KPN started 2015 with a strong quarter

• Further customer base growth in The Netherlands in Q1 2015

• Good uptake Consumer fixed-mobile bundles (+54k) and Business multi play seats (+69k)

• Continued net add growth in broadband (+35k) and IPTV (+77k)

• High postpaid net adds in Consumer Mobile (+59k)

• Progress made with transformation of Business segment to address impact from declining traditional services and lower mobile price levels

• Simplification program on track, approximately EUR 170m run-rate savings realized end Q1 2015
• Improving customer satisfaction across all segments
• Outlook maintained, BASE Company excluded
• Strong commitment to generate shareholder returns; intention to distribute Telefónica Deutschland dividend

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Improved financial performance

• Adjusted revenues were down 3.5% y-on-y in Q1 2015. Stabilizing Consumer revenues were still offset by the impact of the ongoing decline of the business market size
• Adjusted EBITDA increased by 0.2% y-on-y in Q1 2015 driven by customer base growth and positive impact of cost savings, partly offset by declining revenues in the Business segment and change in accounting treatment of Belgian site taxes (EUR 12m)
• Capex in Q1 2015 was 5.9% higher y-on-y due to frontloaded network investments in 2015
• Strong improvement in free cash flow in Q1 2015 versus Q1 2014 driven by different intrayear phasing and improvement in working capital, lower interest payments in Q1 2015 and settlement payment KPNQwest in Q1 2014 ** **

Message from the CEO, Eelco Blok

“The strong operational performance from the second half of last year continued in the first quarter of 2015, and is translating into improved financial performance with adjusted EBITDA stable year-on-year.

We have announced a unique OTT TV service, further differentiating our market leading TV proposition. The new data bundles in Consumer Mobile are delivering good results with strong inflow for the KPN brand, which will be further strengthened by the rebranding of Hi into KPN. These are clear examples of how we are simplifying our product portfolio and lowering our costs, while adapting and innovating our services to give the best quality and value to our customers. Our combination of leading fixed and mobile services is driving strong uptake of our fixed-mobile bundles in both the Consumer and Business markets.

As we look ahead to the remaining three quarters of 2015 we do see challenges in our markets, notably in the Dutch Business segment. However, we have a firm ambition to continue the good financial progress and maintain rigorous discipline in our opex and Capex spending, which will underpin growth in our free cash flow.

The sale of BASE Company shows that we are committed to create further shareholder value. The AGM approved the dividend over 2014 and we expect to grow dividend per share going forward based on improved free cash flow generation.” **

Press release for download here