24 August slide 1

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2 Highlights on results Very strong H financial performance Fixed revenue grew 0.5% yoy. Growth of Internet, TV and ICT services compensates for declining traditional voice Outstanding result of Mobile, limiting total revenue decline to 3.1% Excluding impact MTR-cuts, revenue increased slightly by 0.2% ICS revenue increased 3.3% while EBITDA almost doubled Group Net Income increased 30% to EUR 564 million Free Cash-Flow end of June 2007 of EUR 607 million supported by some solid operational results 51,683 new Belgacom TV customers in first half 2007, of which 41,857 in second quarter. Total TV customer base of 191,348 end June 2007 Very solid customer gain for Proximus, adding 104,388 active customers in first six months of 2007, of which 69,564 in the second quarter Belgacom on its way to beat full-year revenue guidance! slide 2

3 Year-to-date performance versus guidance FY guidance as given in Feb 2007 Q Q H FLS Total revenue: -1% to -2% +0.8% +0.2% +0.5% (Fixed) Fairly stable EBITDA Margin 31.0% 32.0% 31.5% Add Belgacom TV customers at hi pace of , , ,683 Belgacom TV ARPU of MCS Revenue: -5% to -7% -2.8% -3.4% -3.1% (Mobile) -1% to -3% business result -4% MTR impact - 0.4% - 2.4% +0.7% -4.1% +0.2% -3.3% EBITDA Margin decline to around 45% 47.1% 46.0% 46.5% Belgacom feels comfortable to upgrade its full-year 2007 guidance slide 3

4 Belgacom new 2007 guidance Updated full year guidance FLS Total revenue decline of around -1% Fairly stable EBITDA Margin compared to 2006 Add Belgacom TV customers at higher pace than 2006 Belgacom TV ARPU of 15 MCS Total revenue decline to around -4% +1% Business performance -4% MTR impact ( -83 million) -1% Roaming impact (retail + wholesale) ( -23 million) EBITDA Margin of around 44% Ebitda impact MTR -33 million Ebitda impact Roaming -14 million Important to note that: FLS: reduced its Fixed-to-Mobile rates significantly as of 1 May 2007, this will have a full impact in the second half of MCS: estimated financial impact of Roaming regulation includes assumptions on elasticity. Proximus stresses that the level of elasticity at this stage is hard to predict and depends on many other dimensions besides price. slide 4

5 Fixed Line Services

6 Traditional Voice Services Trend continues but revenue decrease limited in H H Voice Access line Loss impacted by Launch VoIP offer for residential customers Launch of ADSL without Voice : migrations and lower net adds ARPU Voice Access ARPU increases 1.8% thanks to price indexation on 1 January 2007 Voice traffic ARPU decreases, especially in the 2nd quarter (-7. 2%) mainly because of lowered Fixed-to-Mobile rates and impact of new international flat rate Revenue decrease Voice services limited to -4.9% in H Voice Access revenue decrease limited to -1.7%, compared to -5.3% H Voice Traffic revenue declines -8.4%, versus -10.1% same period last year slide 6

7 Voice ARPU /Month Voice Traffic Access Q206 Q207 H106 H107 Voice Access Line loss (000) Traffic Volume (mio min) ,286 2,201 4,697 4,544 Q206 Q207 H106 H107 Q206 Q207 H106 H107 slide 7

8 Broadband Battle for the Broadband customer continues Volumes Belgacom Broadband growth affected by tough competitive environment where alternative operators offer internet with voice -bundles and cheap internet access Belgacom added 48,436 new Broadband customers in H1 2007, leading to a total ADSL customer base of 1,176,284 end of June Broadband market share kept stable in Belgium despite highly competitive market ARPU ADSL ARPU increased 2.1% compared to H1 2006, mainly because of price increase (1 Jan 2007) Launches Naked ADSL in March to address the Mobile-only market ADSL as part of a bundle including TV and/or Mobile services slide 8

9 Broadband Growth ( 000) Broadband Q206 Q207 H106 H107 Residential ADSL** ARPU/month (EUR) Broadband lines EOP ( 000) % Q ,056 1,176 H106 H107 H106 H107 Average ADSL ARPU ADSL Light ARPU ADSL GO ARPU * : PSTN, ISDN, ADSL, VDSL (incl. BiLAN) **: incl small business slide 9

10 ICT * Important part of Belgacom revenue and growing Product group contains all ICT-related products and services offered by the Belgacom Group % ICT revenue ( 000) +7.2% Q206 Q207 H106 H107 Revenue evolution H1 07 revenues increased 7.2% compared to same period last year Launch of new solutions Winning significant contracts Contribution Dutch subsidiary ISIT * ICT revenue includes: Telindus Belgacom 'integration services Security & Applications slide 10

11 Belgacom TV Accelerated growth in Q Strong pick-up of net adds in Q2 07 Boost of ARPU in TV Q2 07 customers EUR EOP 15.7 Thanks to end Try&Buy promotion and new launches: Comfort view Belgacom TV over ADSL Time Additional channels Packs including TV Belgacom TV revenue ( 000) TV growth Q2 06 Q2 07 TV total EOP ( 000) ( 000) 74 H1 06 Belgacom TV ARPU (EUR) 191 H Q2 06 Q2 07 H1 06 H1 07 Q2 06 Q2 07 H1 06 H1 07 slide 11

12 FLS revenue Decrease traditional voice compensated by growth of Internet, ICT and Belgacom TV +0.5% ,814 1,823 TV ICT Internet Voice % Q206 Q207 H106 H slide 12

13 FLS costs Slightly increased costs as positive effect MTR cuts was offset by higher personnel expenses Total Cost (EUR mio) Positive evolution of Materials and charges to revenue ( -3.7% compared to H106) mainly driven by reduced MTR charges. Positive effect offset by increased personnel expenses (+5.3% yoy) due to indexation and increase of wages, severance payments % % 1,245 1, Q206 Q207 H106 H107 Mat. & Charges to Rev Remun. Other exp slide 13

14 FLS EBITDA Favourable EBITDA evolution: +0.9% EBITDA (EUR mio) The slight yoy revenue increase of the first half of 2007 together with fairly flat costs, led to an overall EBITDA increase of 0.9% compared to H % % Q206 Q207 H106 H107 Total EBITDA slide 14

15 FLS EBITDA margin Slight increase compared to first six months 2006 EBITDA Margin (%) - 0.2ppt +0.1ppt 30% 20% 32.2% 32.0% 31.4% 31.5% 10% 0% Q206 Q207 H106 H107 slide 15

16 Capital expenditures FLS investments increased yoy 3.9% to EUR 198 million, including: Further roll-out of Broadway project EUR 53 million Belgacom TV capex for EUR 45 million CAPEX (EUR mio) - % of revenue 10.5% 10.9% 12.9% 11.9% -7.8% +3.9% Q206 Q207 H106 H107 YTD 06 slide 16

17 Broadway investment Continued step-by-step fibre roll-out Future proof roll-out of FTTSC (fibre to the street cabinet) ongoing Status end June 2007: National population coverage: 52% Remote Optical Platforms (ROP) installed: 11,487 Km of fibre: 9,351 Broadway invested capex in million including Fibre, ROP and VDSL Q206 Q207 H106 H107 slide 17

18 Updated Outlook 2007 Based upon the results of the first half of 2007, and taking into account the expected impact of decreased Fixed-to- Mobile tariffs, FLS estimates that: The revenue decline of 2007 compared to 2006 will be around -1% The EBITDA margin over 2007 will be fairly flat compared to 2006 Following good H1 result for Belgacom TV, FLS estimates that: It will add Belgacom TV customers at a higher pace than in 2006 With a Belgacom TV ARPU of 15 slide 18

19 Mobile Communications Services

20 Active penetration reached 93.2% (*) in Belgium In 6 months, active penetration increased 3.5pp Total active customers in Belgian market: 9,888, % +3.5ppt 89.7% +4.0ppt +1.6ppt 85.7% +1.3ppt84.1% +1.3ppt82.8% 81.5% EOY'04 H1'05 EOY'05 H1'06 EOY'06 H1'07 (*) BMB estimates slide 20

21 Continued outstanding churn rate Despite fierce competition, churn kept low at 15.3% Proximus maintained high brand loyalty index of 77.5 Customer churn % 15.1% 14.8% 15.4% 15.3% Q206 Q207 H106 H107 * Annualized blended churn rate of registered SIM cards slide 21

22 Proximus strategy results in solid customer gain Yoy Proximus added 163,000 customers, leading to a total of 4,415,824 active customers. 69,564 new active customers in Q2 07compared to a loss of 7,000 a year ago. Quarterly customer growth ( 000) Total customers EOP ( 000) +163K 4,253 4, Q206 Q207 H106 H107 * 3-month active subscribers slide 22

23 Proximus Market Share at 44.7% (*) Effective customer-oriented approach slows down the market share loss 315,000 Postpaid customers added yoy, improving further quality of customer portfolio with 49% of the customers being Postpaid Customer Base and Market Share* (%) 47.3% 45.5% 45.0% 44.7% 43% 46% 48% 49% 57% 54% 52% 51% H106 EOY06 Q107 H107 Prepaid/MVNO Postpaid Market share * 3-month active subscribers (*) BMB estimates slide 23

24 Blended net ARPU H1 07 Net ARPU went down by 5.5%. Excluding the impact of MTR cut in November 2006 and May 2007, the net ARPU decrease would be limited to 1.8%; driven by the success of new bundled tariff plans. Blended ARPU 1 (EUR/month) (Excl MTR: -2%) (Excl MTR: -1.8%) % % Q206 Q207 H106 H107 Gross ARPU Credits & Discounts MTR impact Net ARPU 1 Gross ARPU 3-month active subscribers, includes Machine-to-machine, excludes discounts & promotions Net ARPU : Gross ARPU including discounts & promotions slide 24

25 Total revenue decrease driven by MTR cut Total revenues decline of -3.1% is primarily driven by the decrease in MTR. Excluding the MTR impact, total revenue increased by 0.2%, primarily driven by an increased and improved customer base. Total revenue (EUR Mio) % 1, % 1, , Q206 Q207 H106 H107 Net Service Revenue Handsets Other Rev slide 25

26 Net Service Revenues evolution NSR decreased 2.9%. Excluding the MTR-cut impact, the revenue grew 0.6%. Gross Data revenues increased 24%, partly compensating the decline in gross voice revenue. The success of new pricing offers like Freetime and bonus for life campaigns had a significant effect on the level of credits & discounts. Net service revenue (EUR Mio) -2.9% 1, % Q206 Q207 H106 H107 C&D Voice Other Data slide 26

27 Costs increase primarily linked to customer acquisition The increase of Material and charges to revenues is mainly driven by higher cost in commissions, Leased Lines and content fees, partly compensated by the lower handset, termination and roaming costs Other expenses mainly increased for renting driven by network roll-out Cost Structure (EUR Mio) +2.7% % Q206 Q207 H106 H107 Materials and charges to revenues Remuneration Other Operating Expenses slide 27

28 EBITDA overview The acquisition strategy and to a lesser extent the MTR cuts, are the main drivers of the EBITDA decline EBITDA (EUR Mio) & EBITDA Margin 49.5% 49.1% 46.0% 46.5% Q206 Q207 H106 H107 slide 28

29 Capital expenditures Capex 18% below investments in H1 2006, mainly driven by phasing of projects and network deployment. UMTS Coverage at the end of June is already far above legal obligations. CAPEX CAPEX as % of total revenue 8.6% 8.6% 8.7% 7.4% Q206 Q207 H106 H107 slide 29

30 Update on Roaming and impact on Proximus financials Regulatory requirements Maximum voice charges in EU Retail outgoing Retail incoming Wholesale end Aug/end Sep cents 24 cents 30 cents end Aug cents 22 cents 28 cents end Aug cents 19 cents 26 cents Estimated impact on Proximus financials Isolated impact of roaming regulation* Full financial impact as of Q (Wholesale 1 Sept 07 ; Retail 1 Oct 07) Estimated elasticity: about 13% for 2007 and around 17% for 2008 Expected level of elasticity based upon Proximus current best estimates. Updated 2008 impact will be provided at 2007 FY result. Excl. elasticity Incl. Elasticity Eur mio Revenue EBITDA * e.g. impact of Vodafone Passport not included slide 30

31 Update on MTR and impact on FY guidance Regulatory requirements (excl. VAT and inflation), subject to approval by European Commission. ct 1 Nov 06 1 May 07 1 Jan 08 1 July 08 1 Jan 09 1 July 09 Proximus Mobistar Base % decrease Proximus -20.0% -20.1% -0.7% -0.9% -1.4% -1.5% Mobistar -20.2% -20.3% -10.8% -12.1% -1.4% -1.5% Base -19.3% -19.3% -15.7% -18.7% -1.5% -1.5% assymetry Mobistar - Px 26% 26% 13% 0% 0% 0% Base - Px 56% 58% 34% 10% 10% 10% Estimated impact on Proximus revenue and EBITDA Eur mio Revenue EBITDA Mid 2008: Symmetry with Mobistar Asymmetry with Base reduced to 10% slide 31

32 Updated Outlook 2007 Thanks to the success of its commercial strategy, Proximus estimates its overall business revenue to increase around +1% However, regulation of MTR and Roaming will impact 2007 results negatively: MTR EUR -83 million on revenue (-4%) EUR -33 million on EBITDA Roaming (Wholesale (Sept 1st) and retail (Oct 1st)) EUR -23 million on revenue (-1%) EUR -14 million on EBITDA Therefore Proximus updates its overall 2007 estimates, including the impact of MTR cuts, Wholesale and Retail roaming regulation to: a total revenue decline to around -4% an EBITDA margin of around 44% slide 32

33 International Carrier Services slide 33

34 Operational Overview Consolidation & outsourcing to strengthen leadership Post Merger Integration Swisscom & Belgacom carrier operations successfully completed full network integration through deployment of Next Generation transmission network & switching platform Outsourcing project with MTN Group strongly contributes to grow mobile business MTN outsources international connectivity to Belgacom ICS Implementation of Partnership Agreement with Omantel has started BICS reinforces presence in fast growing Middle East region Be IP-ready with infrastructure & services Good take-up with voice over broadband providers Launch re-engineering of service delivery activities foster innovation through increased efficiency Move up the mobile value chain Peering agreement with Sybase 365 (largest SMS competitor) extension of SMS footprint to global coverage Exponential growth in international SMS/MMS transit traffic slide 34

35 Revenue & Direct Margin overview Revenue and direct margin increase thanks to more Mobile terminated minutes & Middle East and Africa business Shift from Standard Quality to Premium Quality products (higher price & margin) Growth in mobile data products (Signalling & SMS transit) Revenue (EUR Mio) Direct Margin (EUR Mio) % % H106 H107 H106 H107 Direct Routing (Inbound + outbound) Standard Products (Business Class) Premium products (First class, Quality Mobile, Outsourcing) Non-voice (mobile data, capacity) slide 35

36 Cost overview Overall OPEX reduction reflecting synergies of Swisscom integration Cost structure (EUR Mio) % H106 H107 HR related expenses Network expenses IT & General Admin. slide 36

37 Group Financials slide 37

38 Consolidated income statement ( million Euro) H H Variance. Total Revenues 3,032 3, % Cost of goods sold % HR expenses % Other operating expenses % Total Operating Expenses -1,922-1, % EBITDA 1,110 1, % Depreciations % EBIT % Financial Result 4 39 Tax expense Net Income % Minority interests 73 0 Net income (Group Share) % Basic earnings per share 1.28 EUR 1.69 EUR 32.2% slide 38

39 Segment result Revenues (EUR Mio) EBITDA (EUR Mio) 3,032* 0.2% 3,039* 1, % 1, ,069 1, ,814 1, H106 H107 H106 H107 Fixed Line Mobile International Carrier Non recurring item * Total revenues as reported post inter-segment eliminations slide 39

40 Capex (EUR Mio) H106 H107 Fixed Line Mobile International Carrier slide 40

41 Free cash flow influenced by financial assets transactions Free cash flow (EUR Mio) Earlier than last year payment of income taxes related to the past. Transactions on financial assets 2006 : acquisition of Telindus (-584 mio) 2007 : disposal of M* & Eutelsat (+245 mio) acquisition of ISIT H106 H107 slide 41

42 Net financial position (EUR Mio) 1,636 1, Net Debt Dec 2006 FCF Dividends Other Net Debt Jun 2007 slide 42

43 Balance Sheet EUR Mio TOTAL ASSETS Non-Current Assets Goodwill Intangible Fixed Assets Property, Plant and Equipment Associates and Other Participating Interests Deferred Income Tax Assets Pension and Other Non-Current Assets Current Assets Inventories Trade Receivables Current Income Tax & Other Current Assets Investments Cash and Cash Equivalents LIABILITIES AND SHAREHOLDERS EQUITY Equity Shareholders Equity Minority Interests Non-Current Liabilities Interest-Bearing Liabilities Pensions and Other Post Employment Benefits Provisions Deferred Tax Liabilities and Other Amounts Payable Current Liabilities Interest-Bearing Liabilities Trade Payables Income Tax Payable Other Current Payables YTD Dec ,300 5,504 1, , , , ,300 2,399 2, ,053 1, , , YTD June ,058 5,134 1, , , , ,058 2,373 2, ,981 1, , , slide 43