CÉLINE

 ABI  ABDALLAH  -­‐  PABLO  CASTIEL  GAZIER  -­‐  EUGÉNIE  VERHASSELT  -­‐  JEAN-­‐CHARLES  VANDERLINDEN

STRATEGY  SEMINAR
KPN  GROUP  BELGIUM  -­‐  SETTING  THE  GROUNDS  FOR  FUTURE  GROWTH

1
 ACKNOWLEDGEMENTS
WE  WOULD  LIKE  TO  THANK:

THE  SOLVAY  BRUSSELS  SCHOOL  OF  ECONOMICS  AND  MANAGEMENT

OUR  PROFESSOR  OLIVIER  HAMOIR
OUR  ASSISTANT  NICOLAS  LEEUW  
JEAN-­‐PAUL  PHILIPPOT  (RTBF  GENERAL  ADMINISTRATOR)
FOR  THEIR  CONSTRUCTIVE  FEEDBACK,  VALUABLE  INSIGHTS  AND  RICH  LEARNING  EXPERIENCE

THE  INFORMA  GROUP

THOMAS  WEHMEIER  (PRINCIPAL  ANALYST,  MOBILE  OPERATORS)
DEXTER  THILIEN  (RESEARCH  ANALYST,  MOBILE  OPERATORS)
KALYAN  MEDAPATI  (SENIOR  ANALYST,  FIXED  TELECOMMUNICATIONS)
FOR  THEIR  CONTINUOUS  SUPPORT  AND  PROVIDING  BEST  IN  CLASS  INTELLIGENCE

THE  BELGIAN  INSTITUTE  FOR  POST  AND  TELECOMMUNICATIONS  (BIPT)

DIRK  APPELMANS  (SPOKESMAN)
FOR  HELPING  US  UNDERSTANDING  THE  COMPLEX  BELGIAN  TELECOM  LANDSCAPE  AND  INVITING  US  TO  THE  IBPT  INDUSTRY  
INFORMATION  EVENT  ON  THE  UPCOMING  3G  AND  4G  AUCTION  IN  BELGIUM
 {
‣ MARKET  OVERVIEW
‣ KPN  ISSUES
GOALS  FOR  TODAY ‣ OPPORTUNITIES
‣ FINAL  STRATEGY
‣ Q&A  SESSION
 MARKET KPN  ISSUES OPPORTUNITIES FINAL  STRATEGY Q&A

MARKET  OVERVIEW:  BUSINESS  LANDSCAPE  

TELENET B2C  Telecom  market  (bn€)  -­‐  2009
Service Cable
2.609 1.879 809
Revenue €1,299  b€ 7%
Reach Flanders BELGACOM 27% 30%
Service Fixed  line  +mobile 33%
Revenue €6,60  b€
4%
34% 2%
Reach Na]onwide
53%

55%
39%
KPN  GROUP  BELGIUM 16%

Service Mobile Mobile Fixed TV

NUMERICABLE Revenue €0,785  b€
Service Cable
B2B  Telecom  market  (bn€)  -­‐  2009
Reach Na]onwide
1.269 1.885
Revenue €0,046  b€
3%
Reach Brussels 27%
34%
4% Others
9% Telenet
KPN  Group
Mobistar
VOO MOBISTAR Belgacom
63% 60%
Service Cable Service Mobile

Revenue €0,143  b€ Revenue €1,665  b€

Reach Walonia Reach Na]onwide Mobile Fixed

4
Source  :  Annual  Reports  2009/2010,  Company  websites,  IDATE,  Jupiter.
 MARKET KPN  ISSUES OPPORTUNITIES FINAL  STRATEGY Q&A

MARKET  OVERVIEW:  MARKET  TRENDS

Broadband  &  TV  Market  (M  subscriptions) Mobile  Phone  Market  (M  subscriptions)
5M 14M
Flat  Markets

4M 11M

3M 7M

1M 4M
TV  market Broadband  market Number  of  Households Mobile  phone  market Belgian  popula]on
0M 0M
2002 2004 2006 2008 2010 2012E 2014E 2016E 2002 2004 2006 2008 2010 2012E 2014E 2016E

Fixed  Phone  Market  (M  subscriptions) Multiplay  Market  (M  subscriptions)

5M 5M
Down  Market

Up  Market
4M 4M

3M 3M

1M 1M
Fixed  phone  market Number  of  Households Mul]play  market Number  of  Households
0M 0M
2002 2004 2006 2008 2010 2012E 2014E 2016E 2007 2008 2009 2010 2011E 2012E 2013E 2014E 2015E 2016E

5
Source  :  Team  analysis,  Informa  Group,  Company  annual  reports,  The  Economist  Business  Intelligence.
 MARKET KPN  ISSUES OPPORTUNITIES FINAL  STRATEGY Q&A

MARKET  OVERVIEW:  KPN  GROUP  BELGIUM

MARKET  SHARE KPIs
ARPU  mobile  (€/month)
Revenue  break-­‐down  2009  (%)
«KPN    is  a  mobile  telecommunicaHon  provider   20,0  €
posiHoned  as  an  innovator  in  products  and   15,0  €
services  via  a  segmented,  mulH-­‐brand  approach.» B2C B2B 10,0  €
95% 5,0  €
0  €
Belgium  in  KPN  Royal 2008 2009 2010
Mobile  Market  share  -­‐  volume  and  value Key  financial  indicators  (m€)
in  revenue in  EBITDA 30  % 900M€
5% 5% 23  % 675M€
15  % 450M€
8  % 225M€
0  % 0M€
2008 2009 2010 2008 2009 2010
95% 95% Subscrip]ons  (#) Value  (€) Total  revenue Ebitda

Point  of  Sale  (#) Fixed  Market  share  -­‐  volume Capex  (m€/y)  and  %revenue
800
800 4,6  % 17% 150M€
600 4,4  % 13% 113M€
400 4,3  % 9% 75M€
200 69 59 4,1  % 4% 38M€
0 3,9  % 0% 0M€
Dealers Allo  Telecom Base  Shops 2008 2009 2010 2008 2009 2010
6
Source  :  Team  analysis,  Annual  reports,  IBPT,  Press  releases.
KPN  ISSUES
 MARKET KPN  ISSUES OPPORTUNITIES FINAL  STRATEGY Q&A

MOBILE:  4TH  ENTRANT  WILL  CAPTURE  8,3%  MARKET  SHARE  BY  2016
RATIONAL MODEL  -­‐  CABLE  OPERATOR

• Auc]on  in  2.1GHz  and  1,8Ghz  band  will  start  in   5.000.000
July  2011  for  poten]al  4th  entrant  (3G  license)
• License  is  required  to  launch  within  18  month  

Number  of  B2C  clients

(20%  coverage  provide  na]onal  roaming) 3.750.000

CABLE  OPERATOR 2.500.000

• High  investment  in  license  and  

infrastructure  is  required. 1.250.000 Market  share  :  8,28%
• But  s]ll  alrac]ve  :  
-­‐ Convergence  as  a  LT  interest.
-­‐ Defensive  move  against  Mobistar   0
and  KPN Dec-­‐11 Jun-­‐12 Dec-­‐12 Jun-­‐13 Dec-­‐13 Jun-­‐14 Dec-­‐14 Jun-­‐15 Dec-­‐15 Jun-­‐16 Dec-­‐16

Belgacom  Mobile Mobistar KPN  Group  Belgium Fourth  entrant

INTERNATIONAL  PLAYER

• Small  market  with  low  growth.

• But  s]ll  alrac]ve  :   • Very  high  probability  that  cable  operators  buy  a  license  together  (coverage  request)
-­‐ High  %  of  prepaid. • Worst  case  scenario  (entry  of  cable  operator)  taken  into  account  in  all  models.
-­‐ Belgian  =  Price  sensi]ve  belgian. • Too  late  to  take  any  acdon.
-­‐ Low  switching  cost  

8
Source  :  Team  Analysis,  Informa  Group,  The  Economist  Business  Intelligence,  KPN  Investor  Presenta]on,  Early  mover  advantage  and  empirical  analysis  of  european  mobile  phone  market,  Meryl  Lynch  mmC.
 MARKET KPN  ISSUES OPPORTUNITIES FINAL  STRATEGY Q&A

MOBILE:  TERMINATION  RATES  TO  NEGATIVE  IMPACT  OF  -­‐168M€  NPV

RATIONAL MODEL
20,0 19,5
20 18,0 18,5 18,5 19,0 300M€

15 14,0
12,0 11,4 225M€

10

5,7 150M€
4,8
5 Proximus
2,9
Mobistar
KPN  Group  Belgium 1,1
75M€
0
2001 2003 2005 2007 2009 2011 2013

MTR  Asymmetry  in  Europe   0M€

60% 2008 2009 2010 2011 2012 2013 2014 2015 2016

Diff  btw  Op1  &  Op2 Revenue Profit Cost

45% Diff  btw  Op1  &  Op3

30%
• Trial  in  progress  but  low  chances  of  success
15%
• Nega]ve  impact  of  -­‐168M€  NPV  over  5  years  (2011-­‐2016)
0% • No  acdon  can  be  taken
UK Austria Spain Germany   Ireland   Belgium  

9
Source  :  Team  analysis,  Informa  Group,  Corporate  annual  reports,  IBPT.
 MARKET KPN  ISSUES OPPORTUNITIES FINAL  STRATEGY Q&A

MOBILE:  GROWING  DEMAND  FOR  MOBILE  DATA

Total  mobile  data  traffic  per  user  global  (MB  per  month) peak  time  usage  of  actual  3G  network  in  urban  areas
500MB 100%

407MB

375MB
75%

250MB 210MB
50%

100MB
125MB
46MB
9MB 20MB 25%

0MB
2008 2009 2010E 2011E 2012E 2013E
0%
TOTAL Voice Video P2P Data 0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

CAGR  (2008-­‐2013E) 115% 97% 137% 87% 98%

Network  u]lisa]on  in  peak  ]me Limit  of  technology  (Noise  issue)

• Need  for  data  will  be  mul]plied  by  4  by  2013

• Average  CAGR  is  above  114%
• Need  to  increase  the  network  capacity

10
Source  :  Comscore,  Morgan  stanley  research,  AT&T,  Cisco  2008,  Ovum.  
SHOULD  KPN  EXIT  THE  BELGIAN  MARKET?
 MARKET KPN  ISSUES OPPORTUNITIES FINAL  STRATEGY Q&A

SHOULD  KPN  EXIT  THE  BELGIAN  MARKET?

KPI MATURE  MARKET  EBITDA  MARGIN  BENCHMARK
Orange  (France  Telecom)
KPN  GB  -­‐  Free  Cash  Flow
60%
130M€
48%
98M€

35%
65M€

33M€ 23%

0M€ 10% KPN  Royal  should  keep  its  Belgian  subsidiary

2005 2006 2007 2008 2009 2010 Orange  ES Orange  PL BASE  BE Orange  FR
• KPN  GB  KPI  are  in  KPN  Royal  benchmark
Change  in  NOPAT  +  DA  /  Capex • KPN  GB:  5%  revenue  and  5%  EBITDA  of  KPN
Vodaphone
• 10,6%  Free  Cash  Flow  CAGR
60%
60% • KPN  GB  is  in  line  with  EU  EBITDA  margins
45%
30%
15% 48%
0%
-­‐15% 35%
-­‐30%
-­‐45% 23%
-­‐60%
2006 2007 2008 2009 2010 10%
Voda  UK BASE  BE Voda  ES Voda  IT
Belgium Germany Netherlands Total

12
Source  :  Team  analysis,  NBB,  Belfirst,  Companies  Annual  reports.
STRATEGIC  OPPORTUNITIES
{ ‣CURRENT  REVENUE  STREAMS
‣ NEW  REVENUE  STREAMS
 MARKET KPN  ISSUES OPPORTUNITIES FINAL  STRATEGY Q&A

MVNO:  DISCRIMINATE  THE  MARKET  WITH  LAUNCH  OF  TWO  MVNOS

MVNO  MARKET  SEGMENTS
Clients  number  (k)  and  MVNO  %
1.750.000 13%

1.312.500 10%

GEOGRAPHICAL  &  MIGRANT MEDIA  &  ENTERTAINMENT

• ay  yildiz • groupe  rossel 875.000 7%
• chiama • vlaamse  mediamaatschappij
• zoniq • het  belang  van  limburg
• Ortel  mobile • rtl  group 437.500 3%

RETAILER BANKING
• Carrefour • / 0 0%
• aldi 2006 2007 2008 2009
• phone  house TELECOM/CONVERGENCE
%  of  total number  of  MVNO  clients
• allo  telecom • Toledo  mobile

DISCOUNT DATA
BELGIUM FRANCE GERMANY NETHERLANDS UK
• Simyo • Mobile  viking
Market  share 12%  (2009) 6,5%  (2010) 30%  (2010) 20%  (2009) 15%  (2006)
BUSINESS  &  M2M CHARITY
• Base  business • ello  mobile Number  MVNO  companies 36 40 103 42 29

14
Source  :  ARCEP,  Press  review,  IBPT,  Annual  reports,  BuddeComm  2008.
 MARKET KPN  ISSUES OPPORTUNITIES FINAL  STRATEGY Q&A

MVNO:  DISCRIMINATE  THE  MARKET  WITH  LAUNCH  OF  TWO  MVNOS

ACTION MODEL

Launch  of  2  new  MVNO   100M€ CAGR

2012-­‐2016
• 21%  market  share  with  217  point  
RETAILER 15,8%
of  sales. 75M€
(COLRUYT) • Only  major  retailer  not  proposing  
telecom  product
12,2%
• In  depth  analysis  must  be  done  to   50M€
MEDIA  
iden]fy  best  brand
&  
• Poten]al  value  capturing  in  
ENTERTAINMENT 26,4%
content  value  chain 25M€

• With  one  (or  more)  of  the  4  

biggest  retail  bank
BANKS 0M€
• Legal  issues  must  be  taken  into   2011 2012 2013 2014 2015 2016
account Profit Revenue Cost Bull Bear

RISK  FACTOR
NPV  (5  years  )  
• Have  to  convince  partners  before  other  MNO.
• Full  MVNO  might  change  network.
• Legal  issues  might  slow  down  launch  process.
Probability Fit  factor
   72.097  k€
15
Source  :  Team  analysis,  wireless  Inteligence,  Vandercammen  M.  et  Jospin-­‐Penet  N.  La  distribu]on  2009,  Nielsen,  Belfin  (Insight  consul]ng),  Centre  pour  l’égaité  des  chances,  CIM,  astel.be,  bemobile.be.
 MARKET KPN  ISSUES OPPORTUNITIES FINAL  STRATEGY Q&A

SHIFT  TO  POSTPAID  &  REDUCTION  OF  CHURN:  INCREASE  TOP  AND  BOTTOM  LINE
HIGH  %  OF  PREPAID  WITH  LOW  ARPU EBITDA  margin  vs  churn  rate  -­‐  2010
50%
Postpaid  vs  prepaid  Users ARPU  2010  €/month
40%

EBITDA  margin
20% 30%

80% 20%

10%
Blended  churn  rate: Postpaid  churn  rate:
00%
36% 0% 10% 20% 30% 40% 50% 60% 70%
64%
KPN  Belgium  Yearly  revenue  relation  to  %  of  prepaid
1,5b€

1b€

Revenue
43%
57%
0,5b€

0  € 13  € 25  € 38  € 50  € Prepaid  revenue    Postpaid  revenue Total

0b€
Postpaid ARPU Postpaid 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 100%
Prepaid ARPU Prepaid
%  of  prepaid
16
Source  :  Team  analysis,  Informa  Group,  Corporate  annual  reports,  Nokia  Siemens  Networks,  Company  websites.
 MARKET KPN  ISSUES OPPORTUNITIES FINAL  STRATEGY Q&A

SHIFT  TO  POSTPAID  &  REDUCTION  OF  CHURN:  DEVELOPMENT  OF  HOTSPOT  +  3G

peak  time  usage  of  actual  3G  network  in  urban  areas Mobile  broadband  cost  per  Bit  as  %  of  EDGE
100%
100% 100%

75% 75%

50% 50%

25% 20%
25% 15%
10% 6% 5%
Network  u]lisa]on  in  peak  ]me Limit  of  technology  (Noise  issue)
0% 0%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% EDGE WCDMA  (3G) HSDPA  (3,5G) HSPA+ WIFI  (Current) LTE  (4G)

• Leasing  :  2000€  monthly  for  tower  +  150€  for  backhaul • CAPEX  :  50-­‐100€  per  Wi-­‐Fi  access  point
WIFI  
3G  TOWER • Large  reach  (Few  kilometers  depending  on  spectrum  used) • Small  reach  (Max  100  meters)
(HOTSPOT)
• Low  speed  (Up  to  21,6  Mbytes  if  in  reach  of  3  sectors) • Fast  speed  (Up  to  100Mbytes  if  connected  to  FTTH)

LOW  DENSITY  OF  POPULATION  &  LOW  TRAFFIC HIGH  DENSITY  OF  POPULATION  OR  HIGH  TRAFFIC

Con]nue  improvement  of  3G  network  coverage  

(leverage  current  partnership  with  Mobistar)
17
Source  :  Team  analysis,  Morgan  stanley  research,  AT&T
 MARKET KPN  ISSUES OPPORTUNITIES FINAL  STRATEGY Q&A

SHIFT  TO  POSTPAID  &  REDUCTION  OF  CHURN

ACTION MODEL

More  post-­‐paid  offers CAGR

2012-­‐2016
• Bigger  price  range  for  postpaid  offers 230M€

13,9%
Joint  Smartphone  sales 181M€
• Subven]on  of  150€/smartphone  to  
1  € all  postpaid  clients 132M€
32,3%
Call  to  shik
83M€
• Train  vendors  to  propose  postpaid
3,7%
• Call  center  to  propose  1/year  an  
34M€
alrac]ve  shiu
Wifi  hotspot  in  traffic  zone -­‐15M€
• Wifi  coverage  of  all  traffic  points 2011 2012 2013 2014 2015 2016
• 2400  antennas  in  3  years Profit Revenue Cost Bull Bear

RISK  FACTOR
NPV  (5  years  )  
• Wifi  deployment  may  take  more  ]me.
• Effec]veness  of  joint  sales  depends  on  other  MNO.
• Segment  only  interested  in  prepaid
Probability Fit  factor
 207.837  k€  
18
Source  :  Team  analysis,  Annual  report,  Press  review,  Morgan  Stanley  Research,  IBPT,  Cisco.  
 MARKET KPN  ISSUES OPPORTUNITIES FINAL  STRATEGY Q&A

MULTIPLAY:  226M€  OPPORTUNITY

MARKET  SUCCESS KPN  CAPABILITIES

Exploding  Multiplay  Market  (HH)  

4.000k  HH KPN  royal
+400k/year
3.000k  HH • Leader  in  all  four  markets  and  mul]play  in  NL  
• Proven  success  in  IPTV
2.000k  HH

1.000k  HH

0k  HH
2009 2010 2011 2012 2013 2014 Become  a
major  player  
71%  of  HH  will  have  a  mul]play  package  by  2014 in  the  
muldplay
Mobistar  -­‐  Number  of  Residential  fix  clients
 market
60.000
+45%
45.000

30.000

15.000

0
2009 2010
Fixed  broadband  +  voice Starpack

19
Source  :  Team  analysis,  Mobistar  presenta]on  to  analysts  2010,  Informa  Group,  BCG.
 MARKET KPN  ISSUES OPPORTUNITIES FINAL  STRATEGY Q&A

MULTIPLAY:  226M€  OPPORTUNITY

ACTION MODEL

Cover  all  muldplay  segments CAGR

2012-­‐2016
270M€
• Add  a  TV  offer  to  launch  TV  
mul]play  ranges  (71%  of  market)
• Fast  follow  Mobistar’s  4-­‐play   35,6%
202M€
offer

133M€
55,4%
24,7%
Launch  of  a  markedng  campaign  to  raise  awareness
65M€
• 5M€  first  year  then  2,5M€
• Focus  on  3-­‐play  and  4-­‐play
• Mass  media  (TV,  Billboards,  Press) -­‐4M€
• POS 2011 2012 2013 2014 2015 2016
• Direct  marke]ng  (KPN  user  calls) Profit Revenue Cost Bull Bear

RISK  FACTOR
NPV  (5  years  )  
• Increased  compe]]on  in  mul]play
• Late  entrance
• 5  years  of  high  growth  (leads  to  satura]on)
Probability Fit  factor
 226.405  k€
20
Source  :  Team  analysis,  Telenet  presenta]on  to  analysts  2008-­‐2010,  Mobistar  website,  The  Economist  Business  intelligence  operators  annual  reports,  IBPT,  Morgan  Stanley.
STRATEGIC  OPPORTUNITIES
{
‣ CURRENT  REVENUE  STREAMS

‣NEW  REVENUE  STREAMS

 MARKET KPN  ISSUES OPPORTUNITIES FINAL  STRATEGY Q&A

VALUE  CHAIN
Financial  Services:  26.600M€

Hardware Network Content

6b€ 6b€ 6b€

4,8b€ 4,8b€ 4,8b€

Market  Size

3,6b€ 3,6b€ 3,6b€

2,4b€ 2,4b€ 2,4b€

1,2b€ 1,2b€ 1,2b€

0b€ 0b€ 0b€

IT  Services Hardware PC Wireless Wireline TV Multiplay Software Gambling Music/VideoVideo  Games
Share

18% 13% 5% 27% 11% 7,5% 2,8% 10% 7,4% 1,9% 1,1%

• High  value  markets. • High  value  in  the  souware  and  gambling  
• Decreasing  ARPUs  over  ]me.
• Coupled  offers  have  been  legalized  and  start   market.
Industry  Trends

• Mobile  market  is  saturated  (121%  

coming  to  the  market. • Other  content  markets  are  very  small.
penetra]on).
• Low  PC  penetra]on  53,5%    (vs  75%  for  EU)   • Belgacom  is  making  a  move  towards  video  
• Government  conflict  of  interest  due  to  
expected  to  rise  to  71,2  by  2014. games.
53,3%  stake  in  Belgacom.
• 0,7%  of  GDP  spend  on  hardware. • There  is  a  growing  need  for  content  on  
• Convergence  strategy.
• Hardware  private  labels  are  rising  (eg:medion). demand.

22
Source:  Team  analysis,  Economist  Intelligence  Unit,  IBPT,  Informa  Group,  GfK/BEA,  Sta]s]que  du  système  financier  Belge,  Press  review.
 MARKET KPN  ISSUES OPPORTUNITIES FINAL  STRATEGY Q&A

HARDWARE  PRIVATE  LABEL  16M€  OPPORTUNITY

ACTION MODEL
15.000€K
ZTE  as  partner CAGR
2012-­‐2016
• 79€  for  a  classic  phone  (17%  discount)
• 149€  for  a  smartphone  (40%  discount) 7,9%
11.250€K
• Will  drive  addi]onal  traffic  to  store  
due  to  exclusivity  effect
7.500€K
7,9%
Image  :  ZTE  for  Movistar  La]n  America
7,9%
3.750€K

Retail  private  label  margin  advantage

0€K
Brand 90  % 10  %
2011 2012 2013 2014 2015 2016
Private  Label 70  % 30  %
EBIT Revenues Costs EBIT  -­‐  Bull EBIT  -­‐  Bear

RISK  FACTOR
NPV  (5  years  )  
• Low  profit.
• Time  consuming  partnership.
• New  market.
Probability Fit  factor
16.572k€
23
Source  :  Team  analysis,  Morgan  Stanley  2009,  McKinsey  handset  market  research  2009,  Gy  retail  and  technology    Benelux  2009,  BCG  Private  label  cost  advantage,  Informa  Group,  cellulartec.com,  ZTE  website.
 MARKET KPN  ISSUES OPPORTUNITIES FINAL  STRATEGY Q&A

UNLEASH  THE  PING-­‐PING  15M€  POTENTIAL

ACTION MODEL
12.000€K
Enter  the  NFC  payment  market CAGR
2012-­‐2016
• Consumer  use  of  cash  is  
predicted  to  decrease 42%
9.000€K
• First  step  in  the  26,6  billion   43,7%
financial  services  market
6.000€K
Seal  a  fair  deal  with  other  operators
• 33%  of  revenues  for  each
• Shared  ownership  of  Tunz/Ping-­‐ping 3.000€K

Launch  of  a  markedng  campaign  to  raise  awareness 31,7%

• 300k€  total  investment  by  all  3  operators 0€K

• Internet  adver]sing  (websites,  social  networks) 2011 2012 2013 2014 2015 2016
• POS EBIT Revenues Costs

RISK  FACTOR
NPV  (5  years  )  
• Deal  between  telecom  operators  is  s]ll  unclear.
• Proton  rela]ve  failure  (-­‐14%)  last  year.
• New  market.
Probability Fit  factor
15.336k€
24
Source  :  Team  analysis,  Company  website,  Gartner  2010,  Eurostat.  
 MARKET KPN  ISSUES OPPORTUNITIES FINAL  STRATEGY Q&A

LAUNCH  OF  A  KPN  APP-­‐STORE  WITH  GAMBLING  AS  23M€  CASH  COW
ACTION MODEL

Launch  of  a  kpn  app-­‐store 15.000€K

CAGR
2012-­‐2016
• Launch  of  exclusive  apps  with  gambling  as  flagship
• Partnerships  with  other  app-­‐stores  (ovi,  android...) 39,1%
11.250€K
• Low  cost  adver]sing  campaign  (SMS),  POS 45,2%

Gambling  app  in  partnership  with  Loterie  nadonale 7.500€K

• Apps  based  on  Loterie  Na]onale  games
• Gamble  by  SMS
• Directly  charged  on  phone  bill 3.750€K

Low  costs  markedng  campaign 0%

0€K
• SMS 2011 2012 2013 2014 2015 2016
• POS
• Base/partners  website EBIT Revenues Costs EBIT  Bull EBIT  Bear

RISK  FACTOR
NPV  (5  years  )  
• New  market.
• Slower  adop]on  of  e-­‐gambling.
• Gambling  brand  damage.
Probability Fit  factor
22.979k€
25
Source  :  Team  analysis,  Lolerie  na]onale  annual  report  2009,  Lolerie  Na]onale  website,  Juniper  reseach.
FINAL  STRATEGY
 MARKET KPN  ISSUES OPPORTUNITIES FINAL  STRATEGY Q&A

FINAL  STRATEGY  ASSESSMENT

STRATEGY  ASSESSMENT  MATRIX RANKING

Increased  value  at  stake Shik  to  postpaid #1

5 Shik  to  postpaid MVNO

Probability

Muldplay #2

4 Muldplay
MVNO #3

Ping-­‐ping #4
3
App  store/Gambling Ping-­‐ping

App-­‐store/Gambling #5

Hardware  PL #6

Hardware  PL
1
1 2 3 4 5 +  invest  in  4G
Fit
27
Source  :  Team  analysis.
 MARKET KPN  ISSUES OPPORTUNITIES FINAL  STRATEGY Q&A

FINAL  STRATEGY:  KPN  EBIT  WATERFALL

400M€
82,5 370,4

79,2 316,4

300M€ -­‐0,8
-­‐0,2
85,7 260,4 -­‐27,6

2009  EBIT  level -­‐0,7 -­‐7,0

-­‐15,5
-­‐109,9 204,9
200M€
142,4 175,2 -­‐  0,8 -­‐  0,3
171,5
-­‐0,8 -­‐  28,7
-­‐2,1
-­‐19,6
-­‐35,7

100M€
-­‐43,8

-­‐116,9
0M€
2011 2012 2013 2014 2015 2016

Region  1 End  of  year  EBIT y/y  organic  change  in  EBIT y/y  addi]onal  regula]on  cost y/y  addi]onal  cost  of  projects y/y  addi]onal  revenue  of  projects Un]tled  1

28
Source  :  Team  analysis.
 MARKET KPN  ISSUES OPPORTUNITIES FINAL  STRATEGY Q&A

WRAP-­‐UP

Shik  to  postpaid

Net  5  year  NPV
•
• Muldplay
• Terminadon  rates

280M€  
• MVNO
• 4th  entrant
• Ping-­‐ping
• Data  overload
• App-­‐store/Gambling
• 4G

29
CÉLINE  ABI  ABDALLAH  -­‐  PABLO  CASTIEL  GAZIER  -­‐  EUGÉNIE  VERHASSELT  -­‐  JEAN-­‐CHARLES  VANDERLINDEN

STRATEGY  SEMINAR
KPN  GROUP  BELGIUM  -­‐  SETTING  THE  GROUNDS  FOR  FUTURE  GROWTH

30