Directeur Corporate en Business Development

Jan Davids

15 september 2010

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Financing FttH NetworksReggefiber

FttH Council Europe ConferenceMilan 2011

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The Netherlands

Telecommunications

Fixed Line OperatorsKPN (Copper, national coverage)Cable operators (Coax, national coverage)Reggefiber (FttH, roll out started 2005)

Broadband penetration 85% of Households

DSL 55% of market, Cable broadband 41%, FttH 4% (source: Telecompaper)

Trend towards Triple Play and Single Access

General

GDP 2009 635 billion (16th largest economy of the world)Population 16,5 millionHouseholds 7,2 million Density highTotal area 42,000km2

(mostly flat and easy to dig)

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Reggefiber(*) and its shareholders

Reggefiber Shareholders

Reggeborgh (59%)Private investment company of Wessels family, active in building and construction (VolkerWessels), energy (EVI, Frisol van der Sluis), real estate and building and operating Fibernetworks.

KPN (41%)Dutch Telco. End of year 2010 KPN had more than 3,9 million fixed line customers, 2,5 million broadband customers and 1,2 million TV customers. FCF in 2010 EUR 2,4 billion, total revenue EUR 13,4 billion.

(*) Reggefiber short for Reggefiber Group BV.Regge be pronounced

ReggefiberGroup B.V.

Reggefiber

ReggefiberGroup B.V.

KPN B.V.(41%)

Reggeborgh(59%)

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Strategic rationale cooperation Reggefiber and KPN

End of 2008 KPN bought a 41% stake in Reggefiber. The cooperation between Reggefiber and KPN is mutually exclusive in respect to the construction and operation of passive FttH networks in the Netherlands. KPN has the option of increasing its stake to 51%, 60%. KPN will eventually transfer its customers from the Copper network to FttH network.

Strategic rationale for Reggefiber:Reggefiber has been successful in acquiring customers in competition with cable and KPN; cooperation with KPN will further increase the penetration on network and lowers the risks of rolling outOffers direct access to large installed customer base for migration to FttH KPN is a financially strong and committed co-shareholderProvides extensive experience and knowledge of the telecom sector

Strategic rationale for KPN:Taking part in Reggefiber is necessary in light of the trend towards single access and maintaining a substantial share of the consumer market

expertise and experience in building FttH networks in combination with successful existing projects provide KPN with a jumpstart in FttH

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Consumer broadband subscription packages

EUR 45 110 (triple play)

Wholesale broadband accessEUR 25 42 (triple play)

ODF AccessEUR 12 17.50 [*]

Indicative monthly price ranges per active

connection

Deliver services to consumersCommunicate to consumers

Buy in capacity on passive fiber networkDeliver wholesale fiber services to service providers

Builds, owns and operates the passive fiber networkDelivers open access to active operators

[*] excludes one-off fees, line rentals etc.

ReggefiberWholesale  BV

ReggefiberOperator  BV

NEMs

KPN  W&O 3rd party  ActiveOperators

ODF Agreement

Management Agreement

SP SPSP KPN SP SP

Wholesale agreements

CONSUMERS

Passive  Operator

Active  Operators

Service  Providers

Business model parties involved and value chain

Passive  Operator

Active  Operators

Service  Providers

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headoffice marks start of Fiber roll out in NL

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Steady growth of FttH Homes Passed (HP) and Homes Activated (HA)

8 | 19Reggefiber is active in more than 55 Municipalities

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Reggefiber: an innovative company

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Competition Authority (Nma) and Dutch telecoms regulatory body (OPTA) worked together to approve JV Reggefiber

Reggefiber to operate at arm´s length from its shareholders

OPTA has published policy rules for tariff regulation and unbundled fiber access (= ODF access) to provide long-term regulatory certainty for all parties involved and ensure guaranteed, non-discriminatory access for third parties to passive network

Rental rates per active fiber pair, vary per project area as a function of average CAPEX per Home Connected

OPTA has imposed a cap on ODF tariffs:Tariff cap indexed with CPIODF tariff caps validated on 3-year intervals by OPTA by comparing actual IRR against benchmark all-risk WACC that includes fiber specific and asymmetrical regulatory risk premiums

OPTA policy rules provide long-term regulatory certainty for Reggefiber and its customers

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Monthly rentals paid by Active Operators to Reggefiber:Fixed tariffs per Home Activated (fiber pair rental) dependent on capex : 12 17.50Fixed tariffs for Area PoP (*) co-location ( 500) and Area PoP City Pop city-ring( 600)

One-off fees:Area PoP connection: 3,000Fiber pair connection: 100

A discount applies depending on the total number of Homes Activated / customers servedin a certain area

Rentals indexed anually with CPI

Business model Revenues

(*) one Area PoP can serve maximum 2,500 Homes Passed,Rates are per EOY 2008

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Capital expenditure (capex)

CAPEX per Home Connected typically around 1,000, consisting of labor (civil works, engineering: > 80%) and materials: < 20%

CAPEX levels vary depending on local circumstances (in particular urban density, rivers, canals, railroads)

Capex reduces with 10% every year

Operational expenses (opex)

Main items and model assumptions:General costs: 3% of gross rental revenuesActivation costs: 20,- one-off for activating one fiber pairO & M fee: 12,- per year per Home Passed

(payable by NEM subsidiaries to Reggefiber Operator B.V. pursuant to Management Agreement)

Business model - Capex, Opex

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Typical cash flow profile of a FttH project

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(G)NEMsubsidiaries

ReggefiberttH B.V.

ReggefiberGroup B.V.

KPN B.V.

ReggefiberWholesale

B.V.

Reggefiber

NEM33 FttH projects

ReggefiberttH B.V.

ReggefiberGroup B.V.

KPN B.V.

ReggefiberWholesale B.V.

Reggeborgh

KPN B.V.

KPN B.V.

Secured credit facilities ( 285m) from EIB and commercial banks for 33

Ring fence

Reggefiber Operator B.V.

NEM other FttH projects

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Financing

Key characteristics

Maturity c. 10 years

285mn 50%/50%: EIB and five commercial banks

Net Debt/EBITDA covenant

After construction; DSCR-covenant and cash sweep

Security on network, receivables, bankaccounts, shares, etc

Minimum interest hedging requirement

Significant information requirements

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Important aspects on how to get approval

Projects must meet the following criteria (*):

Be technically sound

Be financially viable

Show an acceptable economic return

Comply with environmental protection and procurement regulation

(*) EIB website

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doing the right thing, the right wayFrom press release November 3, 2010

"This 10-year loan is crucial for Reggefiber to reach its ambitions and we greatly appreciate the support of the European Investment Bank for half of the funding." said Jan van Rooijen, Reggefiber Financial Director. "Involvement of the European Investment Bank in close cooperation with ABN AMRO, BNP Paribas, Friesland Bank, ING and RBS enhances the scale of Fiber-to-the-home we

the pace for European economic growth based on digital innovation. The open model will encourage greater competition in the Dutch broadband market. It is also an excellent example of how the EIB and the Commission can work effectively together to stimulate private sector

Neelie Kroes, European Commission Vice President responsible for the Digital Agenda

Reggefiber considers the EIB loan as an EU-endorsement for ambitions and

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People just love FttH

Information session Reggefiber June 17th 2008 in Eindhoven(while Dutch team was playing for the European football championship)

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Thank you for your attention