastest 5G network in NL, 5G Innovation, and bestin mobile data2
• Accelerated fiber rollout provides solid foundation for coming years
• ROCE improved substantially to 10.1% (+80bps y-on-y)
• Continued progress on cost savings program in Q4 (€ 22m), € 278m since start of the program
• COVID-19 impact on revenues largely offset by cost opportunities; net effect on FY 2020 adj. EBITDA AL ~€ 6-10m negative
• Strong balance sheet and liquidity position (€ 2.1bn)
• More specific 2021 outlook: adj. EBITDA AL of ~€ 2,345m, Capex of € 1,200m, FCF of ~€ 765m, DPS of € 13.6 cents over 2021;
2023 ambitions reiterated
Message from the CEO, Joost Farwerck
“During 2020 we were able to make a valuable contribution to people, households, businesses, and government by keeping the
Netherlands connected. At the same time we delivered on our financial ambitions in these dynamic times. The global pandemic
has changed the way we live and work in ways nobody could imagine. This new reality has underlined the vital importance of a
resilient digital infrastructure in which telcos play a crucial role. Our networks have proven to be able to successfully accommodate
the significant increase in traffic. We adjusted the way we work to serve our customers and I am grateful to all our employees for
making this possible.
During the year we saw encouraging base developments in our Consumer segment with growth in our postpaid base and a
stabilizing broadband base driven by fiber. Encouragingly, this quarter fiber service revenue growth outweighed the loss on copper
service revenues for the first time. Although we face COVID-19 related headwinds in the Business segment, we are on track to
migrate our SME and LCE customers to a future-proof proposition and we see growth on our core products broadband and mobile.
Supported by our open access policy, the Wholesale segment continues to show solid growth. Due to several factors, we have
seen adverse customer satisfaction trends in both the Consumer and Business segment. This has our undivided attention and we
have taken additional measures to ensure the service levels customers expect from the quality leader in the Netherlands.
To leverage and expand our superior network, we are accelerating the rollout of fiber, which is at the heart of our strategy to
return to growth. In 2020, we added 319k households to our fiber footprint and we now cover more than one third of the country.
We now modernized more than 2,800 mobile sites and I am excited our 5G network was recognized as the fastest and most
innovative in the Netherlands. We were once again recognized as one of the global leaders on our sustainability efforts by several leading benchmarks.
At our Strategy Update last November we raised the bar and announced our plan to accelerate the expansion of our fiber network
to half a million additional households per year, meaning we will cover half of the country with fiber in 2023. We aim to grow
and strengthen our customer base by providing an outstanding digital experience and differentiated services for families and
businesses. In order to streamline our organization we will further simplify and digitalize our company. Together, these strategic
priorities support our ambition to connect the Netherlands to a sustainable future, to grow mass-market service revenues and
EBITDA, and to provide attractive shareholder returns. With these strategic ambitions we capture the momentum of digitalization in the Netherlands.”

Key figures
Group financials (unaudited) Q4 2019 Q4 2020 ? y-on-y ? y-on-y FY 2019 FY 2020 ? y-on-y ? y-on-y
(in € m, unless stated otherwise) excl. divestments excl. divestments
Adjusted revenues 1,393 1,354 -2.8% -1.0% 5,486 5,275 -3.9% -2.4%
Adjusted EBITDA AL 561 561 0.0% +1.2% 2,317 2,320 +0.1% +1.4%
As % of adjusted revenues 40.3% 41.4% 42.2% 44.0%
Operating profit (EBIT) 202 223 +11% 1,041 912 -12%
Net profit 84 174 >100% 614 561 -8.7%
Capex 322 289 -10% 1,115 1,147 +2.9%
Capex as % of adjusted revenues 23.1% 21.3% 20.3% 21.8%
Operational Free Cash Flow 239 272 +14% +17% 1,202 1,172 -2.5% -0.6%
As % of adjusted revenues 17.2% 20.1% 21.9% 22.2%
Free Cash Flow (excluding TEFD dividend) 284 268 -5.6% -3.6% 726 765 +5.4% +6.6%
As % of adjusted revenues 20.4% 19.8% 13.2% 14.5%
Net debt 5,148 5,332
ROCE 9.3% 10.1%

1 Year-on-year trend corrected for impact of divestments
2 Source: Ookla Speedtest December 2020, Umlaut Connect test 2020

Improving operational performance
• Consumer net adds trend encouraging
? Fixed: +20k fiber net adds (Q3 2020: +27k), -3k total broadband net adds (Q3 2020: -4k)3
; ARPU at € 50 (+4.0% y-on-y)
? Mobile: +1k postpaid net adds (Q3 2020: +9k); postpaid ARPU stable for 8
th consecutive quarter at € 17 (-1.1% y-on-y)
? Convergence: +22k fixed-mobile households (Q3 2020: -4k), 50% of broadband base;
+81k fixed-mobile postpaid customers (Q3 2020: +2k), 65% of postpaid base
? NPS declined to +11 (Q4 2019: +19), driven by increased customer usage and expectations, IPTV interface changes, and
pressure on customer support capacity during lockdown
• Business customer migrations on track
? 87% of SME and 76% of LCE customers migrated4
? +7k broadband customers (Q3 2020: +8k); +26k postpaid customers (Q3 2020: +8k)
? NPS improved to -2 (Q4 2019: -4); the sequential decline (Q3 2020: -1) was driven by increased customer expectations,
and pressure on customer support capacity during lockdown
• Wholesale added +30k broadband lines (Q3 2020: +22k) and +8k postpaid SIMs (Q3 2020: +23k)
• Network delivered further acceleration of fiber rollout
? Added 112k FttH households, +319k in 2020; upgraded 593 mobile network sites in the quarter, 2,803 since 2019
? 5G network reaches ~70% of the country on 700MHz; recognized as fastest 5G network in NL, most innovative 5G network,
leading mobile data category5
• Continued disciplined cost control
? Net indirect opex savings of € 22m in the quarter, € 278m since the start of the program in 2019
Robust financial performance
• Q4 2020 adjusted revenues declined 1.0% y-on-y corrected for impact of divestments (-2.8% y-on-y without correction).
Growth in Wholesale and Consumer Fixed was offset by lower revenues in Business and Consumer Mobile. FY 2020 adjusted
revenues declined 2.4% y-on-y corrected for impact of divestments (-3.9% y-on-y without correction)
• Q4 2020 adjusted EBITDA AL increased 1.2% y-on-y corrected for impact of divestments (flat y-on-y without correction). The
effect of lower revenues was offset by continued disciplined cost control. Adj. EBITDA AL margin increased to 41.4% (Q4
2019: 40.3%). FY 2020 adjusted EBITDA AL increased 1.4% y-on-y corrected for impact of divestments (+0.1% y-on-y without
correction). The estimated net effect of COVID-19 on FY 2020 adj. EBITDA AL was ~€ 6-10m negative
• Q4 2020 net profit of € 174m, € 90m higher y-on-y, supported by a one-off € 67m positive revaluation of KPN’s deferred tax
asset and € 17m release of revenue related provisions in Wholesale, while Q4 2019 was impacted by € 48m positive DTA
revaluation, € 95m finance expenses related to a bond tender, and € 29m book gain from the sale of International Network
Services and Argeweb. Excluding such incidentals, net profit would have increased ~€ 12m net of tax. Excluding incidentals,
FY 2020 net profit of € 466m would have been ~€ 42m higher y-on-y net of tax
• Capex of € 289m in Q4 2020. FY 2020 Capex increased € 33m y-on-y to € 1,147m driven by accelerated FttH rollout and mobile
network modernization. Fiber rollout Capex increased € 167m, while other Capex was € 135m lower y-on-y
• Q4 2020 Operational Free Cash Flow of € 272m increased 17% y-on-y corrected for impact of divestments (14% y-on-y
without correction), and FY 2020 Operational Free Cash Flow declined 0.6% y-on-y corrected for impact of divestments
(-2.5% y-on-y without correction), due to higher Capex
• Q4 2020 Free Cash Flow decreased to € 268m (-3.6% y-on-y corrected for impact of divestments, -5.6% y-on-y without
correction). FY 2020 FCF increased 6.6% y-on-y corrected for impact of divestments to € 765m (+5.4% y-on-y without
correction). Higher Capex and increased investments in working capital were fully offset by lower cash interest paid and lower cash restructuring
• Strong liquidity of € 2,114m; € 864m cash & short-term investments and € 1.25bn undrawn revolving credit facility
Outlook 2021 and ambitions 2023
KPN specifies its FY 2021 adjusted EBITDA AL outlook to approximately € 2,345m with Capex of € 1,200m. The 2021 Free Cash
Flow outlook is raised to approximately € 765m, in line with the FY 2020 realization. In addition, KPN expects to pay a dividend
of € 13.6 cents per share over 2021, representing 4.6% growth y-on-y. KPN reiterates its 2023 ambitions as provided at the
Strategy Update on 24 November 2020.
KPN intends to pay a regular dividend per share of € 13.0 cents in respect of 2020. The final regular dividend of € 8.7 cents per
share is subject to shareholder approval at the Annual General Meeting of Shareholders on 14 April 2021. The provisional exdividend date is 16 April 2021 and the provisional payment date is 21 April 2021.
Achievements FY 2020 Outlook FY 2021 Ambitions 2023
Adjusted EBITDA AL € 2,320m ~€ 2,345m >€ 2,450m
Capex € 1,147m € 1,200m € 1.1-1.2bn
Free Cash Flow € 765m ~€ 765m >€ 870m
Regular DPS € 13ct € 13.6ct, +4.6% y-on-y

Progressive dividend,
+3-5% annual growth
3 Corrected for migrations to, and new customers of, small business proposition (8k in Q4 2020, 5k in Q3 2020, 7k in Q2 2020, 6k in Q1 2020)
4 Eligible customers migrated from traditional fixed voice and legacy broadband services
5 Population coverage; source: Ookla Speedtest December 2020, Umlaut Connect test 202

Financial review KPN Group Q4 and FY 2020
Market environment
Competitive activity continued in the Consumer fixed broadband market, with three nationwide operators focusing on converged
customers and competition from local fiber operators in rural areas. The Consumer mobile market for entry-level propositions
remains competitive, while in the premium segment all operators are now offering unlimited data. The fourth quarter saw
seasonal promotional activity, driven by Black Friday and year-end promotions. The Business market remained competitive,
especially in the mobile market and the LCE segment.
Key financial metrics
Group financials (unaudited) Q4 2019 Q4 2020 ? y-on-y ? y-on-y FY 2019 FY 2020 ? y-on-y ? y-on-y
(in € m, unless stated otherwise) excl. divestments* excl. divestments*
Service revenues 1,271 1,224 -3.7% -1.7% 5,090 4,874 -4.2% -2.7%
Non-service revenues & other 122 130 +6.5% 397 401 +0.9%
Adjusted revenues 1,393 1,354 -2.8% -1.0% 5,486 5,275 -3.9% -2.4%
Cost of goods & services 362 355 -1.9% -0.3% 1,301 1,284 -1.3% -2.1%
Personnel expenses 254 229 -10% -6.5.% 1,027 892 -13% -10%
IT/TI 84 89 +5.5% +7.2% 353 328 -7.3% -4.6%
Other operating expenses 93 84 -9.1% -8.8% 323 300 -7.1% -4.5%
Total adjusted opex 793 757 -4.6% -2.5% 3,004 2,803 -6.7% -5.3%
Depreciation right-of-use asset 33 31 -5.6% -2.4% 138 130 -5.6% -1.2%
Interest lease liabilities 6 5 -9.9% -9.4% 28 22 -21% -12%
Total adjusted indirect opex after leases 470 438 -6.8% -4.3% 1,868 1,671 -11% -7.5%
Adjusted EBITDA AL 561 561 flat +1.2% 2,317 2,320 +0.1% +1.4%
As % of adjusted revenues 40.3% 41.4% 42.2% 44.0%
Operating profit (EBIT) 202 223 +11% 1,041 912 -12%
Net profit 84 174 >100% 614 561 -8.7%
ROCE** 9.3% 10.1%
FTE own personnel (#) 11,248 10,102 -10%
* Q4 and FY 2019 corrected for impact of divestments to be found on page 12
** ROCE is calculated on a 4-quarter average rolling basis. The ROCE in KPN IAR 2019 was based on the Capital Employed as at 1 Jan 2019, thus using a
different calculation method. The difference between these two methods amounts to 0.1%pt positive (ROCE FY 2019: 9.3%, instead of reported 9.2%)
Q4 2020
Adjusted revenues declined 1.0% y-on-y corrected for impact of divestments (-2.8% y-on-y without correction). Growth in
Wholesale and Consumer Fixed was offset by lower revenues in Business and Consumer Mobile. In the fourth quarter, service
revenues declined 1.7% y-on-y corrected for impact of divestments (-3.7% y-on-y without correction). Non-service revenues
increased 6.5% y-on-y, driven by higher hardware-related revenues. Due to COVID-19, KPN saw lower roaming revenues and the
Business segment saw additional revenue challenges due to delayed IT projects in the fourth quarter. Mass-market6 service
revenues declined 0.1% y-on-y and showed an improving trend compared to prior quarters.
Cost of goods and services were 0.3% lower y-on-y corrected for impact of divestments (-1.9% lower y-on-y without correction).
Personnel expenses declined 6.5% y-on-y corrected for impact of divestments (-10% y-on-y without correction), mainly driven by
the ongoing digital transformation of KPN and lower costs due to COVID-19. IT/TI expenses increased 7.2% y-on-y corrected for
impact of divestments (+5.5% y-on-y without correction). During Q4 KPN further supported its employees in working from home
and increased capacity at its call centers to improve customer support, leading to additional costs. Further simplification and
digitalization resulted in structural savings, while COVID-19 created additional cost opportunities, leading to total net indirect
opex savings of € 22m in Q4 2020.
Adjusted EBITDA AL increased 1.2% y-on-y corrected for impact of divestments (flat y-on-y without correction). The effect of lower
revenues was fully offset by continued disciplined cost control. Adjusted EBITDA AL margin increased to 41.4% from 40.3% in Q4
2019.
Operating profit (EBIT) of € 223m increased € 21m y-on-y, partly supported by a € 17m release of revenue related provisions in
Q4 2020, while Q4 2019 was also impacted by incidentals (€ 29m book gain on the sale of International Network Services and Argeweb, and an incidental € 6m negative change in provisions). Excluding these incidentals, operating profit would have been
€ 27m higher y-on-y mainly driven by lower depreciation and amortization and lower P&L restructuring costs.
Net profit of € 174m was € 90m higher y-on-y, supported by € 67m positive revaluation of KPN’s deferred tax asset and € 17m
release of revenue related provisions in Wholesale in Q4 2020, while Q4 2019 was impacted by € 95m finance expenses related
to a bond tender, € 29m book gain from the sale of International Network Services and Argeweb, and € 6m additional provisions.
Excluding such incidentals, net profit would have increased with ~€ 12m net of tax, mainly driven by higher operating profit.

6 Mass market consists of Consumer, SME and Wholesale segments

see & read more on
https://ir.kpn.com/download/companies/koninkpnnv/Results/KPN_Q4_2020_Press_release.pdf

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