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17 september 2010 Financing FttH Networks in the Netherlands Directeur Corporate en Business Development Jan Davids 1| 19 the Netherlands Pre Conference Workshop 8 February 2011, Milan Mark Meijer Manager Corporate Finance Reggefiber
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FTTH Conference 2011 Workshop Financing FTTH Networks in Netherlands Mark Meijer REGGEFIBER

Jan 14, 2015

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FTTH Conference 2011 Workshop Financing FTTH Networks in Netherlands Mark Meijer REGGEFIBER
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  • 1. 17 september 2010Financing FttH Networks in the NetherlandsPre Conference Workshop8 February 2011, MilanMark MeijerJan Davids Manager Corporate Finance ReggefiberDirecteur Corporate en Business Development 1 | 19

2. History 2 | 19Regge river + Fiber = Reggefiber 3. VisionFttH is like real estate FttH is future proof (end infrastructure) Network has to be open 3 | 19 4. Why glass fibre ?Fiber to the Home is the only broadband infrastructure that can comply withthe exponentially growing broadband demands of the consumer and serviceprovidersCAPACITY SPEEDSYMMETRICALUNINIQUE FIBER PAIR 4 | 19 5. About ReggefiberFounded in 2005 by ReggeborghBuilds, owns, rents and operates passive (dark fiber) networks (FttH) in theNetherlandsSince 19 December 2008 a joint venture of Reggeborgh KPN approved byNMa and OPTA and regulated OPTA Combination of KPNs installed base of consumer clients with Reggefibers experience in building and operating FttH networks Current shareholding: KPN 41% - Reggeborgh 59% Under certain conditions KPN could acquire the majority of the sharesRental income has been regulated by OPTA to capped feesBalance Sheet total c. 900mn; strongly growing 5 | 19 6. Key figures30 locations 55 locations6 | 19 7. Key figures7 | 19 8. Business model Parties involved & Value chainConsumer broadband KE^hDZ^subscription packages EUR 55 110 (triple play)W^W^W 80%) andmaterials: < 20%Capex reduces 10% every yearCAPEX levels vary depending on local circumstances(in particular urban density, rivers, canals, railroads)Operational expenses Main items and model assumptions:General costs: 3% of gross rental revenuesActivation costs: 20,- one-off for activating one fiber pairManagement fee: 12,- per year per Home Passed(payable by NEM subsidiaries to ReggefiberOperator B.V. pursuant to ManagementAgreement)10 | 19 11. Typical cash flow profile of a FttH projectAn example, how would you raise debt funding for such a project? 11 | 19 12. Key issues Debt fundingIssueAnswerTrack record Many projects were evidencing already mature cashflows that could be ringfenced as a portfolio in a seperate vehicle: RingfenceHow to secure penetrationDemand-based-role-out ensuring upfront c. 30-40% start penetrationRegulated Billing entity RFO could not Direct Agreement between RFO and thebeb a guarantor/borrower t /bRingfence Ri fNon-recourse Significant contribution of the sponsors: c. 65% of the BS total at financial close and 45% at the end of the construction FttH is very strategic to KPNHybrid debt structure. Various bankers Learning by doing from different backgrounds/desks:Project Finance/TMT/General CorporateLending12 | 19 13. Secured credit facilities (285m) from EIB and commercial banks for33 local Network Companies (NEM) in ring fence ReggefiberReggeborgh KPN B.V.KPN B.V.Reggefiber ReggefiberGroupB.V. Group B.V. ReggefiberReggefiberReggefiber Reggefiber ttH B.V.ttH B.V. Operator B.V. Reggefiber Wholesale B.V. Wholesale B.V. Ring fence KPN B.V. (G)NEMNEM NEMsubsidiaries33 FttH projects other FttH projects KPN B.V.13 | 19 14. FinancingKey characteristicsMaturity c. 10 years285mn 50/50: EIB and commercial banksDrawings and repayments show a roller coaster shapeDraw test: Total debt / Homes Activated < fixed amountNet Debt/EBITDAN D b /EBITDA covenantAfter construction; DSCR-covenant and cash sweepSecurity on network, receivables, bankaccounts, shares, etcMinimum interest hedging requirementSignificant information requirements14 | 19 15. Questions? 15 | 19 16. Regional marketing is Key to create a local hypeInformation session 16 | 19 17. Construction 17 | 19 18. No digging in the gardens! A garden rocket 18 | 19 19. Thank you for your attention!19 | 19