Bond KPN Telecom 2% ( XS2069101868 ) in EUR

KPN Telecom

100 % ⇌

Netherlands

XS2069101868 ( in EUR )

2% per year ( payment 1 time a year)

Perpetual

Prospectus brochure of the bond KPN XS2069101868 en EUR 2%, maturity Perpetual

08/02/2026 ( In 104 days )

KPN is a Dutch telecommunications company providing fixed and mobile telephony, internet, and television services in the Netherlands and parts of Germany.

The Bond issued by KPN Telecom ( Netherlands ) , in EUR, with the ISIN code XS2069101868, pays a coupon of 2% per year.
The coupons are paid 1 time per year and the Bond maturity is Perpetual

OFFERING CIRCULAR dated 6 November 2019

KONINKLIJKE KPN N.V.
(Incorporated in the Netherlands as a public limited company
with its corporate seat in Rotterdam, the Netherlands)
500,000,000 Perpetual Fixed Rate Resettable Capital Securities
______________________________________
Issue Price: 99.389 per cent.
______________________________________
The 500,000,000 Perpetual Fixed Rate Resettable Capital Securities (the Securities) will be issued by
Koninklijke KPN N.V. (the Issuer) on 8 November 2019 (the Issue Date). The Securities will bear
interest on their principal amount from (and including) the Issue Date to (but excluding) 8 February 2025
(the First Reset Date) at a rate of 2.000 per cent. per annum, payable annually in arrear on 8 February in
each year, except that the first payment of interest, to be made on 8 February 2020, will be in respect of
the period from (and including) the Issue Date to (but excluding) 8 February 2020 and will amount to
504.11 per 100,000 in principal amount of the Securities. Thereafter, unless previously redeemed, the
Securities will bear interest from (and including) 8 February 2025 to (but excluding) 8 February 2030 at a
rate per annum which shall be 2.344 per cent. above the Reset Reference Rate (as defined in the Terms
and Conditions of the Securities (the Conditions)) for the relevant Reset Period (as defined in the
Conditions), payable annually in arrear on 8 February in each year. From (and including) 8 February 2030
to (but excluding) 8 February 2045 the Securities will bear interest at a rate per annum which shall be
2.594 per cent. above the Reset Reference Rate for the relevant Reset Period payable annually in arrear on
8 February in each year. From (and including) 8 February 2045, the Securities will bear interest at a rate
per annum which shall be 3.344 per cent. above the Reset Reference Rate for the relevant Reset Period
payable annually in arrear on 8 February in each year, all as more particularly described in "Terms and
Conditions of the Securities -- Interest Payments".
If the Issuer does not elect to redeem the Securities in accordance with Condition 6(g) following the
occurrence of a Change of Control Event (as defined in the Conditions), the then prevailing interest rate
per annum (and each subsequent interest rate per annum otherwise determined in accordance with the
Conditions) shall be increased by 5 percentage points per annum with effect from (and including) the date
on which the Change of Control Event occurred, see "Terms and Conditions of the Securities -- Interest
Payments -- Step-up after Change of Control".
The Issuer may, at its discretion, elect to defer all or part of any payment of interest on the Securities as
more particularly described in "Terms and Conditions of the Securities -- Optional Interest Deferral".
Any amounts so deferred, together with further interest accrued thereon (at the interest rate per annum
prevailing from time to time), shall constitute Arrears of Interest (as defined in the Conditions). The
Issuer may pay outstanding Arrears of Interest, in whole or in part, at any time in accordance with the
Conditions. Notwithstanding this, the Issuer shall pay any outstanding Arrears of Interest, in whole but
not in part, on the first Mandatory Settlement Date, all as more particularly described in "Terms and
Conditions of the Securities -- Optional Interest Deferral -- Mandatory Settlement".
The Securities will be perpetual securities in respect of which there is no fixed redemption date and shall
be redeemable (at the option of the Issuer) in whole but not in part at any time from (and including) 8
November 2024 (the First Call Date) to (and including) the First Reset Date, and thereafter, on each
applicable Interest Payment Date (as defined in the Conditions), at the principal amount of the Securities,
together with any accrued and unpaid interest up to (but excluding) such date and any outstanding Arrears
of Interest. In addition, upon the occurrence of an Accounting Event, a Change of Control Event, a Rating
Event, a Substantial Repurchase Event, a Tax Deduction Event or a Withholding Tax Event (each such
term as defined in the Conditions), the Securities shall be redeemable (at the option of the Issuer) in

whole but not in part at the prices set out, and as more particularly described, in "Terms and Conditions of
the Securities -- Redemption".
The Securities will be unsecured securities of the Issuer and will constitute subordinated obligations of
the Issuer, all as more particularly described in "Terms and Conditions of the Securities -- Status", and
"Terms and Conditions of the Securities -- Subordination".
Payments in respect of the Securities shall be made free and clear of, and without withholding or
deduction for, or on account of, taxes of the Netherlands, unless such withholding or deduction is required
by law. In the event that any such withholding or deduction is made, additional amounts may be payable
by the Issuer, subject to certain exceptions as are more fully described in "Terms and Conditions of the
Securities -- Taxation".
This Offering Circular does not comprise a prospectus for the purposes of Article 8 of Regulation (EU)
2017/1129 (the Prospectus Regulation). Application has been made to The Irish Stock Exchange plc
trading as Euronext Dublin (Euronext Dublin) for the approval of this Offering Circular as Listing
Particulars. Application has been made to Euronext Dublin for the Securities to be admitted to the official
list (the Official List) and to trading on the Global Exchange Market of Euronext Dublin (GEM).
References in this Offering Circular to the Securities being "listed" (and all related references) shall mean
that the Securities have been admitted to the Official List and have been admitted to trading on GEM.
GEM is the exchange regulated market of Euronext Dublin and is not a regulated market for the purposes
of Directive 2014/65/EU.
The Securities have not been and will not be registered under the Securities Act of 1933, as amended (the
Securities Act) or under any securities laws of any state or other jurisdiction of the United States and are
subject to U.S. tax law requirements. The Securities may not be offered, sold, transferred or delivered,
directly or indirectly, within the United States except pursuant to an applicable exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act and applicable state and
other securities laws of the United States. There will be no public offer of the Securities in the United
States. The Securities are being offered and sold in offshore transactions in compliance with Regulation S
under the Securities Act (Regulation S).
The Securities will initially be represented by a temporary global security (the Temporary Global
Security), without coupons or talons, which will be deposited with a common depositary on behalf of
Euroclear Bank SA/NV (Euroclear) and Clearstream Banking, S.A. (Clearstream, Luxembourg) on or
about the Issue Date. The Temporary Global Security will be exchangeable for interests in a permanent
global security (the Permanent Global Security and, together with the Temporary Global Security, the
Global Securities), without coupons or talons, on or after a date which is expected to be 18 December
2019, upon certification as to non-U.S. beneficial ownership. See "Summary of Provisions relating to the
Securities while in Global Form".
The Securities are expected to be rated BB+ by S&P Global Ratings Europe Limited (S&P), Ba2 by
Moody's Investors Service Ltd. (Moody's) and BB+ by Fitch Ratings Ltd. (Fitch) (each a Rating
Agency). Each of S&P, Moody's and Fitch is established in the European Union and is registered under
Regulation (EC) No. 1060/2009 (as amended) of the European Parliament and of the Council of 16
September 2009 on credit rating agencies (the CRA Regulation). A rating is not a recommendation to
buy, sell or hold securities and may be subject to suspension, reduction or withdrawal at any time by the
assigning rating agency.
Prospective investors should have regard to the factors described under the section headed "Risk
Factors" in this Offering Circular.
Joint Structuring Advisers
Barclays
Goldman Sachs International
Joint Lead Managers
Barclays
BNP PARIBAS
Goldman Sachs
NatWest Markets

The Issuer accepts responsibility for the information contained in this Offering Circular. To the
best of the knowledge of the Issuer (which has taken all reasonable care to ensure that such is
the case), the information contained in this Offering Circular is in accordance with the facts and
does not omit anything likely to affect the import of such information.
This Offering Circular is to be read in conjunction with all the documents which are
incorporated herein by reference (see "Documents Incorporated by Reference").
This Offering Circular does not constitute an offer of, or an invitation by or on behalf of the
Issuer or the Joint Lead Managers (as defined in "Subscription and Sale" below) to subscribe or
purchase, any of the Securities. The distribution of this Offering Circular and the offering of the
Securities in certain jurisdictions may be restricted by law. Persons into whose possession this
Offering Circular comes are required by the Issuer and the Joint Lead Managers to inform
themselves about and to observe any such restrictions.
For a description of further restrictions on offers and sales of Securities and distribution of this
Offering Circular, see "Subscription and Sale" below.
No person is authorised to give any information or to make any representation not contained in
this Offering Circular and any information or representation not so contained must not be relied
upon as having been authorised by or on behalf of the Issuer or the Joint Lead Managers.
Neither the delivery of this Offering Circular nor any sale made in connection herewith shall,
under any circumstances, create any implication that there has been no change in the affairs of
the Issuer since the date hereof or the date upon which this Offering Circular has been most
recently amended or supplemented or that there has been no adverse change in the financial
position of the Issuer since the date hereof or the date upon which this Offering Circular has
been most recently amended or supplemented or that the information contained in it or any other
information supplied in connection with the Securities is correct as of any time subsequent to
the date on which it is supplied or, if different, the date indicated in the document containing the
same.
To the greatest extent permitted by law, the Joint Structuring Advisers, the Joint Lead Managers
and the Trustee accept no responsibility whatsoever for the contents of this Offering Circular or
for any other statement, made or purported to be made by a Joint Structuring Adviser, a Joint
Lead Manager or the Trustee or on its behalf in connection with the Issuer or the issue and
offering of the Securities. Each of the Joint Structuring Advisers, the Joint Lead Managers and
the Trustee accordingly disclaims all and any liability whether arising in tort or contract or
otherwise (save as referred to above) which it might otherwise have in respect of this Offering
Circular or any such statement.
THE SECURITIES REFERENCED IN THIS DOCUMENT MAY NOT BE DISTRIBUTED
IN OR INTO THE UNITED STATES OR JAPAN. ANY FORWARDING,
REDISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN
PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS NOTICE MAY RESULT
IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER
JURISDICTIONS.
NOTHING IN THIS OFFERING CIRCULAR CONSTITUTES AN OFFER OF SECURITIES
FOR SALE IN THE UNITED STATES OR JAPAN OR ANY OTHER JURISDICTION
WHERE IT IS UNLAWFUL TO DO SO. THE SECURITIES HAVE NOT BEEN AND WILL
NOT BE REGISTERED UNDER THE SECURITIES ACT OR WITH ANY SECURITIES
REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE
UNITED STATES OR IN ANY OTHER JURISDICTION AND MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) IN THE UNITED

3

STATES EXCEPT IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR (2) IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S
UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE
STATE OR LOCAL SECURITIES LAWS.
MIFID II product governance / Professional investors and ECPs only target market
Solely for the purposes of each manufacturer's product approval process, the target market
assessment in respect of the Securities has led to the conclusion that: (i) the target market for the
Securities is eligible counterparties and professional clients only, each as defined in Directive
2014/65/EU (as amended, MiFID II); and (ii) all channels for distribution of the Securities to
eligible counterparties and professional clients are appropriate. Any person subsequently
offering, selling or recommending the Securities (a distributor) should take into consideration
the manufacturers' target market assessment; however, a distributor subject to MiFID II is
responsible for undertaking its own target market assessment in respect of the Securities (by
either adopting or refining the manufacturers' target market assessment) and determining
appropriate distribution channels.
PRIIPs Regulation / Prohibition of sales to EEA retail investors The Securities are not
intended to be offered, sold or otherwise made available to and should not be offered, sold or
otherwise made available to any retail investor in the European Economic Area (EEA). For
these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as
defined in point (11) of Article 4(1) of MiFID II; or (ii) a customer within the meaning of
Directive 2016/97/EU (the Insurance Distribution Directive), where that customer would not
qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II.
Consequently no key information document required by Regulation (EU) No 1286/2014 (as
amended, the PRIIPs Regulation) for offering or selling the Securities or otherwise making
them available to retail investors in the EEA has been prepared and therefore offering or selling
the Securities or otherwise making them available to any retail investor in the EEA may be
unlawful under the PRIIPs Regulation.
The Securities may not be a suitable investment for all investors. Each potential investor in the
Securities must determine the suitability of that investment in light of its own circumstances. In
particular, each potential investor should:
(a)
have sufficient knowledge and experience to make a meaningful evaluation of the
Securities, the merits and risks of investing in the Securities and the information
contained or incorporated by reference in this Offering Circular or any applicable
supplement;
(b)
have access to, and knowledge of, appropriate analytical tools to evaluate, in the context
of its particular financial situation, an investment in the Securities and the impact the
Securities will have on its overall investment portfolio;
(c)
have sufficient financial resources and liquidity to bear all of the risks of an investment
in the Securities, including where principal or interest is payable in one or more
currencies, or where the currency for principal or interest payments is different from the
potential investor's currency;
(d)
understand thoroughly the terms of the Securities and be familiar with the behaviour of
the relevant financial markets and of any financial variable which might have an impact
on the return on the Securities; and

4

(e)
be able to evaluate (either alone or with the help of a financial adviser) possible
scenarios for economic, interest rate and other factors that may affect its investment and
its ability to bear the applicable risks.
The Securities are complex financial instruments and such instruments may be purchased by
potential investors as a way to reduce risk or enhance yield with an understood, measured,
appropriate addition of risk to their overall portfolios. A potential investor should not invest in
the Securities unless it has the expertise (either alone or with a financial adviser) to evaluate
how the Securities will perform under changing conditions, the resulting effects on the value of
the Securities and the impact this investment will have on the potential investor's overall
investment portfolio.
Prospective investors should also consult their own tax advisers as to the tax consequences of
the purchase, ownership and disposition of the Securities.
The investment activities of certain investors are subject to legal investment laws and
regulations, or review or regulation by certain authorities. Each potential investor should consult
its legal advisers to determine whether and to what extent (1) the Securities are legal
investments for it, (2) the Securities can be used as collateral for various types of borrowing and
(3) other restrictions apply to its purchase or pledge of any of the Securities. Financial
institutions should consult their legal advisers or the appropriate regulators to determine the
appropriate treatment of Securities under any applicable risk-based capital or similar rules.
Unless otherwise specified or the context requires, references to , EUR and euro are to the
lawful currency introduced at the start of the third stage of European Economic and Monetary
Union pursuant to the Treaty establishing the European Community, references to £, GBP and
pounds sterling are to the lawful currency of the United Kingdom and references to U.S.$,
USD and dollars are to the lawful currency of the United States of America.
References to the Issuer and KPN are to Koninklijke KPN N.V. and, as the context requires,
any or all of its subsidiaries and consolidated joint ventures.
Any forward looking statements contained in this Offering Circular speak only as at the date of
this Offering Circular. Without prejudice to any requirements under applicable laws and
regulations, the Issuer expressly disclaims any obligation or undertaking to disseminate after the
date of this Offering Circular any updates or revisions to any forward looking statements
contained herein to reflect any change in expectations thereof or any change in events,
conditions or circumstances on which any such forward looking statement is based.
In connection with the issue of the Securities, Barclays Bank PLC (the Stabilising Manager)
(or any person acting on behalf of the Stabilising Manager) may over-allot Securities or effect
transactions with a view to supporting the market price of the Securities at a level higher than
that which might otherwise prevail. However, stabilisation may not necessarily occur. Any
stabilisation action may begin on or after the date on which adequate public disclosure of the
terms of the offer of the Securities is made and, if begun, may cease at any time, but it must end
no later than the earlier of 30 days after the issue date of the Securities and 60 days after the date
of the allotment of the Securities. Any stabilisation action or over-allotment must be conducted
by the Stabilising Manager (or any person acting on behalf of the Stabilising Manager) in
accordance with all applicable laws and rules.

5

DOCUMENTS INCORPORATED BY REFERENCE
The following documents (together, the Documents Incorporated by Reference) which have
previously been published or are published simultaneously with this Offering Circular and have
been filed with Euronext Dublin shall be incorporated by reference in, and form part of, this
Offering Circular:
(a)
the articles of association of the Issuer (the Articles of Association);
(b)
the publicly available audited consolidated annual financial statements of the Issuer for
the financial year ended 31 December 2018 (prepared in accordance with International
Financial Reporting Standards as adopted by the EU (IFRS-EU) and with Part 9 of
Book 2 of the Dutch Civil Code) which appear on pages 112 to 175 (inclusive) of the
KPN Integrated Annual Report 2018 (the 2018 Annual Report) and the combined
independent auditor's report which appears on pages 184 to 192 (inclusive) of the 2018
Annual Report;
(c)
the publicly available audited consolidated annual financial statements of the Issuer for
the financial year ended 31 December 2017 (prepared in accordance with IFRS-EU and
with Part 9 of Book 2 of the Dutch Civil Code) which appear on pages 76 to 122
(inclusive) of the KPN Integrated Annual Report 2017 (the 2017 Annual Report) and
the combined independent auditor's report which appears on pages 131 to 138
(inclusive) of the 2017 Annual Report;
(d)
the publicly available interim financial statements for the Issuer for the six months
ended 30 June 2019 dated 24 July 2019; and
(e)
the Issuer's press release "Third quarter 2019 results" dated 25 October 2019.
The Issuer will provide, without charge, upon request of such person, a copy of any or all of the
documents which are incorporated herein by reference. Requests for such documents should be
directed to the Issuer at its registered office set out at the end of this Offering Circular. Copies
of documents incorporated by reference in this Offering Circular can also be obtained from
http://ir.kpn.com.
In each case, unless stated otherwise, the entire document is incorporated by reference into this
Offering Circular. Notwithstanding the foregoing, where the documents incorporated by
reference themselves incorporate information by reference, such information does not form part
of this Offering Circular.
Potential investors should only rely on the information that is provided in this Offering Circular
or incorporated by reference into this Offering Circular. No other documents or information,
including the contents of KPN's website (www.kpn.com) or of websites accessible from
hyperlinks on that website, form part of, or are incorporated by reference into, this Offering
Circular.

6

TABLE OF CONTENTS
Page
Documents Incorporated by Reference ..................................................................................... 6
Risk Factors ............................................................................................................................... 8
Overview ................................................................................................................................. 32
Terms and Conditions of the Securities ................................................................................... 40
Summary of Provisions Relating to the Securities While in Global Form .............................. 67
Use of Proceeds ....................................................................................................................... 69
Description of the Issuer .......................................................................................................... 70
Taxation ................................................................................................................................... 87
Subscription and Sale .............................................................................................................. 91
General Information ................................................................................................................ 94
Glossary of Selected Terms ..................................................................................................... 97

7

RISK FACTORS
KPN believes that the following factors may affect its ability to fulfil its obligations under the
Securities. All of these factors are contingencies which may or may not occur and KPN is not in
a position to express a view on the likelihood of any such contingency occurring.
Factors which KPN believes may be material for the purpose of assessing the market risks
associated with the Securities are also described below.
KPN believes that the factors described below represent the principal risks inherent in investing
in the Securities, but KPN may be unable to pay interest, principal or other amounts on or in
connection with the Securities for other reasons, and KPN does not represent that the
statements below regarding the risks of holding the Securities are exhaustive. Prospective
investors should also read the detailed information set out elsewhere in this Offering Circular
(including any documents incorporated by reference herein) and reach their own views prior to
making any investment decision.
Capitalised terms used herein have the meaning given to them in "Terms and Conditions of the
Securities".
RISK FACTORS CONCERNING THE ISSUER
Risks associated with competition
KPN is exposed to significant competition in all areas of its business from existing and
potential new telecommunications service or IT service providers and network operators and
competitors from other industries.
KPN is subject to significant competition for all its products and services in the fixed-line and
mobile telecommunications markets, along with IT services for business customers.
Competitors include cable network operators, mobile network operators, MVNO's and branded
resellers as well as non-traditional voice, data and IT service providers. KPN also competes with
domestic and international business service providers in the provision of IT services for
business customers. KPN competes in the telecommunications markets in the Netherlands on
the basis of pricing, network coverage, network speed and reliability, customer experience,
content, products and services offered, customer service and support and its ability to be
technologically adept, innovative and secure.
KPN may not be able to develop and monetise sufficient new business initiatives and
opportunities in the near future to compensate declining existing business, which may
jeopardise KPN's profitability.
As a result of the above, or as a result of increasing competitive pressure due to factors beyond
KPN's control, KPN's business, results of operations, financial condition and prospects could
be materially adversely affected.
The sectors in which KPN competes are subject to rapid and significant changes in
technology, with which KPN may have difficulty competing successfully.
The fixed and mobile telephony, fixed and mobile broadband internet, iTV and business IT
markets are characterised by rapid and significant changes in technology, customer demand and
behaviour, and as a result feature a constantly changing competitive environment. The
telecommunications industry is experiencing continuous structural changes, including new

8

revenue models and new (disruptive) technologies introduced by KPN's competitors, new
market entrants and OTT players. These structural changes, together with the accompanying
products, or other technological developments are exerting substantial pricing pressure on
KPN's products and services and may increase KPN's subscriber acquisition and retention
costs. Technologies such as IP-based connections (VoIP) (over fixed and mobile technologies),
mobile instant messaging, Wi-Fi, internet protocol TV (IPTV) or cloud computing for retail
and/or business customers have had and are expected to have a continued effect on the
telecommunications industry and on KPN's business. As a consequence of these or other
developments, new and established information and telecommunications technologies or
products may not only fail to complement each other, but in some cases may even substitute or
decrease demand for each other. KPN is also investing in new technologies, which may have
slower than expected customer acceptance, or may be limited by the lack of supply of products
by third parties to enable KPN's customers to take advantage of such new technology. If KPN is
unable to effectively anticipate, react to or access technological changes in the
telecommunications market, KPN could lose customers, fail to attract new customers,
experience lower Average Revenue Per User (ARPU) or incur substantial or unanticipated
costs and investments in order to maintain its customer base, all of which could have a material
adverse effect on its business, financial condition and results of operations. The introduction of
new products and services such as new propositions may not be successful and/or timely. This
could lead to lower profitability as well as lower market shares.
Customer churn may increase, and revenues and margins could be significantly lower than
expected, if KPN fails to offer customer propositions that respond to customer demand.
One of KPN's primary revenue drivers is its number of customers. The success of KPN's
business and its ability to limit churn by retaining existing customers or to win new customers
depends upon the introduction of new or enhanced products and services, flexible pricing
models, high quality customer service, and improved network capabilities in response to
evolving customer expectations, new technologies, or the offerings of its competitors. Any of
the new or enhanced products, services or pricing models KPN introduces may fail to achieve
market acceptance, or products or services introduced by KPN's competitors may prove more
appealing to customers, who may discontinue using KPN's services, either of which would, in
turn, increase KPN's customer churn. Any increase in customer churn may lead to a reduced
number of total customers, increased acquisition and retention costs, the need to reduce other
costs to preserve margins, or lower overall revenues and margins, which could have a material
adverse effect on its business, results of operations, financial condition and prospects.
Risks associated with KPN's business activities and the telecom industry
Risks related to the simplification and transformation of KPN's networks, systems and
processes.
KPN may not make sufficient progress in realising the necessary simplification and
transformation actions, for example by phasing out legacy networks and systems, by simplifying
the processes and services, by digitalising the business, by post-merger integration of
acquisitions or by strengthening its capabilities and culture. These actions must lead to
necessary cost reductions, increased agility (e.g. improved time-to-market of new innovative
services) and higher quality of services (e.g. higher NPS and First Time Right). If KPN cannot
realise simplification and transformation in time, it is not able to adequately respond to actions
of its competitors and which could, consequently, lead to lower revenues and profitability in the
future, which could have a material adverse effect on its business, results from operations,
financial condition and prospects.

9

KPN's results of operations and financial condition depend on economic conditions in the
Netherlands.
KPN operates in the Netherlands, and its success is therefore closely tied to general economic
conditions in the Netherlands. Weakness in the Dutch economy, and, in particular, low GDP
growth and significant levels of unemployment may have a direct negative impact on the
spending patterns of customers, both in terms of the products they subscribe for and the extent
to which they use such products. During periods of deteriorating economic conditions and high
unemployment, retail customers generally have less discretionary income with which to
purchase products. KPN's revenue in the Consumer segment in the Netherlands is directly
impacted by a reduction in discretionary income, and as a result of economic weakness in the
Netherlands, it may be more difficult for KPN to attract new customers, or retain existing
customers, and KPN's revenue and ARPU, particularly in those segments, may decline.
Additionally, KPN's business and corporate customers are also affected by general economic
conditions and consumer spending, and therefore an extended recession, or public perception of
declining economic conditions, is and could substantially decrease IT and telecom expenditures
among KPN's business customers, which would in turn adversely affect KPN's revenues in its
Business segment. KPN also provides products and services to a number of government entities
that have in the past and may in the future be subject to budget cuts or expenditure limitations.
In addition, a deterioration of economic conditions may lead to a higher number of non-paying
customers or generally result in a higher number of service disconnections. A weak economy
and negative economic developments may jeopardise KPN's ability to achieve its strategy and
may have a material adverse effect on its business, results of operations, financial condition and
prospects.
KPN's success depends upon maintaining and improving its networks, systems and
operations.
KPN must continuously maintain and improve its networks and other infrastructure in a timely
and cost-effective manner. A reliable and high quality network is necessary to manage churn by
sustaining its customer base, to maintain strong customer brands and reputation and to satisfy
regulatory requirements, including minimum service requirements. The maintenance and
improvement of KPN's existing networks and infrastructure depends on its ability to:

enhance the functionality or upgrade the technology of its existing fixed fiber, fixed
copper, mobile and other networks in order to offer its services to KPN's customers;

expand the capacity of its existing fixed copper and mobile networks and accelerate the
roll-out of its fiber networks to cope with increased bandwidth usage;

simplify, modify and improve customer service, network management and
administrative systems; and

finance its maintenance costs, future network and IT projects, upgrades and capacity
expansion.
If KPN fails to maintain or improve its networks, IT systems or operations, its business, results
of operations, financial condition and prospects could be materially adversely affected.

10