Reggefiber presentation

Directeur Corporate & Business Development

Jan Davids

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Reggefiber General Overview

Visiting Fujitsu Telecom, CityFibre Holdings, INCA and

KCOM

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Reggefiber’s headoffice marks start of Fiber roll out in NL

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Company Overview

• Reggefiber is the leading provider of Fiber-to-the-Home (“FttH”) in the

Netherlands and a Joint Venture between KPN and Reggeborgh. Its success

based rollout strategy has resulted in an uptake of around 60% in (nearly)

completed projects

• Reggefiber has successfully developed and introduced an open access

business model with a focus on delivering a passive (dark fiber) FttH

infrastructure to active operators. Reggefiber builds, owns and operates the

infrastructure

• Reggefiber is well positioned to benefit from the high broadband penetration in

the Netherlands and the increasing demand for (symmetrical) bandwidth, the

market trends towards single access, the company’s extensive FttH

experience, strong shareholders and the regulatory certainty

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Reggefiber: building and operating passive FttH networks in the Netherlands

• Reggefiber builds, owns and operates passive (dark fiber) FttH networks

• Reggefiber FttH Projects in more than 150 cities in the Netherlands

• 951,000 Homes Passed with 277,000 Homes Activated

per Q4 2011

• Reggefiber’s ambition is to realize a large scale success-based rollout

• Passive infrastructure delivered to active operators in an open access model, enabling:

• Active operators to deliver active networks to service providers as a wholesale service

• Service providers to deliver services (RTV / Internet / telephone) to consumers over active

networks

• Current active operators (customers) include Reggefiber Wholesale (part of Reggefiber), KPN

Wholesale & Operations, BBNed (Tele 2), Edutel and Solcon

• Tariffs and passive network access regulated by OPTA (published December 2008) and NMa

remedies

Company Overview

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About the Reggefiber joint venture and its shareholders

• KPN is the Dutch incumbent and provides high-quality telephone, internet and television services and

products and is an all-round provider of ICT services.

• KPN is market leader in the copper fixed line with more than 3.6 million customers

• KPN is market leader in broadband internet access with 2.5 million customers (Q3 ‘11)

• KPN is a successful challenger in TV with 1.3 million customers (Q3 ‘11)

• KPN is financially strong with an EBITDA of EUR 5.5 bn and revenues of EUR 13.4 bn (over ‘10)

• Reggeborgh is the private investment company of the Wessels family and is active in construction,

energy, real estate, and building and operating (fiber optical) communication networks

Company Overview

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Strategic rationale cooperation Reggefiber and KPN

The cooperation between Reggefiber and KPN is mutually exclusive in respect to the construction and

operation of passive FttH networks in the Netherlands

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 Reggefiber’s network and lowers the

risks of rolling out

• Offers direct access to large installed customer base for migration to FttH

• KPN is a financially strong and committed co-shareholder

• Provides 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

• Reggefiber’s expertise and experience in building FttH networks and associated demand aggregation

in combination with successful existing projects provide KPN with a jumpstart in FttH

Company Overview

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Supervisory Board:

• Herman Hazewinkel – Chairman

(former CEO Volker Wessels Stevin)

• Dik Wessels (founder Reggeborgh)

• Eelco Blok (chairman executive board KPN)

Management Board

• Bert Nijboer – CEO

• Jan van Rooijen – CFO

• Jordi Nieuwenhuis – Director

• Jan Davids – Director Corporate Development

• Arian Lodder – Director Construction and

Operations

Entities and roles

• NEM subsidiaries – network owners

• Reggefiber ttH B.V. – project organization

• Reggefiber Operator B.V. – passive operator

• Reggefiber Wholesale B.V. – active operator (*)

(*) November 8, 2011 Reggefiber has reached an agreement with KPN to sell its non-

passive FttH activities, including Reggefiber Wholesale B.V. to KPN (subject to NMa

approval)

Company Overview

Corporate Structure

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Consumer broadband

subscription packages

EUR 40 – 110 (triple play)

Wholesale broadband access

EUR 35 – 42 (triple play)

ODF Access

EUR 12 – 17.50 [*]

Indicative monthly price

ranges per active

connection

• Deliver services to consumers • Communicate to consumers

• Buy in capacity on Reggefiber’s passive fiber network

• Deliver wholesale fiber services to service providers

• Builds, owns and operates the passive fiber network

• Delivers 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

Business model Passive FttH network open

to all active operators and

their service providers

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Service providers

• Deliver services over fiber to consumers

• Communicate to consumers on services over fiber

Active operators

• Buy in capacity from Reggefiber’s passive fiber network

• Deliver wholesale fiber services to service providers

Reggefiber (passive operator)

• Builder, owner and operator of the passive fiber network

• Delivers open access to active operators, including KPN

Business model

Business model – parties involved and value chain

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Business model – network architecture

• As many homes as possible will be connected to a Fiber Termination Unit (FTU) in the metering

cupboard inside the home

• About 2.500 homes are connected to an Area-POP (AP) with two fibers. Here ODF access can be

obtained

• Max 8 AP’s are connected to a City PoP (CP) using a ring structure (city ring)

AP AP

AP

AP AP

AP

AP

AP

CP

Network

Active

Operator

FTU

Network

Termina-

tion Unit

Equipment

Active

Operator

2 fibers

Reggefiber’s city ring

2.500 homes Backbone

Active Operator

= Reggefiber’s passive network

= Equipment Active Operator

Equipment

Active

Operator

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Marketing

• Key for a successful rollout is creating momentum in local communities, among others through

‘local ambassadors’ (churches, sports clubs, neighbourhood councils etc.)

• Marketing to consumers:

• During roll-out the fibre network is marketed by Reggefiber

• Consumer services typically marketed by service providers

Business model – Demand based roll-out

Information session

Edutel June 17th 2008

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Business model – Demand based roll-out

• With a target start penetration of 30% of the homes passed Reggefiber ensures a minimum

start penetration before starting the construction

• This is a sales formula formerly used in the Blue Projects in Ringfence 1 (excluding project

Deventer) and has been refreshed and sharpened by our new marketing communication

campaign

“Eindelijk Glasvezel”

(“At last FttH”)

• Also new ISP’s like Vodafone and XS4All participate in the demand based roll out

• Reggefiber has established a separate Sales & Marketing organization from the Construction

Organization since the end of 2010. Main role is creating awareness on FttH, coordinating the

demand based roll out process with ISP’s and consumers and thereby supporting the sales of

all ISP’s

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Business model – Roll-out

• Reggefiber’s ambition is to realize a large

scale success-based rollout:

• Realized in 2011: 293,000

• Planned in 2012: 400.000

• Planned in 2013: 500.000

• Existing FttH Projects:

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Business model – Innovations

Prefab PoP

Ducts

Universal FTU

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The Reggefiber experience: initial success for FttH in competitive Dutch broadband

market

• In market with decreasing prices per Mb/s delivered, evidence suggests that consumers do not trade down

to reduce costs but rather upgrade capacity – resulting in stable prices with increasing bandwidths

• Symmetrical connections arguably a different market than ‘regular’ broadband; once obtained consumers

not willing to trade back to asymmetrical lines with same download capacity

• Reggefiber experience from existing projects:

• Willingness among consumers to pay extra for (triple play) fiber, with uptake rates as high as 60 –

70%

• Churn very low (in conformity with evidence abroad): ca.4% on an annual basis for the service

providers currently active on Reggefiber networks

• An 60% of new subscriptions are consumers upgrading from ADSL lines, with and 40% coming from

cable

• Over 75% of consumers on Reggefiber operated FttH network have triple play

• FttH customers show much higher bandwidth usage than typical ADSL user

• FttH networks net uploaders to the Internet (caused a.o. by p2p applications)

The market – Reggefiber

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The market: Reggefiber footprint

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The Market – Reggefiber’s market share

951.000

Homes Passed Q4 2011

Reggefiber

SURFnet

CIF

OBR

Other

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Concluding remarks

• Reggefiber has proven it is able to roll out and operate large numbers of

Homes efficiently

• Reggefiber’s shareholders are fully committed to FttH. KPN has fully shown

this by acquiring Reggefiber’s non-passive activities and Reggeborgh’s

Service Providers

• New promising Service Providers are entering the FttH-market

• Looking at the large increase in HA in 2011, there definitely is a market for

FttH(-services) and Service Providers are capable of providing attractive

Services to end-users

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