Adjusted EBITDA after leases increased 2.1% y-on-y (+3.1% y-on-y corrected for impact of divestments). The effect of lower adjusted revenues was more than offset by net indirect opex savings. Operational free cash flow1 was solid and free cash flow in Q1 2020 was € 80m (+23% y-on-y corrected for impact of divestments). KPN’s balance sheet and liquidity position remains strong, with a leverage ratio of 2.2x and € 696m cash & short-term investments at hand at the end of the quarter. Liquidity is sufficient to cover debt maturities for the next three years. The impact of COVID-19 measures on operational KPIs and financial results was limited in the first quarter of 2020.
It is premature to say what the total impact of COVID-19 measures will be for the remainder of the year. We delivered solid results in the first quarter, however there is high uncertainty about the length of the COVID-19 crisis, its impact on the Dutch economy and our customers, and therefore its impact on KPN.
Overall, good operational performance for the group, Consumer net adds still under pressure
• Consumer operational performance impacted by ongoing strong competition
? Convergence: -18k fixed-mobile households, 49% of broadband base (Q1 2019: 46%);
-21k fixed-mobile postpaid customers, 62% of postpaid base (Q1 2019: 59%)
? Fixed: +13k fiber net adds, -25k broadband net adds; ARPU increased 5.4% y-on-y to € 48
? Mobile: +24k KPN brand postpaid net adds, -13k postpaid net adds across all brands; postpaid ARPU at € 17 for the fifth consecutive quarter, trend improving (-2.4% y-on-y)
? Consumer NPS of +15 in Q1 (Q1 2019: +17)
• Business delivered good progress with customer migrations: 82% of SME and 62% of LE customers migrated from traditional fixed voice or legacy broadband services. NPS improved sequentially to +1 in Q1
• Wholesale added 21k broadband lines and 12k postpaid SIMs, prepaid SIMs showed a decline of 22k in Q1
• Network continued ramping up fiber roll-out: added 58k additional FttH households in Q1, 177k since the start in January 2019. ~290 mobile network sites upgraded, ~930 since September 2019
• Continued good progress on simplification and digitalization resulted in net indirect opex savings of € 38m in the quarter, € 180m since the start of the program in 2019
Q1 2020 financial results show a good start of the year2
• Q1 2020 adjusted revenues declined 2.4% y-on-y (-1.9% y-on-y corrected for impact of divestments): Growth in Wholesale and Professional Services and Security services in Business, was offset by lower revenues from KPN Consulting and continued pressure on fixed voice and mobile services
• Q1 2020 adjusted EBITDA after leases increased 2.1% y-on-y (+3.1% y-on-y corrected for impact of divestments). The effect of lower revenues was more than offset by € 38m net indirect opex savings; margin increased to 43.3%
• Q1 2020 net profit of € 120m, € 31m higher y-on-y was mainly driven by higher EBITDA and lower finance costs as a result of lower gross debt. This was partly offset by slightly higher depreciation and taxes
• Capex of € 278m increased 6.3% y-on-y, due to changed intra-year phasing from increased access investments due to accelerated fiber roll-out and mobile network modernization
• Operational free cash flow1 was solid at € 297m and was flat y-on-y corrected for impact of divestments
• Free cash flow (excl. TEFD dividend) increased 16% y-on-y to € 80m (+23% y-on-y corrected for impact of divestments), despite higher Capex due to access investments, and higher cash impact from change in working capital compared to Q1 2019
• Strong liquidity of € 2.2bn at the end of Q1 2020, consisted of € 422m cash and cash equivalents, € 275m short-term investments, € 1.25bn undrawn revolving credit facility and € 300m undrawn EIB facility3
Key figures
Y-on-y trends in the last column are corrected for the impact of closed divestments: NLDC, International Network Services and Argeweb.2 Group financials (unaudited) Q1 2019 Q1 2020 ? y-on-y ? y-on-y (in € m, unless stated otherwise) excl. impact M&A Adjusted revenues 1,362 1,329 -2.4% -1.9% Adjusted EBITDA after leases 563 575 +2.1% +3.1% As % of adjusted revenues 41.4% 43.3% Operating profit (EBIT) 189 216 +14% Net profit 89 120 +35% Capex 261 278 +6.3% As % of adjusted revenues 19.2% 20.9% Operational free cash flow1 302 297 -1.5% 0.0% As % of adjusted revenues 22.2% 22.4% Free cash flow (excluding TEFD dividend) 69 80 +16% +23% As % of adjusted revenues 5.1% 6.0% Cash & short-term investments 392 696
1 Adjusted EBITDA AL -/- Capex
2 For information purposes only, Q1 2019 corrected for impact of divestments to be found on page 10
3 EIB facility was fully drawn on 2 April 2020

Message from the CEO, Joost Farwerck
“The COVID-19 pandemic is an unprecedented challenge, for people, businesses and society. We have undertaken several initiatives to ensure Dutch society stays connected in these challenging times, while focusing on the wellbeing of our people and customers and on business continuity. We are also supporting important sections of our society such as health organizations and elderly people. Since the beginning of the outbreak, we successfully accommodated a significant increase in traffic on mobile and fixed networks. I am proud of the way in which all of our employees are dealing with the situation and the collaboration in the company seems stronger than ever.
From a business perspective, COVID-19 has had a limited impact on our operational KPIs and financial results in the first quarter. We continued with the execution of our strategic plan and saw continued intense competition in the Dutch market, resulting in a lower customer base in Consumer. Mobile postpaid ARPU in consumer stayed at € 17 for the fifth consecutive quarter. In Business, we made again solid progress with customer migrations towards our KPN EEN portfolio; 82% of our SME and 62% of our LE customers migrated from traditional fixed voice or legacy broadband services. We continued to digitalize and simplify our organization, which led to strong cost savings in the quarter. In Wholesale, the announced assessments of regulated tariffs were discontinued by regulator ACM following the CBb court ruling on wholesale fixed access regulation. KPN’s fixed access network is no longer regulated, however KPN has reconfirmed its open wholesale policy based on its voluntary offer and the long-term contracts it has in place with several parties. During the first quarter, we rolled-out 58,000 households to our fiber network, a three-month figure representing almost half of connections that we achieved in the whole of 2019.
We delivered on our strategy in the quarter, to which we remain fully committed. Looking ahead, it is clear that risks to our outlook have increased due to the COVID-19 situation. The Dutch economy is expected to move towards a recession. However, it is as of yet premature to estimate the duration of this situation through the remainder of 2020, as well as how it will impact our customers and KPN for 2020. Reassuringly, we have a strong liquidity position and the connectivity and communication services are a basic need for people and businesses. We also have the ability to adjust our measures as an economic crisis develops. We expect to have more clarity about what this means for KPN in 2020 at the end of the second quarter.”
KPN has undertaken several initiatives for its employees, customers, and the Dutch society
• Minimizing physical contact amongst employees; mostly working from home including all call center agents.
• Offering employees additional leave hours and facilities to work from home, to best combine work and private life during this time.
• New reorganization requests are postponed until 1 June 2020. Scaled down further on external personnel and reducing the hiring of new employees to a minimum.
• Minimizing physical contact with customers: 16 out of 107 shops open in a safe way, no physical sales meetings in Business, completely moving to online sales and service model.
• Field engineers activities adjusted to the current situation taking into account the safety of our people and customers.
• Unilateral measures to support our customers in these difficult times:
o Free TV channels for Consumer until 1 June 2020;
o For our KPN EEN SME and Corporate customers, we have dropped out-of-bundle costs until end of April 2020;
o Providing free conference numbers and - with the help of Trend Micro - free antivirus scanners;
o In the healthcare sector we are accelerating the roll-out of workplace facilities to meet growing demand for capacity and operate new emergency locations. We have put in place extra monitoring of hospital networks as these come under more pressure.
• SME suppliers can count on payment within 30 days.
• We are working with our main contractors to protect the 3,000 jobs involved in our fiber roll-out and maintain the expertise around network build-out in the Netherlands.
• We are committed to supporting the most vulnerable in society, including children who do not have access to education due to a lack of digital means. We have made 1,000 4G routers available so these children can continue their educations online.
Press release
30 April 2020
KPN first quarter 2020 results 3
Premature to say what the total impact of COVID-19 measures will be for KPN for the remainder of the year
High uncertainty about impact COVID-19 on the Dutch economy, KPN customers and therefore on KPN
With the COVID-19 pandemic continuing and the Netherlands moving towards a recession, the ultimate impact on the Dutch economy and the position of our customers is currently difficult to predict.
Against this backdrop, KPN still generated solid results in Q1 2020, which show we are on track with the execution of our strategy. Demand for our essential connectivity services remained solid, and we have a robust liquidity position.
From a go-forward perspective, we continue to manage our business through the COVID-19 situation, closely monitoring a number of business drivers including payment behavior, net working capital and credit quality. During the first quarter, we started to see limited impact for a period of two to three weeks, and we remain alert throughout Q2. Meanwhile we prepare to take more necessary measures.
We are also looking closely at our revenue risk profile. Consumer, Wholesale and B2B Soho segments account for a large part of our revenue base, and impact here is currently mostly visible through lower roaming revenues and lower handset sales. In the Business segment, we have also seen lower IT and roaming revenues but across the board we see steadily increasing levels of data and voice traffic.
Lastly, we are considering the impact of changes in payment behavior or even bad debts in parts of our Business client base. Importantly, our SME exposure is relatively limited, and sectors such as hospitality, leisure and travel represent a minority within that SME base. Also, many of our LCE customers are active in the public sector.
We also identified a number of cost opportunities as potential counter measures.
Overall, while it is apparent that the external situation does increase the risk to our stated 2020 outlook, the combination of our good start to the year and our lack of visibility into the remainder of the year means it would be premature to confirm whether our 2020 outlook need to be updated. We expect to have a better visibility on potential operational and financial impact at the end Q2 2020. Therefore, we expect to be able to clarify our position at the end of the second quarter.
Meanwhile, we remain committed to our strategy and it is our ambition to reach our 2020 outlook as provided in January 2020, which as a reminder is as follows:
• Adjusted EBITDA AL: Stable to slightly growing compared to 20194
• Capex: € 1.1bn
• FCF (excl. TEFD dividend): at least mid-single digit percentage growth compared to 20195
• Regular DPS: € 13.0 cents

4 FY 2019 Adjusted EBITDA AL of € 2,287m, corrected for divestments. This is € 30m lower compared to € 2,317m as reported for FY 2019
5 FY 2019 FCF (excl. TEFD dividend) of € 718m, corrected for divestments. This is € 8m lower compared to € 726m as reported for FY 2019

Financial review KPN Group Q1 2020
Market environment
Increased competitive activity continued in the fixed broadband market, with three players focusing on converged customers and increased competition from local fiber operators in rural areas. The mobile market has remained competitive. First signs of stabilization are visible in the no-frills segment of the market, while the premium segment remains highly competitive with all operators now offering unlimited data.
Key financial metrics Group financials (unaudited) Q1 2019 Q1 2020 ? y-on-y ? y-on-y (in € m, unless stated otherwise) excl. impact M&A* Service revenues 1,265 1,234 -2.5% -1.9% Non-service revenues & other 96 95 -1.4% -1.4% Adjusted revenues 1,362 1,329 -2.4% -1.9% Cost of goods & services 309 315 +1.9% -1.3% Personnel expenses 276 246 -11% -10% IT/TI 93 81 -12% -9.4% Other operating expenses 78 73 -5.9% -1.9% Total adjusted opex 756 715 -5.4% -5.6% Depreciation right-of-use asset 35 33 -5.1% +1.0% Interest lease liabilities 8 6 -25% -13% Total adjusted indirect opex after leases 489 439 -10% -8.1% Adjusted EBITDA after leases 563 575 +2.1% +3.1% As % of adjusted revenues 41.4% 43.3% Operating profit (EBIT) 189 216 +14% Net profit 89 120 +35% FTE own personnel (#) 12,263 11,117 -9.3%
* Q1 2019 corrected for impact of divestments to be found on page 10
In Q1 2020, adjusted revenues declined 2.4% y-on-y (-1.9% y-on-y corrected for impact of divestments). Growth in Wholesale and Professional Services and Security in the Business segment was offset by lower revenues from KPN Consulting and continued pressure on fixed voice and mobile services. In the quarter, service revenues declined 2.5% y-on-y (-1.9% y-on-y corrected for impact of divestments) and non-service revenues declined 1.4% y-on-y.
Cost of goods and services increased 1.9% y-on-y in Q1 2020, driven by the divestment of NLDC which caused a shift from indirect opex after leases (€ 12m positive impact from divestments) to direct opex (€ 10m negative impact from divestments). Excluding the effect from divestments, cost of goods and services were 1.3% lower y-on-y, personnel expenses declined 10% y-on-y, driven by the ongoing digital transformation of KPN that leads to a reduction in own and temporary personnel, and IT/TI expenses declined 9.4% y-on-y, largely driven by simplification of networks, IT rationalization, and contract renegotiations with suppliers. Accelerating simplification and digitalization drives substantial improvements in quality and customer experience and results in structural savings. In Q1 2020, total net indirect opex savings were € 38m.
Adjusted EBITDA after leases increased 2.1% y-on-y (+3.1% y-on-y corrected for impact of divestments). The effect of lower revenues was fully offset by strong and disciplined cost control. Adjusted EBITDA AL margin increased to 43.3% from 41.4% in Q1 2019.
Operating profit (EBIT) increased € 27m y-on-y, driven by higher Adjusted EBITDA after leases and lower restructuring costs, partly offset by higher charges for depreciation and amortization. P&L restructuring costs were € 10m in the quarter compared to € 36m in the first quarter last year. KPN realized a strong headcount reduction in 2019, starting with a lower FTE count at the start of 2020. This led to a lower FTE reduction and related restructuring charges in Q1 2020. Delayed new reorganization requests as a result of the COVID-19 outbreak had no effect.
Net profit of € 120m was € 31m higher y-on-y. Higher operating profit was mainly supported by lower finance costs and higher share of profit of associates and joint ventures. Lower finance costs were driven by lower gross debt and lower lease interest. This was partly offset by lower other financial results, mainly due to the release of hedge reserve on the GBP hybrid and lower amortization of discontinued swaps after the USD bond tender. Income taxes reported was higher compared to last year due to higher profit before tax.

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