Koninklijke KPN N.V.

Eelco Blok - Chairman and Chief Executive Officer Jan Kees de Jager - Chief Financial Officer

Polo Tang - UBS Keval Khiroya - Deutsche Bank Frederic Boulan - Bank of America Merrill Lynch Daniel Morris - Barclays Joshua Mills - Goldman Sachs Paul Sidney - Credit Suisse Roshan Ranjit - Nomura Jonathan Dann - RBC Usman Ghazi - Berenberg Bank Emmanuel Carlier - ING Bank Guy Peddy - Macquarie Research Mandeep Singh - Redburn Partners

Thank you, Walter and good morning and welcome to KPN's third quarter 2015 results conference call. With me today is Jan Kees de Jager, our CFO.

Let's start with the highlights for this quarter. When we look back at the third quarter of 2015, we see the positive trends from the previous quarters continuing.

Our focus on an excellent customer experience combined with full range of innovative and differentiating services again resulted in customer base growth. A good operational combination in combination with strict cost discipline resulted in year-on-year adjusted EBITDA growth in the third quarter and strong free cash flow growth year-to-date.

The sale of BASE Company has entered the Phase II process and we remain confident that the transaction will be cleared by the European Commission. Furthermore I'm proud that our initiatives in the field of corporate social responsibility are being recognized.

For the fourth consecutive year, KPN has been included in the Dow Jones sustainability index. First, I will present what we have been doing this quarter to further strengthen and develop our services and networks.

And then, Jan Kees will comment on the operational performance and take you through the financial results. I will finish with my concluding remarks.

Thereafter, there will be plenty of time for Q&A. Data traffic continues to grow strongly within our networks.

Today, 60% of the data traffic over our fixed network relates to our IPTV product, which delivers high quality linear TV, On-Demand services and a large number of interactive features. The remaining 40% of traffic is driven by fixed internet.

A breakdown of 40% is shown on this slide. In the third quarter, half of the fixed internet traffic was related to video streaming up from 40% a year ago, which is mainly been driven by Netflix.

To address the shift in consumer behaviour KPN launched Meer TV in the third quarter. Meer TV aggregates and provides access to a wide range of over the top applications including YouTube and Netflix.

We make this accessible to our customers in a smart and cost effective way and believe, this will further increase customer satisfaction. Customers no longer need, Chromecast or Apple TV to be able log into Netflix.

But will be able to access it in on their TV set via KPN's IPTV manual or via a dedicated channel. Also a mobile data usage continues to grow strongly driven by video streaming.

Our data bundles offer carefree usage for our customers and we've seen average data usage doubling year-on-year to 1.3-gigabyte already. We continue to see strong interest in KPN's premium data bundles as 45% of sales consisted of 5-gig and 10-gig data bundles.

Upsell potential remains at 55% of KPN postpaid customers, still have bundles of 1-gig and lower. This compares to 65% a month ago.

Therefore, we continue to focus on upselling our existing base through larger bundles. Furthermore, a couple of weeks ago we increased prices at the low end of our SIM-only propositions for the KPN brand.

As a consequence, the price gap between high and low end bundles has been reduced, which should further drive upsell to higher value bundles. Our unique position as the only, truly integrated player in the Netherland enables us to offer our fixed mobile customer significant additional benefit, at limited marginal cost.

A strong focus on growing our fixed mobile base resulted in very good uptake in recent quarters. As well as increasing the fixed mobile penetration within our broadband and mobile base.

We also focused on deepening our relationship within households by upselling additional SIMs to drive a further reduction in churn. Over the last quarters, we've been increasingly successful in growing the average number of SIMs per household.

There are now, on average approximately 1.5 SIMs per fixed mobile household. We continue to focus on growing this number to increase share of volatile [ph] household and reduce churn.

In the business segment, we continue to operate in a rapidly changing market environment. The size of the business market in the Netherlands continues to decline.

The decline of traditional voice is structural. Mainly driven by line loss due to rationalization by our customers and migration through multi-play, which includes lower margin voice over IP solutions.

Decline in single play wireless which was mainly driven by repricing, is expected to bottom out in the medium-term. In the third quarter, we made good progress.

80% of our mobile base has now been repriced versus about 60% last quarter. Performance of Network and IT services was impacted by the slow economic recovery in the Netherlands, as well as phasing out of legacy networks.

In the medium term, we expect this cyclical business to return to growth. At the same time, we are pushing hard to grow multi-play and new services to retain customer value.

Therefore, we remain confident to stabilize revenues in the medium term. To offset the pressure on top line, we are actively transforming the business segment organization.

We do this by simplifying our portfolio and processes and implementing a rigorous cost discipline approach. Last quarter, we reached an agreement with the Works Council on the planned FTE reduction and we started to implement the reorganization this quarter.

However, it takes sometime before this cost benefits will be reflected in EBITDA. Our focus on providing an excellent customer experience is delivering positive results, evidenced by another year-on-year improvement in Net Promoter Scores this quarter.

Further improving customer satisfaction remains one of our key priorities. Let's move to the next slide, our networks.

We continue to invest in capacity and speed to further strengthen our leading market positions and to enable exponentially rising data usage. In fixed, fiber households coverage increased to 59%.

The increase was mainly achieved through investments in fiber to the curb, which now covers 31% of households. In combination with vectoring and pair bonding, this drives higher bandwidth for our customers.

28% are covered by fiber to the home. In mobile, we continue to strengthen our leading 4G position via aggregating 800 megahertz and 1,800 megahertz spectrum.

This almost double the average download speed and allows us to differentiate the network quality and use experience in times of exponentially growing data usage. Our simplification program remains on track with run rates savings now approximately EUR250 million.

The number of FTE reduced by 200 this quarter and we have now seen approximately 1,350 FTE reductions since the start of the program. In recent quarters, we invested in a simpler and digitalized customer-centric operating model.

In the third quarter, we took further steps toward simplification of our front end and back end processes. This enables us to further improve customer experience and at the same time phase out legacy systems.

At the front end, we introduced a single KPN customer ID. Password-related questions at customer contact centers are currently leading to about 5,000 calls per week.

The single ID is therefore expected to lower call center expenses and at the same time increase customer satisfaction. At the back end, we recently introduced an improved order management system.

Today, around 40% of our consumer residential base has been migrated towards this future-proof IT domain. This leads to a reduction of lead time and lower cost to serve, as we improve customer satisfaction and will be able to phase out legacy IT systems.

I would now like to hand over to Jan Kees to take you through our operational and financial performance. Jan Kees?

Thank you, Eelco and good morning, everyone. Increasing the penetration of fixed-mobile bundles continues to be our main strategic focus, as it increases customer satisfaction and significantly reduces churn.

In the third quarter, the penetration of fixed-mobile bundles increased by 2 percentage points from both our broadband and postpaid customer base. Nearly, 1 million postpaid subscribers are now part of a fixed mobile bundle, churn for these packages is only around 5% annually.

Let's move to the residential segment. Our strong market position in consumer fixed is the result of our investments in network and services, which led to a competitive high speed network, an innovative and differentiating IPTV service and the success of our fixed mobile bundles.

These has driven continued good commercial momentum with strong base growth. Revenue generating units increased year-on-year by more than 5% to 2.26% per household supporting ARPU per customer.

On this slide, you see a stable ARPU year-on-year. However, unrounded we continue to see growth.

Mobile, this quarter we see a continuation of the positive trends of the past quarters. Our high quality network and attractive propositions including fixed-mobile bundles have driven continued growth and lower churn.

This quarter, we added 80,000 postpaid customers driven by a large proportion of new high value KPN brand subscribers. Combined with a stable ARPU, which was somewhat supported by the tax benefits, service revenues increased by 4.6% year-on-year.

As Eelco explained, the market environment in the business segment changes rapidly. This continues to impact both our operational and financial performance.

Wireless service revenues, show a somewhat improving year-on-year trends, which was mainly driven by base growth, although still offset by a lower ARPU driven by repricing. In wireline, we continue to see a decline in access lines as a result of customer rationalization and migration to multi-play.

At the same time, we made good progress to grow multi-play. 90% of our mobile customer base is now part of a multi-play proposition.

In Belgium, the market remained competitive but the service revenue trend improved driven by a better customer intake as a result of new tariff plans. The EBITDA margin improved in the third quarter versus the same period last year.

This was supported by the phase out of our SNOW products and the absence of site tax expenses this quarter compared to the third quarter last year. BASE Company's network investments led to more than 88% 4G coverage over the Belgium population at the end of this quarter.

As such, BASE Company is well positioned to benefit from data usage growth. Let me now take you through our financial performance for the third quarter.

Our strong operational performance and strict cost discipline are clearly leading to improving financial results. Please note, that unless stated otherwise all financial results in this presentation are based on continuing operations.

So excluding BASE Company. In the third quarter, adjusted revenues were down year-on-year but adjusted EBITDA was growing.

Let's start by looking at the revenue breakdown. Consumer residential revenues continued to increase driven by base growth.

While service revenue growth continued in consumer mobile. However, this was still offset by the impact of the ongoing decline of the business market size.

The EUR20 million impact from the divestment of SNT Deutschland at the end of the first quarter of 2015. And the phase out of Auto France [ph].

Our strong operational performance in the last quarters and positive impact of cost savings led to 4.6% year-on-year growth and adjusted EBITDA in the third quarter. The main delta was visible in the line item SAC/SRC and cost of goods sold.

Cost of goods sold were lower due to the consolidation of Reggefiber last year and SAC/SRC levels decreased as a result of lower churn and fewer handset transactions. Personnel cost in Q3, 2015 were lower year-on-year driven by FTE reductions as a result of simplification and the reduction of management layers.

All in all, the OpEx savings supported the adjusted EBITDA margin for the Netherlands which increased to 41.7% this quarter. Please note, that the adjusted EBITDA year-on-year comparison will be more challenging in the fourth quarter due to several effects.

Adjusted EBITDA in the fourth quarter of 2014 included one-off VAT tax benefit of EUR44 million relating to the full year 2014. SAC/SRC levels are expected to be higher in Q4, due to more handset transactions as a result of a higher end of contract base and the new iPhone and Reggefiber was consolidated as per the 1 November of last year already.

CapEx in the Netherlands amounted to EUR937 million in the first nine months of 2015, which was EUR121 million higher than last year. If we compare this on a like-for-like basis with the first nine months of 2014, so including Reggefiber in 2014 as well.

CapEx was EUR51 million lower year-on-year. We expect to continue to see less elevated CapEx levels going forward.

Although, we still have several investment programs running to invest in capacity and speed of our networks. Investments in fiber to the curb and fiber to the home will drive the fiber penetration to approximately 80% of Dutch households at the end of 2016.

In mobile, we are rolling out carrier aggregation of the 800 megahertz and 1,800 megahertz spectrum to increase capacity and speed of the network. This is expected to be completed by the end of next year.

Customer driven CapEx was higher year-on-year due to our strong commercial momentum. Finally, we continue to invest a simplification of our business.

Mainly through investments in IT. We expect these investments to yield savings in 2016.

Free cash flow, free cash flow has grown strongly year-to-date. Free cash flow for the first nine months was EUR329 million which is excluding the EUR146 million dividend received from Telefonica Deutschland.

Please note, that on this slide we have excluded the EUR451 million pension provision released last year from reported EBITDA and change of provisions. The improvements in free cash flow was mainly driven by lower interest payments as a result of reduced growth debt levels in 2015.

The higher cash from changing provisions was due to settlement of various legal claims and additional pension payment in first nine months of 2014 and higher restructuring provisions this year. There was also EUR79 million more cash from changing in working capital compared to last year.

As a result of different intrayear phasing and some structural improvement. This was partly offset by higher CapEx year-on-year which reflects different CapEx phasing in 2015 versus 2014.

Let's now look at our financial position. In the third quarter, net debt was EUR7.5 billion somewhat higher than last quarter.

The distribution of EUR0.034 stands related to the Telefonica Deutschland dividend and to the payments of the EUR0.03 interim dividend in September were partly offset by cash flow generated in the third quarter. The net debt to EBITDA ratio was stable at 2.8 times.

The 20.5% stake in Telefonica Deutschland together as the expected proceeds from the sale of BASE Company provide us with significant financial flexibility. Now let me hand back to Eelco for the outlook and concluding remarks.

Thank you, Jan Kees. Our positive operational performance and strict focus on costs continue to support our financial performance.

We are on track for our full year outlook, which we strengthen at the second quarter results. The performance in consumer was very strong driven by our excellent market position.

The main challenge remains in the business segment. Where we are transforming the organization and overtime this will be reflected in our financial results.

Our simplification program is well on track. To conclude, the third quarter was not a good quarter for KPN with improving financial results on the back of strong operational performance.

Our growing free cash flow and solid financial positions will drive growing shareholder remuneration going forward. Thank you and now we're happy to take your questions.

The first one is on, Tele2 Netherlands. Can you give us your thoughts in terms of how disruptive you think they can be at the market?

And specifically, we've noticed that you've mentioned actually in your call that you've actually raised the pricing of mobile at the lower end. So does this present more risk given Tele2 is in the market or how do you think that your price rises will impact the market, how will Tele2 react?

That's the first question. My second question is really just in terms of, your comment on SAC and SRC.

So it seems to be coming down noticeably and it's helping to drive EBITDA growth, how much room is there for SAC and SRC's to fall further given that there is growing uptake of converged bundles? And my final question, is really just on CapEx because in your CapEx slide.

You outlined that you have EUR200 million of simplification cost year-to-date in your CapEx numbers. After the simplification program is over, will this all drop out.

Or another way to ask the question is, is you have EUR1.2 billion per annum of CapEx guidance for about 80%, 90% CapEx to sales, is there scope for this CapEx to be lower than the EUR1.2 billion that you've outlined going forward? Thanks.

I will deal with question on the Tele2 and then Jan Kees will answer the questions on the SAC/SRC and CapEx. We are very well positioned in the Dutch mobile market looking at the performance of the last six quarters in a very competitive market next to that, our fixed mobile penetration is at the end of third quarter, 28% of our postpaid base.

We see very low churn not only 8% for KPN postpaid and postpaid customers that are in a multi-play offering, had a 5% churn level. We have the highest customer satisfaction levels and there is a very large gap between KPN and Tele2.

And we believe that, combination of the best 4G and upgraded fixed network will really help us, also in the future to position us very well in the Dutch mobile and fixed market. Yes, the current market is challenging, but as I said we are more convinced that we continue to be very well positioned and will be able to compete with everybody in the Dutch market.

Jan Kees?

Thank you. Actually, the SAC/SRC question.

On the short-term actually, we expect higher SAC/SRC levels because more end of contracts bases will be growing on the short-term and also the introduction of the new iPhone will add to higher SAC/SRC levels. But on the longer term, yes because of fixed mobile bundles we expect to, there is room to SAC/SRC levels to trend downwards to the lower term because churn is lower and the fixed-mobile bundles add to that.

Then, to CapEx. Please note that the simplification CapEx also includes innovation CapEx.

Which is will be ongoing, so it's not that all CapEx simplification will fall out. And there is also possibility that of course that we continue to work on simplification also and this program is ending at the 2016, end of 2016.

However, also there in the long-term as we have noted earlier. We expected CapEx levels to trend to downwards because we have seen elevated levels CapEx because of reinvestment program both in the fixed network as well as in the mobile network, which most of the investments are also coming to a conclusion in 2016.

So there is room for CapEx levels to trend downwards, but on the simplification program, we expect also at least innovation CapEx to continue.

I've got two questions if I may. Firstly, on the residential business, obviously we've seen a bit more promotional activity in the broadband segment overall in Q3.

And I think it's fair to say that judging by your own broadband additions this quarter, cable probably hasn't had too much of an impact with their more aggressive moves. When it comes to the start of Q4, have you seen any incremental promotional activity or any signs that cable has improved its momentum at all versus yourselves?

And then secondly, just on the Telefonica Deutschland stake, you've obviously labeled this is a financial investment and you've had the stake for approximately 1-year now. Do you still see upside in holding on to the stake?

Thank you.

The promotional activities in the third quarter were somewhat improved by us after noting that Ziggo continue to increase their, were about to continue to higher level of promotions in the market, we took that decision somewhere in the middle of the third quarter and we expect similar levels of promotions in fourth quarter to be able to continue the group customer growth as we have seen, especially the second part of the third quarter. You need to take into account that Ziggo at this moment is at a six months, EUR30 level monthly subscription and we are at a EUR35 level, also for the same six months.

So there is still a gap in monthly discount when you compare KPN with Ziggo, but with this promotion we were able to increase the sales of our residential business. Then the question on TFD.

The stake is indeed to treated as a financial investment and it means that, from time-to-time we will review our position in Telefonica Deutschland and I can assure you that, any decisions related to the 20.5% stake we're taking with a view to create shareholder value and you also need to know that we, are convinced that Telefonica Deutschland will be able to deliver at least, they have announced at the announce date of deal. As I said, we are strongly committed to generate shareholder value, as evidenced by our decision recently to pass through the dividend of Telefonica Deutschland to our shareholders.

A couple of questions, please. Firstly, to follow up on the previous question on promotional activity in broadband, so it looks like right now, as per a different website, you both charge EUR35 for six months.

Liberty doesn't seem to be very happy about all that. Is there a hope as in the mid-term for a slightly more constructive environment and less of a focus on net additions?

Secondly, in mobile, we saw this quarter flat mobile service revenue if you adjust for VAT. What's your outlook on that?

Can you discuss some of the dynamics you're seeing in mobile data upsell between the different packages and do you think that can lead to some growth in the medium-term above the current level? And lastly, on the content side.

Can you discuss your basic content strategy in the light of some more active moves to content from cable operators in Europe, especially Liberty in some geographies? Thank you very much.

Looking at the promotions, in the residential market. In the second quarter, we took the decision to lower the promotions from six months discount to three months discount and then looking at the third quarter.

Liberty did not make any change in their discounts, they even became especially below the line even more aggressive on promotional discounts and therefore, we have taken the decision. Mid-third quarter to again introduce the six months discounts.

But on a higher level and not a discount on a higher level, but discount on a lower level than Liberty. So Liberty has today, six times EUR30 monthly subscription as a promotion in the Dutch market and we have six times EUR35 discount and as we have shown that we are willing to make some changes to this in the second quarter, yes there is room for improvement.

But we don't want to end up in a situation, as we were in a few years ago. Where, we are not in the lead of the growth.

Then on content strategy, Jan Kees will deal with the consumer mobile growth question, on content. We have a very clear strategy.

We are working closely together with strategic partners that have a proven track record in content to be able to meet the customer requirements on content. Our exclusive agreement with Spotify is an example, but also our exclusive agreement with FOX Sports helping us to offer our mobile customers, so exclusively soccer content and recently we have announced a deal with an agreement with Endemol to develop a KPN original TV series that will be launched next year.

Jan Kees will deal with the consumer mobile growth question.

Yes, when you exclude the VAT benefit this quarter. Consumer mobile service revenue were flat year-on-year.

And you also asked, if I'm correct. If this is sustainable.

Yes, we do believe so because we see an improved value mix within the customer base. We also see that 45% of our current sales in the 5-gig or 10-gig bundle.

And so as I said also relatively high shared intake to contribute to partly offset negative trends at the base also. So we do feel that, this is a stable position at the moment.

I've got three please. Firstly, I wonder if you can give us some thoughts on the overlap between the 45% of customers which are taking more than 1-gigabyte on mobile and how that correlates with the 28%, which are non-fixed mobile bundles.

And I suppose, what I'm trying to understand, is it fair to say that it's your best value subs which are already in the bundles. And therefore the amount of your kind of revenue and EBITDA which is locked in, is rather higher than that roughly 30%?

Second question is on the incidentals between reporting adjusted EBITDA. I think consensus is looking from something less than EUR50 million in 2016 on that delta.

Can you give us some thoughts on whether that's a reasonable number to be going for versus running a little bit ahead versus consensus this year? Finally, third question on the corporate trend.

You obviously got a little bit of a tougher comp in Q4, but obviously the momentum is been kind of quite strong relatively again in Q3. Can we look for another improvement in the corporate business in Q4?

Thank you.

Let's start with the last question about the business market. The transformation plan is in place, the execution is on track and going forward and will it be the fourth quarter or the first quarter of next year.

We expect improved trends on the financial metrics in the business market. We're confident about the execution.

In the second quarter, we shared with you that we have reached an agreement with the Workers Council, so we're able to, well we've been able to start the additional restructuring progress in the business market and that will result in improved cost levels going forward. Also looking at the different top line buckets we see small, well improvement in the different buckets.

So therefore, we are confident that the trends will improve going forward. Then your first question, the clear simple answer to that question is, yes.

KPN brand and the most valuable customers in the KPN brand are driving the group performance in our multi-play offerings. Jan Kees on the incidentals, you will take the first one.

Yes, so we have a EUR38 million difference between adjusted EBITDA reported because of incidentals. Two figures there, the largest is EUR32 million reorganization, we stepped up reorganization somewhat compared to last year because we are also stepping up our FTE reduction program because of simplification.

Delayering of the management layers and the reorganization in the business market, that's the most important reason for the RIO [ph] to be somewhat higher, but it will generate better EBITDA margin going forward. Obviously and then EUR6 million incidental is related to KPN-Qwest.

A remaining claim, there with the banks and we've settled it for EUR6 million. So the total is EUR38 million.

That's clear. Thank you, just as a brief follow-up.

Are you comfortable with, where consensus is sitting on those incidentals for 2016, which I think is a little less than EUR50 million? Thank you.

We're not giving guidance at the moment on the incidentals at the moment. That's very difficult, of course it can be either rate, it can be incidental.

So giving guidance on incidentals is always quite tricky. So I'm afraid, we're again not help too much with that.

No problem at all, thanks.

Just two questions from me. The first is on, Slide 11 the simplification program.

It looks like the run rate of cost savings has stepped up a bit less than in the last quarter, at EUR250 million now of the total EUR400 million. Should we expect that to accelerate into the year-end, and how will your recent agreement with the Works Council affect that?

The second question is just regarding your delivered broadband speed. So on Slide 10, I think you gave a quite useful chart showing the average mobile download speeds.

I wondered if you had a comparable figure where we could see what the delivered speed on bonded vectoring is across your network today. Thank you.

Okay, let's start with first question. Yes, we're looking at the Q3 increase of the run rate savings.

It was somewhat lower level than the previous third quarters, but that had to do with the phasing of the IT renewals. So I can assure you that, the number in the fourth quarter will be, well much higher than the number in the third quarter and we continue to deliver, well very good results on the simplification program going forward.

And as Jan Kees has already mentioned, we expect to continue to well to leverage the opportunities that we see in the spend base of KPN going forward and we will update you with, the numbers and the program in the Q4 results presentation. Then the broadband speed, it's relatively simple.

Today we have bundled vectoring already commercially available giving us the opportunity to deliver 240 megabits per second download speeds to our customers, in areas where we only use vectoring. Its 120 megabits per second in areas with VDSL and pair bonding.

Its 100 megabits per second and its 50 megabits per second. As of next year, we will be able to launch super vectoring and together with pair bonding it will give us the opportunity to deliver in those areas 400 megabits per second to our end users.

Just two question, please. Firstly on consumer residential, you've grown your consumer residential fixed line base over the past four quarters.

I was just wondering, did this give you more scope to put through larger price increases going forward in your fixed line business, just really trying to understand the balance between price increases and line loss. And then secondly on because you're on mobile.

You guided higher SAC and SRCs in Q4 and should we view SACs and SRCs as your preferred method of reacting to potential stronger competition, maybe putting it another way. Do you feel as they're your consumer tariffs are now well placed in where and you want them to be, even if competition intensifies?

Thank you.

On mobile, it's not about SAC/SRC. Obviously Jan Kees just mentioned, we expect this cost line to trend down going forward.

Our focus is really on multi-play and getting as much customers in a multi-play offering resulting in much lower churn that single play customers and we believe that we are really well positioned with the current price levels of today. To support this strategy, we recently have extended EUR5 discount on mobile customers that are part of a multi-play offering to the first SIM in a fixed mobile bundle and next to that, we have increased prices for selection of our SIM-only propositions and together, this price adjustments will in our opinion via the fixed mobile penetration and the number of SIMs per household, that's the real strategy.

We're talking about mobile and talking about, while potential price increases on fixed. We are focused on revenue generating units per customer, per household and TV it's a driving force to increase the revenue generating unit and we have no plans to make any changes to the about normal way of dealing with prices in fixed talking about KPN brand.

When you take the decision, we have taken this year on the Telfort brand. We already have increased the Telfort fixed prices that few times this year, with EUR1 per month.

Just a quick question regarding consumer mobile. Now with 55% of the KPN brand base using less than 1-gig comes in bundles.

Could you, give an idea of their usage so we can maybe get a sense of the timeline to the migration to the 5-gig bundles and maybe even to the 10-gig bundles? Thank you.

I don't know the number byheart, but - about is [indiscernible], yes. Maybe, we can do another question and then I will come back to this question.

So up till 200 megabit, up till 500 megabit is while around 200 megabits and between 500 megabit and 1-gig it's yes, around 650 megabit average usage.

So that's like, 650 megabit in the below 1-gig tariff bracket.

So in the tariff bracket between 500 megabit and 1-gig, its 650 and in the tariff bracket between up till 500 megabit, it's well 200 megabit.

It's a question related to Slide 13. I think you say you've got roughly 1 million mobile customers in a fixed mobile bundle.

Have you estimated the financial impact presumably, a small proportion of that 1 million are on a EUR10 discounts? But as you move to the EUR5 for the first SIM, presumably you'll go from a small proportion getting a EUR10 discount to every, to a large proportion getting a EUR5 discount.

I mean, have you worked out what the net impact of that change is? And then second.

Maybe, if we answer this question directly. There is no EUR10 discount for mobile customers.

There is only EUR5 discount and we've extended the EUR5 discount, offered to the first SIM recently.

So there'll be some headwind, some of those customers now receiving a EUR5 discount, I guess in their contracts?

Yes, that's true.

And a?

Yes.

And a second question, does the supervisory board change now that AMX issued a second convertible?

No because they continue to own to almost 21% of KPN and the supervisory board positions are related to their ownership that's still on above 20% level?

I just wanted to clarify, the 8% postpaid churn that, Eelco mentioned. Is that relating to retail consumer or is it consumer and B2B, so if you could just clarify that?

Please. The second question was just on, as you're growing SIMs per household as you push convergence, are you actually creating elasticity or are you taking share from some other operators?

The third question was just on the intra EU roaming exposure. I don't know if could share at this point what percentage of EBITDA that is and if you've done any sensitivity on what pressure could come on that with the abolition of retail roaming and the price caps?

Thank you.

The 8% is related to retail postpaid. The growth of SIMs, well helping us to increase our service revenue market share that now is at 44% an increase year-on-year of 2 percentage points compared to last year.

And roaming is 1% to 2% of EBITDA.

Okay. Just on the SIMs per household and my question was, are these customers in the household that previously didn't have mobile and are now taking mobile or are you taking share from other operators?

And so we're taking share of other operators.

Three questions from my side. First of all, we saw the rumor on T-Mobile.

Of course you don't want to comment on that, but let's assume that LGI would buy T-Mobile. What is the kind of impact you expect on the market?

Do you believe it would be positive for KPN or negative, and why? Second question, how do you balance your top-line growth with expect EBITDA growth?

Because if I look at the market share, I'm very happy that it's going up. But, yes, you might decide maybe to slow that a little bit down and try to grow EBITDA quicker.

And then the third question is on voice over LTE. What kind of impact do you expect from that going forwards on the mobile market and potentially on the fixed market as well?

Thank you.

The T-Mobile question, well as you can imagine. I'm not going to speculate on all kinds of potential scenarios, just stated based on all kinds of rumors.

We are very well positioned in the Dutch market. We have invested in the quality of our networks in innovative services, in our customer satisfaction and doing well on all these metrics and it does not help to speculating about all kinds of possible scenarios in the Dutch market.

It's always for Jan Kees and myself, the challenge to balance top line growth and EBITDA growth. But at the end, it's very simple decision because it's about the creation of shareholder value not only for the short-term but also for the longer term.

And that's what we take into account, when we assess the different scenarios and take decisions and as you can see in the consumer market, we are now having the right balance continued customer growth resulting in revenue growth, EBITDA growth and free cash flow growth. We will launch commercially voice over LTE somewhere in the beginning of next year.

It will just replace the current voice services at a higher quality level and giving us the opportunity to free up spectrum in the 3G band helping us to continue to build high quality mobile networks. So using spectrum that we already own.

That's well a major change and opportunity we have with voice over LTE.

Just a quick follow-up, Eelco. You keep talking about creating value.

From your internal perspective, can you tell us what measurements you use to assess whether you're creating value or not? That would be useful just as a guideline.

And secondly on this issue, more for Jan Kees, on this issue of restructuring costs, your restructuring costs keep going up. And they're currently running at about 150% of EBITDA improvement.

So is there going to be a point when we can actually see restructuring costs as a smaller number than EBITDA growth? Thank you.

Let's start with the first question. Not just the single metric we're looking at, it's the balance between all metrics, free cash flow, return on capital employed, customer lifetime value and things like that.

So it's not one single item that we're monitoring and using to take the right decisions. It's a combination of the important metrics that at the end result in value creation.

Jan Kees?

Yes, although of course you will always have some level of restructuring cost going forward. We do feel, as we're at an elevated level this year and also partly next year because we're still in a restructuring phase, which will improve our EBITDA margin and get our OpEx also lower.

So yes, I do feel that at the certain point in time, you will clearly see the benefits of the restructuring going forward and further improved EBITDA margins and lower OpEx and also at a certain point in time, it's probably also the restructuring cost itself, can trend downwards again.

But that's not until after 2016 by the sounds of it at the earliest.

I think that's very difficult for us to now to answer. I think, when restructuring cost will improve our EBITDA margin, get our OpEx lower.

I think it's a good, if the shareholders’ value. It's good to do and it's, so we always look at it, like this way.

But 2016, we will do restructuring, we will do FTE reductions and as well improve our EBITDA margins going forward. But in the end, real cost will trend downwards again.

A couple of questions, please. I wanted to ask, first of all, on the actual restructuring.

Sorry, I know you've been asked a few questions already. But if you have a new agreement in place with the Workers Council and you are commencing some FTE reductions, why haven't you changed or improved your guidance, or some phasing of your guidance, with regards to realized cost savings?

So it's like, I guess it's a little bit of a follow-up to the previous question. The second question is really around balance sheet.

I mean, there's some quite big items there. We've got Telefonica Deutschland, we've got BASE Company.

Your balance sheet looks very different depending on what you do and with those assets, and the proceeds from them. Can you just give us a bit of an idea if you're confident in EBITDA stability this year, growth next year?

Some idea on capital structure, how should we think about it? Because there's a lot of moving parts.

One of the assets is worth over EUR3 billion, one's worth over EUR1 billion. And it's got quite profound implications for what your balance sheet could look like, and your interest costs.

So just try and help us a little bit on how we should think about the balance sheet. Thanks.

To start with the first question on restructuring, as I explained to you that in the third quarter. We were on somewhat well lower level than the average quarterly level of spend reduction, that we expect higher number in the fourth quarter.

Giving a result, that is well somewhat above the guidance we have increased beginning of this year. It's too early to well, upgrade the guidance today, but I can assure you that, I - continue to room for improvement on the restructuring and that we will update you in the beginning of next year, when we share with you the Q4 result and the outlook for 2016 including the guidance for the simplification program going forward.

But as I explained, there is continue to room for improvement. Looking at spend level for our company.

Then Jan Kees on the balance sheet.

Yes, first when following the - any possible proceeds of Telefonica Deutschland and in the future and the sales base, we expect excess cash as we always have guided. It should be utilized for operational and financial flexibility, small and contrary M&A and shareholder remuneration.

Looking at the balance sheet again then of course, when we do have these proceeds, we will then [indiscernible] that is used for the financial flexibly, we will utilize in a most balance sheet efficient way. We will look at that time, we did not guide yet because of those who depends on different metrics which part could go to shareholder remuneration and which part should be used for financial flexibility, but we certainly will at that point in time, we will look at our balance sheet, how to utilize it at - to maximize these fixed issues of our balance sheet, which still need some improvement.

As you know, we did make a lot of improvements here, with the pension fund, with the redemption of large bond tender of EUR2 billion. So we made already, we made improvements and we will look further at that point in time.

Can I just follow up in terms of what you view as a sensible target leverage? I mean, 2 times, 2.5 times, what do you think is the sensible range?

Your EBITDA around EUR2.5 billion from recurring operation looks roughly stable, maybe it can grow. Should the market think about the EUR5 billion net debt number or a EUR6 billion net debt number?

So give us some guidance on an optimal capital structure, please.

Yes, that's what we always have said because we have said always that we are committed to maintaining an investment grade credit profile, but we do not provide specific target leverage because then it's always in a too hot, too cold scenario. Our current leverage ratio is 2.8, but we do have the financial flexibility of the stake of Telefonica Deutschland.

So we do very comfortable in that, but we do not target a specific leverage ratio, but we're having a strong commitment to investment grade profile.