The Belga Group

For further information: Florence Coppenolle

Vice President Group Communication 09 Bd du Roi Albert II/Koning Albert II-laan, 27 B - 1030 Brussels Tel: + 32 2 202 40 23 E-Mail: [email protected] belgacom09 The Belgacom For CSR information: Concetta Fagard

Vice President Group CSR, Sponsoring, annual report PR and Events Group Bd du Roi Albert II/Koning Albert II-laan, 27 B - 1030 Brussels Tel: + 32 2 202 89 03 E-Mail: [email protected] Bolstered by its long-standing experience as Belgium’s incumbent operator For financial information: and thanks to the multiple talents of its teams, the Belgacom Group is the Nancy Goossens country’s reference provider of integrated telecommunications services. By Vice President Investor Relations continuously investing in state-of-the-art technology, we are able to offer our Bd du Roi Albert II/Koning Albert II-laan, 27 customers high-speed solutions on all networks, both fixed and mobile. B - 1030 Brussels Tel: + 32 2 202 82 41 Fax: + 32 2 201 54 94 E-Mail: [email protected] Our mission As a responsible company, Belgacom wants to be the preferred provider of intuitive end-to-end solutions combining fixed and mobile telecom, IT and media, thereby empowering its customers to master and enrich their professional and private lives in a sustainable way. Our organisation • Residential customers are taken care of by the Consumer Business Unit (CBU). • Professional customers, meanwhile, benefit from the services of the Enterprise Business Unit (EBU). • Service Delivery Engine and Wholesale (SDE&W) groups together the network and IT services. Its wholesale activity offers telecommunications services to other operators and suppliers on the Belgian market. • Staff and Support (S&S) brings together all the horizontal functions that support the Group’s activities.

In addition to these four pillars, BICS, a joint venture of Belgacom, MTN and Swisscom, is in charge of international carrier services. Our main brands Forward for you Visit Belgacom’s website: www.belgacom.com Making your life easier Respecting your Imagining your Belgacom’s Annual Report is also published in Dutch and in French. Simpler and richer communications environment and the society future thanks to convergence A sustainable and safe world thanks to our Always further through CSR commitments open innovation WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c For further information: Florence Coppenolle

752,000 Corporate name and legal Objects of the Company Digital television record Belgacom TV clients form As described in the Article 3 of the Articles of Association, the Company’s objects sales The autonomous public-sector company The CO emissions related to the are: 2 Belgacom is a Société anonyme de droit printing and distribution of this public/Naamloze vennootschap van pub- 1. to develop services within the field of report have been totally offset -70% liek recht (limited liability company under with CO2Logic, by supporting a telecommunications in Belgium or else- public law) as defined by the Law of 21 renewable energy project in India CO2 where; Key International March 1991 on the reform of certain pub- emissions lic-sector commercial undertakings and Our report is printed Accounts 2. to take all actions aimed at promot- on Satimat Green organized under the laws of Belgium. Creation of Key International PingPing ing, directly or indirectly, its activities or coated paper, made ensuring optimal use of its infrastruc- out of 60% recycled Penetration of our digital tele Accounts, which provide each Launch of PingPing, Belgacom’s micro- The Company is subject to the statutory ture; fibers, 40% FSC vision increased at a rate never major international business payment system via mobile phones. and regulatory provisions of commercial virgin fibers and customers, with its own Key seen since its launch: 246,000 Building on the success of mobile park- law applicable to companies limited by on Cocoon Offset International Account manager. Reduction by 70% of the CO2 emissions of our 3. to acquire participating interests in ing services, it opens up the scope for shares in all matters not expressly deter- extra-white, FSC-certified 100% new clients, up nearly 50 % This way we provide optimal micropayments in other fields. Partner- Belgian operations over the period 2007-2020. bodies, companies or associations – recycled paper. Vegetable-based on 2008, and making a total of Justine Henin service for cross-border busi- Promotion of green solutions for our customers, mined by (or by virtue of) the Law of 21 whether existing or to be created, Bel- ink and non-solvent adhesives announces her ships and pilot projects are underway ness, and address the needs in order to enable a low-carbon society. March 1991 or specific legislation of any gian, foreign or international, and public are used. The printing plates and 752,000 clients. These record return to with Accor Services, Coca-Cola and of our customers outside the kind. ink recipients are recycled. The sales propelled Belgacom TV competition Delhaize. or private sector – that may contribute, six countries where we have a directly or indirectly, to the achievement waste paper is collected and then into the top three IPTV plat- with compressed and recycled by direct presence. Registered Office of its corporate objects; forms worldwide for innovation Belgacom. Innovations Award ‘Anne’, an exclusive digital television station Belgacom SA under public law authorized bodies. The printer is Our new FSC and PEFC certified. and rapid growth. Belgacom wins the Innovations Award Bd. du Roi Albert II 27 partnership Launch of ‘Anne’, an exclusive digital television station 4. to provide radio and television broad- for Fixed Network Infrastructure for our which is included in Belgacom’s standard TV offer. It broad- B-1030 Brussels casting services. with the tennis 5 million mobile customers Broadway Project, which includes the star enhances the casts non-stop music clips, specials and concerts featuring VAT BE 0202.239.951 Proximus reaches 5 million mobile customers - a deployment of a high-speed broadband synergies between Flemish artists. For this new Flemish channel, Belgacom is Brussels Register of Legal Entities Disclaimer new record, and particularly striking in a country network for the delivery of advanced our sponsorship and cooperating with the Vlaamse Media Maatschappij. This communication contains forward- with population barely double that figure. The suc- triple play services across Belgium. our corporate social Consultation of the issuer’s looking statements, including statements Bizz cess is due to the quality of service, the range of responsibility. documents Launch of Bizz, our new service con- additional benefits - such as an allowance of free about the Company’s beliefs and expecta- cept for smaller firms. Bizz offers totally text messages - and the flexibility of offers. The public documents concerning the tions. These statements are based on the Sales of packs reached 258,000 issuer can be consulted at the registered Company’s current plans, estimates and flexible converged solutions combining in the residential segment, tak- Editor-in-chief: fixed lines, smartphones, mobile inter- office. projections, as well as its expectations of Florence Coppenolle ing the total to 560,000, an in- 2010 external conditions and events. Forward- net and even 3G-embedded laptops. crease of 85% year-to-year and +85% Vice President Group And it guarantees a superior level of increase in TOP 5 Date of constitution looking statements involve inherent risks Communication Skynet reflecting the genuine interest packs sales The company was established as an Bd du Roi Albert II/ service, on-line, by phone, and in the of our clients in convergent The group’s fibre optic network is and uncertainties and speak only as of the new Bizz Corners in our shops across Skynet became the recognised at the Broadband World autonomous public sector company, date they are made. The Company under- Koning Albert II-laan, 27 number one internet products. B - 1030 Brussels Belgium. Forum in Paris among the top five in governed by the Law of 19 July 1930 takes no duty to and will not necessarily portal in Belgium, with the world, ranking alongside the lead- Belgacom is awarded the setting up the Belgian National Telephone Conception and coordination: visitors up 13% in a year. update any of them in light of new informa- ing operators in many much larger Top Employer label. It is a and Telegraph Company, the RTT (Régie tion or future events, except to the extent Franck Vanbelle - Corporate It now receives an ave- Communication Project Manager countries. recognition of the Group’s des Téléphones et Télégraphes/Regie van required by Belgian law. The Company rage of 3.3 million visitors Design and prepress: a month, attracted by its BICS and MTN investment in its staff, in Telegraaf en -Telefoon). The transformation cautions investors that a number of impor- training, communication, of Belgacom into a SA of public law was Chris Communications comprehensive and varied BICS and MTN announce the closing of the transaction tant factors could cause actual results or www.chriscom.be contents - news updates, and offering a supportive implemented by the Royal Decree of 16 outcomes to differ materially from those which results in a combination of their international car- Printing: Snel weather forecasts, classi- rier services. The deal pushes the new BICS into the top working environment that December 1994, which was published expressed in any forward-looking state- fied advertisements and 4 operators worldwide. Not only is BICS now the largest promotes and develops in the Belgian Official Gazette on 22 ments. Pictures: Jean-Michel Byl, Pascal Broze, links to blogs. international carrier in Africa; it has also become one of talent and assures a good December 1994, and went into effect on Reporters and Belgacom the leading actors in the consolidation of the sector. work-life balance. the same day. WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Highlights General information

02 Building cohesion 52 Forward with our Interview with Theo Dilissen, responsibilities Chairman of the Board • Enhancing access to communications • Enabling a low-carbon society 06 Forward for you • Communicating on Interview with Didier Bellens, electromagnetic fields and health President and CEO • Promoting a positive working culture • Developing a responsible supply 10 Performing in a chain challenging operating • Supporting our Communities context • Managing complex trends • Adapting to regulation 86 Forward with our shareholders • Shareholder information 16 Forward on our strengths • Moving forward to enrich people’s lives 94 Forward with • Innovation and so much more transparency • Investing in our systems • Corporate Governance CSR 24 Forward for our 107 Glossary Corporate Social customers Responsibility (CSR) • Suiting the individual is embedded in our 108 Financial Report strategy and operations. • Empowering our business clients • Key figures This visual illustrates • Leading in international carrier • Management report CSR initiatives in the service • Consolidated financial statements chapters of our annual • Non-consolidated financial report. Our detailed CSR statements report is available on 44 Forward with our people page 52. • Engaging our people

Belgacom always looks to the future, and tomorrow’s customers, shareholders, employees and other stakeholders are today’s children. This is why we have warmly welcomed them all along the pages of this annual report. We thank Bednet, Action Innocence (two of the organisations that we support in our CSR strategy) and the children for the fresh approach and inspired ideas in their drawings depicting their views of the future of telecommunications. And thanks too to the children of Belgacom employees who have helped in displaying the drawings.

Belgacom Annual Report 2009 - 1 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Every successful company is constantly evolving.

2 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Interview Building cohesion

Theo Dilissen, the Chairman of Belgacom’s Board of Directors, takes a long-term view. He has overseen the Group since 2004, and is certain of its sustainable value - for customers, shareholders and staff.

What were the key developments in 2009 their services any place, any time, via that shaped Belgacom for 2010? fixed and mobile networks. And their “We have chosen Theo Dilissen : Every successful com- expectations are legitimate. to put the accent pany is constantly evolving, but 2009 saw us make one of the biggest changes for Our new configuration is our response to on innovation, on many years. We integrated the different their expectations. It is the concrete ex- responsiveness to components of the Group. The process pression of our adaptation to what our was formally completed only at the start customers want. Our different brands our customers, on of 2010, but it is a task that we worked continue to exist, but the way we offer our responsibility on assiduously throughout 2009, so as to them will provide our customers with to- to our workforce make it possible. tal solutions. The reorganisation will make their lives easier. And we will be in a better and the communi- It is a step-change in the way the Group position not only to meet their expecta- ties we work in.” operates. Now we are a coherent organi- tions, but to be ahead of them! sation that will allow us to live up to our motto of convergence more than ever be- What does it mean for employees? fore. Convergence is not just a buzzword. TD: The 17,000 employees in the “new” We have changed our way of working so Belgacom are all winners from the we can match promise with performance. change. They will gain in terms of ca- The integration has given us a faster track reer advantages, because our coherence to the future. opens up more career paths. They will gain in terms of job mobility opportuni- Of course the story goes back further than last year, to our takeover of Telindus and ties, across a large, solid Group. They will the acquisition of the whole of Proximus gain in confidence, because they can be in 2006. The integration is the logical sure of our continuous investment in the conclusion to this period of growth. Group’s future. And they will gain in terms of job satisfaction, as clearer management What will the reorganisation mean for structures allow clearer definitions of roles customers? and clearer evaluations of performance. TD: In a word, ease. They will get total solutions faster and more efficiently. At the same time, we have ensured equitable treatment for all our staff, throughout the 17,000 Customers’ expectations are constantly numerous administrative changes that the The employees in the rising. As the boundaries between integration inevitably implies. As chairman “new” Belgacom are all different technologies become blurred, of the parity commission, I have seen at winners from the change customers increasingly expect to access first hand how our social partners have

Belgacom Annual Report 2009 - 3 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c “We have already helped deliver the new structures in an of the agenda, and we have put in place atmosphere of social peace and cons mechanisms to make it happen throughout shown that we tructive collaboration – and I recognize the Group. their contribution. have been able to We are checking ourselves out while stabilise the share What does it mean for shareholders? we do it, too. To make sure the policy value in difficult TD: A better guarantee than ever of the becomes routine practice, we are con- future health of the Group. The reorgani- ducting constant surveys of satisfaction times, and to give sation allows the Group to focus with new among every segment of our customer a better reward to precision on its markets, and to deploy base, with a clear system of tracking its resources with greater efficiency. We from red to green, according to results. our shareholders have already shown that we have been Management is reporting this with regu- than many other able to stabilise the share value in difficult larity to the Board. And we are instituting times, and to give a better reward to our policies on pay and bonuses that rein- companies in the shareholders than many other compa- force our ambition. sector.” nies in the sector. Now, with streamlined processes and an optimised organisa- It is impossible to talk of the changes in tion, we are poised for continued suc- 2009 without mentioning another of the cess against the challenging competitive breakthroughs of the year – the merger of context we operate in. BICS with MTN ICS. This has given us a seat at the top table of the world’s inter- What other major changes are you national carrier services. And above all, proud of? it has demonstrated the Group’s sound TD: Our number one goal now is to give judgement in its growth strategy, and on absolute priority to the customer – what deals that deliver real synergy. we call “customer centricity”. This implies a quiet revolution in the way we work. Of You sound as if you envisage a total course we have always been customer transformation of Belgacom? conscious. But this is something more. TD: This is what is at stake. We know It means that we, Belgacom, adapt that we have to complete the transfor- what we do so that our customers do mation from being merely engineers pro- not have to. At board level as well as at viding networks to a coordinated Group management level, this is now at the top offering a complex array of services and

4 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Interview

“Our number one goal now is to give absolute priority to the customer – what we call “customer centricity”. This implies a quiet revolution in the way we work. Of course we have always solutions – and doing so in a way that shareholders too are beneficiaries: we is easy for our customers. Our networks have been able to recommend a divi- been customer remain vital, and we continue to develop dend for the year that will total EUR 2.08 conscious. But them – but if we do not attract and re- per share. We have also instituted a new tain customers, our networks will serve shareholder return policy that clearly re- this is something for nothing. flects the company’s overall shareholder more. It means remuneration intentions, with a commit- The world we operate in is in constant ment to return, in principle, most of its that we, Belga- evolution – today we are leaders in of- annual free cash flow, to its shareholders. com, adapt what fering quadruple play packages, in the From the financial result of the year 2010, extent of our networks, and in the quality we expect to return an annual dividend of we do so that our of our IPTV. But we can see the advent EUR 2.18 per share. customers do not of cloud computing and changes in the regulatory environment and the rise of We have chosen to put the accent on have to.” new competitors and other seismic shifts innovation, on responsiveness to our in the way that IT services are develop- customers, on our responsibility to our ing. We must be able to evolve, too. workforce and the communities we work in, and on constant alertness to change. At Board level, it is our role to evaluate I am certain that we are building from this our top management team and make the cohesion that will continue to benefit sure we are focusing on what counts, our shareholders too. constantly assessing how we are performing against new challenges. I want to thank my fellow Board members for their invaluable assistance and guidance throughout the year.

We are also fortunate in the team we have, from top management to our staff at every level of the Group, and we are proud of the changes we have made. EUR I also have to thank formally manage- 2.08 dividend per share in 2009 ment for its solid performance. Our

Belgacom Annual Report 2009 - 5 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c 2009 was a year of records for the Group.

6 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Interview Forward for you

Didier Bellens is confident about the future. Belgacom Group proved how strong it is in 2009, and it is now prepared to build on those strengths. Even in a tough market and difficult economic times, the Group is in an unrivalled position to bring new satisfaction to its clients, shareholders and employees, and to act as a responsible company in the community it is a part of.

How did Belgacom cope in 2009? been additional drivers to keep us moving Didier Bellens: 2009 was a year of records forward on our strengths. for the Group. Just look at what we achieved. We had huge success with our packs. A So how did you keep moving forward? DB: We kept on investing in innovative net- record number of new customers opted for works, in higher-speed delivery – with VDSL2, Belgacom TV. We now have more than 5 million mobile customers, and 1.5 million broad- in more efficiency – with our Move-to-all-IP, band customers. Our solutions for business and in new products and services – like TV clients are highly appreciated by profession- or mobile payments. As a result, Belgacom als, making us the preferred ICT partner for is one of the three fastest-growing and most this market. Our 3G network – outstanding innovative IPTV services in the world, and we for quality and for its 96.7% coverage – has are among the top five worldwide for fibre enabled us to push mobile internet revenues deployment. by 12% in the consumer segment and 20% We have also reconfirmed this year that we in the business segment. Our international want to enable sustainable growth and seize million carrier services grew by almost 10%. the opportunities offered by developments in >5 mobile customers Did you feel the effect of the crisis? e-health, e-government, and green initiatives DB: We did well, despite the economic and such as smart management of domestic financial downturn. Our consumer business energy consumption. We are now increasingly was very resilient and showed no significant offering technologies, products and services impact from the slow economy. On the con- that respect the environment, and we want trary, we saw a surge in new customers for to help our customers to manage their own our products and services, and our existing impact on climate change. Belgacom TV subscribers customers remained loyal, despite the fierce Where did growth come from? 752,000 competition. The impact on our enterprise DB: Nowadays, 78% of our revenues come business has been within expectations, with from products and services that did not exist some weakness in IT and a slowdown in 15 years ago. Our strategy has developed 506,000 mobile usage. alongside the evolution of the technology, and ahead of the market. Not only have we We could see the crisis was coming. It did 305,000 not change our strategy. We continued to consistently been innovative in providing – invest in the future, but we were able to do and often in creating – stand-alone products 140,000 so because one of our strengths has been to and services, in everything from fast networks maintain a smart mix of investment, innova- to smart phones. We have also been equally tion and cost control over years. Our strategy innovative over recent years in convergence paid off yet again, even in challenging times. – in providing combinations of our products 2006 2007 2008 2009 And our new products and services have and services in packs.

Belgacom Annual Report 2009 - 7 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Our results show how well our convergence What about the international strategy is paying off. Converged products dimension? are attractive in themselves to our customers. DB: In 2009 international activities And for us, they provide a perfect platform represented some 25% of our total. We are for cross-selling. This is how the strategy pursuing an active international growth path. increasingly feeds our growth. We offer We are present in several carefully-selected existing customers in one domain the full countries – for international ICT activities with portfolio covering the other domains: fixed- Telindus International, and in our international mobile, telecoms-IT, internet-TV. carrier activities with BICS. On the consumer side, we have done so well But the most powerful example of our inter- with our bundles that we have even broken national dimension is our deal with MTN ICS. some records. In the consumer market, our This has consolidated our significant position sales of bundles rose by 85% in 2009. in the global market for carrier traffic, making the enlarged BICS the world’s fourth biggest In the business segment, we kept our operator for international voice traffic. It car- leading position in fixed voice, data, and ries 19 billion minutes. Year on year, this is a mobile voice, and the response to our offers 20% increase. by smaller firms proves we are providing What are your priorities for 2010? something that they want. We remain the DB: The story is much more than the finan- preferred supplier for ICT and we won some cial results. “We have a clear important new international accounts, on vision and want to the grounds of quality as much as price. We have a clear vision, and we want to develop as a more innovative, more customer-centric develop as a more This reflected our ability to offer products and more responsible company. and services that are well-adapted to both innovative, more our consumer and enterprise market. And Innovating with the customer constantly in customer centric we are also seeing real growth potential mind is central to the vision that I have con- in mobile data and a network-centric ap- sistently set out, of a telco company fully and more respon- transformed into a servicing company. sible company.” proach. But the star performer was Belgacom TV. We are now a platform that is able to pro- Our constant innovation in services and vide an incomparable range of services that marketing has made it one of our fastest- our customers increasingly want. Our aim growing products. It now has 752,000 sub- therefore is to improve the quality of service scribers – and this is in less than five years for our residential and corporate customers. since its launch, and in a country where cable Convergence means that service needs are television was previously the sole provider. It evolving. The expectations of service among is without question the best IPTV service in our customers are becoming convergent too. Europe, and the market has proved to be a To really enjoy the benefits of convergence, they need our constant attention and care. In secure area for growth. 2010 more than ever, we want the customer How else has the strategy paid off? to be king. DB: We have achieved good balance in We want our teams to be better able to our growth. We have done well investing in answer those evolving needs. This is one organic growth. But we also have ambitions of the reasons we have integrated our BICS voice volumes to grow through attractive in-market deals. So subsidiaries into a single Belgacom Group. (in billion of minutes) we continue to monitor growth opportunities Instead of working in the traditionally separate outside Belgium, with a judicious blend 19.3 silos, our teams can now cooperate better, of alertness and discipline. We have and together deliver better service. We have 16.2 demonstrated that the deals we make should mobilized our many strengths, so that we can 13.8 fit Belgacom’s strategic rationale, create place the customer right at the centre of all our 12.2 shareholder value, and answer strict financial activities, and truly care for him, or for her. criteria and synergy analysis. What does this mean in terms We have also cut our costs – by about 5.6% of products and services? over the preceding year. Altogether, we have DB: We are consistently developing the plat- achieved a performance that allows us to form we have created, with an increasing pay a dividend of EUR 2.08 for the year, way shift to services. It means putting interactive ahead of many companies in our sector. And television, fast internet, high-quality mobile, 2006 2007 2008 2009 this in a market where there is strong pres- and many other innovations into our custom- sure on competition and on prices. ers’ hands – and increasingly across different

8 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Interview

devices. It can be seen already in our services to ensure future generations to understand our staff that can make progress happen in payment by sms or in e-health, where we the world they live in. We constantly invest for all our customers. What our teams have are trend-setters. And we are already explor- in and support the work of associations to contributed in 2009 and what I know they ing how other innovations, such as further in- improve the quality of life in the communities can contribute in 2010 makes me confident teractive TV services and entertainment, can we operate amongst. that we are heading towards new levels of be added to our range. We have captured achievement. We succeed in being a profitable company. the major technological trends and made I now want Belgacom to succeed in being a Belgacom wants to be considered as a them our own in advance of other operators company that is also a leader in sustainability leader in customer satisfaction. We want to in Europe. and responsibility. go forward with our customers and for our Internet and television will morph into one in- customers. What about the regulatory landscape? distinguishable product offering high growth DB: We consider that the playing field on opportunities for new services. The future will which we compete is still uneven. Belgium is see fixed and mobile networks being used for a good market in that there is wide consumer new forms of entertainment and mobile tele- choice – and that means there is strong com- vision. Many professional applications will use petition. But all operators should be subject intelligent communications networks in new to the same rules and obligations. The Group ways for monitoring and managing their busi- is still exposed to unfair treatment, as the cur- nesses, with machines talking to machines rent regulatory framework does not take into via fixed and mobile intelligent networks. We account the presence of cable, leaving that have already started to prepare that future. side of the industry totally unregulated. We see the emergence of cloud comput- Regarding mobile, a recent draft decision of ing services as an important opportunity for the BIPT foresees a lesser degree of asym- us. Services, applications, and even infra- metry of the mobile termination rates than in structure that were once located locally on the past years. We are going in the right di- computers or servers in companies or at rection. Nevertheless, Belgium is still the only home are moving more and more towards country where there is asymmetry between remote servers in the network. Customers the first and the second operator. Belgacom will be able to store content on the network continues to insist that BIPT should abolish all and access it any time on any device – the the asymmetries in its final decision. computer, the TV or the mobile handset. We intend to play a key role in this new delivery Concerning competition, we believe that model. it is better for consumers to have a limited number of mobile operators that really invest How far have you taken sustainability in new applications, rather than multiplying the into account? number of operators with unclear investment DB: My objective was to embed sustain commitments. This would coincide with the ability even more firmly in our daily operations. trend in Europe: fewer operators, but more I wanted CSR to be integrated into each busi- competition, with real advanced services that ness unit. So we drew up a robust five-year have an added value for consumers. CSR plan and governance model, endorsed top 5 by both the Belgacom Management Com- A few words you want to add worldwide for fibre mittee and the Board of Directors. to conclude? DB: Our strategy is the right one: Belgacom network Our CSR strategy is focused on widening ac- is a leader in IPTV, is a top employer, and has cess to communications, on issues of health one of the best networks in the world. But we (and specifically in relation to electromag- still have to improve the way we implement netic fields), and on contributing to a greener it. That is the reason why I have chosen to society. assign one top priority to the whole Group for “CSR helps us to 2010: end-to-end customer satisfaction. CSR helps us to anticipate societal trends anticipate societal and stakeholder expectations. It drives in- I want the customer to be king at Belgacom. novation and opens doors to promising new I want us to follow our customers from the trends and stake- business areas. very first contact to the moment we install holder expecta- their equipment or they pay their first bill. Good examples of this are our initiatives in the tions. It drives e-health sector and in enabling higher energy As we move into 2010, we are realising and carbon efficiency via the use of ICT convergence in every sense: among our ser innovation and applications. Optimising our energy usage vices, our products, and – above all – our opens doors to and waste lowers our costs. Raising own operations and operators. In line with awareness among youngsters of safe use of the integration of our subsidiaries, we are promising new our technologies and of climate change helps creating a culture and an attitude among business areas.”

Belgacom Annual Report 2009 - 9 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Performing in a challenging operating context

Because Belgacom knows its markets and its clients, it can answer their expectations, and anticipate them. That is how we maintain our leadership. And beyond the demands of our customers, we also answer - as a responsible company - to the expectations of other stakeholders, and respect our engagements in a complex regulatory environment.

10 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Managing complex trends

Belgacom has once again demonstrated its skill in operating within a constantly evolving market. 2009 presented challenges to everyone – and opportunities for alert players. Belgacom showed it could seize the opportunities.

his difficult year for the global ite operator of Belgian companies, with BICS success economy hit the telecommu- strong and stable market shares in all With the extension of BICS coop- nications market too. Con- domains. eration with MTN, BICS has leapt sumers were more careful into the top 4 carrier operators At the international level, the Group con- worldwide. It carried 19 billion about how they spent their minutes in 2009, and boosted Tmoney, and businesses postponed major solidated its existing strengths with BICS, revenues by 9.9 %. Not only is investments and reduced their roaming Telindus and Tango, and went one step BICS now the largest interna- and mobile usage. further – jumping into the top four of inter- tional carrier in Africa, it has also national carriers worldwide in terms of become one of the leading actors But even in difficult times, there is still international voice traffic. in the consolidation of the sector. plenty of growth in the telecommunica- Our strong assets – our network, our tions market. The mobile Internet market workforce, and our know-how, backed is booming for business and residential by healthy financials – helped us to keep customers. Technology keeps opening our performance in the enterprise market up new possibilities for cross-platform services. And customers are receptive to in line with expectations. Belgacom’s con- offers that meet their needs or desires. vergent portfolio with innovative services, The smart companies are the ones that such as Explore, integrated fixed/mobile are able to maximise these opportunities and telco/IT solutions, was a key success – by innovation, by investment, and by factor. The Group developed targeted and creative response to customers. That is flexible offers for smaller firms, such as what Belgacom has done. “Fusion” and “Bizz packs”. Belgacom not only proved resilient, but Caring for the smart made real progress. It achieved a slight consumer increase in revenues of 0.2%, and booked a net profit of EUR 904 million (EUR 104 The consumer telecom market remained million more than in 2008). It harvested buoyant. Although a traditional market like the fruits of sensible management and voice telephony is maturing, significant excellent cost control. It continued to go growth was realised in other markets such forward in its markets. as digital television. Convergence played an important role in the consumer market.

A firm favourite Our customers are smart customers. They According to a survey conducted by the are not afraid to combine low-cost pur- Belgian ICT news service Data News at chases with premium purchases. Belgacom the end of 2009, Belgacom is the favour- has to give them the arguments to choose

12 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Operating context

Today’s customers want to relax while they are using technology. They demand simple, personalised the premium brand, and to provide the best Leadership beyond solutions that work value for money. markets for them. They Customers want to be always online, in Belgacom wants to become a leader in don’t want to have touch with friends, family and fellow-thinkers. CSR, and a leader among sustainable They communicate through more devices, companies. It has an ambitious five-year to adapt to the on different platforms, in search of distinct plan, and a clear strategy of combating technology. content. Increasingly, smart customers are climate change. Our engagement is em- very demanding and want maximal proxim- bedded in business – the plan has been ity, service, and solutions. They expect sup- taken on in the strategic goals of each pliers to be accessible, honest, caring and of our business units. There are three fo- even stimulating. cuses: access to communications; health and clear information on electromagnetic Today’s customers want to relax while they fields; and climate change. We have made are using technology. They demand simple, a strong commitment to cut our CO2 emis- personalised solutions that work for them. sions by 70% by 2020. They don’t want to have to adapt to the technology. They welcome services such as We have a clear vision and want to devel- Belgacom TV that help them maximise qual- op as a more innovative, more customer- ity time through added applications such as centric and more responsible company. VOD and PVR. Customers like to choose Our convergence strategy is a success, when it is convenient for them to watch TV. and proves that Belgacom continued to make good strategic choices both for its We have achieved unique success due clients and for its investors. It is following to the popularity of our widened range of a judicious policy of organic growth and Number of packs sold combined offers through our packs. Bel- innovation, with a focus on its domestic 560,000 gacom is the only operator in Belgium that market, complemented by a careful and can offer both fixed and mobile telephony disciplined monitoring of opportunities 302,000 alongside Internet and TV. And we contin- elsewhere, based on strict valuation crite- ued to invest significantly in order to offer ria and a focus on shareholder value. 153,000 these best-of-breed solutions to our customers, despite strong regulatory pressure Responsibility, innovation and customer and a challenging economic environment. proximity are the keys to our long-term success. Our growth is linked to our ability to cross-sell, moving customers from single-play to multiplay offers that meet their needs ever more closely. 2007 2008 2009

Belgacom Annual Report 2009 - 13 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Adapting to regulation

14 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Operating context

As the leading telecommunications operator in Belgium, Belgacom has always been at the forefront of innovation, and consequently has often been the first in the market to experience regulatory pressure. We do not set the rules: we adapt to them, so that we can continue to move forward in meeting our customers’ needs.

The regulatory framework Regulatory equivalence with cable Renewal of 2g licenses in Belgium does, however, Regulators don’t treat Belgacom’s Despite a Court decision of July 2009 pose some exceptional chal network and the cable network in the that the Belgacom Mobile 2G license was lenges, which put Belgacom same way. Belgacom has requested the already tacitly renewed until April 2015 at a disadvantage to some regulatory authorities to remedy the current under the 1995 conditions (i.e. without Tof its main domestic competitors. As a inequalities in competition. It wants equal any additional fee for this extension), a law consequence, we have to work even regulatory treatment to cover all types of voted by the Parliament on 25 February harder to achieve success. At the same broadband access networks (both HFC 2010 imposes the payment of an additional time, we continue to make our case cable and DSL). It also wants a solution to fee for extension of its license until 2015, to the national regulator that changes the monopoly that cable TV operators enjoy and another fee for extension until 2021. would produce a more equitable working on analogue cable TV functionality, leaving Belgacom questions the legality of the environment. alternative TV operators at a competitive imposition of these fees. disadvantage. A resale of analogue cable TV services would be one way of allowing Level playing field alternative TV operators like Belgacom Universal service Efficient and balanced regulation in the to compete with the dominant cable Since 1998 Belgacom has been the only telecom sector is in the long term interest operators on an equal footing. operator subject to a broad universal of Belgian consumers and companies. service obligation. Belgacom has not For Belgacom, there are two key issues. Mobile termination rates received any compensation for the pro The market would work more efficiently vision of social tariffs, despite a clear legal if Belgacom and cable companies were The mobile termination rate is the fee framework applicable since mid 2005. treated on an equal footing, so that cable that mobile network operators charge to operators were subject to the same rules connect calls made from other fixed or as telecoms operators. The market also mobile networks. Competition in Belgium still suffers from asymmetries in mobile is distorted – and consumers are impacted regulation which put Belgacom at a negatively – because Belgacom mobile disadvantage, because fees for traffic subscribers have to pay high charges between mobile operators (termination when they make calls to subscribers of rates) are not equal. The regulator is other networks in Belgium. These charges currently reviewing the regulation of the are higher than subscribers of other mobile termination rates with a view to fully networks have to pay for a call to Belgacom align them by 2013 but Belgacom insists subscribers; this asymmetry amounts to that this should happen sooner. unfairly requiring Belgacom – and its custo mers – to subsidise its competitors. VDSL Belgacom has asked BIPT to reduce the The Belgian regulatory authority, BIPT, asymmetry between these termination continues to regulate Belgacom’s VDSL rates. services, in line with its decision of January 2008. Belgacom developed a The regulator’s proposal of 1st February 2010 wholesale VDSL service, which has foresees a lesser degree of asymmetry of been available since mid-2008, but the mobile termination rates than in past years, formal approval from BIPT is still pending. but Belgacom continues to insist on abolition Operators can, however, already use the of the asymmetries in the regulator’s final service. Belgacom is seeking fair terms for decision. opening up its VDSL2 network, so that its investment risks are taken into account.

Belgacom Annual Report 2009 - 15 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Forward on our strengths

It is part of the richness of our group that it covers many different activities and territories. But it is part of our character as a group to operate increasingly in a coherent way. In 2009 we created a new and clearer focus. This applies to our own view of ourselves. It also applies to the image we present to our customers and to the world outside.

16 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Moving forward to enrich people’s lives

The successes that Belgacom enjoyed in 2009 were not born out of luck. They were the result of our group strategy, consistently applied over the years since we conceived our unique approach of convergence.

hroughout these years of the same time retaining the same values seismic change in the world of can do, respect and passion It is this we operate in, Belgacom’s unique alliance of innovation in what we deliberate choice has been do and stability in who we are that has to take a long-term view. won us our image of a creative and reli- TThis has shown itself in our commitment to able partner and employer. developing innovative business in our home market and our own high-quality network, in our alertness to seizing real opportunities Who we are defines what abroad, and in our attachment to being a we do. And not reversely responsible company on every level: as an In a world of widely distributed knowledge, employer, in terms of acquisitions, and in our group is rich in the diversity of activities our attitude to our environment. In all our and territories it covers - but it is also part decisions, we have always had one goal in of our character as a group to seek coher- mind: easing and enriching people’s lives, ence and to start from who we are and the whoever and wherever they are, whatever effect we want to have on our world. All our they do. activities are uprooted in our identity, support our mission and are enabled by our To do so, we made smart choices, in internal culture. infrastructure, in technology, in products, in services, and in our human resources. One identity: And we implemented our choices opti- We are a customer oriented, innovative and mally. Our convergence strategy was responsible company revolutionary when we introduced it, and it proved so fruitful that our competitors start One mission: to play in the same field. With an increas- As a responsible company, Belgacom ing focus on the customer, we have trans- wants to be the preferred provider of intui- formed Belgacom from an engineering tive end-to-end solutions, combining fixed into an entertainment and ICT leader, and and mobile telecom, IT and media, thereby from a Belgian telecommunications com- empowering its customers to master and pany into a services organisation with a Grégoire Dallemagne – Executive Vice enrich their professional and private lives in President Strategy worldwide reputation. Our attention to our employees has repeatedly won us loyalty a sustainable way. “Our strategy has ensured from our staff and awards from the outside One culture: we made the right choices, in world. infrastructure, in technology, in Everyone in the group shares our three fun- products, in services, and in our It is innovation that has always been the damental values - “Can Do”, “Passion” and human resources. We prepare fuel of our achievements. Our secret lies “Respect” - that are reflected in skills, work, our future and the future of our in our ability to reinvent ourselves, to reor- and attitudes, and in our encouragement to customers with a continuous ganize ourselves so that our strategy can responsibility, creativity, and talent develop- focus on innovation.” be implemented successfully, while at ment.

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True The Belgacom Group Convergence is now a single entity. A new start! Launch of the VDSL2 network. 2010

Telindus joins the 2008 Integrated Belgacom Group. 2006 solutions Belgacom becomes a listed company. 2009 Belgacom Mobile Belgacom PingPing ! launches the first launches ADSL. 2004 GSM network in 2007 Belgium and four 2000 Belgacom and Proximus years later, SMS. launch the first bundled 1994 2005 offers: the packs. Belgacom TV enters the market and Belgacom Mobile launches the 3G 1998 services. Creation of Belgacom Skynet. 1992 The RTT becomes Belgacom.

Who we want to become More than ever defines our future before, all our footprints operations will It is in new fields of operation that Belgacom The crucial innovation in 2010 will be to will increasingly excel, bringing new types be optimised to angle this focus to the ultimate goal of all and levels of service to customers and new secure the best our activities: Customer Satisfaction. models of business development. We see possible customer the next wave of growth coming from open More than ever before, all our operations forms of innovation. experience, will be optimised to secure the best possi- because the ble customer experience, because the cus- Vast opportunities for further innovations tomer is king. We will achieve this via our are already opening up, and Belgacom will customer is king. four priorities: increasingly become an incubator for innovation. We are geared up to work with new • Customer Centricity: in every act and ideas generated by our own employees, every decision, we will put customers’ or in partnership with other companies, or interest first and offer them simple, effi- responding to possibilities emerging from cient and accessible solutions. academia. Our innovations will play a bigger • Sustainable Growth: we want to cap- and bigger role in how we help build a better ture value through maximising our cross- society, with more environment-friendly tech- selling; we want to grow in a sustainable nology and processes, with our contributions way, in line with our CSR commitments. to allowing everyone access to the opportunities of a digital society, and with our services • Innovation: we want to strengthen our that make healthcare more efficient. leadership in innovation. So that we can capture growth from new fields, bringing We will continue to innovate on all fronts - additional value to our customers. and because our staff is central to our success, our innovations will continue to bring • Operational Excellence: we want to new benefits in terms of work-life balance, excel in efficiency, and implement lean ever-wider opportunities, and a flexible and models, so that we can keep our costs supportive working environment. But the down. greatest beneficiaries will be our customers.

Belgacom Annual Report 2009 - 19 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Innovation and so much more

Innovation is central to Belgacom’s strengths – in everything from its networks to its customer focus and its embrace of new business opportunities. Combining its innovative capacity with a new global strategy is boosting Belgacom’s market leadership and giving it even greater strengths to move forward and create true progress.

Innovation as a culture to develop new products and services based on convergence of contents and of There can be no sustainable growth with- technology, with offers that provide greater out innovation. This is why innovation is a 78% simplicity and global solutions. of our revenues are state of mind for Belgacom, a keystone of our company culture. It is not confined to generated by products Innovation and services that did not our research and development activities, but is integrated into the everyday tasks of exist 15 years ago as an adventure each department. It is a conscious rejec- In a world of widely distributed know-ledge, tion of complacency, a determination to Belgacom is determined and realistic. be open and to continuously re-invent, to We know we cannot depend solely on experiment, and to be ready to learn from our own innovation and development experience. Our ambition - and our strat- capabilities. So our innovation team man- egy - is to turn innovation into a sustain- ages partnerships with key organisations able competitive advantage. (Alliance) such as Google, Microsoft and 78% of our revenues are generated by Vodafone, in order to enrich internal devel- products and services that did not exist opments and share innovation roadmaps. 15 years ago. It was Belgacom that We have also created an open coopera- launched mobile phones in Belgium. It tion framework - Business Accelerator - for was Belgacom that followed up with high- exploring new opportunities with dynamic tech products and services such as ADSL business partners, so as to speed up the th Innovation Catalyst – which celebrated its 10 anniversary deployment of ideas into products. Com- Belgacom created a dedicated in 2008 – and, more recently, Belgacom bining our strategy of constantly monitor- innovation department in 2009. TV. Today, the richness and diversity of ing new trends and emerging needs with It nominated its first Vice Presi- the range of our IPTV products place us an open-door approach allows us to work dent Innovation, and created a among the pioneers of the sector. And our team representing all aspects of with new players in generating an environ- Explore platform, providing a new degree ment favourable to innovation. business development within the of unified connectivity for the professional Group. Its mission is to create market, is unique in Belgium. We continue value by fostering new ways of doing business through concrete projects, and to act as an incubator and catalyst for our Group’s products, processes and Innovation Awards solutions, so we can be sure we are always alert to addressing Belgacom Group was nominated as finalist of the A.T. Kearny Best Innovator Award, recognizing unmet needs. its innovative vision. SMS-Parking was nominated “Product of the Year 2009” by Stichting Marketing and De Standaard.

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Innovating with our products

SunSwitch An intelligent and green energy Zorg provider SunSwitch, a company based in Louvain-la- TV Neuve, is the leader in sales and installation of photovoltaic solar panels in French speaking technology at Belgium. the service of In collaboration with Belgacom, Sunswitch health has developed a unique offer that monitors the management and production of green Zorg TV is a platform electricity. that puts technology at This intelligent green electric meter is equipped with a GPRS card that offers different services the service of health. such as alert, continuous technical control, Health insurance Softkinetic, performance comparison, error analysis or even an intuitive interface that responds to organisations are green certificates management to the owners gesture. as well as the technicians. piloting health Belgacom has become a partner of Softkinetic, a Belgian information and company specialising in human movement interfacing. advice transmitted Its technology brings to television,to video games and to computers what the iPhone has brought to mobile by television to type 2 phones – an intuitive interface that responds to gesture. diabetes patients. So users can switch channel without using the remote- control, play games without a joystick, react to marketing information just by using their hands but without touching the screen, and follow fitness programmes that analyse their movements in real time. A new business model HTC Magic Android In 2009 • 2.4 million mobile payment transactions One of the best examples of our • 2 million parking transactions in 12 innovative solutions is PingPing, a cities by 300,000 unique users mobile platform for micropayments, • 300,000 sms-tickets De Lijn at Antwerp & which permits all mobile phone Gent, purchased by 60,000 unique users users in Belgium to buy products The introduction in June 2009 of the HTC and services with their mobile Magic is a good example of our Alliance phone, and offers options such as program. This is the first handset available fidelity services or the collection and in Belgium that runs on the innovative open source Android mobile software platform cancelling of electronic coupons. and will take advantage of Proximus’ state- It is operated by Mobile-For, a of-the-art 3G network to deliver a highly 100% subsidiary of Belgacom, and intuitive, easy to use mobile web experience has already succeeded in web- with adapted mobile internet tariffs. payment solutions, smart vending The handset gives one-touch access to several embedded Google applications, machines, catering, SMS parking, such as Google Maps for Mobile, Gmail, the De Lijn bus company, and Ipark YouTube, Google Calendar™ ,Google Talk for you. and of course the Android Market.

Belgacom Annual Report 2009 - 21 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Investing in our systems

From our earliest days as a telephone company through to the Belgacom of today, with its wide range of services, we have built upon our networks. Our growth and development go hand in hand with the evolution of these systems, from copper wiring through to fibre. We aim at operational excellence through deployment of a high quality network.

ur investments have pro- As part of the continuous transformation vided us – and Belgium of our activities, 2009 saw us take the first – with one of the most steps to move forward beyond the separate advanced systems in the service platforms that have until now served world. And in 2009, on the different types of traffic. This is a historic thresholdO of the dramatic new changes and pioneering departure for Belgacom, that technology will bring to the world of and requires a complete adaptation of communications, we made a crucial step processes, IT systems and the networks. in network management, to ensure that It is a model of the convergence that will we continue to move forward. eventually become commonplace among integrated telecom operators everywhere. Gradually all platforms will shift to an Revolutionising network IP-based multimedia system. Our ‘Move convergence to All IP’ project is already able to deliver Convergence is our ambition not only benefits in terms of the enhanced repair among the products and services we offer process and the implementation of a new to our customers, but also in the way that Voice-over-IP platform on which the first we manage our networks. Aggregating professional customers are connected. the elements in our networks and consoli- In technical terms, the switch also allows dating our traffic brings us economies of us more efficiency in our installations and scale in handling fixed line voice, mobile equipment – the buildings and operational voice, Internet and TV. It also allows us to centres we require to run the network, give our business and residential custom- the mechanisms for our thousands of ers a better service, and to be ready for customer interface installations, and our the new possibilities – and increased traf- hundreds of service platforms and IT fic – that multiply every day. systems.

Don’t just say “SDE” – say “SDE & Wholesale”! Scott Alcott – Executive Vice Wholesale is one of Belgacom’s big assets. Our SDE department not only provides infrastructure, President Service Delivery Engine network and IT services, but also offers “domestic wholesale” telecommunications services to other & Wholesale operators and suppliers on the Belgian market. So the SDE business unit is now known as “SDE and Wholesale”. The Carrier & Wholesale Solutions unit is now a central component of SDE, mana- “At Belgacom, technology is the ging commercial arrangements between Belgacom and other operators and service suppliers. It is heart and soul of our business, also responsible for managing roaming relations with foreign mobile operators. Providing wholesale and we bring this to life through services makes more use of our network, and the revenues from other operators help balance the our state-of-the-art networks and investments we make in constant upgrading, which in turn allows us to increase the earnings that datacenters.” our shareholders expect. Wholesale clients are seen as partners in extending the penetration of Belgacom’s network. End-to end control is no longer required to achieve profitability.

22 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Networks

In only a few years, convergence has converged offer which puts the customer moved from the first days of digitisation to at the centre of operations. As a result, integration of networks and IT, and the shift customers have more influence in ap- to IP. This in turn will permit fixed/mobile pointment handling, service ordering and Going greener convergence, providing one number, and configuration, trouble shooting, and re- In the context of our 70% CO one email address, ubiquitously valid. The covery. We will be able to personalize still 2 reduction target, we launched a further step of convergence for the cus- further our services, our communication, major programme to replace all tomer is also nearly upon us, with conver- our products, and our contacts. Enhanced mobile equipment by minimum gence among devices – pc, TV, handhelds web access will put customers in the driv- 25% more energy efficient equip- and cameras – and among services, in ing seat for placing orders and handling ment in the coming 2 years. both business and leisure. appointments with our staff. We will get We also initiated major optimisa- to know our customers better, so that we tion works in our datacentres in Investing in transformation can serve them better. Convergence – with order to improve the efficiency of network transformation and IT transforma- our cooling facilities and contin- In response to these opportunities, Belga- tion – makes for shorter times to market, ued to virtualise our servers. Our com continued to invest almost EUR 600 customer web-enablement (less manual networks and datacenters are milion of the Group’s revenues, so that our support), activity automation and remote powered with green electricity clients always have the products that meet automation. exclusively. their needs. The investments aim to sup-  see more on page 64 port our organic growth and are the proof Quality circles of our commitment to innovation, trans- ‘Quality circles’ build on feedback from formation and increased customer satis- customers and from our staff who have faction. As a result, our fibre-to-the-curb direct contact with customers. We im- coverage now reaches 73.1% of Belgium prove our ways of working, so as to en- households, placing Belgacom among hance end-to-end customer experience, the top five worldwide – and winning us which is essential to our customer centric the Global Telecom Business ‘2009 Inno- approach. Pilot programmes in the call vations Award’. By end 2009, Belgacom centers in Mons and the technical help- had increased its TV coverage to 87.2% desk in Antwerp have demonstrated how of Belgian households, with 68.8% having a quality circle approach can improve cli- access to High Definition TV. ent satisfaction and first-time-right. We are now developing a framework and a set of At the same time, to ensure that it can tools for use across call centers, techni- move forward at the forefront of new devel- cal helpdesks, shops, and technicians in opments, Belgacom has been upgrading the field. Quality monitoring and coaching its mobile network for 3G and HSDPA, with individuals ensures that employees aware that the network revolution already are involved in the feedback loop. And we underway is going to demand increasing 3G coverage (population) are resolving structural issues where more 96.7% mobile access – to voice, to data, and to than one department is involved and there 90.2% host new services. It now offers an out- 84.4% is a need for a coherent response at a door coverage of 96.7% – the best 3G cross-functional level. coverage in Belgium, so its customers can play a full part in the emerging world of Results of the pilot phase active as well as passive digital commu- For Customer Satisfaction, the results were nication. We have made a visionary stra- conclusive. There was 23% improvement tegic choice. The network we have been at the technical helpdesk in Antwerp, 5% deploying since 2004 has put us a long improvement at the commercial contact 2007 2008 2009 way ahead of our main competitors. centre in Mons. For first-time-right, we achieved a 3% improvement at the techni- Embedding customer care cal helpdesk. For a set of piloted structural Fibre-to-the-curb coverage in our operations initiatives, we were able to demonstrate a 73% substantial potential for reducing call in- 66% Customer service at the centre of flow. 59% operations These developments in hardware match the evolution in our approach to customer service. No longer will fixed line customers be treated separately from mobile telephony customers. We are developing a 2007 2008 2009

Belgacom Annual Report 2009 - 23 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Forward for our customers

Underlying our new approach to our business is an intensified focus on the customer - on all our customers, residential and business, in Belgium and abroad. We are changing our methods of working so that our customers do not have to change theirs. Whether the customer with a fixed line wants an Internet connection or a mobile phone or access to our television services, whether it is for business or for pleasure, we increasingly offer a single point of access, a single contact through which any customer aspiration can be met. The same applies to our customers seeking large-scale business services, often in several countries; we are now providing them with a single point of contact and a seamless service across platforms and frontiers.

24 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Suiting the individual

A combination of innovation, convergence and customer care helped to drive success for our Consumer Business Unit. Building on the strategic choices Belgacom has made over the years, we consistently offered high-quality services and products. We increasingly met the needs of our broad customer base, orienting them towards multi-play offers that correspond ever more closely to what customers want.

evenues were up 7.1% are more than ready for this next step. year on year, showing that This development supports our growth residential clients continue in Mobile Internet, reinforces our credibil- to see our offers as real ity as a fixed Internet provider, and is in added value. This excellent line with our strategy of complementarity performanceR comes from the contribution between fixed and mobile services. of Tango and Scarlet and the two main drivers of growth, Belgacom TV and Our mobile triple play and quadruple play mobile data. offers are increasingly valued by our clients – and appreciated by the media, too. All in One, which is one of our first possible The solutions that make formulas for quadruple play, provides Michel Georgis - Executive Vice the difference voice, fixed and Mobile Internet, as well President Consumer Business Unit as television – all for one fixed payment a Convergence through packs “We want as many people as month. Customers get high-speed Internet We say “convergence”, but what our cus- and can make fixed and mobile calls free possible to have access to new tomers see is greater freedom, simpler technologies – and we are there of charge to any number in Belgium in the to help our customers make the products, and better value for money. evenings and during weekends, so they best use of them.” Our convergent offers on packs in the risk no unpleasant surprises on their bill. residential segment saw 258,000 packs Belgacom TV: the star player sold in 2009. The total is now 560,000, an Belgacom TV is a star player. External and increase of 85% year-on-year. This record impartial researchers have identified it as level of sales reflects the genuine interest an industry-wide benchmark(1). of our clients and the real value added that our products bring them. It is a further The most compelling demonstration that proof that the Group offers products and we have got our offer right is the unprece- services that meet the criteria of flexibility, dented success that Belgacom TV enjoyed simplicity and value. in a market still largely in the hands of cable operators. Just four years after its launch, Internet One, bringing convergence of Belgacom has become one of Europe’s fixed and Mobile Internet, is boosting leading IPTV companies. +85% growth. The offer entitles customers to increase in pack sales yoy free Mobile Internet during the weekend, and the response shows that customers

(1) Source: Forrester Research 26 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Customers

We increased the number of our clients at milestone of more than 5,000,000 mobile a rate never seen since the launch of digital clients, a strong performance in a country television: 246,000 new clients, up nearly where the competition is tough. 50% on 2008, and making a total of 752,000 +30% clients. These record sales propelled Belga- Mobile Internet, a growing share of the Belgian com TV into the top three IPTV platforms market and a symbol for true digital TV market worldwide for innovation and rapid growth. convergence Belgacom introduced mobility in Belgium A unique offer: free digital TV with the first mobile phones. Now it is In July Belgacom launched new packs doing it again with Mobile Internet. Our Exclusivity on the with great success. The packs offer free investments have created a quality 3G first solar phone TV when you subscribe to both a ‘voice’ network and a level of service that gives our in Belgium (fix or mobile) and an ‘internet’ solution. clients 96.7% outdoor coverage. Yet again, As part of our corporate social This very advantageous offer is valid for we have proved that we give the customers responsibility, we continuously new and existing customers. what they want. Mobile Internet revenues seek to help customers reduce rose by 12% in 2009. their environmental footprint via Thanks to the national launch of our FAIR eco-friendly products and solu- and FAIR XL programmes, which offer The Belgian market for Mobile Inter- tions. We launched in exclusivity television for free, we won over many new net continues to grow. In the 15-45 age the Samsung Solar E1107, which combines a solar panel and an clients - demonstrating the relevance of range particularly, it is becoming the norm energy-efficient charger, along our convergent strategy and the appeal to check e-mails, consult websites or with minimised and recycled of digital TV in the Belgian market. Market carry on with social networking while on packaging. EUR 1 was donated to penetration was boosted thanks to the the move. In parallel, Proximus has been the Climate Education Pro- advantages of digital TV and services such promoting Mobile Internet among cus- gramme for each sold handset, as video on demand, high-definition TV and tomers who use a laptop. In September, which raises awareness of Bel- an ever increasing content offer, with for it launched a prepaid Mobile Internet deal gian students on climate change. We experienced 300% higher example the launch of our Flemish music for laptops, aimed at customers who do sales than forecasted. channel: Anne. The Group also passed the not want to be tied to a subscription.

Belgacom Annual Report 2009 - 27 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Valable sur les appels nationaux pour Pay&Go Flex et Pay&Go Generation. 28 Offre valable jusqu’au 31/01/10 inclus pour toute nouvelle carte Pay&Go. Les transferts d’un autre opérateur bénéﬁ cient automatiquement de l’avantage. WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Les clients qui deviennent utilisateurs Pay&Go pour la première fois tapent avant le 31/01/10 le code #144# sur le clavier de leur GSM et appuyent ensuite sur YES/Téléphone/Envoi pour proﬁ ter de l’offre. Les transferts d’un plan tarifaire Proximus vers Pay&Go n’entrent pas en ligne de compte. Appelez jusqu’au 30/06/10 à – 50 % par rapport aux tarifs standard Pay&Go, vers des numéros en Belgique, à tout moment de la journée (hors numéros spéciaux). Pour Pay&Go International, cette offre est également valable pour les appels effectués à partir de la Belgique vers la destination internationale de votre choix (hors numéros spéciaux). Valable pendant 31 jours pour toute recharge de minimum € 10 dans les 31 jours suivant votre dernière recharge effectuée jusqu’au 31/05/10 inclus. Pour les recharges effectuées après le 31/05/10, la promotion s’arrêtera automatiquement le 30/06/10 à minuit. Infos et conditions sur www.proximus.be Customers

We have designed our packs so that they provide what the customer wants in terms of products and services, but also so that customers get more for their money – and can see the benefits clearly. Delivering value as well as price designed them so that they provide what Consumers care about costs, and we the customer wants in terms of products operate in a transparent market. So we and services, but also so that customers make sure that our prices compare well get more for their money – and can see the with competitors, whether it is a mobile benefits clearly. Our Packs allow us to be subscription, the fee for a television more competitive than our principal rivals, connection, or the charges for our ADSL the cable operators. One of the results is -33% service. For ADSL, for instance, Belgacom that, today, the majority of our broadband ADSL tarifs over proposes the best value for money. and TV sales are through packs. the last 4 years Domestic clients pay, on average, only EUR 28.7 a month – less than the EUR 30.0 FAIR XL exemplifies the way our offers average in 2008 (both figures excluding give our customers more than they can VAT). Tariffs have fallen by 33% over the get anywhere else, and at an excellent last four years. Belgacom is committed price. Customers who already have internet, fixed and mobile subscriptions with us to being clear about its prices, with no are offered television for free. This has won hidden costs, - so that our customers can over many new clients – demonstrating to see what they are paying for, as well as the our principal competitors that we are way value of they are getting. ahead of them in terms of innovative offer- Comparisons across offers from com ings. peting suppliers are not always easy to draw. It is necessary to compare like The services our with like: that means, for example, taking customers deserve account of the number of free advantages we offer with a Proximus subscription – More “Care and Ease” for not always the case with our competitors. everyone Success was not only derived from sales. Consumers also care about value. So they A major priority in 2009 has been impro- Belgacom has taken an active role in increasingly make assessments of the the federal government’s «Start2surf@ ving customer experience – through our home» campaign which aims to bring longer-term or recurrent advantages of the “Care & Ease” programme, which puts the advantages of home Internet to offers available in the marketplace. This is the customer right at the centre of all our the widest public.  see more on page 61 where our packs score so highly. We have activities. “Care” measures the ‘end-to-

Belgacom Annual Report 2009 - 29 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Care & Ease initiatives

end’ satisfaction of our clients, and “Ease” • more personalised aims at simplifying the way customers communication: special efforts access our services – with facilities like were made in the call centers more precise appointment slot choices and points of sale to capture during the day, simplified interactive voice the mobile phone number of menus, and a focus on getting it right the each customer during the first contact, to allow better and first time. more personal communication and follow-up A new approach to our • making it easier when customers in Belgium customers move: a ‘Move During the year we added a new dimension Coordination Desk’ was set to our communication with our customers up – a virtual team to help in Belgium. We made special efforts to customers when they change address; special priority get closer to our customers wherever is given to customers with they live, and to connect with them in their installations that involve more different backgrounds. So we conceived than one service promotional campaigns with a strong • quality circles: listening to regional or local flavour, to reflect what our Proximus deals to suit the customer experience to get customers are most familiar with. Among customer feedback and give guidance to the successful examples are the new operators In October, Proximus launched a new Flemish music channel added to our TV • answering the right questions: range of mobile rate plans with packs offer, and the notoriety acquired by one of the FAQ section on our .be to match different user profiles, and with website has been analysed, our television commercials. easy-to-see tariffs for contacting any fixed reduced, simplified and or mobile network in Belgium. Some of • “Anne”: the brand-new TV channel with enriched to give customers the rate plans are designed for customers easier and quicker access “music from home” ‘Anne’ is a digital who use their mobiles mainly for calling, television channel which is exclusive to and others are designed for customers Belgacom TV since July, as part of the who mainly send text messages. And standard offer. Televiewers can enjoy each rate plan comes with a bonus of free non-stop music clips, concerts and minutes or text messages. special programmes featuring Flemish artists. Rewards for customer loyalty • Belgacom’s first Customer Day: The • “Who took my badjas?” – A hugely Bobbejaanland amusement park was successful Belgacom TV commercial where 14,000 Belgacom customers and acquired fame during the year. “Who their families enjoyed an exclusive day took my badjas (bathrobe)?” - intended out of fun... courtesy of Belgacom’s first to highlight our attractive video-on- Customer Day. demand offer - was a big hit in its own right on the web and in the media, espe- • Belgacom gifts: as a thank-you to loyal “Who took my badjas?” – A hugely cially in Flanders, with thousands of vis- Belgacom customers, half a million gifts were successful Belgacom TV commercial its on YouTube and more than 170,000 offered on the www.Belgacomthanksyou. acquired fame during the year. fans on Facebook. be site and at Belgacom points of sale.

30 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Customers

The proximity our to maximise our ability to connect with customers want customers. Among the most important activities, we added five more shops to Growth across all contact the network under our own management. +51% growth of sales via channels This means we now have 121 Belgacom e-channels Because we have a comprehensive range Centres, of which 91 are shops with our of products and services, we also have a own employees, and 30 are shops with wide range of channels through which we outsourced personnel. connect with our customers. Across all these channels, 2009 has been a growth We also initiated a service differentiation year. in customer care in our front-office con- The “One Partner tacts. Since we have different customer programme” Our e-channel experienced dramatic suc- segments, this provides each of them Another initiative in 2009 to keep cess. There was a +51% growth in the with a more appropriate and personalised us closer to our customers - this total number of sales transactions through time through closer links with service. Conscious of the vital importance it. Through our more traditional outlets, we our agents - was the creation of of our frontline staff, we continued recruit- had 4% more mobile sales transactions the “One Partner programme”. (post- and prepaid) in our own channels. ment and training efforts to help them give This created a single legal framework for all our agents, for And via our partners – the shops which every customer excellent service every time. fixed and mobile product lines, are not under our own management – we for CBU and EBU. It aligned the saw a 26% growth in fixed sales transac- product commissioning for CBU tions (for voice, Internet and television). More focus on ‘e’ and EBU, and provided coherent Customers move ahead with their use of support that matches each This growth has not been generated technology too, and more of them are con- partner’s business. Already by only through our classic sales methods. tacting Belgacom on-line, as well as mak- the end of 2009, we had brought 1,500 partners into convergence. We introduced cutting-edge changes ing purchases via our websites.

Belgacom Annual Report 2009 - 31 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Offrez-vous un Pack avec TV digitale gratuite

Décodeur gratuit inclus

Téléphonez et surfez avec Belgacom, et recevez votre abonnement gratuit à Belgacom TV Comfort, décodeur gratuit inclus. Que vous téléphoniez avec votre fixe ou votre GSM, il y a toujours un Pack qui vous convient. Vous regardez la TV gratuitement aussi longtemps que vous téléphonez et surfez avec Belgacom.

Découvrez les Packs : 0800 33 909 • www.belgacom.be/pack • Points de vente Belgacom

32 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c

Offre valable pour chaque nouvelle souscription de 12 mois à un des Packs Mobile + Internet + TV ou Telephony + Internet + TV. Frais d’activation : € 50. Cette offre n’est pas cumulable avec les promotions/avantages accordés sur les différents services du Pack. Offre valable en fonction du stock disponible de décodeurs et/ou modems. Customers

In the residential market, Tango Tango Complet kept its leading position for Vainqueur sur la vitesse prepaid through an aggressive et sur le prix ! commercial strategy and strong Plus de 100 €/an product innovation d'économie !

In response, we decided in the spring to Scarlet The Netherlands create an e-Business Unit, with end-to-end Scarlet NL continued to deliver triple-play responsibility for every Group website. services offering good value for money, 10 fois plus rapide : ADSL jusqu'à 20 Mbit/s while improving its operational efficiency. et moins cher : 26 € 16,50 €/mois Our strategy for the web is to leverage And it did so to the satisfaction of consu the audience of our different portals – L’offre Tango Complet est conclue pour une durée d’engagement de 24 mois. mers: it was elected “best customer serv- Prix de l’ADSL valable pour les clients éligibles au réseau fixe Tango (hors prix de l'abonnement de la ligne fixe). proximus.be, belgacom.be, skynet.be, ice” by a leading client service consultancy. Voir détails et conditions de l’offre dans l’un des points de vente Tango ou sur www.tango.lu belgacomtv.be - by moving towards one It also signed a wholesale agreement with TANGOB_COMPLET_Annonce_Revue_235x297_prod.indd 1 9/09/09 11:33:25 converged and integrated media/telco KPN to deliver DVBT services bundled portal. This will allow us to maximize with its triple-play offer as off Q2 2010. online interactions with our customers. A major step in this direction was taken in November, when we simplified and Tango dances to success harmonised the structure and the look in Luxemburg The new shop concept • creates a coherent environment and feel of the Belgacom and Proximus Tango successfully consolidated its pre websites. across all our shops and shop sence in the consumer market and captured types (discovery stores, points the growth potential in the business sector. Meanwhile, online sales are becoming of sales…), leading us towards Revenues grew, particularly through upgrading and developing increasingly significant. The total has exploiting synergies, now that migration the network with the same already reached 4.6 % as the result of sharp and full integration into Belgacom Group atmosphere. growth, particularly for fixed products: infrastructures is finalized. Solid financial • brings harmony and balance the volume of e-sales of Internet and TV performance was achieved alongside within the Belgacom Group increased by a factor of four compared to critical network investments. among the distinct brands of the beginning of 2009. Belgacom and Proximus. In the residential market, Tango kept • allows focus on convergence The Scarlet way its leading position for prepaid through and multiple play. an aggressive commercial strategy and Scarlet Belgium strong product innovation, and it increased Scarlet performed in line with the post- its subscriber base in the post-paid mar- acquisition integration strategy during Safer Internet ket, including positive performance in 2009, despite the exceptional economic for everyone the triple-play market, with the launch of circumstances and the fiercely competitive Preserving the security 20Mbps ADSL speed as standard. market. Consolidating its positioning as a and privacy of our customers is key for us and we aim to raise “no frills” brand, it successfully launched In the enterprise market, in line with Group its Scarlet One best-buy 4-play offer, awareness about a safe use of priorities, it focused on customer needs and our technologies, in particular which includes digital TV from Belgacom. maximised synergies between Belgacom, towards young people. For Migration of customers onto the Belgacom Telindus and Vodafone: encouraging initial instance, we distributed 30,000 st network reached 75% by Dec 31 , and is market reactions have been given tangible leaflets in our shops, with in line for completion in the first quarter form by some recently closed deals. advice to adolescents about safe of 2010. The projected operational and Internet usage network synergies are being achieved in The exclusive partnership concluded with line with expectations. Vodafone in March gave Tango an even Healthy choices broader international dimension, and the To help our customers make launch of the partnership with Apple in responsible choices, we provide July allowed Tango to add one of the most information on the exposure popular devices in the market to its offer. level to electromagnetic fields for all our wireless devices

Belgacom Annual Report 2009 - 33 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Empowering our business clients

34 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Customers

The performance of our enterprise business unit proved that Belgacom is capable of innovation in all its segments and of backing its clients’ growth with offers that are always more responsive to their needs. EBU increased its profitability from 47% to 49 %. It is the quality and range of our services that allow our clients to choose their own combination of the products and services we offer. That way they can build the solution which best meets their current and future needs. It is one of the principal strengths of the Group in servicing our business clients.

Exploring new services Thanks to the quality of our services and our teams, and the range of solutions we Our Explore platform, an offer of conver- offer our clients, Belgacom also retained gent, integrated end-to-end mobile and its leading position in fixed voice, data, and fixed solutions, enjoyed continued suc- mobile voice and made progress in mobile cess. It achieved 30,851 units at the end data. of 2009, confirming the confidence of our business clients. Our international presence was reinforced with the creation of Key International Account Belgacom continued to develop targeted Managers, which allows firms with decision convergent offers to help SMEs to evolve. centers in different countries to have a single Michel De Coster – Executive Vice President Enterprise Business Unit “Fusion” proposes flat-rate tariffs to com point of contact with us - strengthening our panies for calls between colleagues from customer-centric approach and boosting “We are providing solutions that a fixed line or GSM. 127,000 SMEs and the confidence of our clients. our most demanding customers self-employed persons have already want. And by doing so we help subscribed. It lived up to the promise them to reach new successes.” Didier Bellens made in the 2008 annual Looking after tomorrow’s report: “In 2009, our focus will be to win winners the loyalty of SMEs with little in-house The future of the economy depends on technical capacity, by offering them a new the success of the numerous small and simple integrated approach.” medium-sized enterprises. Together, these provide most of the employment in Europe, In mobile telephony too, Belgacom has and some of them will be tomorrow’s helped the development of SMEs and leading companies. Belgacom provides self-employed workers. The Group made services customised for the needs of this efforts to allow its clients to use the segment, both to promote the growth of technology of its mobile data services by SMEs, and to assure itself a healthy share reducing the minimum level of business of a growing market. to access the technology. The result was a growth of 19.8% against 2008 in Building a strong SME identity advanced mobile data. 2009 saw the full launch of the “Bizz”, the new communication concept for SMEs. Belgacom remains the preferred ICT Bizz is the name for “Belgacom at the supplier for firms. Despite longer buying service of all SMEs”, and has provided Bel- cycles and the postponement of some gacom’s SME division with a real identity, orders, growth continued in datacenters, +19.8% both in the market and within the Group. growth in advanced housing and hosting and in videocon mobile data ference services.

Belgacom Annual Report 2009 - 35 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Boosting customer proximity terms of mobile acquisition, both mobile During the year, all our Bizz corners – 57 voice and mobile advanced data. in total, right across Belgium – were rolled out, and fully integrated into our new shop We launched a series of Bizz deals pro- concept, allowing clients direct access viding mobile advanced data. Clients can to advice, with the possibility of book- have a combination of a mobile smart- ing an appointment in advance. We also phone or Blackberry plus a Mobile Inter- launched our unique 0800 55 500 cus- net tariff plan at a very attractive price, to boost Mobile Internet penetration among tomer service number for all SME needs, SMEs. Or they can have a complete for fixed and mobile. mobility offer, combining a Mobile Internet Focusing on servicing our offer and a 3G-embedded laptop, in part- customers nership with vendors & IT sales channels. This offer has then been expanded to all One of the new services offered to SME our direct sales channels. We reviewed clients is the IT assistant, geared to fixing our Internet on GSM and Mobile Internet problems with computers. This is another on laptop portfolio, launching attractive 0800 number that all SMEs may call when new offers. These offers have continued they have an IT question. It is a ‘no-cure to drive sales upwards, and are backed no-pay’ system: if the problem is solved, a by improvements in customer experience, fixed fee of EUR 35 is payable. such as an sms notification both while Linked with convergence, we launched roaming and in case of national mobile data usage, allowing the client to switch the Bizz service pack, which is a pack- to a more favourable tariff. age of additional services for our triple- play (ie fixed/mobile/internet) customers, For mobile voice, too, we introduced giving them priority at the fixed line repair new offers. They included a new range desk and our customer service desk, and of mobile voice tariff plans for SME (Bizz including the IT assistant. Self-employed Happy & Bizz Flex), and the launch of workers benefited particularly from this specific packs for SMEs, in addition to the pack, which support them with totally flex- CBU packs which include free unlimited ible converged solutions and a superior fixed-to-fixed calls. level of service. Our offer on fixed voice has evolved Innovative Bizz deals constantly from the days when it was our Overall, our success can be measured by principal service. In 2009 we introduced a the fact that the SME churn rate on mobile combination of the I-Office VoIP solution voice and Internet was kept under con- with our high-end fixed voice tariff plans. trol, and that we achieved a strong year in This enables us to successfully position

Overall, our success can be measured by the fact that the SME churn rate on mobile voice and Internet was kept under control, and that we achieved a strong year in terms of mobile acquisition, both mobile voice and mobile advanced data.

36 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Customers

our VoIP solution on the Medium-sized We are a partner in “je suis fantasTIC”, Paving the way for 2010 Enterprise market – as has been confirmed the campaign to promote ICT that the We shall stay close to our customers, as by a continuous increase in penetration of Walloon region led, and we concluded part of our strategy of proximity, so that the Forum IP PABX. some attractive deals with Levis, Mercure, whenever they have a need in terms of Eurobussing, Group Renault Motors and service or equipment, we are there to The market for fixed data is fiercely com- others. We also launched the first subsi- supply it. We will make a step forward in petitive and highly saturated, but we per- dised 3G embedded laptop with Hewlett servicing with a new dedicated call center formed well with ADSL, and saw continu- Packard. In 2010, “Bizz goes ICT”. We for SMEs. For medium-sized firms, we will launch a new ICT agent sales chan- ous growth both in Explore connectivity will also offer account sharing solutions, nel, including selling ICT-related hardware, providing more economical mobile tariffs and Explore Managed Services. such as laptops and servers. We will also that cover several employees. Our unique launch ICT Application Packs, which will For start-up firms, we launched the “Start selling proposition is that we offer a full combine all the basic ICT applications that and convergent solution comprising fixed, your Business” partnership, working with SMEs need, and we will install them – thus mobile & Internet services. Moreover 13% ING, Electrabel and Systemat. This is a overcoming what is often an entry barrier of Belgacom TV’s customer base consists specialised portal providing all the infor- for these products. of SMEs. mation needed for starting up a company, and listing events of interest to start-ups.

Belgacom Annual Report 2009 - 37 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Bizz rend l’internet mobile accessible à tous les indépendants et les PME.

Bizz Deal € 289 htva*

Bizz présente le Bizz Deal de la rentrée

Smartphone Samsung Option Mobile C6625 Internet 200MB • Smartphone 3G Connectez-vous à l’internet et consultez • Clavier complet vos e-mails où et quand vous voulez sur • GPS votre smartphone. • 6.1 € 108 htva* € 180,99 htva* soit € 9 htva (au lieu de € 16,52 htva) facturés mensuellement pendant 12 mois.*

Plus d’infos dans votre Bizz Corner ou dans un point de vente Proximus.

* Offre destinée aux clients professionnels et indépendants. Bizz Deal à € 289 htva (€ 349,69 tva comprise) : 38 achetez un appareil Samsung C6625 d’une valeur de € 180,99 htva (€ 219 tva et cotisation Récupel comprises) et souscrivez du 20/08/2009 au 19/10/2009 simultanément à l’option Mobile Internet 200MB pour une WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c durée de 12 mois. Vous payez alors seulement € 9/mois htva (€ 10,89 tva comprise) pendant 12 mois pour l’option Mobile Internet 200MB au lieu de € 16,52 htva (€ 19,99 tva comprise). Prix et conditions d’utilisation uniquement valables en Belgique pour un usage national. Cette offre est non cumulable avec d’autres promotions Mobile Internet et est disponible jusqu’à épuisement des stocks. Les différents éléments du Bizz Deal sont disponibles séparément aux prix et conditions mentionnés dans l’annonce. Customers

Within our Enterprise Business Unit, our aim is to be the leading network-centric ICT partner, offering professional end-to-end managed solutions to our customers.

Supporting our corporate Invest have made their decisions to work clients with us based on value rather than cost. Within our Enterprise Business Unit, our Changing inside for better impact aim is to be the leading network-centric outside ICT partner, offering professional end-to- Internally, we set up projects to improve end managed solutions to our customers. efficiency in bid management, and we plan The 2009 strategy was to support our to introduce SAP EPS early 2010. To bet- customers during the crisis and make sure ter translate customer needs into practical that our budget targets and theirs could converged solutions, the Belgacom Cor- be met. And this strategy worked, as we porate University trained the sales teams were able to realise numerous strategic with a focus on ICT knowledge. We further projects for our customers. The bases intensified customer interaction with many have been laid to enhance their ICT infra- workshops, and successful events such structures for the coming years, as well as as the STAR Conference that took place to continue working together to build the within the framework of the European future of ICT in Belgium. Business Summit, and “The Night of ICT”. The Belgacom website (ict.belgacom.be) Meeting six expectations was completely revamped with a fresh Our solutions have been rearranged to look and clear structure, based on our better meet the customers’ expectations new value propositions, and we added an in six categories: network, security, data- extra dimension of customer interactivity center, unified communications, appli- with the launch of the One magazine blog cations, and mobility. All six categories (www.onemagazine.be) linked to the well- showed they could deliver the right solu- known printed customer magazine. tions for our customers. In order to guide our customers through Our partnerships with market leaders have a constantly changing environment, we been strengthened, in a way that allows developed the “uprooted enterprise” us to deliver solutions based on industry concept(1), and in this context, new value standards, while leaving room for further propositions that meet their needs and extensions as customers’ needs evolve. expectations. We encouraged companies to exploit the advantages that ICT brings, Explore We managed to win deals in all segments. to make full use of the opportunities that Explore evolved from a connec- The result is that we still have a strong the market offers, to see challenges and to tivity solution to an enhanced position in fixed voice and data, we embrace them. These are the companies ICT services platform. By inte- maintained our position for mobile voice, that can evolve at the pace of the changing grating fixed and mobile services and won new deals for mobile data. Our economic context. And their ability to it provided new opportunities and possibilities for our cus- ICT solutions grew across all categories. adapt and stay flexible comes from their Thanks to our datacenter infrastructure, tomers, offering mobile backup reliance on ICT. Belgacom positioned itself for Explore sites, and a mobile we were able to deliver solutions on-site, as their partner ensuring their ICT remains data network for teleworking. It hosted or in managed services, giving our operational 24/7. benefited from a new service re- customers the power of choice, as well as porting portal with an integrated the power to combine the best options for Datacenters and cloud computing reporting dashboard for connec- their actual and future needs. We also saw At Belgacom, we stay ahead of the curve – tivity and ICT services – demon- that our convergence approach worked: and that means we are moving forward with strating again our end-to-end approach with Explore as a basis. companies such as Dexia, KBC and Sea- new trends in the use of datacenters and

(1) http://ict.belgacom.be/nl/aboutbelgacom/theuprootedentreprise.asp Belgacom Annual Report 2009 - 39 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c We have focussed cloud computing. Our datacenters allow Our Business Innovation and Datacenter clients to keep their data safely on remote Services are now integrated into our on building computers hosted by Belgacom. Cloud Datacenter and Application Services. bridges between computing takes the trend still further, allow- This is more than a purely administrative the countries, ing clients to share computer resources via rearrangement. It opens up prospects for the internet, instead of using software or interesting further developments, in which enhancing storage on their own computers. we reflect internally the potential for offering awareness of the In both these areas we obtained finan- our clients transversal services such as Belgacom Group cial results beyond our expectations in streaming, digital signage, media screens, 2009. Our performance exceeded our IPTV, and managed video surveillance. and expanding objectives, with significant growth in most the potential of the domains. This success was all the more Further commitments for 2010 international sales remarkable at a time when traditional IT In 2010, we will continue to work on cus spending patterns were disrupted and tomer satisfaction, by further enhancing the forces. investments delayed. We devoted special skills of the sales teams and by delivering a attention to this segment, and we finished superior end-to-end customer experience. the year with results that more than justi- In addition, we will execute programmes fied our investment of time and effort. to build a stronger partnership with our customers on a strategic level, to help Higher volumes compensated for price them innovate in their business. erosions. And we shifted to a hybrid approach for our customers, to which we Belgacom will maintain its focus on an provided cloud computing as an alternative improved convergent offering, combining to traditional on-site IT. There are major fixed, mobile and IP telephony with Unified projects underway already for storage and server business. And increasingly Communications, and will continue to business will increasingly to make greater invest in datacenters and managed ser use of managed services. The innovative vices in order to further grow and fully workplace solutions we are offering to capture the opportunity in cloud computing our clients indicate that we are also ready and on-demand services, as a proof point for the next wave of virtualisation: the of implementation of Network Centric ICT, virtualised desktop. both domestically and internationally.

40 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Customers

Exploring abroad The key to success One of our crucial innovations was the Increasingly, Belgacom is a company creation of Key International Accounts. with an international presence. Belgium These are a well-defined group of inter- remains its primary market, but through national customers that have decision- a careful programme of acquisitions and making centers spread throughout dif- commercial links, we win business from ferent countries. Each Key International beyond Belgium’s borders in carefully An increasing number of customers Account benefits from the attention of its selected key markets. This focus has have been using the same kinds of own Key International Account manager. services and applications on mobile given additional value to our international This means that our own organisation is phones and laptops as they already operations. enjoy on their home or work compu- designed to provide optimal service for ters. The launch of the HTC Magic cross-border business, and to address is in direct response to this growing Adaptation of our organisation the needs of our customers outside the interest. The Enterprise Business Unit (EBU) has six countries where we have a direct pre an established and strong position on sence. the Belgian market for business services. But 2009 saw a major development in Until now, major international clients fre our ability to provide solutions for a wider quently concluded separate deals with our market. We created a new International distinct operations in different territories, Sales & Marketing organisation. and we managed each of these deals separately. In the new organisation, a The objective was to respond to the single Key International Account mana needs of clients who want an ICT part- ger ensures that each of these clients ner that can offer seamless cross-border receives comprehensive service across Helping our solutions. This is something increasingly frontiers. This not only makes for greater customers to required by many of our Belgian cust efficiency. It also boosts the perception reduce their CO2 omers with international activities. And it is of the Belgacom Group among many of emission equally a need among many customers in our international clients. This increased Our products and services can our international segment, which focuses awareness and prestige translates into a contribute to ways of living and on five countries in addition to Belgium: more attractive platform for marketing our working that are more efficient France, Luxembourg, Spain, the Nether- international services. in terms of CO2 emissions and lands & the United Kingdom. Customers energy consumption. Reports are looking for strong regional players. The International Sales & Marketing (ISM) such as the GeSI/Climate Group organisation is responsible for managing Smart 2020 study demonstrate The objective has been met, and the our sales strategy for Key International that through enabling other results are clear even in the first year of Accounts and for coordinating the pro- sectors to reduce their emissions, this new configuration. We have focussed grammes of Key International Account the ICT industry could reduce on building bridges between the countries, Managers and Global Account Manage- global emissions by as much as 15% by 2020 – a volume of CO enhancing awareness of the Belgacom ment. It also detects new international 2 five times its own footprint in Group and expanding the potential of the business potential, and supports the six 2020  www.smart2020.org. international sales forces. As a result we EBU countries on complex international We launched an online tool have won new business among interna- opportunities, in bid management, techni- which helps our customers quan- tional companies and organisations. cal design & presales support. tify the CO2 savings related to the use of our videoconferencing and As an integral part of the Belgacom Group, teleworking solutions. this new ISM organisation will become one  www.belgacom.be/ict of the major pillars of growth within EBU.

Belgacom Annual Report 2009 - 41 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Leading in international carrier service The international carrier services market – transmitting traffic for other telco operators – is highly specialised, and highly competitive. BICS, with its strong technical skills and its focus on customer needs, is well placed to compete in this market. And in 2009 it did more than compete. It was a huge success. Trading in large volumes with slender margins, it established for itself a leading role.

The MTN connection It is specialist work, and we win business because we provide transparency to 2009 was an exceptional year for BICS, with customers on pricing and guarantees on continued growth of its organic business, service levels. and with the deal with the MTN Group. BICS has also expanded its organic In June, BICS announced the extension of business, exceeding EUR 100 million of its strategic co-operation with the South EBITDA (100% consolidated) and reach African mobile telecommunications Group ing 8.5% of EBITDA margin. Key factors MTN, the biggest mobile operator Group in were continued growth in voice business, Africa. This marked a major step forward Daniel Kurgan – CEO Belgacom despite an extremely competitive environ International Carrier Services in the strategy of becoming a leader in the ment, mainly driven by the mobile seg international carrier market. The transaction “Our strong growth figures ment especially in Africa and Asia. It was completed in November, and will bring combined with a strategic M&A also leveraged its worldwide submarine have boosted us into the Top 4 economies of scale, improve efficiencies and cost benefits. and European terrestrial network with worldwide, a huge achievement significant sales of capacity services (high for BICS.” BICS has leapt into the top four operators bandwidth leased lines) to operators worldwide for international voice traffic – in Europe, Middle East and Asia, and it carried 19 billion minutes in 2009, and consolidated its market leadership in boosted revenues by 9.9%. Not only is mobile data carrier services (signalling, it now the largest international carrier in messaging and GPRS roaming), with Africa; it has also become one of the leading increased usage and market share. At the actors in the consolidation of the sector. same time, operational expenses were tightly controlled to keep growth below the Belgacom owns 57.6% of the new gross margin growth rate. enlarged entity, while Swisscom holds 22.4% and MTN 20%. It is an interesting Up the value chain example of a Belgian company leading on the international scene. In line with its strategy of moving up the mobile value chain, BICS deployed new Overall, BICS won increased traffic both value added services for the wireless in minutes and in the volume of SMS and industry, including the launch of its 19 billion MMS messages carried. It won more Roaming Hub, making it the only provider minutes carried in 2009 than 100 new contracts for mobile data. with the Open Connectivity certificate of

42 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Customers

+9.9% increase in revenues

Not only is BICS now the largest international carrier in Africa; it has also become one of the leading actors in the consolidation of the sector. the GSM Association (GSMA) for SMS Hubbing, Global Roaming Quality and Roaming Hubbing.

BICS also took its first steps into the mobile money market with its Homesend© international remittance service, becoming one of the two official solutions endorsed by GSMA.

In the course of 2009, BICS has started to progressively replace the current TDM switching infrastructure by a Next Genera- International Network tion Network solution. This new platform will permit the use of advanced technical features and improve BICS’ operational ERMC efficiency while significantly reducing fu- TAT14 Londonn Amsterdam FFrankfurt FLAG Atlantic BrusselsBru l AC1 Paris ture capital and operational expenditures. Geneva AC2/Yellow Zurich New York Apollo EIG MMiMilal n Tokyo Ashburn SEA-ME-WE3

In 2010, BICS will focus on the implemen EIG

Miami Taiwan Taipei SEA-ME-WE4 Hong Kong tation of the transaction with MTN, the Muscat

EIG completion of the switching platform SEA-ME-WE4 migration and the further deployment of SEA-ME-WE3 its new mobile initiatives. It will also pursue Singapore SAT-3/WASC/SAFE its consolidation strategy, by triggering SEA-ME-WE3 new outsourcing agreements. It continues Europe

Stockholm to concentrate on the growth regions SAT-3/WASC/SAFE in Africa, Asia, and Middle East, while Warsaw Dublin Amsterdam Londonn r boosting its value chain by reinforcing its ankfurt Kiev Sydney Brusse Prah bourg CityringC s Pa Bratislava leading position in mobile data. ourg el Vienn PoP'sP Vaduz Budapest Ljubljana Geneva Zurich Terrestrial cable Zagreb Optic Fiber Lyon an Bucharest SDH ERMC Marseille Sofia Roma Submarine cables Istanbul SAT-3/WASC/SAFE Barcelona Madrid SEA-ME-WE3 Lisbon SEA-ME-WE4 Athens EIG Atlantic seacables Seacables between America & Asia Pacific

Belgacom Annual Report 2009 - 43 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Forward with our people

Belgacom received the label of Top Employer during 2009 – and for good reason. It invests in its staff, it trains its staff, it cares for its staff, and it communicates with its staff. In 2009 it provided a powerful demonstration of how well it works with its staff, by integrating its Belgian subsidiaries into the Group, and by initiating a shift in working patterns in line with its new customer- centric approach.

44 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Engaging our people

For Belgacom to take advantage of the opportunities and cope with the challenges of 2009, it was vital that employees throughout the Group were appropriately informed and felt involved. So at the start of the year, we sent out a clear message: while the recession would present difficulties to us, our move towards convergence would provide us with new opportunities of success.

The key elements of our HR approach Creating a new culture throughout the year were: A shared and supportive corporate cul- • the integration of all our resources within ture is being constructed step by step, a single organisation, in a climate of based on the experiences of teams work- mutual respect ing together, in order to support our con- • the convergence, deployment and vergence objectives and Group strategy. development of our talents to enable Rather than coming from the top, our us to meet the needs of customers and corporate campaigns and actions related generate innovations to the Group’s values (Respect, Can Do, • the implementation of our strategy, Passion) motivated employees to put allowing us to organise work in a more Astrid De Lathauwer – Executive Vice them into practice on their own initiative. President Human Resources flexible way The campaigns aimed to increase un- • the promotion of work-life actions resulting derstanding about our strategy, so as to “Together we will make a dif- in increased interest and participation inspire rather than persuade employees. ference is a motto that is being among our staff In parallel, systematic skills development, put into practice throughout the • diversity as more than just a commit- Group, at all levels, making our training and performance evaluations pro- ment HR actions coherent in the eyes vided employees with insights on how to of employees, as we bring our tal- apply these values in their daily work. Nu- ents together to meet the needs Integrating with respect merous initiatives were taken by the busi- of customers and generate inno- Bringing all our resources within a single ness units and by many teams, and indi- vations in a sustainable way.” organisation was achieved in a climate of vidual employees also developed personal mutual respect. Belgacom’s 2009-2010 initiatives. Collective Labour Agreement enabled us to offer the same treatment to all em- Developing our staff for ployees. Collective agreements were also more convergence signed with the Belgacom subsidiaries, providing guarantees on the transfer of Recruitment benefits. We increased internal mobility by 20%, corresponding to 1,100 job changes. Ex- A social platform, bringing together all the ternal recruitment was down 25% on last social partners from all the subsidiaries year, but even so, 638 people were hired, and the Belgacom Group’s management and the Group maintained its high profile committee, negotiated the different and strong position in the external labour phases of the integration. market. Recruitment focused on ICT func-

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Our initiatives • The “Who shares our values?” campaign invited employees to talk about what the values mean for them, and who their role models are. • Senior management and the business units developed a series of events to promote the values, including a seminar to make sales employees reflect on how the values can be applied in their job. • Pilot programmes on ”quality circles” – a feedback process involving customers and employees who have direct contact with customers (see page 23) – gave employees a new level of influence and confidence in their contacts, while boosting customer centricity and employee job-satisfaction. • The annual employee survey, Elix, monitored progress in putting the values into practice and in increasing employee commitment. This stimulated genuine dialogue throughout tions, sales functions for the call centers class”), and the Master class in Marketing the workforce. and sales outlets, and technicians. that Belgacom Corporate University orga But this is only the beginning. nised in cooperation with the Vlerick We have developed a multi-year We continued our highly selective “Young Management School in Ghent. programme that will continue in Potential” project, recruiting 36 young 2010 with a new action plan. high-flyer graduates, who entered our intense coaching and career development Improving work flexibility programme. We also incorporated Our focus on improving customer service emerging social networks and media into also implied changes in some of our our recruitment process, using LinkedIn, working methods and practices, so we Facebook and blogging to tap the talent implemented the strategy by organising on the Net. our work in a more flexible way. New agreements within our organisation were Training concluded with the social partners, which In 2009, the Belgacom Corporate Uni- reconcile the new business demands versity has given about 430,000 hours of with the social priorities of employees, training to the Group. 86% of the collabo- and which have a direct impact on rators has followed at least one class in customer satisfaction. In the Care & Ease Favouring the 2009. programme, for instance, we now make environment provision for installations in the evening A series of new facilities were In 2009 we adapted our approach to for our residential customers. And we made available to employees in training to support our growth objectives have also attained greater flexibility in 2009. These included a “cafeteria and our increasingly customer-centric handling peak workloads, introducing plan” with various commuting structure. The emphasis was on customer new shift arrangements and providing options, which encourages em- focus and convergence, operational excel more coaching. An approach offering ployees to go green and cut their lence and new technologies, and leader differentiation of services per customer travel costs, and an eco-check promoting ecological products ship. Pilot training programmes were category was also set up. at more reasonable prices. created following an analysis of future Employees also took part in the needs in sales and front-line customer Friday Bike Day organised by services. Various training options were the Brussels-Capital Region (in developed, including our sales academies which 113 cyclists covered 30,769 (where CBU provides product and service km), and we decided to extend training to staff in our points-of-sale and the initiative in 2010 to the whole COR pioneers forward planning in sales country, as well as launch a “Bike to work” operation in the spring. skills to ensure that we remain “best in

Belgacom Annual Report 2009 - 47 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c 2010

In 2009 we Managing work-life May and accident prevention campaigns. won the “Top In this regard, we pursued our efforts to balance & well-being build a safer working place. In 2009, we Employer” award Belgacom is proud of its success in bringing launched an awareness campaign to re- granted by the a social dimension to the professional duce fall & stumble accidents, with posi- life of its staff as part of its contribution tive results. CRF Institute. to achieving a work-life balance. 2009 saw numerous additional activities and Work-related stress is a growing concern initiatives in this regard. in developed countries due to developments in the modern world; one of the Our Work-Life Unit organised major events most important causes of stress at work for the staff, including the Belgacom Group is the constantly changing nature of work. Fun Day, attended by more than 12,528 At Belgacom, we always have to adapt to employees and family members, and the new technologies and market changes, end of year celebration for employees’ which means that changes in our work children, attracting 10,580 participants. are frequent. For this reason, we want In addition, the Group’s concern for the to raise awareness at an early stage, so well-being of its employees led to the we developed a global policy to prevent continuation of our health awareness problems at work, including all aspects of campaign – including free screening for stress, bullying, sexual harassment and common pathologies in middle-aged acts of violence. Advice, contact persons employees (for which 2,315 people signed and specific tools are available within the up). The Group also supported employees Group. In 2009, we launched a stress and their families who took part in the self-assessment tool called ISAT, which Vacances enfantines Brussels 20 km (providing an opportunity allows employees to measure their stress automne-hiver-printemps 2009-2010 for promoting the sense of conviviality level and determine the factors of stress, within the Group), as well as a programme to help them solve their problem together for looking after sick children at home (on with their manager. Extensive information 6,207 hours), and school holiday activities on the Belgacom policies regarding a re- for over 8,600 children. sponsible work environment is available on our intranet. Health and safety activities included blood 8,600 donor sessions with the Red Cross of Bel- Belgacom also hosts the activities of The children took part in the gium in the Belgacom head office, road Pulse, an initiative started by a group of school holiday activities safety campaigns for our drivers, partici- enthusiastic employees, which offers pation in the Brussels “no smoking day” in courses and workshops outside working

48 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c People

hours on subjects ranging from photogra- on a range of subjects relating to age (e.g. phy and video-making to painting, drama added value, salary differentials, the future Belgacom Fun Day and even disco dancing. of the Belgacom Group, motivation factors, differing needs and different roles for 24/05/2009 Promoting inclusiveness human resources). Based on this, Rand- stad was commissioned to produce an Belgacom attaches great importance to in-depth analysis and to propose lines of inclusiveness in the work place. More than action in our management of age-related just a commitment, diversity is an integral issues. part of our HR approach. The label granted to us by the Federal Equal Opportunities Gender Minister and the Federal Employment Equality of men and women is one of our and e-Government Minister was renewed highest priorities. There should be more this year, and demonstrates that our own women in the top/senior positions. Within concerns are in line with those of society in our network of women, Winc., measures general. We act in favor of the integration were taken to make it easier for women to Belpark © of people with disabilities, the promotion maintain professional contacts and to ac- of women, more focused management cess promotion paths. We initiated a men- of employees over 45 years of age and toring programme for women. Women in integrated management of people from middle-management are now offered the diverse ethnic backgrounds who are opportunity to receive coaching from col- present in ever-increasing numbers in the leagues in senior management. This has 12,528 employees and family workforce. created links that allow contacts and ex- changes outside the hierarchical relation- members attended the Disability ship, with regard to career development Belgacom Group Fun Day We are committed to the integration of and experiences as well as the work-life people with disabilities into the employment balance. market, and took new measures in 2009 which are leading to projects which will benefit current and future employees. Our positive HR approach These included checking systematically makes a positive impact how well Belgacom makes provisions for Internal recognition the integration of people with disabilities. Our policy and positive approach paid off We set up a partnership with the charity in 2009, and were reflected in the Group’s Wheel-it, which gives our recruitment staff results. The Group delivered, and it grew. special access to its database of CVs of The findings of the Elix survey (Employee job candidates and allows us to post our Loyalty Index Survey) clearly show that vacancies on its website. We conducted staff commitment grew, partly due to a review of all our buildings in Belgium, an increased sense of job security. Our to check their accessibility on a broad employees embraced change, and were range of criteria, including not only the confident in the future of the Group. obvious question of lifts, passage ways and lavatories, but also proximity to public External recognition transport and the provision of reserved We received two awards during 2009. We parking places. featured on the “Most Wanted Companies” list of Vlerick-References & Vacature, and People Objectives for Age won the “Top Employer” award granted Belgacom Group 2010 We are concerned about age-related is- by the CRF Institute. These awards • Continue the development sues. In line with current progressive views, confirm that Belgacom’s HR policies and of complementary skills we pay attention to the related possibilities practices are maintaining the Group as a towards jobs of the future and challenges: do employees who are leader among attractive firms, and that by strengthening our 50 have the same needs as those who we are well-known for our investments in competencies with respect are 20? What are the expectations and to customer service and our staff, as well as our extensive training centricity. needs of older workers? And what is the programme. best way of assuring knowledge transfer • Continue to invest in the between the generations? culture change & change management to improve We asked Randstad Diversity to conduct customer satisfaction. an assessment, which involved Group dis- • Adapt our organisation to cussions in which some 50 employees of become more customer- centric. more than 45 years of age gave their views

Belgacom Annual Report 2009 - 49 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Forward with our responsibilities

In 2009, Belgacom made Cor- porate Social Responsibility a central feature of its Group strategy and operations, making a reality of our claim that we are a company that takes seriously its responsibilities to the wider community and to the wider world. And to mirror this, we are for the first time incorporating our CSR report into our annual report, demonstrating that CSR is now completely integrated into our 52 • Our CSR strategy business. 54 • Highlights 56 • How we manage CSR 60 • Enhancing access to communications 64 • Enabling a low-carbon society 70 • Communicating on electromagnetic fields and health 72 • Promoting a positive working culture 74 • Developing a responsible supply chain 76 • Supporting our Communities 78 • Achievements & commitments 80 • Key figures 82 • About our CSR reporting 83 • Independent Assurance Report 84 • GRI content table

50 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Our CSR strategy

The financial and economic turmoil has increased the importance of transparency, ethics and governance while the environmental and social concerns remained high in stakeholders’ expectations. As a consequence, it has and will even more in the future put the principles of corporate social responsibility (CSR) to a level that was never reached before and to the heart of businesses.

At Belgacom, we recognise the need for a responsible and sustainable approach to doing business. We consider CSR as a strategic management tool and as a key component of our corporate mission and strategy. CSR helps us to anticipate on societal trends and stakeholder expectations. It drives innovation and opens doors to promising new business areas, as illustrated by our initiatives in the e-health sector and in enabling higher energy and carbon efficiency via the use of ICT applications. Supporting ICT training programs and donating PC’s to schools and NGOs reduces the digital divide. Optimising our energy usage and our waste lowers our costs. Raising awareness of youngsters on a safe use of our technologies and on climate change better prepares future generations. Informing consumers on electromagnetic fields and health encourages customers to make responsible choices. Developing a fair, safe and diverse working culture enables us to retain and attract talents. Ensuring a Didier Bellens - CEO responsible supply chain helps us manage reputational risks and increase our “We succeed in being a profitable operational excellence. By donating money and time to good causes, we seek company. I now want Belgacom to improve the quality of life in the communities we operate in. to succeed in being a sustainable one. I believe we are good Our ambition is to be recognized as a leading responsible company in Belgium on track to become one of the by 2012 and we believe we are on the right way. leading responsible Companies by 2012.” Our CSR strategy sets priorities to promote an inclusive e-society and enable a  See also our CEO’s interview sustainable growth, based on six commitments. in the activities report

52 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Strategy presentationCSR Mission_ As a responsible company, Belgacom wants to be the preferred provider offering intuitive end-to-end solutions; combining fixed and Strategymobile telecom, IT and media; presentation and empowering its customers to master and Missionenrich their – As professional a responsible and company, private lives Belgacom in a sustainable wants to be way. the preferred provider offering intuitive end-to-end solutions; combining fixed and mobile telecom, IT and media;CSR priorities and empowering its customers to master and enrich their professional and privatePromote lives an in ainclusive sustainable e-society way. Enable a sustainable growth

CSR priorities •Promote an inclusive e-society •Enable a sustainable growth CSR strategy ons stituti c In ubli P Cl Commitme ien Key nts ts w-ca ling a lo rbon soc Enab iety

lth - Reduce our CO2 emissions by 70% ea (2007-2020) E h n d - Help our customers lower their envi- ha an n s ronmental impact c ld in e - Raise awareness of stakeholders g f c a ti c e c n e s g s r a s e m t C d o o l r o t o c c m h o le m m e e r a n m u o h u n g S n it n i i i t - Simple and relevant offers c e a - Network compliance a s c - Customer experience and service i t i n - Transparent communication on expo- - Customer privacy and online safety o u iness eth s n sure levels Bu ics - Products for elderly and disabled m - Monitor scientific research s m - ICT trainings for disadvantaged people

o C CSR

G commitments o

v e e r r u n lt a u n C - Social dialogue ce - Donate money and time to good causes P - Diversity and Non-Discrimination r - Responsible sponsoring o - Safety and Health m s E - Career Management and Trainings e m o i t t i i n p n s l g u o O a m y G e p m e o o N s c s it r iv u e o w g o n ti rk r i o n p g p c u u S l tu re - Raise CSR standards of our suppliers - Include CSR as sourcing and selection criteria - Train our buyers De velo ain pin y ch S g a resp le suppl s u onsib er p ts pli po en up U rti tm S ni ng Commi ons

Belgacom Annual Report 2009 - 53 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c 2009 highlights

Supporting our communities We invested EUR 1.5 million to support the communities we operate in.  see more page 76 How we manage CSR To further embed CSR in our daily operations, we elaborated a We started robust five-year CSR action to align our plan and governance model, international endorsed by both the Belga- activities com Management Commit- with our tee and the Board of Directors. Group CSR  see more page 56 strategy © Dieter Bernaers

A reduction of 70% of our CO2 emissions. We now commit to achieve this.

Enabling a low-carbon society

-70% We set ourselves a 70% CO2 reduction target for our Belgian activities over the period 2007-2020, and promoted CO2 green products and solutions for our customers.  see more page 64

54 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c CSR

Promoting a positive working Developing a culture responsible supply chain We elaborated a new Code of Conduct to better incor- 2010 We conducted a detailed assessment of the CSR porate our Mission, Values challenges performance of 23 strategic and CSR principles and will suppliers. implement it in 2010.  see more page 74  see more page 72 • Continuing the integration of our international subsidiaries into our Group CSR strategy and action plans. Enhancing • Helping our business access to units to successfully communications deliver the Group CSR We continued to help re- action plan. duce the digital divide by • Improving our stake- promoting simple con- holder engagement vergent offers, providing approach. tailored offers for elderly  See our performances and disadvantaged peo- and commitments table on ple, by donating 775 PC’s page 78 to schools and NGO’s and by providing ICT trainings to 7,000 persons.  see more page 60

Communicating on electromagnetic fields and health We extended our communication on the impact of electromagnetic fields on health and now provide transparent information for all our wireless devices.  see more page 70

We raised awareness in schools on safe use of Internet and on climate change in collaboration with our partners.

Belgacom Annual Report 2009 - 55 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c How we manage CSR

Our approach to CSR aims to: – Engage with stakeholders to understand their expectations – Respond to stakeholders with our CSR programs, focusing on most significant issues – Monitor the progress of our CSR programs and report back to our stakeholders on progress.

Engaging with stakeholders

Stakeholder to understand their expectations expectation Our diverse range of stakeholders includes employees, investors, suppliers, customers, NGOs, governments and regulators, and the communities where we operate. We interact with our stakeholders through this CSR report, by completing question- Monitoring naires from analysts, investors, suppliers, customers and CSR organisations, by meet- Progress Materiality ing stakeholders, and by replying to enquiries made to [email protected]. This year, we Reporting to CSR assessment stakeholders took new measures to better understand our stakeholders’ perceptions and expectations, and we will continue to improve our stakeholder engagement strategy in 2010.

CSR programs We commissioned the Université Catholique de Louvain to conduct independent in- and targets per terviews with a broad range of external stakeholders: unions, consumer associations, business unit NGOs, industry associations, suppliers, public authorities, and CSR associations. 31 stakeholders were asked how they perceived and what they expected from our CSR activities. Survey results confirm that our CSR strategy choices meet the concerns of stakeholders. We surveyed our employees on their perception and expectations of CSR, which confirmed that our employees find CSR important and are willing to participate in CSR projects. General awareness on our CSR actions was still low. We included CSR topics in our presentations to investors and analysts and disclosed our environmental performance to investors via the Carbon Disclosure Project. of the employees90% thinks that We very much value feedback of rating agencies on our CSR performance as it helps Belgacom is involved in CSR us improve the quality of our reporting. We also carried out extensive market research in consumer (trends), and were reas- sured to observe that several of these societal trends were already being tackled by our CSR actions. For instance: wants17% to participate outside office hours Green and Health: Green and Health are increasingly important to people, but they will not make green or healthy choices if it has an impact on their lifestyle. Companies should take on the responsibility, and the associated costs. We address this trend by providing information on the potential health impacts of our wireless products and by providing greener alternatives at same price levels, such as the E1107 solar phone we wants to46% actively participate sold at EUR 49. Smart and connected consumer: With the internet fully embedded in our society, 92% consumers are increasingly aware and informed in their choices. Honest and transpar- finds it important to be informed ent communication will be key to retaining customer trust and loyalty. This gives us a about CSR activities responsibility to help people to get online, educate them, provide simple and objective Base: 1,208 employees information and to prevent the growth of the digital divide.

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Responding to stakeholders’ expectations In response to our stakeholders’ expectations, we improved our CSR governance model, including a new Code of Conduct that will be implemented in 2010. We sharp- ened our CSR strategy and embedded it in our business unit priorities, and increased communication on our CSR activities. This new CSR plan and governance model was endorsed by the Belgacom Management Committee and the Board of Directors. We also delivered on the commitments we had taken.  See our achievements and commitments table on page 78. CSR Governance Board of Our mission, our corporate values (Respect, can Do, Passion) and our Corporate Gov- Directors ernance Charter underpin our approach to business and to corporate social responsibility. These are the foundations to create and sustain a culture of vigilance, promote implementation and adhere to sustainable management and compliance processes Belgacom and procedures. Management Committee To further embed CSR in our organisation, we created a new Code of Conduct, called “The way we do responsible business”. It will be implemented in 2010. It translates, into a reference document, our mission, strategy, corporate values and CSR objective. CSR steering Wherever they are, all Belgacom employees will share a common way of working, the committee VP CSR + CSR team expression of the new corporate culture. VP’s from each business unit A cornerstone of our approach is the development of an internal governance and reporting structure, centred around two entities: the Group CSR department and the Coordination CSR Steering Committee, including Vice-Presidents from each business unit. These entities, headed by the Vice-President Group CSR, report directly to the CEO and the 3 Strategic 3 Workgroups Belgacom Management Committee. Programs – Responsible – Low-Carbon/Green supply Chain – EMF & Health – Positive working We appointed CSR representatives in each business unit, who work closely with the – Access to culture Group CSR team to implement the CSR actions. Our key CSR priorities are managed Communications – Community Support as “corporate strategic programs”, with monthly progress reports to our Belgacom Divisional Management Committee. execution

Belgacom Annual Report 2009 - 57 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c We included the Materiality assessment and embedding CSR in our key CSR actions business units Based on the results of our stakeholder surveys, our analysis of societal trends, bench- in the strategic marking of our peers, and interviews with employees, we assessed whether we were plans of our busi- still addressing the CSR issues that are the most significant for our stakeholders and ness units and for our business. It was reassuring to discover that the six CSR issues we had been working on for three years were still the most relevant, according to their financial and defined clear reputational impact on our business, and the level of stakeholder concern. Our CSR targets to monitor reporting focuses on these most relevant CSR issues (see table below). progress. We organised workshops involving 50 employees to prioritise the CSR actions needed to address our CSR issues over the next five years. CSR priorities were defined based on their importance (for stakeholders and for Belgacom) and our current maturity level. We included the key CSR actions in the strategic plans of our business units and defined clear targets to monitor progress.

Foundation/charity Learning & development Reward & recognition Responsible network deployment

High Health, safety, wellbeing Social dialogue Local community Energy efficiency Communicatie on EMF & health investment Clear pricing Privacy & safe use of products Employee involvement Equal opportunities & diversity Waste Management Digital Divide reduction

Medium Scientific research on EMF Ensure ICT education Maturity level Maturity

Employee Sustainable sourcing CO2 footprint reduction volunteering Responsible marketing Green customer solutions

Low Biodiversity Promote product reuse Customer service Priority 1 Water Priority 2 Low Medium High Monitor Low priority Key issues for Belgacom and its stakeholders

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Concetta Fagard - Vice President Group CSR, Sponsoring, PR & Events

CSR and our international operations We have succeeded in So far, our CSR activities have been focused on Belgium. We recognize the need to fully embedding CSR in expand the scope of CSR to our international activities, and we started working on this. each Business Unit. With my We assessed the importance and maturity level of CSR in our international subsidiaries, team, my role is now to monitor, based on a self-assessment questionnaire and follow-up meetings. We will work further challenge and support all depart- on the incorporation of our international activities in 2010 in order to include them in ments of the Company to make our Group CSR strategy. Meanwhile, we decided to provide an overview table of their sure that CSR objectives are not activities and main CSR achievements so far, and highlighted some of their CSR initia- only embedded in roadmaps, but tives throughout this report. are alive and part of our day to day operations.

Activity FTE Belgacom Material CSR Main description 2009 Ownership issues achievements Telindus 166 100% ISO 14001, ISO Great 9001, ISO 27000, Britain IPP certification, supplier assessment system Telindus 222 100% ISO9001, SCC/ Netherlands VCA, ISO27001 (ISIT included) Network-centric (in preparation) ICT services Climate Change, Telindus and solutions 327 64.69% Positive work ISO 9001, Luxembourg (installation, environment, Founding partner of maintenance, Responsible Luxembourg Safer We will work consulting and Supply Chain Internet awareness services) center (www.Lusi.lu) further on the Telindus 636 100% UN Global incorporation of France Compact, ISO9001, ISO 14001, ISO our international 27001 planned activities in 2010 Telindus 218 100% ISO 14001, Spain in order to include Tango Provides fixed, 87 100% Access to Com- Best Buy offers, them in our Group mobile and munications, Safe usage internet services in EMF and Health, campaigns CSR strategy. Luxembourg Positive work environment Scarlet Reseller of internet, 55 100% Access to Com- Winner Customer Netherlands fixed and mobile munications Service award telephony services in Holland

Joint approach and memberships In recognition of the need for a collective approach to our CSR challenges, we joined GeSI (Global e-Sustainability Initiative), which promotes collaboration between telecom operators and vendors on common CSR issues. We are active members of industry organisations and specific CSR associations like the Sustainability working group of the European Telecommunications Network Operators’ Association, Business & Society (the Belgian CSR network), and CSR Europe. We are a principal founder of the CSR Network of the Louvain School of Management.

Belgacom Annual Report 2009 - 59 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Enhancing access to communications

Because telecommunications bring a wide range of benefits in our daily lives, we want to make our products and services accessible to as many people as possible, overcoming geographic, economic and physical obstacles, and offering maximum safety and ease of use. Key elements to fulfil this ambition are the initiatives we take to simplify our offers and improve the customer experience and servicing; the way we ensure our customers’ online safety and the way we protect their privacy; and how we contribute reducing the digital divide by improving access for disadvantaged people and providing ICT trainings.

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Key priorities • Simple and relevant offers • Customer experience and service • Customer privacy and online safety • Products for elderly and disabled • ICT trainings for disadvantaged people

We have Simplified our offers and lowered our prices Our new services deliver the benefits of convergence to our clients: greater freedom and simplicity for a better deal on price and quality. With the new All-In-One pack, the client benefits from free fixed and mobile calls to all Belgian numbers after 17.00 and at weekends, as well as surfing at home and on a portable computer anywhere free at the weekends. Digital television is included with no extra charge. Our roaming tariffs have come down sharply (-67% for SMS for example), in line with the decisions of the European Commission. Belgacom has taken an active role in the federal government’s “Start2surf@home” We work hard to look campaign, which aims to bring the advantages of home internet to the widest public, after our customers in all and to bridge the digital divide between those who currently have access to the 3 mil- situations, and are particularly keen lion active internet connections in the country, and those who do not. The Start2Surf on promptly reacting to incidents. En- kit from Belgacom comprises a new computer with all necessary softwares, including suring the security of our customers antivirus and antispam software, and 12 months free access to Belgacom Internet and keeping them informed in case of problems is an integral part of our Budget. Each purchaser also has the right to one day’s training in using computers and customer-centric approach. We had the internet, a free after-sales help line, and a tax credit for 21% of the purchase price to deploy our crisis management plan (ex-VAT).  www.belgacom.be/s2s this year to cope with two network breakdowns and one security attack. We cooperated with the national regulatory authority to make it easier for the public Our mobile network and broad- to compare operators’ tariffs. Belgacom welcomes the tariff comparison simulator band network each suffered a major created by the national regulatory, IBPT, because it introduces an objective measure of breakdown this year. Technicians and service, taking account of quality as well as price. It shows clearly that Belgacom has equipment suppliers soon identified the cause of the problems, and an attractive deal for every client – not only in quality, but also with keen prices. the networks were restored to full  http://www.meilleurtarif.be and  http://www.bestetarief.be functionality rapidly. We devoted great attention to keeping our customers In May, the Belgian competition council fined Belgacom Mobile EUR 66 million, ruling informed during these breakdowns, that it abused a dominant position on the business market in 2004 and 2005, by via specific communication towards under-charging for communications on its own network, and consequently harming traditional press, via alternative chan- its rivals. At the same time, the council threw out four other complaints against nels like Twitter and blogs, and via an Belgacom Mobile – neatly demonstrating the uncertainties surrounding competition efficient internal communication to all our employees. Commercial gestures law. Belgacom Mobile has appealed against the ruling, and the case is still under were made as well. Once the service review. Belgacom Group devotes the greatest attention to ensuring compliance with has been restored, Belgacom attached regulations in force. But some of these regulations are less than clear, and court rulings a special attention to transparently are often required to provide definitive guidance on their precise significance. communicate on the causes of the failure and apologized to its impacted Focused on improving our customer experience and servicing customers by sending them a dedi- A priority for 2009 has been our Care & Ease program. “Care” measures the ‘end-to- cated sms or e-mail. end’ satisfaction of our clients. “Ease” aims at simplifying the way customers access Late in the year, an internet pirate pub- our services. The introduction of new and more precise appointment slot choices lished – on two occasions – connection codes for several of our clients. Our during the day, the merging of different support call center access numbers into one technicians checked the loophole that number for residential customers and one for professional customers, the simplifica- had allowed access to the pirate, and tion of interactive voice menus and the improvement of first time right both for remote immediately provided all the affected and field support have contributed to the easyness to do business with the customer clients with a new password. This operations. The proactive identification of non optimally executed Do It Yourself instal- too fits in our customer-centric and security policy. lations and other individual quality improvement opportunities offering support to the related customers have enforced our care approach. In 2010 customer operations will Further action was taken to avoid any repetition of such incidents in the future. continue on this track improving further overall customer experience.

Belgacom Annual Report 2009 - 61 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Continued to protect customer privacy and promote a safe use of our technologies Privacy and data protection are increasingly important issues for customers of all kinds. Our comprehensive privacy policy is available on our intranet and our management system for information security is certified ISO27001. All our products include security features that provide our customers with the highest possible level of protection and privacy. On Belgacom TV, adult content is protected by default at the highest security level of the parental control function. For internet, parental control is available on request in our Norton Security solution, which can be downloaded for free on our web site. Filtering systems have also been made available to block adult content delivered by third party services on mobile phones. On the Vodafone live multimedia portal, a warning precedes the opening of adults sites. Child safety online is particularly important for Belgacom and we partner with two NGOs to raise awareness of children on a secure use of our technologies. We support Action Innocence, which visited 3,198 schoolchildren this year to raise awareness about the dangers of the internet. We also hosted two Action Innocence conferences for Belgacom Group staff. We continued to support Child Focus, the European Centre for Missing and Sexually Exploited Children, by providing office space for its members in Belgacom buildings, and by supporting its preventive campaigns on safer Internet usage. We distributed 30,000 leaflets in our shops, with advice to adolescents about safe Internet usage. Through this work, we are also members of the committee of the Belgian Integrated Network for Safer Internet, a project financed by the European Commission. As signatories of the European Framework for Safer Mobile Use by Younger Teenag- ers and Children, we also took part in the drafting of the Belgian code of conduct for safer mobile use by younger teens and children, which has been signed by all the members of the GSM operators’ forum (GOF), and lays down rules they agree to respect.  www.gofguidelines.be/ The European Telecommunications Network Operators Association, to which we belong, has identified protection of children on-line as a priority, and Belgacom participates in this workgroup aiming to exchange and disseminate good practice in this field. Launched new products tailored to the needs of elderly and disadvantaged people For the elderly, Belgacom offers specifically-designed mobile phones. Simple and user-friendly, they provide basic services, with a bright and easy-to-read screen, large keys, and a powerful loudspeaker. For children with chronic disease or a long illness, Bednet ( www.bednet.be) and Take Off ( www.asbl-takeoff-vzw.be) create a virtual network allowing them to stay in contact with their teacher and classmates, and to carry on with their studies through Child safety online is particularly im- distance-learning, to cut the risk of them falling behind or out of touch. Belgacom portant for Belgacom and we partner supplies equipment, software and internet links between classrooms and homes or with two NGO’s to raise awareness of children on a secure use of our hospitals. In 2009, some 75 children benefited from Bednet and 40 from Take Off. technologies. Belgacom has provided a video-conferencing facility in the Maria Middelares Univer- sity Hospital in Ghent, which involves general practitioners more closely in multidis- ciplinary consultations on cancer cases. This assures the patient of the best possible coordination among treating doctors, both inside the hospital and outside, and also Telindus Luxembourg has saves time for the general practitioner. This pioneering project is supported by the developed its www.lusi.lu website, as part of the European Commis- national health insurance organisation, INAMI. sion’s Safer Internet Program, An innovative SMS-based telemonitoring project linking general practitioners and providing advice, games, and cardiac patients discharged after hospital treatment is helping to reduce the number of news for children, adolescents patients who need to be readmitted (40% of heart failure patients have to be readmit- and adults that aim to raise aware- ted to hospital within six months of discharge). More information about Belgacom’s ness on a safe use of the internet. role on  www.belgium-hf.be.

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In collaboration with the mutual health insurance funds in Belgium, Belgacom has launched Zorg TV, which provides information and coaching to 25 patients suffering from type 2 diabetes, via Belgacom’s video telephony and digital TV platforms. Further supported the development of ICT skills via our ICT training programs We donated 775 computers to 60 schools and to 52 organisations providing ICT train- For the elderly, Belgacom offers specifically-designed mobile phones. ings to disadvantaged people across the country. Via our partnerships with several social organizations providing ICT skills, we indirectly trained about 7,000 people in 2009. Techno.bel, is an ICT training centre issued from a partnership between Belgacom and the FOREM in Wallonia. In 2009, 70% of job seekers managed to find a job after the training. Compared to 2008, Techno.bel reached 34% more job-seekers in 2009, and 115% more students completing technical training. Techno.bel also aims to raise awareness about ICT, and has conducted a series of studies on the development of technologies and their impact on our economic and social environment, which have been presented to a wide public. At the end of 2009 it launched TIDI, a 3D virtual universe designed to stimulate e-learning.  www.technobel.be We continued to support The Network for Training Entrepreneurship (NFTE), which aims to encourage disadvantaged young people to develop their social and professional skills, and Formation Insertion Jeunes (FIJ), a Brussels based centre for unskilled jobseekers in the ICT.We also supported three Flemish organisations to develop the ‘Digidak’ concept – digital facilities open to the public, to help widen access to new technologies and to basic internet training. Belgacom supplies the internet connections. The HomeSend service of 2008 2009 2008 2009 Belgacom International Total trainees Total hours Carrier Services is the first FIJ NA 416 NA 5,989 mobile centric global hubbing Techno.bel 997 2,814 101,189 114,372 service for international remit- Digidak 1,080 3,500 9,994 35,300 tance, airtime exchange and roaming recharge, endorsed by NFTE 329 475 1,980 2,520 the GSM Association. Interna- Total 1,326 7,205 113,163 158,181 tional remittances are a significant Continued to digitise our cultural heritage, preserving it and making it more part of mobile payments, allowing accessible mobile subscribers to easily and New technologies allow cultural heritage not only to be preserved, but also made quickly transfer money internationally. widely available. This is why Belgacom launched its Digita project. In 2009, it continued to work with the Royal Library and began a project with the Royal Film Library, two Access to facilities to receive major exercises that safeguard and facilitate the use of a part of these institutions’ col- transfers of money is often lim- lections. The RFP for the digitisation of the federal museum foreseen in 2009 has been ited, particularly for people on postponed in 2010, Belgacom will be candidate. low incomes and in rural areas, where the banking sector is often under-represented and cash plays a larger part in the economy. We will Mobile technology can lower the • Simplify and harmonize our offers cost of remittances as it removes • Improve the overall customer experience and servicing the need for physical points of • Further promote a safe use of our technologies, via a dedicated website presence and ensures a rapid and • Continue to develop targeted offers for disadvantaged people secure transaction. • Continue to promote and support programs aimed at reducing the digital  divide www.homesend.com

Belgacom Annual Report 2009 - 63 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Enabling a low-carbon society Climate change is increasingly recognized as one of the major challenges of the 21st century, and is a strategic concern for ICT companies like Belgacom Group: it represents potential risks for our operations, and at the same time it enables new business opportunities. As the leading provider of telecommunication services in Belgium, we are committed to playing an important role in enabling the transition to a low-carbon society.

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Key priorities

• Reduce our CO2 emissions by 70% (2007-2020) • Help our customers lower their environmental impact • Raise awareness of stakeholders

Our climate change strategy has three elements, supported by our environmental policy: We have set an 1. Reduce carbon emissions of our Belgian operations by 70% over 2007-2020; ambitious CO2 2. Provide customers with products and services that help them manage their own reduction target for environmental footprint more efficiently; 3. Involve our stakeholders (employees, suppliers, etc.) and raise awareness on climate all our operations change in Belgium: In order to ensure the delivery of our climate strategy, we included it in our list of key a reduction of 70% corporate strategic programs. As a consequence, our climate targets are monitored over the period and reported to the Belgacom Management Committee on a monthly basis, and a cross-functional team is responsible for the implementation of action plans. 2007-2020 1. Reducing our own impact on the environment We have

Committed to reducing the CO2 emissions of our Belgian operations by 70% over 2007-2020 With the support of a leading carbon consultancy, Ecofys, we have set an ambitious Clear targets have been defined in all key areas CO2 reduction target for our operations in Belgium: a reduction of 70% over the period 2007-2020. • 100% Renewable electricity: all our electricity is to come from This target applies to all our operations in Belgium: office buildings, fixed and mobile certified renewable sources by networks, data-centres, fleet vehicles, air/train business travel, employee commuting, 2009, via own-production and and outsourced transport. In the framework of the Greenhouse Gas Protocol, our purchasing agreements target covers our scope1, scope 2, and a significant share of our scope 3 emissions. • Mobile network: increase the  www.ghgprotocol.org/calculation-tools/faq energy efficiency by 25% by replacing all our equipment with This new definition of our scope explains the differences in CO2 reporting compared to our previous CSR reports. state-of-the-art technology by 2012 To reach this ambitious reduction target, we will focus on optimizing the consumption • Fixed network: increase the of energy throughout our operations, and on using renewable electricity only. energy efficiency by 25% by shifting to an all-IP network by 2018 Reduced our CO2 emissions by 55% vs 2007 (and 24% vs 2008) In 2009, we managed to reduce our carbon emissions by 55% compared to 2007 and • Data-centres: Increase the 24% compared to 2008. This is due to the full-year impact of our renewable electricity efficiency of our data-centres in in 2009 (100% since September 2008) and the various initiatives taken to reduce order to reach an average Power our energy consumption. Compared to last year, we reduced our heating needs by Usage Effectiveness (PUE) of 8%, our fleet consumption by 3%, and managed to keep our electricity consumption 1.75 by 2012 constant, despite increased traffic on our networks. • Office buildings: further consolidate our real estate Became the biggest buyer of certified renewable electricity in Belgium and continuously monitor and All our electricity comes from certified renewable sources, and we are the biggest improve the energy efficiency of buyer of green electricity in Belgium, with an amount of green electricity equivalent our buildings to the yearly consumption of 140,000 households. Electricity comes from our own • Transport: further encourage production through solar panels, and via purchasing agreements for hydroelectric the use of low-carbon transport, generation. reach an average of 120 gr/ km for CO emissions in new Implemented major energy-saving initiatives in our data-centres and networks, 2 delivering EUR 1.4 million yearly savings company-car orders by 2012, The main initiatives we took this year delivered total electricity savings of 14.4 GWh, and launch a major eco-driving training program equivalent to EUR 1.4 million yearly cost savings.

Belgacom Annual Report 2009 - 65 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c These key energy-saving measures were monitored on a monthly basis and progress is reported to the Belgacom Management Committee.

Yearly energy Target 2009 Realised 2009 Variance savings from key 2009 actions Server virtualization 1 GWh 1.3 GWh +30% Shut-down plan 5.8 GWh 6.1 GWh +5% Free Air Cooling 6.6 GWh 7.0 GWh +6% Total 13.4 GWh 14.4 GWh +7%

We significantly reduced energy consumed in our data-centres by virtualising 1,000 servers and buying energy-efficient servers. A virtualised server typically consumes 90% less electricity than a physical server. We also initiated major optimization works in our data-centres in order to improve the efficiency of our cooling facilities, which should deliver significant energy savings as of 2010. All our electricity We continued to replace air-conditioning by fresh-air cooling in our fixed and mobile networks, which reduced our need for cooling by up to 90%. We launched a major comes from program to turn off unused network equipment, and achieved spectacular energy certified renewable savings. sources, and we Reduced by 11% the energy consumed in our offices and performed energy are the biggest audits in key buildings We have consumed 11% less energy in our office buildings by vacating 4,700 2m , buyer of green and by optimization measures such as adapting the temperature settings and imple- electricity in menting presence-based lighting. We asked external specialists to audit the energy consumption of our key office buildings and to assess the opportunities for further Belgium. improvement.

Lowered CO2 emissions from our transport by 2% Measures that we took to reduce the environmental impact of our transport (fleet vehi- -55% cles, employee home-work commuting, outsourced transport, and business travels), include: CO2 emissions vs 2007 – 3% reduction of total fleet consumption compared to 2008 – A new mobility policy encourages our employees to use public transport: 100% reimbursement of public transport, or options to combine public transport and a CO2 emissions (in Thousand tons) company car; 200 180 – All our truck drivers (logistics) followed an eco-driving training. The positive results 150 have encouraged us to launch a major ecodriving program in 2010, for all company 108 car drivers. 100 82 50 – Systematic tyre-pressure checks were introduced, but had to be put on hold due to resource limitations. 0 2007 2008 2009 – The number of satellite workers increased by 29% vs. last year, as we expanded the number of sites and desks. Transpor Heating oil – Our logistics distribution routing was optimised, resulting in 165,025 km saved. Heating gas Electricity

– The CO2 emissions related to business travel (train and plane) decreased by 17%. Reduced waste by 25% against 2008 Energy Consumption (In Terajoules) Our waste management approach follows the principles “reduce, re-use, recycle”, and 3,000 includes office waste and waste related to our operations (paper, wood, metal, cables, 2,500 batteries, electronic scrap, etc.). 2,000 We have decreased our overall waste by 25% against 2008, thanks to less network 1,500 deployment works, consolidation of buildings, and more efficient waste management. 1,000 500 We have recycled/reused 66% of our waste, which is less than last year. This is due to 0 the stronger decrease of recycled waste volumes compared to the decrease in residual 2007 2008 2009 waste therefore does not denote to a weaker performance than last year. Vehicle fuel Heating fuel Our “investment recovery” department has obtained value from 801 tons of surplus Heating gas Electricity equipment from our operations (such as cables, switching and transmission equip-

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-25% waste production vs 2008

Waste (In tons) 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2007 2008 2009

Operations waste Office waste

ments, mobile devices); we implemented a recycling optimisation process in collaboration with a sheltered workshop and thereby recycled 204 tons of electronic waste. We managed to collect and recycle 25,877 mobile phones in our point of sales this year and supported initiatives encouraging customers to return used handsets. 97% of the collected mobile phones have been reused, and the remaining 3% have been recycled. 2. Help our customers reduce their carbon footprint Through enabling Our products and services can contribute to ways of living and working that are more other sectors efficient in terms of CO2 emissions and energy consumption. Reports such as the GeSI/Climate Group Smart 2020 study demonstrate that through enabling other sec- to reduce their tors to reduce their emissions, the ICT industry could reduce global emissions by as emissions, the much as 15% by 2020 – a volume of CO2 five times its own footprint in 2020.  www.smart2020.org ICT industry could reduce global We have emissions by as Promoted further some dematerialization solutions much as 15% by Many physical products and services can be replaced by their virtual equivalents, enabling energy and carbon savings on raw materials, production processes, logistic flows, 2020 – a volume and end-of-life disposal processes. of CO2 five times Examples of such applications include e-billing (602,367 residential customers end its own footprint in 2009), mobile payments via PingPing (replaces paper tickets and paper vouchers), video on demand via Belgacom TV, and digitization of medical files and cultural heritage. 2020.

Belgacom Annual Report 2009 - 67 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Launched new transport optimization solutions Significant reductions in transport can be achieved today via our teleworking, video conferencing, and mobile intranet/internet services. All these solutions lead to lower

CO2 emissions, increased work productivity, and better work-life balance. Future ICT applications in fields such as “intelligent cars” (telematics) or road charging will accelerate this low-carbon transformation. Our Euremis subsidiary launched a field force automation solution, which optimises the planning and routing of mobile technicians. This contributes to less mileage and paper- less order management.

We also launched an online tool which helps our customers quantify the CO2 savings We launched related to the use of videoconferencing and teleworking.  www.belgacom.be/ict an online tool Continued our efforts to enable monitoring and metering of energy consumption which helps and production via our mobile technologies Residential and office buildings can benefit from ICT-enabled energy efficiency our customers solutions. For instance, we have trialled a smart-metering solution with the NGO Bond Beter Leefmilieu to test customer reactions and technical capabilities of this solution. quantify the CO2 savings related This real-time collection of energy consumption enables customers to visualize their to the use of energy consumption (via web interface, sms) and consequently change their behaviour, resulting typically in 2%-10% energy and CO2 savings. The energy supplier can use videoconferencing the same data to optimize production or adapt tariffs better to consumers’ needs. and teleworking. These solutions are now in operation with companies like Sunswitch who, thanks to our mobile technologies, let their customers monitor the production of their solar pan- www.belgacom.be/ict els in real time  www.sunswitch.be.

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Successfully launched the first solar phone in Belgium and reduced our product packaging We started promoting green devices, for-instance the Samsung Solar E1107, which combines a solar panel and an energy-efficient charger, along with minimised and recycled packaging. EUR 1 was donated to the Climate Education Program for each sold handset. We experienced 300% higher sales than forecasted. We continued our efforts to minimize the impact of our product packaging, reducing by 30% the packaging of our TV products for-example and shifting to FSC-certified and recycled materials. 3. We continued to involve our stakeholders and raise public awareness on climate change

We believe it is vital to involve our employees and suppliers in our CO2 reduction efforts, and we aim to raise public awareness on climate change. We launched the first solar phone in Belgium, the Samsung Solar E1107, Involving our employees which combines a solar panel, an energy-efficient charger and recycled We organized several events and internal communication campaigns to raise employee- packaging. awareness on climate change and our 70% CO2 reduction plan. We also started offering eco-cheques to our employees, which can be used for environment-friendly purchases. 46 employees took advantage of our discounted offer for the installation of photovoltaic panels, which results in 49 tonnes of CO2 savings. Influencing our suppliers We believe we can also influence our suppliers, and we therefore increasingly include energy-efficiency and “green” requirements in our tenders and discussions with our suppliers. The strict energy consumption norms defined in the EU Code of Conduct serve as reference when we buy new broadband and digital TV equipment. Participating in sector initiatives, such as the Global e-Sustainability Initiative To engage further with our industry peers and to share best practices, we joined GeSI (Global e-Sustainability Initiative), which promotes collaboration between telecom operators and vendors on climate change issues. We continued to participate actively in initiatives such as the ETNO sustainability and energy workgroups. Disclosing our performance via the Carbon Disclosure Project We disclosed our environmental performance to investors via the Carbon Disclosure Project for the first time, and will continue doing so on a yearly basis.  www.cdproject.net Raising awareness in Belgian schools via the Climate Education Program We decided to support the Climate Education Program, which raises awareness of climate change in Belgian schools  www.climate-education.be We will

• Continue to reduce the CO2 emissions of our Belgian operations by 70% over the period 2007-2020 In 2010:

• Review our list of company cars and avoid cars with CO2 levels above 170 gr/km • Launch a large-scale ecodriving training program • Launch a mobile phone recycling campaign • Provide customers with products and services that help them manage their environmental footprint more efficiently We support the Climate Education Program, to help raise awareness of future generations on • Sign the European Code of Conducts on energy efficient digital TV and data- climate change. centers.

Belgacom Annual Report 2009 - 69 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Communicating on electromagnetic fields and health

While the rapid growth of wireless technologies has brought advantages in personal, commercial and social terms, some anxieties remain about the effect on health of the electromagnetic fields (EMF). We have taken on board these concerns by closely following scientific research in this domain, and widening our communication initiatives towards our stakeholders.

In order to manage the strategic risks and opportunities related to EMF and to ensure Key priorities the delivery of our EMF and health priorities, we included this in our list of key corpo- • Network compliance rate strategic programs. As a consequence, our EMF realisations are monitored and • Transparent reported to the Belgacom Management Committee on a monthly basis and a cross- communication on functional team is responsible for the implementation of action plans. exposure levels Latest developments in the legal framework • Monitoring scientific research Our 2G and 3G mobile networks meet the Belgian norm adopted at federal level in 2001, which is four times stricter than international standards. According to a January 2009 Belgian Constitutional Court ruling, protection against electromagnetic emissions is a matter of regional competence, and earlier regimes have been abandoned. In the Brussels region, the authorities have imposed a norm of 3 V/m for a 900 MHz frequency reference, which is 50 times stricter than the federal norm, and 200 times stricter than the international recommendation, and antennae are now subject to environmental planning permission. The retrofit of existing base stations will start 6 months after the validation of a simulation tool by the Brussels authorities. In order to comply with a stricter norm, the emission power of some base stations will need to be lowered. The coverage will be consequently reduced. Each environmental permit may nevertheless foresee a delay to comply with the norm in order to allow the operators to have time to build the base stations needed to compensate for the coverage loss. The customers shouldn’t then notice any change. In Wallonia, the authorities have adopted a different norm (3 V/m per antenna), and different monitoring procedures. The retrofit of the existing base stations will be completed by end September 2010. The same norm is applicable to our Tango network in Luxembourg. In Flanders, no decision has yet been taken on which norms will be required. We are following developments in this region and will put the necessary actions in place in order to comply with the new regulation.

70 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c CSR 16/11/09 12:15

We have Increased communication towards our stakeholders We were the first supplier in Belgium to provide information on exposure to mobile phones (SAR, Specific Absorption Rate), and in 2009 we extended this initiative beyond our Proximus Collection to our Twist cordless phones (using DECT technology) and our broadband equipment (using WiFi technology). The information appears on packaging and on our internet sites. In addition, as from 2009, most mobiles in the Proximus Collection are equipped with an earpiece, which makes it possible to reduce exposure to emissions when in use. We have kept our staff up to date on the subject through dedicated information sessions, and have taken part in similar events with local and national government bodies - including the Belgacom Telecom Days and ten sessions with people living near Our 2G and 3G mobile networks meet planned new base stations. A specific presentation on the use of wireless telecom- the Belgian norm adopted at federal munication technologies in the hospital environment was given at the Health Innovation level in 2001, which was four times stricter than international recommen- Forum organised by our business division for healthcare professionals. dations. Through our commercial link with Vodafone, we took part in their study “EMF Key Stakeholder feedback”, which revealed high awareness of our stakeholders of Belga- com’s initiatives.

Key findings of latest scientific reviews The European Commis- association between RF some evidence that RF fields sion’s Scientific Committee exposure and single symp- can influence EEG patterns on Emerging and Newly toms was indicated in some and sleep in humans. How- Identified Health Risks of the new studies, taken together, ever, the health relevance is European Commission con- there is a lack of consistency uncertain and mechanistic cluded, in respect of cancer: in the findings. Therefore, explanation is lacking. Fur- “It is concluded from three the conclusion that scien- ther investigation of these ef- independent lines of evi- tific studies have failed to fects is needed. Other stud- dence (epidemiological, ani- provide support for an effect ies on functions/aspects of mal and in vitro studies) that of RF fields on self-reported the nervous system, such as exposure to radiofrequency symptoms still holds. Scien- cognitive functions, sensory (RF) fields is unlikely to lead tific studies have indicated functions, structural stability, to an increase in cancer in that a nocebo effect (an and cellular responses show We inform humans. However, as the adverse non-specific effect no or no consistent effects.” widespread duration of ex- that is caused by expecta- customers on In respect of children; it Blootstellingposure of aan humans radiogolven to RF tion or belief that somethingExposition aux ondes radio concluded: “From the risk their exposure to fields from mobile phones is harmful) may play a role in Uw draadloze telefoon bestaat uit een of meer handsets Votre téléphoneassessment sans l se compose perspective du/de combiné(s)it is De blootstelling vermindert naarmate u zich verder enis eenshorter basisstation. than the De handsetinduction zendt enkelsymptom tijdens formation. et As d’une in station de base. Le combiné n’émet un signal electromagneticvan het basisstation verwijdert: gesprekken een signaal uit, terwijl het basisstation que pendantimportant les communications to recognise tandis que that la station time of some cancers, fur- the previous opinion, there is permanent signalen uitzendt. de base émetinformation en permanence. on possible ef- fieldsL’exposition diminue from au furour et à mesure que vous ther studies are required to no evidence supporting that fects caused by RF fields in vous éloignez de la station de base : Deidentify handset whether considera- individuals, including Le those combiné wireless devices. De SAR-index (Speci c Absorption Rate of speci ek L’indice DASchildren (débit d’absorption is limited.” spéci que) absorptietempo)bly longer-term is de(well meeteenheid beyond voorattributing de hoeveelheid symptoms est to l’unité RF de mesure de la quantité d’énergie 50 cm 1 m elektromagnetischeten years) human energie exposure waaraan hetexposure, lichaam wordt are able to électromagnétiquedetect  www.belgacom.com absorbée par le corps lors de blootgesteld bij gebruik van een telefoontoestel.RF fields.” l’utilisation d’un téléphone. Le combiné est considéré 1,1 V/m 0,55 V/m Deto handsetsuch phones wordt beschouwd might pose als een elektronisch toestel comme un appareil électronique de faible puissance. In gesprek metsome een cancer gering vermogen. risk.” De SAR-index voor handsets L’indice DAS des combinés varie entre 0,01 W/kg En conversation 0,033% 0,008% schommelt tussen 0,01 W/kg en 0,1 W/kg.In De respect maximaal of electro-et 0,1 W/kg, le DAS maximum autorisé en Europe toegelatenIn respect SAR-waarde of self-reported in Europa bedraagt encephalogram 2 W/kg. (EEG)étant pat de- 2 W/kg. Stand-by 0,55 V/m 0,27 V/m Hetsymptoms basisstation, “Although an terns and sleep “ThereLa station is de base En veille 0,008% 0,002% De blootstelling wordt gekarakteriseerd door de sterkte L’exposition est caractérisée par l’intensité du champ van het elektrisch veld op een zekere afstand van het électrique à une certaine distance de la station de base basisstation bij maximaal vermogen en wordt getoetst émettant à puissance maximale et est comparée aux aan de internationale aanbevelingen op het vlak van recommandations internationales en matière de santé. BelgacomMeer info op provides www.belgacom.com information on gezondheid. Deze aanbevelingen werden vastgelegd door Ces recommandations ont été établies par l’ICNIRP exposure to mobile phones (SAR, spe- deWe ICNIRP will (International Commission on Non-Ionizing (International Commission on Non-Ionizing Radiation cificPlus d’infosAbsorbtion sur www.belgacom.com Rase), cordless pho- Radiation Protection) en schrijven een maximumwaarde Protection) et xent une valeur limite de pour 60 V/m nes and broadband equipment. The van• Continue 60 V/m voor communication de DECT-basisstations on voor. electromagnetic lesfields stations via de baseour DECT.points of sale • Launch an e-learning tool on electromagnetic fields for internal and external information appears on packaging and Alle toestellen van Belgacom zijn conform Tous les appareils Belgacom sont conformes websites. (example of the base station de stakeholdersEuropese richtlijnen. aux directives européennes. of a Twist mono cordless phone) • Initiate the retrofit of our mobile network to comply with the new legal obligations

Belgacom Annual Report 2009 - 71 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Klok, alarm Klok, Vergrendelbaar klavier Handige navigatietoets voor snelle toegang tot alle functies van het toestel Directe naar toets het telefoonboek Handenvrije functie Gebruiksgemak Toets voor automatisch heroproepen van het laatst nummer gevormde Telefoonboek voor 100 namen en nummers Geheugencapaciteit 15 beltonen Oproepidenticatie op basis van de beltoon Regelbaar volume van de beltoon Geluid Weergave datum en uur Groot met achtergrondverlichting scherm Scherm Batterij: 2 x NiMH AAA Oproepdoorschakeling, in wacht plaatsen SignaalCompatibel met de Slimme Diensten van2e Oproep, Belgacom: 107 gram van de handset: Gewicht 50 meter binnen en 300 meter buiten Bereik: Autonomie van 12 uur in gesprek en 4 dagen in stand-by Verzenden en ontvangen van sms, tot 30 sms’jes geheugen Weergave oproeper via de diensten Weergave Naam en Weergave Oproeper Draadloze met ingebouwd telefoon antwoordapparaat 24 minuten) (tot max. Algemeen Twist Belgacom Belgacom Group s’engage à respecter l’environnements’engage Grouprespecter à Belgacom milieu het voor in zich zet Group Belgacom 410 Compatible Malins avec de Belgacom les Services : Signal 2 Poids du combiné : 107 grammes Portée : 50 mètres à l’intérieur et 300 mètres à l’extérieur Autonomie de 12 heures conversation en mode et 4 jours veille en mode Envoi et réception de SMS ; mémoire pour 30 SMS maximum A¡chage de l’appelant A¡ via les services chage du Nom et A¡ de 24 minutes) chage du Numéro Téléphone sans l avec répondeur intégré (capacité maximale d’enregistrement Généralités Horloge, alarme Verrouillage du clavier Touche de navigation pratique pour un accès rapide à toutes les fonctions Touche d’accès direct au répertoire Fonction mains libres Facilités d’utilisation Touche de rappel automatique du dernier numéro composé Répertoire de 100 noms et numéros de mémoire Capacité 15 sonneries Identication de l’appel surde la sonnerie base Volume réglable de la sonnerie Son A¡chage de la date et de l’heure Large écran rétroéclairé Batterie NiMH : 2 x AAA Déviation d’Appel, en attente mise É cran

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Cet appareil est destiné à à destiné est appareil Cet 253206846A 05_292_Pack_Twist410_Mono_SAR.indd 1 Promoting a positive working culture We aim to promote a fair, diverse and safe work environment and culture. The success of the Belgacom Group is founded on competencies, involvement, and on the adaptability of the staff to all changes we are confronted with. We believe in the professional development of our employees, we work towards equal opportunities and we promote balance in life through many initiatives. Through all our policies and initiatives, we respect the Belgian law on human rights (16 March 1971, law on labour) and we define all priorities through a continuous social dialogue, guaranteed by the law from 1991 on public enterprises.

Key priorities We have Integrated all our human resources within a single organisation in collaboration • Social dialogue with social partners • Diversity and non- Social dialogue enabled us to integrate our Proximus and Telindus subsidiaries in a con- Discrimination structive atmosphere. We have negotiated an agreement with the social partners that is • Safety and health the only one of its kind in Belgium, allowing representation of staff from the subsidiaries • Career management and within the Belgacom formal consultation arrangements. As agreements were reached, trainings the 2009-2010 collective labour agreement at Belgacom opened the way for aligning the various remuneration practices within the Group in order to offer standard treatment to all employees. Collective agreements have been signed with the Belgacom subsidiaries, providing guarantees about transfer of benefits. This offers the Belgacom Group a stable working environment enabling it to implement its strategic objectives and provide its services to customers, while optimising the work-life opportunities designed for its workforce. Created a new corporate culture, based on our new values and open to diversity Throughout the year, we communicate the new corporate values we had defined in 2008 (Re- spect, Can Do and Passion). Many initiatives were taken, such as the launch of a new intranet dedicated to our values and the definition of 5 key competencies linked to our new values. We incorporated our mission, strategy, and the corporate values into a new Code of Conduct, structured around the three ‘P’s (people, planet, profit) of corporate social responsibility. This new code is an expression of the new corporate culture through which all Belgacom employees can share a common approach to working. The new Code of Conduct also reflects the positive approach todiversity adopted by Belgacom. The label granted to us by the Federal Equal Opportunities Minister and the Federal Employment and Computerization Minister has been renewed this year, and reflect the fact that our own concerns match those of society in general. It will be communicated in 2010. We asked Randstad Diversity to conduct an assessment, which involved group discussions (called Sounding Boards) in which some 50 employees of more than 45 years of age gave their views on a range of subjects relating to age. We initiated a mentoring program for women in middle-management, who can now benefit from coaching by colleagues in senior management.

72 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c CSR

We are committed to the integration of people with disabilities. We set up a partnership with Wheel-it, a charity in the field, which gives our recruitment staff special access to its bank of CVs of job candidates, and allows us to post our vacancies on its website. And we conducted a review of all our buildings in Belgium, to check their accessibility on a broad range of criteria. A special focus will be given to communication as our employee survey revealed a lack of awareness from employees on all these initiatives. Preserved the safety and health of our collaborators Work-related stress is an issue of growing concern in developing countries due to important developments in the modern world. At Belgacom we want to raise awareness at an early stage, and we have developed a global policy to prevent psychosocial problems at work including all aspects of stress, bullying, sexual harassment and acts of violence at work. Advices and contact names to support employees who suffer from stress are available on the Group intranet. In 2009, we also launched a stress self assessment tool, named ISAT, for Belgacom SA employees. The purpose of the tool is to enable them to measure their stress level and determine the factors that cause and maintain stress, and thus help them, with their managers, to solve the issue. Roll out of the tool to all affiliates is foreseen in 2010. Our work related accident rate decreased from 9.65 in 2008 to 9.58 this year for all Belgian affiliates. A positive result, due to high awareness in health and safety matters. In 2009, we launched an awareness campaign to reduce fall & stumble accidents, a flu vaccination campaign and, in collaboration with Red Cross of Belgium, four blood donor sessions have We increased been organised in our headquarters. Belgacom also participated at the “no smoking day in internal mobility Brussels”, distributed flyers and published information on the intranet. We continued training our employees on first aid and fire fighting. In 2009, we trained 46 new first aid workers; 167 by 20%, followed the refresh course and 287 followed a fire fighting course. corresponding to In 2008, Belgacom signed the European Road Safety Charter, committing on actions to in- 1,100 voluntary crease the safety of all Belgacom’s drivers. In 2009 we focused on increasing the safety level of Belgacom Group vehicle: importance of safety aspects (ESP, ABS, airbags, extra load moves. fixing features) played a role in the selection of the vehicles, inspections in Belgacom car parks to ensure correct tyre pressure on all vehicles (1,000 vehicles tested). The correct tyre pressure is also mentioned now on stickers attached to all new vehicles. We also launched awareness campaigns (polite driving, safety on holidays) for safety on the road. Promoted career management and training We increased internal mobility by 20%, corresponding to 1,100 voluntary moves. External recruitments was down 25% compared to last year, but even so, 638 people Average number of Training hours were recruited, and the Group maintained its high profile and strong position in the per year per employee external labour market. 35 34 Pilot training programs have been created in light of an analysis of future needs in 31 30 sales and front line customer services. Among the training options developed are our 29 sales academies and the Master class in Marketing that Belgacom Corporate Universi- ty has been running with the Vlerick Management School in Ghent. 86% of employees 25 followed at least one training, and 29 hours of training were given on average to each employee, which is slightly less than last year. 20 2007 2008 2009

Learning Penetration (% of employees We will who followed at least 1 training) • Continue building our new customer-segmented organization with a deeper inte- 100 gration of all subsidiaries • Communicate on our new Code of Conduct throughout the organization 90 89 89 • Develop practical tools for 45+ career management and publish a handbook to 86 facilitate recruitment of disabled people 80 • Continue implementing commitments included in the “Road safety” charter and in 70 our Safety and Health prevention plan • Develop new trainings aiming at improving our customer service and centricity, and 60 start promoting employee volunteering 2007 2008 2009

Belgacom Annual Report 2009 - 73 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Developing a responsible supply chain

Our approach is to raise social and environmental standards throughout our supply chain by working with our direct suppliers to improve their CSR performance and their own supply chain management while improving our own efficiency. Embedding our CSR standards in our procurement practices helps us to protect our reputation and make a real difference to the communities where our suppliers operate.

The Belgacom Group dispatches products towards shops, dealers, clients, technicians Key priorities and subcontractors throughout Belgium, but owns no manufacturing facilities. To build and operate our network, we buy the equipment and services we need from thousands • Raise CSR standards of our suppliers of suppliers worldwide, with whom we spend roughly EUR 1.5 billion a year. Some of Belgacom Group’s suppliers are large multinationals, but 87% of them are local • Include CSR as sourcing providers that operate their own assembly factories, and/or source from independent and selection criteria manufacturers. • Train our buyers Our Group procurement policy includes our Corporate Social Responsibility approach and our Code of Ethical Purchasing (CEP). Our Code of Ethical Purchasing sets out our expectations towards suppliers and is a 87% mandatory component of our procurement contracts.  http://www.belgacom.be/sup. local suppliers The priorities and action plans are defined and implemented by our Supply Chain experts, in close collaboration with our CSR team. To reinforce our approach, we recently appointed a full-time CSR manager in our Supply Chain team.

CSR performance evaluation of 23 suppliers We have Evaluated the CSR performance of 23 suppliers 35% Using a tool developed by the company Ecovadis, we assessed 23 suppliers in depth 30% on their CSR performance in relation to the environment, labour practices, fair busi- 25% ness practices, and supply chain. 20% Two suppliers were identified as “below benchmark”, and we are currently defining 15% improvement plans with them. 10% We will extend this approach in 2010 to our strategic suppliers, representing at least % suppliers assessed suppliers % 5% 30% of our total procurement spend. 0% Incorporated ethical purchasing more widely into our purchasing and sourcing Low score Average High score processes 2 supppliers Action Plan within 6 months Compliance with our CEP has been a mandatory provision in all our new contracts since last year. However, it came to our attention that certain contracts were still sent We assessed 23 suppliers in depth on out without the proper reference to our CEP and we are currently taking the appropri- their CSR performance in relation to ate actions to prevent further deviations. This year, we added a CEP compliance clause the environment, labour practices, fair to all our purchase orders, in order to require compliance by our existing suppliers. business practices, and supply chain. We thus now require all Belgacom Group suppliers to comply with labour, ethics and

74 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c CSR

100% of buyers trained on CSR

environmental standards. Moreover, each new supplier accessing our Sap e-Sourcing tool needs to sign our CEP. Included CSR as a criterion in sourcing and selection projects We started to include CSR as a selection criterion in new sourcing projects. For instance, in the selection of our gadgets and gifts, CSR has been given a 10% weight, next to price, quality and delivery. We also drafted a sustainability charter for our suppliers of catering services, in order to raise their CSR standards. We are currently finalizing our approach and will further include CSR as a selection criterion in our 2010 sourcing process. Trained all our buyers on CSR We organised several training sessions in order to raise awareness of our buyers about the importance of a responsible supply chain, and completed CSR training for all of them. Increased sourcing of sustainable products Although we have no formal sustainable-product policy, we ask buyers to give maximum attention to sustainable alternatives and to promote a lifecyle analysis approach. For instance, we use almost exclusively FSC-labelled and/or recycled paper and we use almost cardboard in our product packaging, print communication and office paper; and all our electricity is now sourced from certified renewable sources. We refer to the strict exclusively FSC- energy-efficiency norms of the European Code of Conducts when we buy new cus- labelled and/or tomer equipment (broadband and digital TV). recycled paper Promoted e-supply and cardboard In line with our efforts to reduce our environmental footprint, we have continued to promote e-supply and to reduce usage of paper and faxes. 88.1% of Belgacom group in our product purchase orders were sent out electronically (83% in 2008) packaging, print Increased collaboration with sheltered workshops communication We decided to increase our collaboration with sheltered workshops in order to provide and office paper employment opportunities for people from disadvantaged backgrounds. 126 people with disabilities are performing reconfiguration, assemblage, packaging and recycling activities for us. We will • Evaluate the CSR performance of our strategic suppliers, representing at least 30% of our total procurement spend 88.1% • Follow-up all our suppliers with insufficient CSR performance, within 6 months of Belgacom group • Finalize our approach to include CSR as a criterion in sourcing and selection purchase orders were projects sent out electronically • Include a CSR topic in our strategic reviews with key suppliers

Belgacom Annual Report 2009 - 75 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Supporting our

Communities

We aim to make a contribution to improving the quality of life of the communities we are a part of. We focus on the issues directly linked to our CSR responsibilities: widen access to those on the margins of society, respect children’s rights, promote sustainable development and involve our own staff in the life of their own local communities.

Key priorities • Donate money and time to We have good causes Provided cash donations of EUR 1.5 million as well as time and equipment to • Responsible sponsoring charitable organisations We continued to encourage social engagement by our staff through Le Petit Coup de Pouce/De Helpende Hand initiative. This provided up to EUR 5,000 by special project where our staff works as volunteers with people who are disadvantaged, handicapped or sick. 69 projects were selected in 2009. Belgacom also continued donating furniture no longer needed in its offices. More info on  www.lepetitcoupdepouce.be  www.dehelpendehand.be The Proximus Foundation supported 36 local charities working with young people in Belgium who are disadvantaged by poverty, social exclusion, or handicap.  www.proximusfoundation.be Seeing the success of both above-mentioned initiatives, we did not feel the need to create a Belgacom Group Foundation yet. Now that our subsidiaries are integrated, we will assess our Group-wide charity approach in 2010. We became a partner of UNICEF Belgium to support wide public information campaigns. For instance, we supported the WaSH action, an initiative to provide drinking water in developing countries, in which EUR 2 were donated to UNICEF for every text message sent to a dedicated number. We also set up an internal campaign, enabling our employees to buy discounted ethical and fair trade products, and granting 10% of the purchase price of each item to UNICEF. We helped raise environmental awareness among schoolchildren by supporting the Climate Education Programme.  www.climate-education.be We continued to support the independent Trans-Mission charity, which involves young people in social projects. As a partner of Responsible Young Drivers, we yet again donated the revenues from the first million text messages sent by our mobile clients on New Year’s Eve. We also continued to support Child Focus and Action Innocence. In addition, we hosted numerous charity sales and recruitment campaigns in our Street Basket aims at giving children headquarters building during the year, including for United Fund for Belgium, Amnesty in disavantaged areas an initiation into International, la Fondation Damien, la Ligue Nationale Belge de la Sclérose en Plaques, the game. Child Focus, Les Enfants du Viêtnam, and SOS Villages d’Enfants.

76 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c CSR

Centre de Compétence

Created synergies between our sponsoring and CSR activities We aim to exploit our commercial sponsoring activities to promote inclusion of disadvantaged people.

We made place for disabled athletes during the Belgacom Memorial Van Damme. © Belga Two 100 m wheelers races were organised during this event. The first one dedicated to the youth, in collaboration with To Walk Again. The second one, with promising “The partnership Paralympic top athletes selected by the Belgian Paralympic Committee. with the Belgacom Street Basket, is an initiative of Belgacom Liège Basket, aimed at giving children living in and around Liège in disadvantaged areas an initiation into the game. By learning Group allows sports values, they get a mean of social integration. us to create As part of the Music for Life campaign to combat malaria, collaboration between the favorable Studio Brussel and the Red Cross, we sponsored the delivery of 6,000 mosquito nets, through actions in which donors had their photograph taken in a celebrity location, and conditions for individuals handed in unwanted mobile phones at our sales outlets. athletes to Thanks to our new partnership with Justine Henin (one of the UNICEF ambassadors), take part in we also enhance synergies between Sponsoring and CSR. the Paralympic Games and win We will medals.” • Further integrate CSR in our sponsoring activities and events • Assess our Group-wide charity/Foundation strategy Anne d’Ieteren, President Belgian Paralympic Committee • Launch an initiative to sponsor the equipment and web site of local sport clubs.

Belgacom Annual Report 2009 - 77 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Achievements & commitments We said We have We will Enhanced our CSR 5-year plan, with clear priorities and accountabilities in all our business units Continue the integration of our international subsidiaries in our Group CSR strategy and action plans How we manage CSR Improve our stakeholder engagement approach Help our business units to successfully deliver the Group CSR action plan We would continue to simplify our offers Simplifed our offers, lowered our prices, and helped ease tariff comparison Simplify and harmonize our offers Enhancing access to We would commercialize more convergence offers Launched new convergent packs such as our All-in-One Pack with free TV We would improve the customers experience while using our products & services Taken new initiatives to improve our customer experience and service via our Care&Ease program Improve the overall customer experience and servicing communications We would continue to develop targeted offers for disabled people Launched a mobile phone for elderlies and continued to support children with long-term sickness Continue to develop targeted offers for disadvantaged people We would further promote and finance programs aiming at closing the digital gap Donated 775 computers, and increased the development of ICT skills via our ICT training programs Continue to promote and support programs aimed at reducing the digital divide We would investigate new initiatives in the eHealth domain Launched new healthcare applications, such as ZorgTV for diabetics and videoconferencing in hospitals We would be candidate to the RFP for digitalisation of federal museum Continued to digitise our cultural heritage, preserving it and making it more accessible. The RFP for the digital museum was postponed to 2010 Raised awareness on a safe use of our technologies in schools and in our shops Further promote a safe use of our technologies, via a dedicated website

We would further lower our CO2 emissions and define an overall CO2 reduction target for Committed to reducing the CO2 emissions of our Belgian operations by 70% over 2007-2020 Continue to reduce the CO2 emissions of our Belgian operations by 70% over the period 2007-2020 Enabling a low-carbon society our Belgian activities Decreased our CO2 emissions by 55% vs 2007 Became the biggest buyer of certified renewable electricity in Belgium Implemented major energy-saving initiatives in our datacenters and networks, delivering EUR 1.4 million yearly savings Reduced by 11% the energy consumed in our offices and performed energy audits in key buildings

We would implement a new mobility policy, promote ecodriving trainings, and increase Launched a new mobility policy focused on stimulating the use of public transport Review our list of company cars and avoid cars with CO2 levels above 170 gr/km the number of internal teleworkers Trained all our truck drivers (logistics) on ecodriving Launch a large-scale ecodriving training program Increased the number of satellite workers by 29% We would increase % of waste recycled/reused Recycled 66% of our waste, which is less than last year. We did achieve a reduction in residual waste volumes, but reduced the volume of recycled waste even more We would take further action to help our customers lower their carbon footprint Launched the first solar phone in Belgium and reduced our TV product packaging by 30% Provide customers with products and services that help them manage their environmental footprint more efficiently

Developed an online CO2 savings calculator for videoconferencing and teleworking Launch a mobile phone recycling campaign Launched new dematerialization and transport optimization solutions We would further engage with external stakeholders, by joining GeSI (Global e- Joined the Global e-Sustainability Initiative (GeSI) and reported to the Carbon Disclosure Project Sustainability initiative) for-instance Supported a climate education program in Belgian schools We would launch an internal employee involvement campaign Organised various awareness sessions for our employees, and started offering eco-cheques for environment-friendly purchases Sign the European Union’s Code of Conducts on energy efficient digital TV and datacenters. We would continue to closely monitor the scientific research on electromagnetic fields Created a web page on scientific research on EMF Launch an e-learning tool on EMF for internal & external stakeholders Communicating on We would further increase communication on EMF towards our stakeholders Extended the EMF exposure labelling of our wireless products to DECT and WiFi Continue communication on EMF via our points of sale electro-magnetic fields and Formalised our approach of EMF and health in a Corporate Strategic Program Initiate the retrofit of our mobile network to comply with new legal obligations health We would Complete the 2nd Staff & support integration phase Integrated all our ressources within a single organization in a climate of mutual respect Continue building our new customer segmented organisation with a deeper integration of all affiliates Promoting a positive work We would develop communication campaign and actions plans to implement new Created a new corporate culture, including campaigns to put values in practice and the redaction of Communicate on our new code of conduct throughout the organisation corporate values a new code of conduct We would continue to promote diversity Launched several new initiatives within our diversity program and Federal government confirmed our Develop practical tools for 45+ career management and edit a handbook to facilitate recruitment of culture Diversity label for the third time disabled people We would implement commitments included in the "Road safety" charter Focused on the increase of our vehicles' safety level, and raised awareness of our drivers Continue implementing commitments included in the "Road safety" charter and in our Safety and Health prevention plan Increased internal mobility by 20% and recruited 638 new employees Continued to develop our training offers: 86% of the collaborators followed a training, resulting in 29 Develop new trainings aiming at improving our customer service and centricity, and start promoting hours of training per employee employee volunteering We would finalize the training of our buyers on CSR and ethical procurement Trained all our buyers on responsible procurement Developing a responsible We would assess the CSR performance of our high risk suppliers Assessed the CSR performance of 23 high risk suppliers Evaluate the CSR performance of our strategic suppliers, representing at least 30% of our procurement spend, and follow-up all our suppliers with insufficient CSR performance, within 6 months supply chain We would include CSR performance as criteria in sourcing & selection projects Tested CSR as a selection criteria in several sourcing projects Finalize our approach to include CSR as a criterion in sourcing and selection projects Added a CSR compliance clause in all our purchase orders, in order to require compliance of our Include a CSR topic in our strategic reviews with key suppliers existing suppliers We would further study the feasibility of a Belgacom Group Foundation Decided to go on with existing initiatives and donated EUR 1.5 million to charities and good causes Assess our Group-wide charity/Foundation strategy Supporting our communities through the Proximus Foundation, De Helpende Hand/Le Petit Coup de Pouce We would finalize our Community Investment policy Initiated synergies between CSR and Sponsoring Increase integration of CSR in our sponsoring activities and events Launched a new partnership with UNICEF Launch an initiative to sponsor the equipment and web site of local sport clubs

78 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c CSR

Achievements & commitments We said We have We will Enhanced our CSR 5-year plan, with clear priorities and accountabilities in all our business units Continue the integration of our international subsidiaries in our Group CSR strategy and action plans How we manage CSR Improve our stakeholder engagement approach Help our business units to successfully deliver the Group CSR action plan We would continue to simplify our offers Simplifed our offers, lowered our prices, and helped ease tariff comparison Simplify and harmonize our offers Enhancing access to We would commercialize more convergence offers Launched new convergent packs such as our All-in-One Pack with free TV We would improve the customers experience while using our products & services Taken new initiatives to improve our customer experience and service via our Care&Ease program Improve the overall customer experience and servicing communications We would continue to develop targeted offers for disabled people Launched a mobile phone for elderlies and continued to support children with long-term sickness Continue to develop targeted offers for disadvantaged people We would further promote and finance programs aiming at closing the digital gap Donated 775 computers, and increased the development of ICT skills via our ICT training programs Continue to promote and support programs aimed at reducing the digital divide We would investigate new initiatives in the eHealth domain Launched new healthcare applications, such as ZorgTV for diabetics and videoconferencing in hospitals We would be candidate to the RFP for digitalisation of federal museum Continued to digitise our cultural heritage, preserving it and making it more accessible. The RFP for the digital museum was postponed to 2010 Raised awareness on a safe use of our technologies in schools and in our shops Further promote a safe use of our technologies, via a dedicated website

Belgacom Annual Report 2009 - 79 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Key figures

2007 2008 2009 General Information Total revenue (Mio EUR) 6,065 5,978 5,990 Net income (Mio EUR) 958 800 904 Total number of employees (Full Time Equivalent) 17,833 (1) 17,371 16,804 Enhancing Access to communications mobile network coverage - 2G 99.80% 99.98% 99.98% mobile network coverage - 3G 84.40% 90.2% 96.70% Number of Base stations Mobile network 3,946 4,097 4,243 Mobile network: Landlord relationships (average TRIM) 83.75% 90.14% 84.20% Fast Internet coverage 99.70% 99.7% 99.70% Digital TV coverage 80.00% 86.60% 87.20% hours of ICT training provided via our partners n/a n/a 158,181 Enabling a low-carbon society (2) Electricity (Terajoules) (2) 1,604 1,667 1,670 % renewable electricity (Terajoules) (2) 7% 76% 100% Heating gas (Terajoules) (2) 149 170 151 Heating fuel (Terajoules) (2) 141 101 97 Vehicle (fleet) fuel (Terajoules) 509 517 502 Yearly electricity savings (Terajoules) n/a n/a 52 (2) CO2 emissions (Tons) 179,618 108,019 81,638 Waste (Tons) 15,061(3) 13,709 10,251 % waste reused/recycled n/a 71% 66% Mobile phones collected in our shops for reuse and recycling n/a 26,742 25,877 Water ('000L) n/a n/a 223,874 Communicating on health & EMF % of wireless devices with labeling of exposure levels n/a n/a 100% Promoting a positive working culture Employee satisfaction (index) 70.5 70 74.5 % of employees having followed at least 1 training 89% 89% 86% Average number of training hours per employee 34 31 29 % of woman in total workforce (1) 30.3% 29.7% 29.4% % of woman in middle management (1) 31.3% 31.3% 32.0% % of woman in senior management (1) 19.1% 18.9% 20.7% % of woman in top management (1) 16.2% 15.5% 16.8% % of employees receiving regular performance and career development reviews 100% 100% 100% Occupational accidents rate (index) n/a 9.65 9.58 Ilness rate (including long-term illness) n/a 6.50% 6.60% average age of employees (years) (1) n/a 43.6 44.3 average career length (years) (1) n/a 17.6 18.5 Number of employees working part-time (1) 2717 3463 4124 Voluntary attrition rate (1) n/a 2.37% 2.01% Workforce represented in health and safety committees 100% 100% 100% % of employees covered by collective bargaining agreements 100% 100% 100% Developing a responsible Supply Chain % of suppliers based in Belgium n/a n/a 87% CSR supplier assessments, in % of total procurement spend n/a n/a 12.5% % of buyers trained n/a 43% 100% % of e-orders 80% 83% 88% Supporting our communities Funding amount in % of pretax profit 0.2% 0.3% 0.2% # of local non-profit organisations supported 112 99 105 (1) In 2007, we reported on the total number of employees. As from 2008, we report on total FTEs. Reporting does not include Scarlet

(2) 2007 and 2008 energy and CO2 data restated according to new scope of our CO2 emmisions reduction target (3) restated due to error in 2007

80 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c CSR

158,181 hours of ICT training provided -55% CO2 100% vs 2007 renewable electricity 100% of wireless devices with labeling of exposure levels

Evolution of Employee Belgacom employees Satisfaction index age distribution

80 < 25Y 74.5 60 25Y-29Y 70.5 70 nationalities 30Y-34Y 35Y-39Y 70 among Belgacom 40Y-44Y employees 45Y-49Y 50Y-54Y > 55Y 60 2007 2008 2009 87% 100% of suppliers based of buyers trained on in Belgium CSR procurement 105 local non-profit organisations supported

Belgacom Annual Report 2009 - 81 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c About our CSR reporting This is Belgacom Group’s fourth Corporate Social Responsibility (CSR) Report. It covers the year ended 31st December 2009. In this report, we aim to provide a balanced account of our performance on the socioeconomic, ethical and environmental issues which are the most relevant to Belgacom Group and its stakeholders.

• Further information on our Scope and data business and financial perfor- The scope of this Report includes CSR data and activities from all Belgian operating mance, corporate governance, companies managed by Belgacom in 2009, unless otherwise stated. We are currently regulatory issues and directors’ working with our international subsidiaries in order to include them in future CSR repor- remuneration is provided in our ting. Meanwhile, we have highlighted some CSR initiatives from international subsidia- Annual Report. ries throughout the report. • A glossary of the technical The indicators have been collected, calculated and consolidated using dedicated com- terms used in this report is puterized reporting tools. The data presented cover all Belgian operating companies available on pg 107 managed by Belgacom in 2009, unless otherwise stated. • We welcome your feedback on our CSR engagement and Compliance with Global Reporting Initiative guidelines your views on this report. Please We base our approach to CSR management and reporting on the principles of the Global contact: Mrs Concetta Fagard Reporting Initiative third Generation (GRI:G3), here under some principles; others can be Mr. Loïc van Cutsem found in the glossary. E-mail: [email protected] Completeness: We identify our stakeholders by assessing who is impacted significantly by the company and who could have an impact on the company. Stakeholder engagement helps us understand the issues of concern to our stakeholders. Materiality: There is no natural basis for comparing the significance of one issue with another. Nevertheless it is important to be able to prioritise effort and resources. To make these judgements we assess the extensive list of issues for significance in three areas: the level of concern and interest among stakeholders most affected by our operations, our impact on society and the environment, the financial and reputation impacts on our business. Stakeholder Inclusiveness: The selection of content for this report draws upon the out comes of stakeholder engagement processes. We use the knowledge gained from stake- Disclaimer This report has been drawn up for the holder engagement to explore possible actions and solutions. Where possible,we make an purpose of informing our stakeholders appropriate commitment and publish it in this report. On occasion we will not agree with on the Belgacom Group’s performance a criticism or not be able to respond with a solution. In this situation we explain our view and commitment with respect to CSR. Nothing in this document is intended to clearly and publicly. extend or amend the Belgacom Group’s existing obligations to its customers, Sustainability Context: The report presents the organization’s performance in the wider employees, suppliers, shareholders and context of sustainability. This context is defined by a benchmark analysis and a press review. investors or other stakeholders. The Belgacom Group is not responsible for We have included a GRI cross-reference table on p84 to help readers find GRI-related the reasonableness, accuracy or com- content and data. pleteness of the information available on these Web sites, nor does their mention in this report constitute tacit approval or Independent Assurance endorsement by the Belgacom Group of such sites or the products or the Our progress against targets and other aspects of our CSR performance is subject to services offered therein. The Belgacom independent external assurance by Ernst&Young in accordance with the International Group accepts no liability with regard to Standard for Assurance Engagements 3000 (ISAE 3000). Ernst & Young’s assurance any such information that has been or will be provided by external parties via statement does not provide assurance on quantitative data, neither on the references their Web sites. to external web links in this report.

82 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c CSR

Assurance report of the Independent Auditor

To the management of BELGACOM Group SA de droit public Our main procedures were: Engagement • Obtaining an understanding of the telecommunication sector and its We have been engaged by BELGACOM Group SA de droit public (“BEL- relevant CSR issues; GACOM”) to obtain limited assurance on BELGACOM’s Corporate Social • Assessing the acceptability of the reporting principles used, the choices of Responsibility (“CSR”) specific sections (pages 52 to 85) included in the 2009 the stakeholder groups, and the topics on which BELGACOM reports; Annual Report (“the Report” hereafter) of Belgacom Group for the year ended • Reviewing, through press review and internal documentation review, the key 31 December 2009. CSR expectations regarding BELGACOM ; The scope of the Report, including any inherent limitations that could affect • Evaluating the procedures at BELGACOM Corporate level and at opera- the reliability of the information contained therein, is set out in the section tional level to identify CSR issues relevant for internal and external stake- “About our CSR reporting” (page 82) of the CSR sections of the Report. The holders; CSR sections of the Report cover BELGACOM’s Belgian activities (including Belgacom SA de droit public, Belgacom Mobile SA, Belgacom Skynet SA • Evaluating the existing procedures to define report content and to en- and Skynet I-Motion Activities SA, Telindus SA and Connectimmo NV). The sure that key stakeholders’ expectations are being addressed in the CSR CSR sections of the Report are the responsibility of the management of BEL- sections of the Report; GACOM. Our responsibility as independent auditor is to provide limited as- • Evaluating the procedures at the BELGACOM Corporate level to obtain, surance on whether the topics discussed in the CSR sections of the Report process and report data and assess internal control measures; address the key CSR issues affecting BELGACOM, whether the reporting • Examining, on a limited test basis, evidence supporting the descriptive data procedures and principles used are appropriate and consistently applied and provided, and studying relevant company documents; whether the description of the policy and management systems provides a reasonable reflection of the efforts made by BELGACOM with respect to CSR • Assessing the adequacy of the documentation and “audit trail” from the during 2009. A limited assurance engagement provides less assurance than information in the report to the basic data; an audit. • Evaluating the procedures for compliance with relevant laws, regulations and internal policies relevant to CSR including the monitoring of this compli- Limitations in our review ance; Our engagement did not include verification or review of any of the quantitative information contained in the CSR sections of the Report nor did it include • Conducting interviews with responsible company officers, mainly for the a verification of the internet links in the CSR sections of the Report and their purpose of assessing the consistency of the descriptive data in the CSR related information disclosed on the BELGACOM internet site. In the section sections of the Report; “About our CSR reporting” (page 82) of the Report, an explanation for the • Evaluating the overall view of the CSR content of the Annual Report, reasons of these limitations is provided. amongst others by testing its content against the guidelines issued by the Criteria and reporting principles Global Reporting Initiative, (i) GRI content principles (materiality, stakeholder inclusiveness, sustainability context, completeness) and (ii) GRI quality prin- There are currently no generally accepted criteria for reporting sustainability ciples (balance, clarity, accuracy, timeliness, comparability, reliability). performance in Belgium. The CSR sections of the Report have been prepared in accordance with the Sustainability Reporting Guidelines of the Global Re- Conclusions porting Initiative (“GRI”) detailed in the section “About our CSR Reporting” Based on our procedures performed to obtain limited assurance, nothing (pages 82) of the Report. came to our attention that causes us to believe that: Management’s responsibility • The topics discussed in the CSR sections of the 2009 Annual Report do not Management is responsible for the preparation of the CSR sections of the address the key Corporate Social Responsibility issues affecting BELGA- Report and the information therein in accordance with the criteria mentioned COM Group SA de droit public; above. This responsibility includes designing, implementing and maintaining • The reporting procedures and principles used, are not appropriate and con- internal control relevant to the preparation of the CSR content in the 2009 sistently applied; Annual Report that is free of material misstatements, selecting and apply- • The description of the policy and management systems of BELGACOM ing appropriate reporting policies and using measurement methods and does not provide a reasonable reflection of the efforts made by BELGACOM estimates that are reasonable in the circumstances. The choices made by in respect of Corporate Social Responsibility in 2009. management, the scope of this report and the reporting policy, including any inherent limitations that could affect the reliability of information, are set out in the CSR sections of the Report. The auditor’s responsibility and scope of the work Brussels, 20 March 2010 performed Ernst & Young Reviseurs d’Entreprises SCCRL Our responsibility is to express a conclusion with regard to the CSR specific Represented by sections included in the 2009 Annual Report of BELGACOM based on the limited assurance engagement described above. We conducted our procedures in accordance with the International Standard for Assurance Engage- ments 3000 (“ISAE 3000”): “Assurance Engagements other than Audits or Reviews of Historical Financial Information” and the Code of Ethics, issued by the International Federation of Accountants (“IFAC”). Procedures We have performed all the procedures deemed necessary to obtain the evi- Harry Everaerts dence that is sufficient and appropriate to provide a basis for our conclusions. Partner

Belgacom Annual Report 2009 - 83 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c GRI Content Table in accordance with GRI G3 and the Telecommunications Sector Supplement (TSS)

Content as per GRI G3 and Sector Supplement Compliance Reference to Content and Comments 1. Strategy and analysis 1.1 Statement from the most senior decision-maker. Yes CSR strategy / Annual Report 1.2 Description of the key impacts, risks and opportunities. Yes CSR Strategy, How we manage and in each chapter 2. Organizational Profile 2.1-2.10 Comprehensive description of organization, products, brands, etc. Yes About our reporting, How we manage CSR / Annual Report 3. Report parameters 3.1-3.11 Scope of report, contact details, data and measurement methods. Yes About our reporting, How we manage, KPI table 3.12 Table identifying the location of the Standard Disclosures in the report. Yes 3.13 Policy and current practice with regard to seeking external assurance for the Yes About our reporting, External Assurance Statement report. 4. Governance, Commitments and Engagements 4.1-4.10 Governance structures, committees, policies, etc. Yes How we manage / Annual report / www.belgacom.com (about the group) 4.11-4.13 Commitments to external initiatives. Yes How we manage, signatories of ETNO Sustainability Charter, Code of Ethical Purchasing based on ILO principles, European Road Safety Charter, Safer Internet Framework 4.14-4.17 List of stakeholders, approach, key expectations. Yes How we manage Economic Performance indicators EC1 Direct economic value generated and distributed. Yes KPI table / annual report EC2 Financial implications and other risks and opportunities due to climate Yes Enabling a low-carbon society change. EC6 Business policy, business practices, and % of locally-based suppliers. Yes How we manage, Developing a responsible supply chain, KPI table EC8 Development/impact of infrastructure investments and services for public Yes KPI table, enhancing access to communications / annual report benefit. Environmental Performance indicators EN3-4 Direct and indirect energy consumption by primary energy source. Yes KPI table, enabling a low-carbon society EN5 Energy saved due to conservation and efficiency improvements. Yes KPI table, enabling a low-carbon society EN6 Initiatives to provide energy-efficient or renewable energy based products and Yes Enabling a low-carbon society services. EN7 Initiatives to reduce indirect energy consumption and reductions achieved. Yes KPI table, enabling a low-carbon society EN8 Total water withdrawal by source. Yes Not material - KPI table EN16 Total direct and indirect greenhouse gas emissions by weight. Yes KPI table, enabling a low-carbon society EN17 Other relevant indirect greenhouse gas emissions by weight. Yes Enabling a low-carbon society (business travel, outsourced transport, Employee commuting) EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved. Yes Enabling a low-carbon society EN22 Total weight of waste by type and disposal method. Partial KPI table, enabling a low-carbon society EN26 Initiatives to mitigate environmental impacts of products and services, and Partial Enabling a low-carbon society extent of impact mitigation. EN27 Percentage of products sold and their packaging materials that are reclaimed Yes KPI table, enabling a low-carbon society. All packaging material circulating by category. in Belgium is subject to FostPlus and Val-i-Pac national collection systems. EN29 Significant environmental impacts of transporting products and other goods Yes KPI table (included in total transport figures) and materials used for the organization’s operations. Social Performance indicators Labor practices and decent work performance indicators LA1 Total workforce by employment type, employment contract, and region. Yes Promoting a positive working culture LA2 Total number and rate of employee turnover by age group, gender, and Yes KPI table / Annual Report region. LA4 Percentage of employees covered by collective bargaining agreements. Yes KPI table LA6 Percentage of total workforce represented in formal joint management– Yes KPI table worker health and safety committees. LA7 Rates of injury, occupational diseases, lost days, and absenteeism, and Yes KPI table number of work-related fatalities by region. LA8 Training, prevention, and risk-control programs in place to assist workforce Yes Promoting a positive working culture members, their families, or community members regarding serious diseases. LA10 Average hours of training per year per employee by employee category. Yes KPI table, Promoting a positive working culture LA11 Programs for skills management and lifelong learning that support the Yes Promoting a positive working culture / Annual Report continued employability of employees and assist them in managing career endings. LA12 Percentage of employees receiving regular performance and career Yes KPI table development reviews.

84 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c CSR

LA13 Composition of governance bodies and breakdown of employees per Yes KPI table / Annual report (HR) category according to gender, age group, minority group membership, and other indicators of diversity. Human rights HR2 Percentage of significant suppliers and contractors that have undergone Yes Developing a responsible supply chain screening on human rights and actions taken. HR3 Total hours of employee training on policies and procedures concerning Yes Developing a responsible supply chain aspects of human rights that are relevant to operations, including the percentage of employees trained. HR6 Operations identified as having significant risk for incidents of child labor, and Yes Developing a responsible supply chain measures taken. HR7 Operations identified as having significant risk for incidents of forced or Yes Developing a responsible supply chain compulsory labor, and measures taken. Society performance indicators SO1 Nature, scope, and effectiveness of any programs and practices that assess Yes We measure landlord relationship satisfaction (KPI table), dialogue with and manage the impacts of operations on communities, including entering, communities close to base stations, network compliance with EMF norms operating, and exiting. Product responsibility performance indicators PR3 Type of product and service information required by procedures, and Partial KPI table (labeling of EMF Exposure level) percentage of significant products and services subject to such information requirements. PR6 Programs for adherence to laws, standards, and voluntary codes related Partial Enhancing Access to communications / included in our Code of Conduct to marketing communications, including advertising, promotion, and and Belgacom complies with competition laws sponsorship. Telecommunications sector specific guidelines Category: internal operations IO1 Capital investment in telecommunication network infrastructure broken down No Annual report by country/region. IO4 Compliance with ICNIRP (International Commission on Non-Ionising Yes Communicating on electromagnetic fields and health (labeling of exposure Radiation Protection) standards on exposure to radiofrequency (RF) emissions levels) from handsets. IO5 Compliance with ICNIRP (International Commission on Non-Ionising Yes Communicating on electromagnetic fields and health (regional norms on Radiation Protection) guidelines on exposure to radiofrequency (RF) emissions exposure to EMF) from base stations. IO6 Policies and practices with respect to Specific Absorption Rate (SAR) of Yes Communicating on electromagnetic fields and health (labeling of SAR) handsets. IO7 Policies and practices on the siting of masts and transmission sites including Yes We measure landlord relationship satisfaction (KPI table), dialogue with stakeholder consultation, site sharing, and initiatives to reduce visual impacts. communities close to base stations, network compliance with EMF norms Describe approach to evaluate consultations and quantify where possible. Category: providing access Access to telecommunications products and services: bridging the divide 1 PA2 Policies and practices to overcome barriers for access and use of Yes Enhancing access to communications telecommunication products and services. PA3 Policies and practices to ensure availability and reliability of Partial Enhancing access to communications telecommunications products and services and quantify, where possible, for specified time periods and locations of down time. PA4 Quantify the level of availability of telecommunications products and services Yes KPI table in areas where the organisation operates. PA7 Policies and practices to manage human rights issues relating to access and Yes Enhancing access to communications use of telecommunications products and services. PA8 Policies and practices to publicly communicate on EMF related issues. Yes Communicating on electromagnetic fields and health (information of Include information provides at points of sales material. population, exposure level labeling) PA10 Initiatives to ensure clarity of charges and tariffs. Yes Enhancing access to communications PA11 Initiatives to inform customers about product features and applications Yes Enhancing access to communications, enabling a low-carbon society that will promote responsible, efficient, cost effective, and environmentally preferable use. Category: Technology applications TA2 Provide examples of telecommunication products, services and applications Yes Enabling a low-carbon society that have the potential to replace physical objects (e.g. a telephone book by a database on the web or travel by videoconferencing). TA3 Disclose any measures of transport and/or resource changes of customer Partial Enabling a low-carbon society use of the telecommunication products and services listed above.

Belgacom Annual Report 2009 - 85 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c 86 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Forward with our shareholders

Belgacom is a company quoted on the stock market, and its success is measured – and influenced – by its share-price and by the way we are perceived by investors. This is why our attention to our shareholders is up there with our attention to customers, staff, and our wider community. WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Shareholder information

Belgacom aims at transparent and consistent communication with the Belgian and international investment world. Through an open and regular dialogue with investors and financial analysts, the Group aims to achieve a fair share value.

Stock market: First Market of Each quarterly results announcement is followed by a conference call with the analyst Euronext Brussels community. Twice a year, following the full-year and half-year results, Belgacom Ticker: BELG organises a roadshow, covering the main money centers of Europe and the United ISIN: BE0003810273 States. Furthermore, Belgacom participates in several major international investment National SVM 3810.27 conferences. In between these events, meetings and conference calls with senior code: management are organised. In all these activities, the management is supported by the Bloomberg BELG BB Investor Relations team. code: Thomson code: BELG-BT On a daily basis, the retail and institutional shareholders as well as the analysts can count on the support of the Investor Relations team. Four weeks before the announcement of the quarterly results and six weeks before the annual results Belgacom Investor Relations adopts a quiet period.

Changes in the share capital and number of shares End 2009, Belgacom held 17,410,452 treasury shares, representing 5.2% of the total number of shares. In the course of 2009, 221,238 treasury shares were used in a Discount Share Purchase Plan for Belgacom management, and 59,184 options were exercised.

Treasury shares evolution Status 31 December 2008 17,690,874 Options exercised during 2009 -59,184 Ray Stewart – Executive Vice Discount Purchase Plan employees -221,238 President Finance & CFO Acquisition of treasury shares 0 “We keep an open dialogue with Cancellation 0 investors. We like to bring them Status 31 December 2009 17,410,452 a consistent and transparent story about the progress we The voting rights of the treasury shares are suspended by law. The dividend rights of the are making on our continued treasury shares acquired in 2004 are also suspended, whereas the dividend rights for long-term strategy. Gaining and shares acquired as from 2005 are cancelled. keeping the trust of investors is important, especially in difficult Under Belgian law, companies are prohibited from owning more than 20% of their times.” outstanding share capital.

88 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Shareholder

Belgacom ownership structure Ownership on 31 December 2009 Belgacom Shares % % % ownership total shares voting rights dividend rights Belgacom ownership Belgian State 180,887,569 53.5% 56.4% 55.9% structure (% of total shares) Belgacom 17,410,452 5.2% 0.0% 1.0% Free-Float 139,727,114 41.3% 43.6% 43.2% TOTAL 338,025,135 100.0% 100.0% 100.0%

Transparancy declarations According to Belgacom’s bylaws, the thresholds as from which a shareholding needs to be disclosed, have been set at 3% and 7.5%, in addition to the legal thresholds at 5% and each multiple of 5%.

In 2009, Capital Research and Management Company notified Belgacom twice of its 53.5% Belgian State change in shareholdership: 5.2% Belgacom Treasury Share • On 18 May 2009, its shareholdership in Belgacom fell below the 5% threshold. With 41.3% Free Float 16,577,773 Belgacom shares in its possession, Capital Research and Management Company had a participation of 4.9% of the shares with voting rights issued by Belgacom S.A. • On 8 October 2009, its shareholdership in Belgacom fell below the 3% threshold. With 10,062,800 Belgacom shares in its possession, Capital Research and Management Company had a participation of 2.98% of the shares with voting rights issued by Belgacom S.A.

Notifications of important shareholdings to be made according to the Law of 2 May 2007 or Belgacom’s bylaws should be sent to: • CBFA (e-mail [email protected], to be confirmed by fax on number +32 2 220 59 12) • Belgacom (e-mail [email protected], to be confirmed by fax on number +32 2 201 54 94)

Belgacom Annual Report 2009 - 89 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c The Belgacom share Belgacom closed the year 2009 with a share price of EUR 25.32 and a market capitalisation of EUR 8.1 billion. The share reached its year high closing price of EUR 28.65 on 5 January, and its lowest level on 15 June, with a closing price of EUR 21.67.

(1 January – 31 December) 2008 2009 Closing prices (in EUR) Closing price last trading day of year 27,33 25,32 Year high 33,31 28,65 Year low 24,58 21,67 Annual Trading volume (number of shares) 281,419,643 181,364,309 Average trading volume per day 1,099,295 708,454 (number of shares) Market Capitalisation 31 Dec. (billion EUR) 8.75 8.12 EUR Key figures Earnings per share (in EUR) 2.45 2.82 Ordinary dividend per share, gross (in EUR) 1.68 1.68 2.82 Extra-ordinary dividend per share, gross (in EUR) - - earnings per share Interim dividend per share, gross (in EUR) 0.5 0.4 in 2009 Price/Earnings ratio 31 December 11.15 8.98

Belgacom share compared to BEL20 and Euro STOXX The BEL20 and the DJ stoxx Telecommunication index have been rebased to the Belgacom share price on 1 January 2009 (in EUR).

price (in EUR) 40

37.5 BEL 20 35 32.5 Stoxx index 30 27.5 25 Belgacom 22.5 20 03/01 23/02 19/04 09/06 01/08 21/09 11/11 30/12

Shareholder remuneration Return to shareholders In October 2009, the Belgacom Board of Directors approved the payment of an interim dividend for a gross amount of EUR 0.40 per share (net amount of EUR 0.30 per share), corresponding to a total amount of EUR 128 million. The dividend was paid on 4 December 2009.

EUR On 25 February 2010, the Board of Directors decided to propose an ordinary dividend of EUR 1.68 per share to the Annual Shareholder Meeting of 14 April 2010. 2.08 This brings the 2009 total shareholder return to EUR 667 million, including the interim dividend per share dividend of EUR 0.4 per share paid in December 2009. After approval, the normal in 2009 dividend will be paid on 23 April 2010, with record date on 22 April 2010 and ex-dividend date on 20 April 2010.

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Dividend per Share EUR 2.18 2.18 2.18 2.08 2.0 1.93 1.89 1.68 1.68 1.68 1.38 1.68 1.60 1.5 1.52 2.18 expected dividend 1.0 for 2010

0.5 0.55 0.50 0.50 0.50 0.40 Normal dividend 0.29 0.0 Extra-ordinary dividend 2004 2005 2006 2007 2008 2009 2010 expected Interim dividend

New shareholder return policy Belgacom Belgacom’s shareholder return policy remained unchanged since the IPO in March 2004. Over the past years, however, Belgacom has returned cash amounts to its shareholders commits itself significantly exceeding the stated dividend policy of 50% to 60% of Group net income, to an attractive under the form of dividends, interim dividends and share buybacks. shareholder To increase the transparency of its future shareholder remuneration, Belgacom’s remuneration management proposed to the Board of Directors a new shareholder return policy that clearly reflects the company’s overall shareholder remuneration intentions. policy by returning, in principle, most On 25 February 2010, the Belgacom Board of directors approved the shareholder return policy as follows. of its annual free cash flow(1), to its Belgacom commits itself to an attractive shareholder remuneration policy by returning, in principle, most of its annual free cash flow(1), to its shareholders. shareholders.

The return of free cash flow, either through dividends or share buybacks, will be reviewed on an annual basis, in order to keep strategic financial flexibility for future growth, organically or via selective M&A, with a clear focus on value creation. This also includes confirming appropriate levels of distributable reserves.

From the financial result of the year 2010, Belgacom expects to return an annual dividend of EUR 2.18 per share, payable in two tranches: an interim dividend of EUR 0.5 per share and a normal dividend of EUR 1.68 per share.

The shareholder remuneration policy is based on a number of assumptions regarding future business and market evolution, and may be subject to change in case of unforeseen risks or events outside the company’s control.

Financial calendar 14 April 2010 Annual General Shareholder meeting 7 May 2010 Announcement of first quarter results 2010 30 July 2010 Announcement of half-year results 2010 29 October 2010 Announcement of third quarter results 2010

(1) Belgacom defines free cash flow as cash flow generated by operating activities, minus capital expenditures and including other investing activities such as acquisitions or divestments. Belgacom Annual Report 2009 - 91 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Forward with transparency

Belgacom undertakes to comply with the Belgian Corporate Governance Code 2009. We believe that good corporate governance is the basis for long-term success. Responsi- bility and transparency are the key words, which enable us to meet the expectations of our stakeholders.

92 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Corporate governance

Corporate governance aims to define a set of rules and behaviours according to which companies are properly managed and controlled, with the objective of increasing transparency. It is a system of checks and balances between the shareholders, the Board of Directors and management. Belgacom is committed to comply with the legal, regulatory, and more specifically the best practices of Belgium’s Corporate Governance Code.

Belgacom governance model Functioning of the Board of Directors The Board of Directors meets whenever the interests of the At Belgacom, the Articles of Association are strongly influenced company so require or at the request of at least two Directors. In by the specific legal status of the company. As a limited liability principle, the Board of Directors meets every year in four regularly company under public law, Belgacom is in the first instance scheduled meetings. The Board of Directors must also evaluate governed by the Law of 21 March 1991 on autonomous public the strategic long-term plan in an extra meeting each year. sector enterprises (“the 1991 Law”). For matters not explicitly regulated otherwise by the 1991 Law, Belgacom is governed In general, the Board’s decisions are made by simple majority of by Belgian corporate law. The key features of Belgacom’s the Directors present or represented, although for certain issues governance model are: a qualified majority is required. • A Board of Directors, which defines Belgacom’s general policy and strategy and supervises operational management; The Board of Directors has adopted a Board Charter which, • The creation by the Board of Directors within its structure together with the charters of the Board Committees, reflects the of an Audit and Compliance Committee, a Nomination and principles by which the Board of Directors and its Committees Remuneration Committee and a Strategic and Business operate. Development Committee; • A President & Chief Executive Officer, who takes primary The Board Charter provides, among other things, that important responsibility and ownership for operational management decisions should have broad support, understood as a (including, but not limited to, day-to-day management); qualitative concept indicating effective decision-making within • A Management Committee, which assists the President & Chief the Board of Directors following a constructive dialogue between Directors. They should be prepared by standing or ad hoc Board Executive Officer in the exercise of his duties. Committees with significant representation of non-executive, Board of Directors independent Directors within the meaning of Article 526ter of the Belgian Company Code. As provided for in the 1991 Law, the Board of Directors is composed of: All charters were updated on 5 March 2009. • Directors appointed by the Belgians State in proportion to its shareholding Committees of the Board of Directors • Directors appointed by a separate vote among the other In accordance with the bylaws, Belgacom has an Audit and Com- shareholders, for the remaining seats. These Directors are pliance Committee, a Nomination and Remuneration Committee independent according to the criteria of article 526ter of the and a Strategic and Business Development Committee. Belgian Code of Companies and the criteria of the Belgian Corporate Governance Code. The Board of Directors is Audit and Compliance Committee composed of maximum 16 members, including the person The Audit and Compliance Committee (ACC) consists of five appointed as President & Chief Executive Officer. non-executive Directors, the majority of whom must be independent. In line with its charter, it is chaired by an independent

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Director. The Audit and Compliance Committee’s role is to assist these meetings, the Committee organises a meeting on Human and advise the Board of Directors in its oversight of: Resources and a meeting on Corporate Governance. • The financial reporting process; • Efficiency of the systems for internal control and risk manage- Mr. Theo Dilissen (Chairman), Ms. Martine Durez, Mr. Georges ment of the company; Jacobs and Ms. Lutgart Van den Berghe are the members of the • The Company’s internal audit function and its efficiency; Nomination and Remuneration Committee. • The quality, integrity and legal control of the statutory and the Strategic and Business Development Committee consolidated annual accounts and the financial statements of The Strategic and Business Development Committee (SBDC) the Company, including the follow up of questions and recom- consists of six Directors. In line with its charter, the President & mendations made by the auditors; Chief Executive Officer and the Chairman of the Board of Direc- • The relationship with the Company’s auditors and the assess- tors are ex-officio members, and the Committee is chaired by ment and monitoring of the independence of the auditors; the Chairman of the Board of Directors. One additional member • The Company’s compliance with legal and regulatory require- is chosen among the Directors appointed by the Belgian State. ments; and compliance within the Company with the Compa- Three members must be appointed among the independent ny’s Code of Conduct and the Dealing Code. Directors.

The Audit and Compliance Committee meets at least once every The Strategic and Business Development Committee’s role is to quarter. Mr. Philip Hampton (Chairman), Messrs. Pierre-Alain De review envisaged acquisitions, mergers and divestments over Smedt, Michel Moll, Oren G. Shaffer and Paul Van de Perre are EUR 100 million and to review large corporate restructuring pro- the members of the Audit and Compliance Committee. grammes. If appropriate, the Board of Directors can decide on establishing a special ad hoc Committee, dealing with a specific Nomination and Remuneration Committee subject, and composed of members with the appropriate experi- The Nomination and Remuneration Committee (NRC) consists of ence. four Directors. In line with its charter, this committee is chaired by the Chairman of the Board of Directors, who is an ex-officio member. Mr. Theo Dilissen (Chairman), Mr. Didier Bellens, and Messrs. Guido J.M. Demuynck and Oren G. Shaffer are currently the One member is chosen among the Directors appointed by the members of the Strategic and Business Development Commit- Belgian State. Two members must be appointed among the tee. independent Directors.

The Nomination and Remuneration Committee’s role is to assist Changes in the composition of the Board and advise the Board of Directors regarding: of Directors • The nomination of candidates for appointment to the Board of The mandate of Mr. Robert Tollet came to an end on 30 Septem- Directors and the Board Committees; ber 2009. • The appointment of the President & Chief Executive Officer and The mandate of Mr. Didier Bellens as President & Chief Executive of the members of the Management Committee on proposal of Officer was renewed in December 2008 for a period of 6 years the President & CEO; which will end on 28 February 2015. • The appointment of the Secretary General; • The remuneration of the members of the Board of Directors and The mandate of Mr. Theo Dilissen as Director was renewed in the Board Committees; March 2009 for a renewable period of 6 years which will end • The remuneration of the President & Chief Executive Officer and on 28 February 2015. His mandate as Chairman was renewed members of the Management Committee; for a renewable period of 3 years which will end on 29 February • The review on an annual basis of the remuneration philosophy 2012. and strategy for all personnel, and specifically the compensation packages of top senior management; Directors’ remuneration • The oversight of the decisions of the President & Chief Execu- The remuneration and compensation of the Directors was tive Officer with respect to the appointment, the dismissal and decided by the General Shareholders Meeting of 2004. The cal- the compensation of management; culation of this compensation did not change in 2009: it foresees • Corporate governance issues. an annual fixed compensation of EUR 50,000 for the Chairman of the Board of Directors and of EUR 25,000 for the other members The Nomination and Remuneration Committee meets at least of the Board of Directors, with the exception of the President & four times a year. CEO. All members of the Board of Directors, with the exception of the President & CEO, have the right to an attendance fee of The first meeting each year reviews the performance, budgets EUR 5,000 per attended meeting of the Board of Directors. for payout of bonus and merits, and long-term and short-term incentive plans. At that meeting an annual review of the philoso- Attendance fees of EUR 2,500 have been foreseen for each phy and strategy of the remuneration is also discussed. At the member of an advisory committee to the Board of Directors, with second meeting the Nomination and Remuneration Committee the exception of the President & CEO. For the Chairman these fixes the performance measurement targets of the President & attendance fees are doubled. The members also receive EUR Chief Executive Officer and the members of the Management 2,000 per year for communication costs. For the Chairman of the Committee through Key Performance Indicators. In addition to Board of Directors the communication costs are also doubled.

Belgacom Annual Report 2009 - 95 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Members of the Board of Directors

Georges Jacobs Philip Hampton Martine Durez Didier Bellens Pierre-Alain Baron Jacobs is Chairman Mr. Hampton spent the first ten Ms. Durez was the Chief President & Chief Executive De Smedt of the Board of Directors of years of his career at Lazard Financial and Accounting Officer Officer and Director of Belgacom Mr. De Smedt is Chairman Delhaize Group. He started as Brothers in London, New York at La Poste until January 2006 since March 2003, more of Febiac (Fédération belge an economist at the International and Paris. He then took up the when she became Chairman info see p. 100, Members of de l’Automobile et du Cycle). Monetary Fund (USA). Later, he positions of Finance Director for of the Board of La Poste. Ms. the Belgacom Management From 1999 till end of 2004 he joined the UCB Group and was British Steel plc, British Gas plc Durez was also Professor of Committee. was Executive Vice President appointed Director and CEO and British Telecommunications Financial Management and of Renault. He was chairman of UCB in 1987 until 1 January Group plc and for Lloyds TSB Analysis at the University of Oren G. Shaffer of Autolatina, VAG and Ford’s 2005, when he became Group plc. He was Chairman of Mons-Hainaut till 2000. She joint venture subsidiary in Chairman of the Board. He holds J. Sainsbury plc. from 2004 until has also served as a member of Formerly, Mr. Shaffer was Vice Chairman and Chief Latin America. He served as a law degree and a degree in October 2009. Mr. Hampton the High Council of Corporate Chairman of Volkswagen Brazil economics from UCL, as well as became Chairman of The Auditors and the Committee of Financial Officer of Qwest Communications from 2002 to and Argentina before being a Master of Arts in Economics Royal Bank of Scotland Group Accounting Standards and as a appointed as Chairman of Seat. from the University of California, in February 2009 and a non special emissary at the Cabinet 2007 and President and Chief Operating Officer of Sorrento Mr. De Smedt is the Chairman Berkeley. executive Director of Anglo for Communication and State of the Board of Deceuninck American plc in December 2009. Companies. She serves as a Networks. He was a member of the Board of Directors at Plastics Group and a member Michèle Sioen He is a Chartered Accountant regent of the National Bank of of the Board of Avis Group and and holds an MBA from INSEAD, Belgium. Ms. Durez graduated Belgacom from 1996 to 2000. Since 2005 Michèle Sioen is He is a member of the Board of Alcopa (Group Moorkens). He is Fontainebleau and a M.A. from as a Commercial Engineer the Vice President of FEB/VBO CEO of the Sioen Industries Oxford University. and holds a PhD in Applied Intermec and Terex Corporation. group. She started her career He holds a Bachelor of Science (Fédération des Entreprises de Economics from the University of Belgique). He is a graduate in in 1988 at an IT company. Two Brussels (ULB). in business administration from years later she was appointed Paul Van de Perre The University of California at engineering and economics of director of the Board of Directors Mr. Van de Perre is the co- Berkeley and a Master of the University of Brussels (ULB). of Sioen Industries and actively founder of GIMV (Venture Science in management from joined the Sioen Industries Capital Firm) and was formerly The Massachusetts Institute of group. The group produces and a director of Sidmar (Arcelor). Technology. processes technical textiles, He is currently director of designs and manufactures Grontmij NV, Greenbridge personal protective clothing Incubator (University of Ghent) and produces fine chemicals. and member of the Investment Furthermore, Michèle Sioen Committee of PMV. Mr. Van de is President of Fedustria Perre is CEO of Five Financial (the Belgian association of Solutions (corporate finance) and textile, wood and furniture CEO of Caesar Real Estate Fund industries). She holds a degree (real estate finance). He holds in Economics and several post- an MBA in Economics and is a graduate degrees. certified accountant (IAB).

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Michel Moll Lutgart Carine Doutrelepont Jozef Cornu Guido J.M. Demuynck Mr. Moll serves as a non executive Van den Berghe Ms. Doutrelepont is a lawyer at Mr. Jozef Cornu embarked on Mr. Demuynck is CEO of Liquavista director in industrial and financial Ms. Van den Berghe holds a PhD the Brussels’ Bar and member his career at the Brown Boveri since August 2009. He held companies such as Société in economics from Gent University of the Bar of Paris. She is the Research center (now ABB) various positions within Philips Nationale de Construction where she is an extraordinary founding partner of the Belgian in Switzerland in 1970. From from 1976 till 2002. Amongst Aérospatiale and the Belgian professor. She is a Partner at the law firm Doutrelepont & Partners, 1973 until 1982 he held various others, he was Vice President Corporation for International Vlerick Leuven Gent Management which specialises in Information positions in Bell Telephone Mfg Marketing Audio in the USA, Investment (SBI). He is also a School and executive director and Communication Technologies, Co, the Belgian subsidiary of the CEO of Philips in South Korea, Censor of the National Bank of of GUBERNA, the Belgian Intellectual property, Media law, ITT Group. From 1982 to 1984 General Manager Line of Business Belgium. Until April 2007 he was Directors’ Institute. She lectures on Competition matters and European he was CEO of Mietec, a start-up Portable Audio in Hong Kong, President & CEO of the limited Corporate Governance and serves law. She holds a PhD in law from semiconductor company. From CEO Group Audio in Hong Kong. company BATS (Belgian Advanced as a non-executive director in a the University of Brussels (ULB). 1984 to 1987 he was General In 2000, he became CEO Product Technology Systems), specialized number of listed and non-listed She is a Professor of Media Manager of Bell Telephone Mfg Division Consumer Electronics in in Security Electronics, in Liège. multinational companies such as Law, Intellectual Property Law, Co. From 1988 to 1995 he was a Amsterdam and member of the Until December 2005, Mr. Moll was Electrabel, CSM (The Netherlands), and European Law at the ULB member of the Management Board Group Management Committee President of the venture company SHV Holding (The Netherlands). Faculty of law, at the Institute for of Alcatel NV, before assuming the of Philips. In 2003, Mr. Demuynck BRUFICOM and before that he European Studies, as well as in post of General Manager of Alcatel joined Royal KPN where he was manager and director of the universities in other countries. Telecom from 1995 to 1999. From became member of the Board National Investment Corporation Mimi Lamote She is also President of the 2000 to 2008 he was a member of Management and CEO of (SNI) in Brussels. Mr Moll Ms. Lamote is Vice President Information and Communication of the board of Alcatel (and later the Mobile Division (KPN Mobiel graduated as Engineer in applied at Pearle Europe, Amsterdam. Law Centre of the ULB. For years, Alcatel-Lucent) and advisor to the Netherlands; Base Belgium, economics from the business She started her career in retail she worked as an Expert for the chairman until 2004. From 2006 E-Plus Germany). Until July 2008, school of the University of Louvain in 1988: she occupied different European Commission (General to 2007 he was chairman of ISTAG he was the CEO of Kroymans (UCL). functions in C&A Europe. From Directorate Internal Market), at the (Information Society Technologies Corporation BV in the Netherlands. 2001 until 2005 Ms. Mimi Lamote Belgian Senate and at the Belgian Advisory Group) of the European Mr. Demuynck is also member Theo Dilissen was General Manager of C&A Competition Authority. Since 2008, Union. From 2007 to 2008 he of the Supervisory Board of Tom Belgium-Luxembourg. From she is a Member of the Royal was chairman of Medea+, the Tom since June 2005. He holds a Chairman of the Board of Directors 2001 until 2004 she was member Academy of Belgium (Technology European Eureka programme for degree in applied economics from of Belgacom since October 2004. of the Board of Directors of the and Society Section). She is research in Microelectronics. Mr the university of Antwerp (UFSIA ) Previously Mr. Dilissen was CEO, Federation of Enterprises in the author of several books and Cornu is CEO of Agfa-Gevaert and a degree in marketing from the Managing Director and Vice- Belgium (FEB). In the same period, publications. since 1 December 2007. He is University of Ghent ( R.U.G ). Chairman of Real Software and Mrs. Lamote was also member also a non-executive director at from 1989 to 2000 he was COO of the Board of Directors of Fedis KBC. Mr Cornu holds a degree and member of the Board of ISS (Federation of Distribution). From of civil engineer in electrical and (a Danish publicly listed company). January 2005 until June 2006 mechanical engineering from the From September 2005 until the she was CEO of SCF (Belgium- Catholic University of Leuven, as end of March 2009 he was CEO Lithuania), listed on the Belgian well as a Ph.D. in electronics from and afterwards Chairman of stock market. From February Carleton University in Ottawa, Aviapartner. He studied Sociology 2007 until October 2009, Ms. Canada. and holds a Master in Business Lamote worked as COO in ZNA Administration. (hospital network Antwerp). She holds a university degree in Applied Economic Sciences of the University of Antwerp and a master in Retail Management of the Tias University of Tilburg.

Georges Jacobs Michèle Sioen Philip Hampton Paul Van de Perre Martine Durez Didier Bellens Oren G. Shaffer Pierre-Alain De Smedt Michel Moll Theo Dilissen Mimi Lamote Lutgart Van den Berghe Carine Doutrelepont Jozef Cornu Guido J.M. Demuynck WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c The Directors do not receive performance-based remunera- Members of the Board of Directors appointed by tion such as bonuses or long-term share-related incentive pro- the shareholders’ meeting and independent grammes, nor do they receive benefits linked to pension plans. term Name Age Position Since expire Transactions between the company and its Board Jozef CORNU 65 Director 2009 2015 Members and executive managers Guido J.M. DEMUYNCK 59 Director 2007 2013 A general policy on conflicts of interest applies within the com- Pierre-Alain DE SMEDT 66 Director 2004 2010 pany. It prohibits the possession of financial interests that may Carine DOUTRELEPONT 49 Director 2004 2013 affect personal judgment or professional tasks to the detriment Philip HAMPTON 56 Director 2004 2010 of the Belgacom Group. Georges JACOBS 69 Director 2004 2013 Oren G. SHAFFER 67 Director 2004 2013 In accordance with article 523 of the Belgian Companies Code, Lutgart VAN den BERGHE 58 Director 2004 2010 the President & CEO, Mr. Didier Bellens, declared to have a conflict of interest in connection with the Employee Incentive Plans of Activities Report and Attendance at Board and the agenda of the Board of Directors’ meeting of 5 March 2009. Committee meetings He is in fact a beneficiary of the Senior Management Short- & The Board of Directors in its meeting of July 30, 2009 decided Long-term Incentive Plan 2009. He informed Belgacom’s auditor to create an ad hoc Committee, consisting of the members of of this conflict of interest and decided not to participate in the the Nomination and Remuneration Committee extended with the deliberation or voting on this item. Chairman of the Audit & Compliance Committee in order to prepare the Board’s position with respect to the investigation of the Members of the Board of Directors CBFA on the possible misuse of privileged information in relation appointed by the Belgian State to the acquisition of Telindus in 2005. term Name Age Position Since expire Name Board ACC NRC Ad hoc SBDC TOTAL (1) (total 5) (total 5) (total 5) Ctee (total 1) Remuneration Theo DILISSEN 56 Chairman of 2004 2015 (total 1) (EUR) the Board(1) Theo DILISSEN (1) 4/5 4/5 1/1 1/1 124,000 Didier BELLENS 54 President & 2003 2015 CEO Didier BELLENS 5/5 1/1 0 Martine DUREZ 59 Director 1994 2012 Jozef CORNU 4/5 40,750 Mimi LAMOTE 45 Director 2006 2012 Guido J.M. DEMUYNCK 5/5 1/1 54,500 Michel MOLL 62 Director 1994 2012 Pierre-Alain DE SMEDT 5/5 5/5 64,500 Michèle SIOEN 44 Director 2006 2012 Carine DOUTRELEPONT 5/5 52,000 Robert TOLLET(2) 64 Director 2003 2009 Martine DUREZ 5/5 5/5 1/1 67,000 Paul VAN de PERRE 57 Director 1994 2012 Philip HAMPTON 4/5 5/5 1/1 74,500 Georges JACOBS 5/5 5/5 1/1 67,000 (1) As chairman until 2012 (2) End of mandate 30/09/2009 Mimi LAMOTE 5/5 52,000 Michel MOLL 5/5 4/5 67,000 Oren G. SHAFFER 5/5 5/5 1/1 67,000 Michèle SIOEN 4/5 47,000 Robert TOLLET (2) 2/3 1/1 33,250 Lutgart VAN den BERGHE 5/5 5/5 1/1 67,000 Paul VAN de PERRE 5/5 5/5 64,500

(1) As chairman until 2012 (2) End of mandate 30/09/2009

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Application of the measures taken by Management Committee the company in order to comply with The members of the Management Committee are appointed and dismissed by the Board of Directors on proposal of the President legislation on insider trading and market & Chief Executive Officer, after consultation of the Nomination manipulation (market abuse) and Remuneration Committee. The powers of the Management In order to comply with legislation on insider dealing and market Committee are determined by the President & Chief Executive manipulation, Belgacom adopted a dealing code prior to the Officer. The Management Committee’s role is to assist the Presi- Initial Public Offering. This code aims to create awareness about dent & Chief Executive Officer in the exercise of his duties. possible improper conduct by employees, officers and Directors The Management Committee aims to decide by consensus, but and the possible sanctions. This dealing code has been widely in the event of disagreement, the view of the President & Chief communicated and is available to all employees. A list of key Executive Officer will prevail. persons is kept, and all Directors and key employees were requested to sign an affidavit that they had read, understood The Management Committee generally meets on a weekly and agreed to comply with the dealing code. Closed periods basis. (including prohibited periods) are defined, and any deal must be communicated to and cleared by the Head of Compliance Services In 2009, the Belgacom Management Committee was composed before transaction (see “Compliance” section on p. 106). of the following members, in addition to the President & Chief Executive Officer (see table below). Management President & Chief Executive Officer Name Age Position The President & Chief Executive Officer is appointed by the Bel- Scott ALCOTT 44 Executive Vice President Service Delivery Engine gian State by Royal Decree deliberated in the Council. Grégoire DALLEMAGNE 37 Executive Vice President Strategy Astrid DE LATHAUWER 46 Executive Vice President Human Appointments are for a renewable six-year term, and can be ter- Resources minated only by Royal Decree deliberated after discussion in the Michel DE COSTER 47 Executive Vice President Enterprise Business Unit & Chief Executive Council of Ministers. In line with the 1991 Law and the Com- Officer of Telindus Group N.V. pany’s Articles of Association, the President & Chief Executive Michel GEORGIS 57 Executive Vice President Consu- Officer is a member of the Board of Directors. The President & mer Business Unit & Chief Execu- Chief Executive Officer and the Chairman of the Board of Direc- tive Officer Proximus (Belgacom Mobile) tors must come from different language groups. Ray STEWART 61 Executive Vice President Finance The President & Chief Executive Officer is entrusted with day- to-day management, and reports to the Board of Directors. In addition, in line with the 1991 Law and the company’s Articles of Association, the Board of Directors may, deciding by a majority of two thirds of its members present or represented, delegate all or part of its powers to the President & Chief Executive Officer, with the exception of: • The approval of the Management Contract with the Belgian State and changes to it; • The establishment of the business plan and general policy of the company; • The supervision of the President & Chief Executive Officer; • And other powers explicitly reserved by law to the Board of Directors which include, for example, the establishment of the annual accounts for submission to the General Shareholders Meeting and the preparation of merger proposals.

The Board of Directors has delegated broad powers to the Presi- dent & Chief Executive Officer.

The current President & Chief Executive Officer is Mr. Didier Bellens. Mr. Bellens’ six-year fixed-term contract started as from 1 March 2003 and was renewed in December 2008 for a new six-year term that will end on 28 February 2015.

Belgacom Annual Report 2009 - 99 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Members of the Belgacom Management Committee Didier Bellens He is also a member of the Board of Scott Alcott the University of Ghent and a degree Directors of AXA Belgium, VOKA (the in International Politics and Diplomatic Mr. Bellens started his career at Deloitte Scott Alcott is the Executive Vice Flemish Chamber of Commerce and Sciences from the University of Leuven. Haskin & Sells. He held the post of President of Belgacom’s Service Delivery Industry) and is on the steering committee financial Director of the Brussels Lambert Engine division. In that capacity, of the FEB (Federation of Enterprises Group until 1985, before taking on he oversees all technical infrastructure Michel Georgis in Belgium). In addition, Mr. Bellens the position of Deputy Manager of and operations for the group as well as serves as independent Chairman of Michel Georgis is since June 2007 the the Pargesa Holding, where he was wholesale activity. Previously Mr. Alcott the Appointments and Remuneration Executive Vice President of the Consumer responsible for the management of has served as Belgacom’s Chief Operating Committee, and as independent Business Unit Belgacom. He is also holdings, mergers and acquisitions. Officer Fixed Line Services, Chief Strategy Director of the Board of Directors of the the Chairman of Skynet and Tango Between 1992 and 2000 he was back at Officer, Chief Information and Technology Compagnie Immobilière de Belgique. Luxembourg Boards and member of the the Brussels Lambert Group, as Managing Officer, General Manager of Marketing He is also advisor to CV Capital Partners Committee for Development of Belgian Director, taking charge of the group’s and Product Management, EVP (a.i.) and member of the International Advisory Sports (Belgian Olympic Committee). strategic participations in companies such Enterprise Business Unit and CEO (a.i.) Council of the New York Stock Exchange. as Royale Belge, the BBL and the CLT. He of the Telindus Group. Prior to Belgacom, As of May 2005 and until the integration played an instrumental role in the merger Mr. Alcott held various positions in He is also a member of the Board of in January 2010, Michel Georgis was the between AXA and Royale Belge, the marketing, product management and new Directors of the Erasmus Foundation and CEO of Proximus (Belgacom Mobile). Prior change in ownership of the BBL, and the business development for AT&T, AT&T the ULB Foundation, and serves as Vice to this position he was as of January 2004 merger between the CLT and the UFA. Wireless, Ameritech and SBC. Chairman of the Solvay Business School’s the Chief Operations Officer at Proximus. Consultative Council. He joined Proximus in January 2000 as Between 2000 and 2003, he served as Mr. Alcott holds a B.S. in Economics from Executive Vice President Sales, Marketing CEO of the RTL Group, where he focused the Wharton School at the University of Mr. Bellens holds a degree in management & Customer Operations. on the group’s international expansion. Pennsylvania. engineering from the Solvay Business He concluded the merger with Pearson School (ULB). Michel Georgis started his career in Television and launched the RTL Group on Astrid De Lathauwer 1977 at Coca-Cola Belgium. In 1991 he the stock market. joined Interbrew, where he filled different Astrid De Lathauwer is the Executive positions before becoming Sales & Vice President Human Resources. Ms. Mr. Bellens was appointed Belgacom’s Marketing Director Central & Eastern De Lathauwer joined Belgacom in 2000 President and Chief Executive Officer for Europe. Michel Georgis holds a Master’s and previously held the positions of Top the first time in March 2003. His mandate degree in Applied Economics from the Group Resources & Talent Director and was then renewed in March 2009 for a University of Leuven. six-year term. Mr. Bellens is a member of HR Director of Belgacom. Prior to joining the Board of Directors of Belgacom ICS, Belgacom, Ms. De Lathauwer worked the Telindus Group, Proximus, Scarlet in marketing and human resources with and Tango. AT&T and Monsanto. Ms. De Lathauwer holds a degree in History of Art from

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Grégoire Dallemagne Michel De Coster Ray Stewart Grégoire Dallemagne joined Belgacom in Michel De Coster is the Executive Vice Ray Stewart is Executive Vice President 2008 as Executive Vice President Strategy. President Entreprise Business Unit. Finance & CFO. Prior to Belgacom, Mr Dallemagne started his career at Arthur Previously, Mr. De Coster worked in from 1994 until 1997 he was the Andersen in the audit division and then the Bosch Telecom Group as Sales Chief Financial Officer for Matav, the as consultant in the telecommunications Representative and rapidly evolved incumbent Telephone Company in team. Later, after a traineeship with within the sales organisation up to top Hungary. From 1991 to 1994 he was Microsoft (USA) while completing his management positions, finally becoming the Chief Financial Officer for Ameritech MBA, he embarked on his career in the Division Manager Benelux. In 1998, he International which was the International Tele2 group in 2000. From assistant to moved to Colt Telecom as Managing Business Development unit for Ameritech the CEO of Tele2 AB, he became group Director Belgium in order to set up the headquartered in Chicago. He has a financial controller and rapidly finance Belgian activities from scratch. In 2002, Business Undergraduate degree in manager of Tele2 Luxembourg, before Mr De Coster became CEO of BT Accounting and a Masters of Business launching the Tele2 activities in Belgium Benelux, a position he held until May 2008 Administration in Finance. He is also a from scratch in 2003. In 2005, he led when he joined the Belgacom Group. Certified Public Accountant. the acquisition of Versatel Belgium and Mr. De Coster holds a Master Degree in Ray Stewart is also member of the Board took the position of Managing Director of Political and Administrative Sciences. of Directors of Nyrstar since September Tele2 and Versatel Belgium. In 2007, KPN 2007. acquired Tele2 and Versatel Belgium and Mr Dallemagne became member of the Executive Committee of KPN International. Mr Dallemagne holds a commercial engineer degree from the Louvain School of Management, a CEMS Master from the Community of European Management Schools and an MBA from the University of Chicago Graduate School of Business. He is also member of the Board of UWE (the Walloon Chamber of Commerce and Industry) and Tango Luxembourg.

Belgacom Annual Report 2009 - 101 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Remuneration report The company wants to attract, retain and provide incentives for top executives for its Management Committee and for its senior As the 2009 edition of the Corporate Governance Code management. Belgacom wants its top executives to be clear role substantially revises the principles relating to remuneration of models, with a commitment to high performance and the com- executive managers and directors, the Corporate Governance pany values. Committee has drawn up implementation guidelines covering the main recommendations. In advance of any legal obligation, The top executives are covered by dedicated reward programmes Belgacom has decided to comply with these principles – which which focus on the principles of Belgacom strategy to consistently entail greater transparency over executive remuneration – in its reward high performance by individuals and by the company. To 2009 annual report. distinguish itself from other employers, Belgacom seeks to excel in the total package it offers, by providing not only cash but also Remuneration Policy numerous benefits. A fundamental principle of its remuneration Belgacom has an advanced and creative remuneration policy which is policy is a degree of freedom for executives in choosing how they regularly assessed and updated through close cooperation with exter- are to be rewarded. nal Human Resources fora and universities. The company wants to position top executive pay towards the The Belgacom remuneration policy aims at offering fair remuneration median in the market for base salaries, and towards the upper both to civil servants and to the group’s contractual employees, taking quartile for total remuneration when there has been sustained into account the performance of the employee and the company. The excellent performance. evolution of total remuneration is linked to the results of the company. The policy aims to ensure that top performers can benefit from Because of the Belgacom history as a public-service company, there the growth of the company through long-term incentive plans. are some differences in its dynamics and structure compared to the private sector. This is a major influence on how its remuneration policy The Nomination & Remuneration Committee sets the remunera- has evolved. Belgacom Human Resources developed creative and tion policy for top executives and decides the individual packages adaptable programmes to deal with its obligations related to the statu- for the President & CEO and the members of the Management tory employment status of some of its workforce, and introduced new Committee. These are regularly verified by benchmarking execu- elements that harmonised policies between civil servants and con- tive pay against both the BEL 20 companies and a set of peer tractual employees. Some powerful private sector instruments were companies in the ICT sector, both in Belgium and in Europe. In introduced, such as performance differentiation, job classification, 2009 an independent consultant assisted in this verification exer- employee engagement and variable pay. These were superimposed cise. on the traditional payment rules linked to statutory employment. The relationship between the distinct remuneration components Belgacom also maintains - and modernises - powerful public sector of the Belgacom Management Committee members and the instruments, such as work-life benefits and social assistance. It is the President & CEO is illustrated in the figures below (figure 1). responsibility of the Belgacom work-life department to combine the needs and responsibilities of employees and their families with those Figure 1: Relative importance of the various components of the company and society as a whole. Over the years it has won of remuneration (KPI’s 100% at target). several awards, including the ‘Entreprises Familles Admises’ prize, awarded by the ‘Ligue des Familles’, in 2007. This recognised the President & CEO efforts of Belgacom to create a balanced working environment for its staff. The public-sector component is also an important tool in brand- 43% Basic Remuneration ing in employment terms. The objective of Belgacom is to treat all 30% Variable Remuneration employees equally and to create a working environment in which any differences are acceptable to employees. 5% Group Insurance premiums 1% Other benefits The remuneration policies of Belgacom employees are determined in a process of full dialogue with the board of directors and the social 21% Share-based Remuneration partners.

Executive Remuneration Policy Belgacom Management Committee Belgacom has developed an executive remuneration policy which rewards executives competitively and at rates which are attractive in 46% Basic Remuneration the market, aligning the interests of management and of sharehold- 25% Variable Remuneration ers. 10% Group Insurance premiums 3% Other benefits 16% Share-based Remuneration

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Overview of executive remuneration Figure 3: The Belgacom Management Committee policy takes Remuneration earned by the CEO and the members of the into account Group, Business Unit and Individual performance Management Committee for the reported year Base salaries of the Management Committee are reviewed annually by the Nomination & Remuneration Committee, based on GROUP an extensive review of performance and potential assessment 30% provided by the President & CEO, as well as on external benchmarking data.

Annual variable pay is calculated in relation to performance against Key Performance Indicators set by the Board of Directors RESULT upon advice of the Nomination & Remuneration Committee. For 2009, these performance indicators included financial indicators BUSINESS INDIVI UNIT DUAL as well as non-financial indicators, at both Group and Business 30% 40% unit level.

Important non-financial indicators included are the ‘care and ease’ indicator and the ‘employee loyalty index’. The ‘care and ease’ indicator supports the ambition of Belgacom to offer superior service to each customer (care) and to re-introduce a culture The table on the next page reflects remuneration and other ben- of superior process quality (ease). The ‘care indicator’ measures efits granted directly or indirectly to the members of the Belga- the end-to-end satisfaction of our customers. The ‘ease indica- com Management Committee in 2009 by Belgacom or any other tor’ measures operational excellence in our customer interac- undertaking belonging to the Belgacom Group (benefit based on tions: the ‘First Time Right’ principle. Measurements are made gross or net remuneration, depending on the type of benefit). regularly of all interactions and channels with customers. The year-on-year evolution of the figures is the consequence of: Figure 2: Information about the ‘Care and Ease indicator’ • The new contract granting a new six-year mandate to the Presi- CARE dent & CEO; • The full-year impact of BMC members Michel De Coster (who joined the Group in May 2008) and Gregoire Dallemagne (who WEB Distribution Install & Usage Customer joined the Group in June 2008); Repair Service • Scott Alcott becoming subject to Belgian (rather than US) social security as from 2009; EASE • No merit increase being allocated to the president & CEO and the members of the Management Committee;

For convenience, we restated the figures of 2008 following the WEB Distribution Install & Usage Customer Repair Service new disclosure guidelines.

Another operational indicator is the ‘employee loyalty index’, which each year measures employees’ organisational commitment and job engagement, through a survey they fill in themselves. This is used as a starting point for further action.

The ‘Short-Term Incentives Plan’ offers the executive on a regular basis a choice between several pay formulas. The current options are cash, a complementary pension fund, and a ‘Share Purchase Plan’ - or a combination.

The Belgacom Group variable-pay system reflects the group values, emphasizes the strengths of the business units, and creates incentives for individual achievement.

Belgacom Annual Report 2009 - 103 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Table 1*: Overview basic and variable remuneration CEO and other members of the Management Committee President & CEO Other members of the Management Committee Remuneration 2008 2009 2008 2009 Basic Remuneration 1,362,254.35 985,720.74 2,235,699.33 2,647,390.97 Variable Remuneration 466,238.85 481,428.36 1,227,612.18 1,006,459.57 SUBTOTAL 1,828,493.20 1,467,149.10 3,463,311.51 3,653,850.54 Group insurance premiums 100,366.80 106,860.01 532,140.65 551,880.91 Other benefits 10,515.49 10,176.80 200,978.57 206,056.30 Share-based Remuneration 448,519.60 475,972.12 1,253,645.99 906,245.86 TOTAL (excl. employer’s social contribution) 2,387,895.09 2,060,158.03 5,450,076.74 5,318,033.62 TOTAL (incl. employer’s social contribution) 2,862,689.97 2,403,385.99 6,101,157.36 5,858,722.47 (*) In 2008 annual report, the ‘short-term employee benefits’ consists out of ‘basic remuneration’, ‘bonus’ and ‘other benefits’. In 2009, the ‘bonus’ part is included in the ‘variable remuneration’. In 2008, ‘post-employment benefits’ included ‘group insurance premiums’ and ‘complementary pension plans’ paid in the framework of the bonus. This last part is included in the ‘variable remuneration’ in the annual report of 2009.

Contractual arrangement of the President & CEO The President & CEO chose to receive his bonus through a In March 2009 Didier Bellens started the first year of his new ‘Share Purchase Plan’. The other members of the Management six-year mandate as President & CEO. He has a contract as a Committee have chosen different options. self-employed executive. Nevertheless he is subject to employee Extra-legal pension social security charges, in line with Article 11 § 1 of the Royal Decree of November 28, 1969. The President & CEO participates in a complementary pension scheme which foresees an annual indexed contribution of EUR This article states that ‘the application of the law on the social 73,495.45. The members of the Management Committee have security system for employees is expanded/extended to those a ‘Defined Benefit Plan’, except for Michel De Coster, who has a institutions of public utility and autonomous public enterprises ‘Defined Contribution Plan’ linked to his remuneration. as well as such individuals who, in their capacity of agent and against remuneration, devote their principal activity to the day- Other benefits to-day management or direction of these institutions and enter- Belgacom Group wants to encourage its executives by offering prises, to the extent no statutory pension regime is applicable to a portfolio of benefits and advantages that are competitive in the these individuals’. market place. The President & CEO and the Management Com- mittee receive benefits on top of their remuneration, including Basic remuneration insurance, car and other benefits in kind. The basic remuneration comprises the base salary earned for the reported year. The President & CEO, Didier Bellens, is also Share-based remuneration a non-remunerated member of the Board of Directors. During On an annual basis the members of the Management Committee 2009 neither the President & CEO nor the other members of the may also receive a stock-option grant. The options issued under Management Committee received a merit increase, in line with this plan are subscription rights, each giving the right (for a limited the general merit freeze in the Belgacom Group. period) to acquire Belgacom shares at a price equal to the value of the share at the time of grant of the options. Variable remuneration On an individual basis, the Management Committee received the The variable remuneration includes the actual bonus paid in the options mentioned in table below. Grants are awarded over a reported year 2009, for performance year 2008, through one of period of three years in equal instalments, and can be exercised the options of the ‘Short Term Incentive Plan’. within a period of seven years.

The CEO and the members of the Management Committee can In early 2009, the Belgian government approved a law permitting choose to receive the bonus in cash, or under the ‘Share Pur- the extension, under certain conditions, of certain stock options. chase Plan’ or complementary pension plan. Since Belgacom Group’s ‘Long-Term Incentive Plan’ falls within The Discounted Share Purchase Plan provides the right to buy the scope this extension, the Board of Directors of Belgacom allocated shares at a 16.67% discount. The price of the shares is decided to offer the opportunity of an extension of life of five determined by the price in April each year. The shares are treasury years for the stock options granted between 2004 and 2009 to shares and are blocked for a period of two years. The employee all Group employees holding such stock options within the condi- himself finances 83.33% of the full share purchase price. The tions of this law. As a consequence, the life of stock options held discount is financed by the employer. by the President & CEO and the members of the Management Committee has been extended within the limitations of the law.

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Table 2*: Overview of stock option plan: President & CEO and other members of the Management Committee Didier Scott Grégoire Michel Astrid DE Michel Ray BELLENS ALCOTT DALLEMAGNE DE COSTER LATHAUWER GEORGIS STEWART Stock options remaining from 371,703 111,043 55,000 55,000 103,409 71,605 151,527 previous years: Stock options Number 107,686 31,847 28,873 27,838 27,067 37,955 51,453 granted during Exercise price 22.71 22.71 22.71 22.71 22.71 22.71 22.71 reported year (in EUR) Stock options Number 0 0 0 0 0 0 0 exercised Year of grant during of options reported year exercised

Stock options Number 0 0 0 0 0 0 0 lapsed during Year of grant reported year of options lapsed TOTAL 479,389 142,890 83,873 82,838 117,493 109,560 202,980 (*) The decision on the principles of the stock option plan was taken by the Board on 5 March 2009.

Main provisions of the contractual relationship The other members of the Board of Auditors are, together with The President & CEO is bound by a non-competition clause, Ernst & Young, entrusted with the audit of the non-consolidated prohibiting him for 12 months from working for a competitor financial statements of the parent company. of Belgacom Group in Belgium and in those countries where Belgacom Group generates at least 5% of its consolidated Mr. Lesage’s mandate will expire on 30 June 2014, the mandates revenues. He will receive an amount equal to one year’s salary of Mr. Rion, Ernst & Young, and Callens, Guévar, Van Impe & Co. as compensation. will expire at the annual General Shareholders Meeting in 2010.

The members of the Management Committee, who are bound Additional fees paid to the statutory auditors by a non-competition clause prohibiting them for 12 months from In accordance with the provisions of Article 134 § 2 of the Bel- working for any other mobile or fixed licensed operator active on gian Companies Code, Belgacom declares the supplementary the Belgian market, will receive an amount equal to six months’ fees that it granted during the 2009 financial year to two audi- salary as compensation. tors, members of the Joint Auditors: Ernst & Young Réviseurs d’entreprises S.C.C.R.L. and Callens, Guévar, Van Impe & Co. Didier Bellens and Ray Stewart have a contractual termination S.C.C. clause with an indemnity of one year’s remuneration. The Group spent during the year 2009 an amount of EUR 618,210 Scott Alcott, Grégoire Dallemagne, Michel De Coster and Michel for non-mandate fees for Ernst & Young Réviseurs d’entreprises Georgis have a contractual termination clause with an indemnity S.C.C.R.L., the Group’s auditors. This amount is detailed as fol- of one year’s remuneration plus one month pay per year of lows: seniority acquired, with a maximum of two years’ remuneration (in EUR) Auditor Network of auditor after 12 years of service. Other mandatory audit missions 202,406 54,083 Tax advice 6,000 10,000 Astrid De Lathauwer has a contractual termination clause with Other missions 296,569 49,152 an indemnity of one year’s remuneration plus one month pay per Total 504,975 113,235 year of seniority acquired. The Group also spent during the year 2009 an amount of EUR Board of Auditors 6,500 for non-mandate fees paid to Callens, Guévar, Van Impe The Board of Auditors of the company is composed as follows: & Co. S.C.C.

ERNST & YOUNG Réviseurs d’Entreprises S.C.C.R.L./ This amount is detailed as follows: Bedrijfsrevisoren B.C.V.B.A., represented by Marnix Van Dooren, (in EUR) Auditor also Chairman of the Board of Auditors; Other mandatory audit missions 6,500 • Romain LESAGE, Member of the Court of Auditors; Tax advice 0 • Pierre RION, Member of the Court of Auditors; Other missions 0 • CALLENS, GUEVAR, VAN IMPE & Co S.C.C./B.C.V., repre- Total 6,500 sented by Herman VAN IMPE.

Ernst & Young is responsible for the audit of the consolidated financial statements of Belgacom and its subsidiaries.

Belgacom Annual Report 2009 - 105 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Government Commissioner The Compliance Program In 2009 the Belgacom Compliance Programme was reviewed The State has appointed Mr. Paul Vanwambeke, in replacement to ensure the involvement of the business with respect to com of Mr. Roger De Borger, whose mandate expired on 31 July pliance. 2009, as Government Commissioner in order to supervise, in conformity with the 1991 Law, the management of Belgacom The most important changes are the following: from an administrative point of view. (i) Within the Belgacom Group, “compliance” stands for: “The Departure from the 2009 Belgian decisions made and the process created to protect the company from economic and reputational harm, for arguably unlawful or Corporate Governance Code unethical (as defined by internal guidelines) behavior or inaction Belgacom complies with the principles and provisions of the of the company and its employees.” Hence, ethical behavior and 2009 Belgian Corporate Governance Code, except provisions respect for the values are part the compliance approach within 4.6, 4.7, 5.3/1, 5.4/1 and 8.8. Although provision 4.6 stipulates the Belgacom Group. that mandates of Directors should not exceed four years, the mandates of Belgacom Directors are for six years as prescribed (ii) Compliance, being for the business and by the business, by article 18 of the 1991 Law. Where provision 4.7 states that the active involvement of every business unit in the compliance the Board appoints its Chairman, article 18 § 5 of the 1991 Law activities is crucial. Hence, every business of the Belgacom foresees that the Chairman is appointed by the King. Contrary to Group has its own ambassador for compliance, the “Compliance provisions 5.3/1 and 5.4/1, the Company has chosen to reflect Business Partner”, who will lead and coordinate the compliance also in the Nomination & Remuneration Committee the balance efforts for his or her respective unit. Compliance plans are set between the Directors appointed by the Belgian State and the up per specific business unit whilst being articulated around the independent Directors. compliance domains.

Given its current shareholder structure, contrary to provision (iii) Compliance domains still form the pillars of the Belgacom 8.8, the Articles of Association do not provide for shareholders Compliance Programme. However, these Compliance Focus representing 5% of the capital to submit proposals to the Annual areas are redefined every year in function of the evolving busi- General Meeting. Under the Articles of Association, shareholders ness environment and the risks the Belgacom Group faces. In must represent at least one-fifth of the company’s share capital to 2009 the compliance domains were: be entitled to do so. • Corporate governance; • Regulatory compliance; Compliance • Accounting practices; • Competition law; Role of Compliance at Belgacom • Chinese walls; In an increasingly complex legal and regulatory context and a • Privacy; changing business environment, compliance plays an important • Environment; role in the business world. • Dealing Code.

The Belgacom Group Compliance Office is responsible for Since the Compliance Office is also responsible for ensuring Bel- coordinating compliance activities within the Belgacom Group, gacom Group employees recognise the need to be fully aware explaining the applicable rules, providing management with of and to comply with internal and external regulations, several the required tools to encourage compliance, and ensuring awareness-raising campaigns promoting employee compliance a consistent approach to compliance within the Group. All activities within the company have been organised. employees are expected to comply with the Code of Conduct and the various policies as they are updated. As in previous years, to raise awareness, the Top Group Resources within the Group signed, as role-models, a “Code of Conduct Acknowledgement and Conflict of Interest Statement”. In addition to the existing helpdesk, a “Code Focus” allowed employees to report any breaches of the law, the Code of Conduct or other regulations.

Organisation of compliance activities The Compliance Office is managed by the Vice President Group Legal, who reports directly to the Chairman of the Audit and Compliance Committee (ACC). The ACC Charter determines the ACC’s responsibility in helping and advising the Board of Directors with respect to monitoring Belgacom’s compliance with the legal and regulatory requirements, as well as internal compliance with the Code of Conduct.

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2G – mobile network of the second generation global and open cooperation, informs the ISAT – Interactive online self assessment tool: (GSM), allowing both voice and data transmission public of its members’ voluntary actions to tool is to enable employees to measure their with low throughput improve their sustainability performance, and stress level, determine the factors that cause and promotes technologies that foster sustainable maintain stress, and thus help them, with their 3G – mobile network of the third generation managers, to solve the issue (UMTS), allowing both voice and data development transmission with higher throughput (Universal GRI – “Global Reporting Initiative. This framework ISO27001 – Security Management Standard: Mobile Telecommunications System) sets out the principles and indicators that The basic objective of the standard is to help organizations can use to measure and report establish and maintain an effective information ADSL – Asymmetric Digital Subscriber Line management system, using a continual (high-speed connection) their economic, environmental, and social performance. In addition to the criteria described improvement approach BICS – Belgacom International Carrier Services in the chapter “”About our CSR Reporting””, GRI ISO14001 – Standard that provides the BIPT – Belgian Institute for Postal services and relies on following criteria: requirements for an environmental management Telecommunications Balance: The report reflects positive and negative system CBU – Consumer Business Unit aspects of the organization’s performance ISO 9001 – Standard that provides a set CEP – Code of Ethical Purchasing to enable a reasoned assessment of overall of standardized requirements for a quality CRF Institute – Corporate Research Foundation performance. The report discloses both management system CSR – Corporate Social Responsibility favourable and unfavourable results and topics. MMS – Multimedia Messaging Service DECT – Digital Enhanced Cordless Telephone: Comparability: The reported information is MTN – The MTN Group Limited is a multinational home cordless phone presented in a manner that enables stakeholders telecommunications group, operating to analyze changes in the organization’s in 21 countries across Africa and the Middle East DSL – Digital Subscriber Line (DSL) is a family performance over time, and could support NGO – Non-governmental organization: legally of technologies that provides digital data analysis relative to other organizations. The report constituted, non-governmental organization transmission over the wires of a local telephone and the information contained within it can be created by natural or legal persons with no network compared on a year-to-year basis. participation or representation of any government DVBT – Digital Video Broadcast Terrestrial Timeliness: Reporting occurs on a regular PABX – Private Automatic Branch eXchange EBITDA – Earnings before Interest, Taxes, schedule and information is available in time for Depreciation, and Amortization stakeholders to make informed decisions. PUE – Power Usage Effectiveness is a metric used to determine the energy efficiency of a data EBU – Enterprise Business Unit Clarity: Information is made available in a center. PUE is determined by dividing the amount manner that is understandable and accessible to Elix – Employee Loyalty Index of power entering a data center by the power stakeholders using the report. EMF – Electromagnetic fields: propagation of used to run the computer infrastructure within it. electric and magnetic energy through the air Accuracy: The reported information should be PUE is therefore expressed as a ratio, with overall Employee Loyalty Index sufficiently accurate and detailed for stakeholders efficiency improving as the quotient decreases to assess the reporting organization’s toward 1 ETNO – European Telecommunications Network performance. Operators’ Association is the principal policy PVR – Personal Video Recorder group for European electronic communications Reliability: Information and processes used in SAR – Specific Absorption Rate: unit for network operators. ETNO’s primary purpose is the preparation of a report should be gathered, measuring the quantity of electromagnetic energy to establish a constructive dialogue between its recorded, compiled, analyzed, and disclosed in that is absorbed by the human body when a member companies and decision-makers and a way that could be subject to examination and mobile phone is used. The maximum allowed other actors involved in the development of the that establishes the quality and materiality of the SAR in Europe is 2 W/kg in accordance with the European Information Society to the benefit of information ICNIRP guidelines users HDTV – High Definition television SDE –Service Delivery Engine FSC – Forest Stewardship Council is an HFC – Hybrid Fiber Coax SME – Small and Medium Enterprises international NGO and a certification system that HSDPA – High Speed Downlink Packet Access TDM – Time Division Multiplexing provides internationally recognized standard- (sometimes called 3.5 G or even 3 G +) setting, trademark assurance and accreditation VDSL – Very High Rate Digital Subscriber Line ICNIRP – International Committee on Non services to companies, organizations, and (advanced version of ADSL) Ionising Radiation Protection communities interested in responsible forestry. VDSL2 – Very High Speed Digital Subscriber The FSC label provides a credible link between ICT – Information and Communication Line 2 is an access technology that exploits the responsible production and consumption of Technologies existing infrastructure of copper wires forest products, enabling consumers and IP network – “An IP network is a computer VOD – Video on Demand businesses to make purchasing decisions that network made of devices that support the VoIP – Voice over Internet Protocol benefit people and the environment as well as Internet Protocol (IP) local wireless network providing ongoing business value IPP – Investors in People: standard allowing to WiFi – GPRS – General Packet Radio Service build up a complete picture of how a business WEEE – The Waste Electrical and Electronic Equipment Directive (WEEE Directive - EU) aims GeSI – Global e-Sustainability Initiative brings is managing its people and where it can make to reduce the amount of electrical and electronic together leading ICT companies – including improvements equipment being produced and to encourage telecommunications service providers and IPTV – Internet Protocol television is a system everyone to reuse, recycle and recover it manufacturers as well as industry associations through which digital television service is – and non-governmental organisations delivered using the architecture and networking committed to achieving sustainability objectives methods of the Internet Protocol Suite over a through innovative technology. GeSI fosters packet-switched network infrastructure

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As a listed company, Belgacom provides the market with a regular update of its operational and financial results. The main trends and variations for the Group and the segments are explained in the financial report. WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Key figures Financials

Revenue 2009 (before non-recurring items) (EUR million) Non-HR costs (EUR million)

6,000 5,978 5,990 1,000 890 840 +0.2% 800 -5.6% 4,000 600 400 2,000 200 0 0 2008 2009 2008 2009

Net Income (EUR million) Personnel (FTE)

1,000 904 5,718 CBU 800 800 +13% 5,328 EBU 16,804 600 3,303 SDE FTE 400 2,230 S&S 200 225 ICS 0 2008 2009

FCF (EUR million) Earnings per share (EUR) CAPEX (million)

1,000 3.00 2,82 1,000 2,45 800 797 800 764 2.00 600 600 597 400 409 EUR 400 1.00 EUR 10% 200 797 200 of Group 0 million 0 2.82 0 revenue 2008 2009 2008 2009 2008 2009

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Operationals

752,000 560,000 packs TV customers Customers increasingly opt for a multi-play of- Ranking Belgacom among the top 3 of fastest fer clearly showing the success of the Belgacom growing and most innovative IPTV platform in the convergence strategy world > 19 > 5 million billion minutes mobile customers In 2009, Belgacom added 142,000 new customers carried by BICS to end the year with a total of 5,059,000 mobile Ranking BICS among the top 4 largest operators customers worldwide in terms of traffic volume

Belgacom Annual Report 2009 - 111 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Key figures

Year ended 31 December Income Statement (EUR million) 2008 2009 Total revenue before non-recurring items 5,978 5,990 Non-recurring revenue 8 74 Total revenue 5,986 6,065 EBITDA (1) before non-recurring items 1,990 1,955 EBITDA (1) 1,905 1,967 Depreciation and amortization -743 -706 Operating income (EBIT) 1,161 1,261 Net finance costs -109 -117 Income before taxes 1,053 1,144 Tax expense -254 -241 Non-controlling interests -1 -1 Net income (Group share) 800 904 Cash flows and Capital Expenditures (EUR million) 2008 2009 Cash flows from operating activities 1,552 1,406 Capital expenditures -764 -597 Cash flows from / (used in) other investing activities -380 -12 Free cash flow (2) 409 797 Cash flows used in financing activities -570 -1,030 Net increase / (decrease) of cash and cash equivalents -161 -233 Balance sheet (EUR million) 2008 2009 Balance sheet total 7,782 7,450 Non-current assets 5,564 5,505 Investments, cash and cash equivalents 618 408 Shareholders' equity 2,271 2,521 Non-controlling interests 5 7 Liabilities for pensions, other post-employment benefits and termination benefits 777 677 Net financial position -1,835 -1,716 Data per share 2008 2009 Basic earnings per share (EUR) 2.45 2.82 Diluted earnings per share (EUR) 2.45 2.82 Weighted average number of ordinary shares 326,179,820 320,475,553 Data on employees 2008 2009 Number of employees (full-time equivalents) 17,371 16,804 Average number of employees over the period 17,465 16,878 Total revenue before non-recurring items per employee (EUR) 342,291 354,917 Total revenue per employee (EUR) 342,746 359,322 EBITDA (1) before non-recurring items per employee (EUR) 113,934 115,849 EBITDA (1) per employee (EUR) 109,058 116,551 (1) Earnings Before Interests, Taxes, Depreciation and Amortization. (2) Cash flow before financing activities.

The Belgacom Management Committee declares that to the best of its knowledge, the consolidated financial statements, established in accordance with International Financial Reporting Standards (“IFRS”), and the statutory financial statements of Belgacom SA under public law, established in accordance with the financial reporting framework applicable in Belgium, give a true and fair view of the assets, financial position and results of Belgacom and of the entities included in the consolidation. The management report gives an accurate overview of the evolution, results and position of Belgacom and of the entities included in the consolidation, together with a description of the major risks and uncertainties they are confronted with. The Belgacom Management Committee is represented by Didier Bellens, President and CEO, Scott Alcott, Executive Vice President Service Delivery Engine & Wholesale, Michel De Coster, Executive Vice President Enterprise, Astrid De Lathauwer, Executive Vice President Human Resources, Ray Stewart, Executive Vice President Finance and CFO, Grégoire Dallemagne, Executive Vice President Strategy and Michel Georgis Executive Vice President Consumer.

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Belgacom Group • Slight revenue increase in a difficult economic market • Strong cost reduction: Non-HR costs down 5.6% yoy • Benefitting from reduced headcount: HR expenses 1.4% lower • Solid EBITDA margin at 32.6% • Free cash flow of EUR 797 million Revenue Year ended 31 December Variance (Eur million) 2008 2009 2008 / 2009 Consumer Business Unit 2,253 38% 2,414 40% 7.1% Enterprise Business Unit 2,696 45% 2,501 42% -7.2% Service Delivery Engine & Wholesale 415 7% 386 6% -7.0% Staff & Support 34 1% 33 1% -2.0% International Carrier Services 812 14% 892 15% 9.9% Inter-segment eliminations -232 -4% -236 -4% 1.7% Total 5,978 100% 5,990 100% 0.2% Non-recurring revenue 8 74 Total 5,986 6,065 1.3% EUR The Belgacom Group ended the year 2009 with a solid revenue(1) of EUR 5,990 million, up slightly from 2008, an achievement giving the challenging economic environment. This results from: – a solid full-year 2009 revenue from the Consumer Business Unit (CBU), growing year-over-year by EUR 5,990 161 million or +7.1%. The acquired companies Scarlet and Tango contribute for EUR 136 million(2). CBU’s million revenue (1) organic revenue grew 1.2%, largely driven by a strong growth in TV revenue (+55%) and higher mobile data revenue (+9%), more than offsetting the lower revenue from fixed voice (-6.3%) and mobile voice (-2.8%); – a 9.9% revenue growth in the International Carrier Services (ICS), increasing year-over-year by EUR 80 million; – lower revenue (-7.2%) in the Enterprise Business Unit (EBU) which saw its revenue impacted by divestments for a total amount of EUR 88 million. Organically, EBU’s revenue decline was limited to 4.2%, driven by regulation and by the economic crisis impacting mobile usage and large IT-projects.

Excluding the impact from acquisitions and divestments, the Belgacom Group reports a flat organic revenue for the full year, including a EUR 60 million negative impact from regulation. Excluding the regulation impact, Belgacom’s underlying business grew by 1%.

(1) Reported revenue before non-recurring items. (2) On Group level this is EUR 98 million as a part is eliminated. Belgacom Annual Report 2009 - 113 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Reported vs organic revenue Year ended 31 December Variance (Eur million) 2008 2009 2008 / 2009 Reported Group revenue 5,978 5,990 0.2% Acquisitions (CBU) -53 -189 Divestments (EBU) -93 -5 Inter-segment elimination 9 46 Organic Group revenue 5,842 5,843 0.0%

Non-recurring revenue Following the closing of the transaction between Belgacom ICS and MTN, Belgacom recognized a non- cash capital gain of EUR 74 million. This is the net result of the MTN contribution at fair value for 57.6%, minus the dilution of the BICS book value, going from 72% to 57.6%. Operating expenses before depreciation and amortization Belgacom reduced its costs significantly during 2009, with personnel expenses 1.4% lower than the -5.6% previous year and other operating expenses reduced on a yearly basis by 5.6%. Organically, the other other operating operating costs are even 7% lower than 2008. costs This achievement is mainly driven by the company-wide cost reduction programme as launched at the start of 2009 in anticipation of the impact of the economic recession on some parts of Belgacom’s business.

Following initiatives contributed to the favorable cost evolution: • Cost efficiency efforts across the Belgacom Group in terms of body shopping, maintenance, utilities, general services, etc. • In May 2009, Belgacom requested a price reduction from its suppliers providing body-shopping for financial and technical services. • Belgacom vacated the Proximus Boréal building by end 2008 and moved all Proximus employees to its headquarter building. This was made possible by the “active office program” which optimized the headquarter office space. In 2009 this brought important cost savings in Staff & Support. • The Enterprise Business Unit took an early decision to divest all non-core Telindus countries, resulting in significant cost savings in the ICT domain and lowering its risk profile.

Year ended 31 December Variance 2008 2009 2008 / 2009 Costs of materials and charges to revenue 1,975 2,087 5.7% Personnel expenses and pensions 1,124 1,108 -1.4% Other operating expenses 890 840 -5.6% Total 3,988 4,035 1.2% Non-recurring expenses 93 62 -32.9% Total 4,081 4,097 0.4%

Costs of materials and charges to revenue The sales-related costs increased by 5.7% compared to 2008, mainly as a result of a changing revenue mix within the Consumer Business Unit and the growing weight of International Carrier Services in the total Group revenue. In the Enterprise segment and in Service Delivery Engine & Wholesale on the other hand, sales-related costs came down significantly.

Personnel expenses Full-year 2009 Personnel expenses decreased 1.4% compared to 2008, with Belgacom visibly benefitting from the past and ongoing headcount reduction programmes. In the course of 2009, 567 FTEs left the company through a combination of natural attrition and outflow through the Tutorship and External mobility programmes. This fully offset the salary indexation impact carried-over from 2008.

12 months Number of FTE End 2008 End 2009 variance Consumer Business Unit 5,979 5,718 -261 Enterprise Business Unit 5,479 5,328 -151 Service Delivery Engine & Wholesale 3,421 3,303 -118 Staff & Support 2,263 2,230 -33 International Carrier Services 229 225 -4 Total 17,371 16,804 -567

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Other operating expenses Other operating expenses were reduced by 5.6% or EUR 50 million compared to 2008. This positive evolution is mainly the result of cost reduction initiatives across the company, lower costs following the Telin- dus divestment programme in EBU and cost savings linked to the vacated Proximus building. The savings were partly offset by the cost increase in CBU resulting from the acquired companies Tango and Scarlet. On an organic basis, the non-HR cost decreased by 7% compared to 2008, including a positive one- off.

Non-recurring expenses(1) Non- recurring expenses of EUR 62 million reported in the second quarter 2009 include the fine imposed by the Belgian Competition Authority for a net amount of EUR 55.5 million and the costs of restructuring programmes for an amount of EUR 7 million. Operating income before depreciation and amortization (EBITDA) Year ended 31 December Variance (Eur million) 2008 2009 2008 / 2009 Consumer Business Unit 1,093 55% 1,048 54% -4.1% Enterprise Business Unit 1,266 64% 1,231 63% -2.8% Service Delivery Engine & Wholesale -67 -3% -64 -3% -4.6% Staff & Support -366 -18% -337 -17% 7.9% International Carrier Services 64 3% 78 4% 21.7% Inter-segment eliminations 0 -0% 0 -0% - Total 1,990 100% 1,955 100% -1.7% Non-recurring revenue 8 74 Non-recurring expenses -93 -62 Total 1,905 1,967 3.3%

Belgacom reports for the full-year 2009 a Group EBITDA, excluding non-recurring items, of EUR 1,955 million, or a year-over-year decline of 1.7%. This brings the EBITDA margin -excluding non-recurring 32.6% items- for 2009 to 32.6%, compared to 33.3% for 2008. EBITDA margin -excluding non- Depreciation and amortization recurring items Depreciation and amortization decreased from EUR 743 million in 2008 to EUR 706 million for 2009, driven by a lower asset base in SDE&W and the divestments of the non-core Telindus subsidiaries in EBU. This decrease was partially offset by higher depreciations in CBU resulting from the consolidation of Tango and Scarlet and the success of Belgacom TV which increased the number of rented set-top boxes. Net finance result The year-over-year variance in the net finance result, going from EUR -109 million in 2008 to EUR -117 million in 2009, results from the interest on bonds issued in the last quarter of 2008 for a nominal amount of EUR 500 million and lower interest revenues on deposits in 2009. Tax expense Tax expenses amounted to EUR 241 million for 2009 or a 21.0% effective tax rate (ETR) compared to 24.1% in 2008. The ETR is based on the application of general principles of Belgian tax law and was in 2009 impacted by a number of one-time items. Net income (Group Share) The Group net income increased from EUR 800 million end of 2008 to EUR 904 million end of 2009, mainly as a result of a positive evolution of non-recurring revenue and expenses while year-over-year the depreciation and amortization decreased.

(1) Non-recurring revenues and non-recurring expenses include gains or losses on the disposal of consolidated companies exceeding individually EUR 5 million, fines and penalties imposed by competition authorities or by the regulator exceeding EUR 5 million and costs of employee restructuring programmes. Belgacom Annual Report 2009 - 115 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Capital expenditure (Capex) Belgacom Group invested over the full-year 2009 a total amount of EUR 597 million or 10% of its Group revenue. The difference with last year is mainly explained by the renewal of the football broadcasting rights in 2008 (EUR 105 million, covering three football seasons).

Year ended 31 December Variance (Eur million) 2008 2009 2008 / 2009 Consumer Business Unit 195 25% 89 15% -54.1% Enterprise Business Unit 19 3% 20 3% 2.0% Service Delivery Engine & Wholesale 477 62% 422 71% -11.5% Staff & Support 54 7% 44 7% -18.7% International Carrier Services 19 2% 22 4% 17.4% Total 764 100% 597 100% -21.8% Cash flows Year ended 31 December (EUR million) 2008 2009 Cash flows from operating activities 1,552 1,406 Capital expenditures -764 -597 Cash flows from / (used in) other investing activities -380 -12 Cash flow before financing activities or "free cash flow" 409 797 Cash flows used in financing activities -570 -1,030 Net increase / (decrease) of cash and cash equivalents -161 -233

End 2009, Belgacom reports a cash flow from operating activities of EUR 1,406 million, including the payment of the EUR 66 million fine to the Belgian Competition Authority, the EUR 35 million EBITDA decrease in 2009 before non-recurring items, and the deferral in 2008 of the payment of the football broadcasting rights over three years . The cash flows from other investing activities increased year-over-year by EUR 368 million, mainly due to the acquisition of Tango and Scarlet in 2008 for a combined amount of EUR 380 million net of cash. This results in a free cash flow for 2009 of EUR 797 million, i.e. EUR 388 million higher compared to 2008. EUR The cash flow used in financing activities decreased by EUR 460 million compared to 2008, mainly due to the issuance of bonds end 2008 for a nominal amount of EUR 500 million, partly offset by EUR 352 mil- 797 lion used in 2008 for share buy-back programmes, while in 2009, the Group reimbursed matured long-term million loans for an amount of EUR 300 million. The cash flow used in financing activities includes dividends paid to free cash flow shareholders in 2009 for a total amount of EUR 684 million, whereas this was EUR 710 million in 2008. As a result, the cash and cash equivalents decreased by EUR 233 million in 2009 compared to a decrease of EUR 161 million in 2008. Balance sheet and shareholders’ equity As a result of the finalization of the purchase price allocation of Scarlet, the goodwill decreased by EUR 23 million compared to year-end 2008. Intangible fixed assets and property, plant and equipment decreased by EUR 11 million in 2009 resulting from a mix of impacts from capital expenditures, depreciation and amortization, the recognition of customer base and trade name as a result of the purchase price allocation of Scarlet and the contribution by MTN of its international carrier assets into BICS.

The shareholders’ equity increased from EUR 2,271 million at year-end 2008 to EUR 2,521 million in 2009, reflecting mainly the excess of the 2009 net income over the dividends declared and distributed in April and December 2009.

Belgacom continues to have a sound financial position. End of 2009, Belgacom’s net financial debt decreased to EUR 1,716 million, or EUR 119 million lower compared to end 2008. The lower debt is mainly the result of the Free Cash Flow (EUR 797 million) exceeding the dividend payment (EUR 685 million) in 2009. The outstanding financial debt amounted to EUR 2.2 billion end 2009, most of it maturing in 2011 and 2016.

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Consumer Business Unit - CBU • Resilient to crisis: reported revenue +7.1%; underlying business(1) +2.3% yoy • Change in revenue mix impacts sales-related costs • Successful cost reduction: organic non-HR expenses -4.4 % yoy • Record sales Belgacom TV

P&L Consumer Business Unit Year ended 31 December Variance (EUR million) 2008 2009 2009/2008 TOTAL SEGMENT REVENUE 2,253 2,414 7.1% Costs of materials and charges to revenue -553 -723 30.8% Personnel expenses and pensions -325 -345 6.2% Other operating expenses -282 -297 5.5% TOTAL OPERATING EXPENSES before depreciation & amortization -1,160 -1,366 17.8% TOTAL SEGMENT RESULT (1) 1,093 1,048 -4.1% Segment contribution margin 49% 43% Non-recurring expenses 0 -7 - OPERATING INCOME before depreciation & amortization 1,093 1,041 -4.7% Depreciation and amortization -105 -144 37.4% OPERATING INCOME 988 897 -9.2% (1) Operating income before depreciation and amortization and before non-recurring revenue and expenses CBU revenue resilient to crisis, growing 7.1% CBU ended the year 2009 with a solid revenue of EUR 2,414 million, growing year-over-year with 7.1% or EUR 161 million. As expected, the consumer segment showed resilience to the economic crisis, with no significant financial impact in 2009. Year-over-year, the acquired companies Scarlet and Tango had a positive contribution of EUR 136 million. On an organic basis, CBU’s revenue increased by 1.2% or EUR 26 million, including a negative impact from regulation for a total amount of EUR 25 million. Excluding regulation, the underlying business grew 2.3% compared to last year. Main growth drivers are Belgacom TV and mobile data, more than compensating for the decline in fixed and mobile voice revenues. EUR 2,414 DETAILED REVENUES Year ended 31 December million revenue Variance Variance % (EUR million) 2008 2009 2009/2008 2009/2008 Revenues 2,253 2,414 161 7.1% From Fixed 1,144 1,239 95 8.3% Voice 599 561 -38 -6.3% Data 313 323 10 3.1% TV 86 134 48 55.2% Terminals (excl. TV) 57 51 -6 -10.4% Scarlet 9 95 86 - Other 80 76 -4 -4.8% From Mobile 1,110 1,175 66 5.9% Voice 723 704 -20 -2.8% Data 277 303 25 9.1% Terminals 50 62 12 23.6% Tango 43 93 50 - Other 16 14 -2 -11.3%

Fixed voice revenue down 6.3%, line loss improved while ARPU was kept flat The 2009 fixed voice revenue was positively impacted by the price indexation in July and October 2008. However, this could not offset the revenue pressure from the carry-over impact of the price decreases for Fixed-to-Mobile traffic (April and July 2008), the lower access line base, the discount on Packs and success of flat-rate plans.

(1) Excluding impact from acquisitions and regulation. Belgacom Annual Report 2009 - 117 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c In 2009, CBU could limit its fixed lines loss to 138,000 lines, a significant improvement compared to 2008 (-162,000 lines). The packs including a fixed line and the continued success of flat-rate offerings clearly stabilized the loss in access lines. Fixed voice traffic came down year-over-year with 5.4% as a result of a lower access line base. Year-over-year the fixed voice ARPU remained flat at EUR 21.7 as the positive impact from theprice indexations compensated for the regulation impact and lower retail prices for calls to Telenet/Versatel following lower Fixed Termination rates since 1 January 2009.

Fixed data revenue up 3.1%, customer increase offsetting lower ARPU Internet revenue picked up as from the second half of the year as it was no longer impacted by the discounts of the 2008 year-end promotion. This positive effect is also reflected in the ARPU. CBU closed the year with an ARPU of EUR 28.7 or a decline of EUR 1.3 compared to full-year 2008, mainly driven by the success of the Packs. CBU added 53,000 new Internet customers in 2009, and was slightly impacted by a small loss in Scarlet customers. End of 2009, CBU counted 1,075,000 Internet customers, including the residential customers of Scarlet.

Belgacom TV revenue up 55.2%, strong customer acquisition and increased ARPU In 2009, Belgacom managed to grow its TV customer base by 246,000 new TV subscribers, compared to 201,000 in 2008. In fourth quarter 2009 Belgacom TV performed particularly well, and reached a new all-time high with no fewer than 89,000 new subscriptions sold. This strong result was driven by the company-wide FAIR programme, and was supported by a positive seasonality effect. FAIR, launched mid-2009, addresses the cable competition through several initiatives, including the launch of the “Free TV” Pack. Scarlet is also contributing to the TV customer growth since the launch of Scarlet One in September 2009. By end 2009, CBU counted 752,000 TV customers of which 100,000 are second stream users. Year-over-year, the TV ARPU per household increased by 5.4% (+ EUR 1.1) to EUR 20.4 due to a lower impact of promotions. Especially the fourth quarter of 2009 showed a strong performance with an ARPU of EUR 21.3 driven by higher usage of on-demand services, a higher number of activations and customers switching to the comfort offer including high-definition.

Mobile voice revenue down 2.8%, larger customer base offset by decline in ARPU For 2009, CBU reported a mobile voice revenue of EUR 704 million or a decline of 2.8%. As from the third quarter 2009, the year-over-year revenue evolution improved considerably. As from July 2009, mobile voice revenues were no longer impacted by the mobile termination rate cuts. Even though voice roaming revenues were hit by a regulated tariff cut on 1 July 2009 , the fourth quarter voice revenue remained flat compared to 2008. In 2009, CBU added 74,000 new mobile customers. However, in the fourth quarter of 2009 Belgacom identified 27,000 inactive cards. These cards have been deleted and cause a net decrease in the total customer base by 5,000 cards compared to the status of end September 2009. The total mobile customer base end 2009 stands at 3,824,000 customers, or a year-over-year increase of 47,000 customers. The postpaid ratio evolved positively going from 39% at the end of 2008 to 41% at the end of 2009. During 2009, the MVNO market proved to be very volatile with cards being used as calling cards leading to high churn rates. This resulted in a loss of 16,000 MVNO customers for the year 2009, whereas in 2008 CBU added 70,000 new MVNO customers. The combined impact of regulation and customers moving to more attractive pricing plans result in a mobile net voice ARPU of EUR 15.7 or 5.4% lower than the year before.

Mobile data revenue up 9.1% with both SMS (+8.1%) and Advanced data (+12.2%) solidly growing SMS revenue increased to EUR 227 million driven by the success of pricing plans including free SMS, lead- +12.2% ing to an increase in inbound revenues. Compared to 2008, the paying SMS per month increased almost Advanced mobile 22% to 73.4 SMS/customer driven by the substitution of voice towards SMS. In the fourth quarter of 2009, data revenue paying SMS reached their highest level ever with 80.3 SMS per customer. This is driven by seasonality and an elasticity effect for SMS roaming following the lower prices as stipulated by the European regulation. As of 1 July 2009, SMS roaming pricing has been regulated, capping the SMS price to EUR 0.11. The positive impact on volumes fully offset the negative pricing impact. The growth in Advanced Data revenue to EUR 75 million or +12.2% is the result of the successful Internet One promotions launched as from April 2009. Internet One combines fixed and Mobile Internet into one Pack, lowering the threshold for Mobile Internet. In addition, as from April 2009, the year-over-year revenue evolution was no longer impacted by the stricter rules on gaming and voting set by the Royal Decree of April 2008.

(1) Tariffs for retail outgoing traffic coming down 6.6% to EUR 0.43 and retail incoming traffic coming down 13.7% to EUR 0.19. 118 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Financials

Year ended 31 December Variance % (EUR million) 2008 2009 2009/2008 Mobile Data revenue 277 303 9.1% Data - SMS 210 227 8.1% Advanced data 67 75 12.2% % in Mobile Data revenue Data SMS 76% 75% Advanced data 24% 25% CBU operating expenses before depreciation and amortization CBU reported full-year total operating expenses of EUR 1,366 million or an increase of EUR 206 million compared to previous year. Tango and Scarlet contributed for EUR 121 million to the year-over-year increase. On a comparable basis, costs were up 7.6% or EUR 86 million driven by higher cost of sales. This fully offset the cost savings realized through the company-wide cost cutting programme.

Costs of materials and charges to revenue increased due to acquisitions and changing revenue mix Full-year 2009 cost of sales increased EUR 170 million year-over-year to EUR 723 million, with Scarlet and Tango contributing EUR 76 million to the year-over-year variance. Organically cost of sales increased 18% or EUR 94 million driven by higher commissions as the mix in sales channels changed, higher TV sales, higher mobile handset sales impacting the terminal costs and higher interconnection costs driven by free SMS and free minutes.

Personnel expenses impacted by acquired companies, organic HR-costs kept flat By year-end 2009, CBU counted 5,718 FTEs or 261 FTEs fewer than year-end 2008. This is the result of the Tutorship programme, External Mobility and natural attrition. The reported year-over-year increase in personnel costs by 6.2% to EUR 345 million, is the result of the additional headcount from Scarlet and Tango, impacting the year-over-year variance for a large part of 2009. Organically, the personnel expenses remained flat year-over-year.

Other operating expenses positively impacted by strict cost control The company-wide cost-efficiency programme launched at the beginning of 2009, resulted in a good cost control performance within CBU. Organic other operating costs were down 4.4% compared to one year ago. The increase in reported other operating expenses of 5.5% is fully driven by the cost contribution of the acquired companies. CBU operating income before depreciation and amortization 43.4% (EBITDA) Contribution CBU reported a full-year EBITDA of EUR 1,048 million or 4.1% lower than one year ago due to the higher margin cost of sales. For 2009, CBU reported a contribution margin of 43.4%.

Belgacom Annual Report 2009 - 119 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c CBU operating result Year ended 31 December Variance Variance % OPERATIONALS 2008 2009 2009/2008 2009/2008 FROM FIXED Number of access channels (thousands) 3,068 3,102 35 1.1% Voice (PSTN/ISDN) 2,111 1,968 -143 -6.8% IP 54 60 5 9.2% ADSL, VDSL (1) 902 1,075 173 19.2% Traffic (millions of minutes) 4,801 4,594 -207 -4.3% National 3,996 3,781 -215 -5.4% Fixed to Mobile 417 423 6 1.4% International 388 390 2 0.5% TV (thousands) 506 752 246 48.6% +246,000 TV - households TV customers 441 652 211 47.8% Of which TV-second stream users 65 100 35 54.2% ARPU (EUR) ARPU Voice 21.6 21.7 0.1 0.4% ARPU broadband 30.0 28.7 -1.3 -4.5% ARPU Belgacom TV 19.4 20.4 1.1 5.4% FROM MOBILE Number of active customers (thousands) 3,777 3,824 47 1.2% Prepaid 2,235 2,199 -37 -1.6% Postpaid 1,431 1,530 99 6.9% MVNO 111 95 -16 -14.3% Annualized churn rate 19.5% 20.7% - (blended - variance in p.p.) Net ARPU (EUR) Prepaid 14.4 14.2 -0.2 -1.6% Postpaid 37.6 35.7 -1.8 -4.8% Blended 23.0 22.5 -0.5 -2.1% Blended voice 16.6 15.7 -0.9 -5.4% Blended data 6.3 6.7 0.4 6.3% UoU (units) 225.8 286.0 60.2 26.6% MoU (min) 115.3 110.5 -4.8 -4.1% Normalized MoU (min) 96.7 95.6 -1.1 -1.2% SMS (units) 111.4 176.5 65.2 58.5% Normalized SMS (units) 60.2 73.4 13.2 21.9% Tango Year ended 31 December 2009 Revenue1 (in EUR mio) 93 Total active mobile customers (in '000) 259 Blended net ARPU (EUR/month) 23.9 (1) Total Tango revenues i.e. fixed and mobile revenues Over the full year 2009, Tango reported a revenue of EUR 93 million. End 2009, the total mobile customer base amounted to 259,000 customers or an increase of 14,000 customers compared to 2008. The blended net mobile ARPU was EUR 23.9.

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Enterprise Business Unit - EBU • Segment contribution margin up from 47% to 49% • Strong cost reduction mitigated impact of downturn • Non-HR costs reduced by 20% yoy, organically 12.8% lower • Full-year underlying business revenue(1) at -3.1% yoy

P&L Enterprise Business Unit Year ended 31 December Variance (EUR million) 2008 2009 2009/2008 TOTAL SEGMENT REVENUE 2,696 2,501 -7.2% Costs of materials and charges to revenue -844 -748 -11.4% Personnel expenses and pensions -408 -379 -6.9% Other operating expenses -178 -142 -20.2% TOTAL OPERATING EXPENSES before depreciation & amortization -1,430 -1,270 -11.2% TOTAL SEGMENT RESULT (1) 1,266 1,231 -2.8% Segment contribution margin 47% 49% Non-recurring revenue 8 0 - Non-recurring expenses -39 -56 - OPERATING INCOME before depreciation & amortization 1,235 1,176 -4.8% Depreciation and amortization -32 -27 -15.6% OPERATING INCOME 1,203 1,149 -4.5% (1) Operating income before depreciation and amortization and before non-recurring revenue and expenses EBU revenue not fully immune to crisis, impact limited EBU reported a full-year revenue of EUR 2,501 million, which is 7.2% or EUR 195 million lower than the EUR 2,501 previous year, including a EUR 88 million revenue loss resulting from divestments(2). As anticipated, the million revenue enterprise segment was not fully immune to the economic downturn, which pressured parts of its revenue stream. The pressure, however, did not worsen over the last quarters. Excluding for the divestment impact, EBU’s 2009 organic revenue declined by 4.2% or EUR 108 million, including a negative impact from regulation for a total amount of EUR 26 million. Therefore, the impact on the underlying business revenue was limited to a 3.1% decline for full-year 2009. As expected, this was mainly due to revenue pressure in the mobile and IT domain. EBU managed to end the year with a slight increase in the order level compared to 2008, an achievement given the challenging economic environment.

Year ended 31 December Variance Variance % (EUR million) 2008 2009 2008 / 2009 2008 / 2009 Revenue 2,696 2,501 -195 -7.2% From Fixed 1,880 1,729 -151 -8.0% Voice 608 574 -34 -5.6% Data 408 401 -6 -1.6% ICT 756 670 -86 -11.3% Terminals 77 74 -2 -3.2% Other 32 10 -22 -68.4% From Mobile 816 771 -45 -5.5% Voice 624 560 -63 -10.2% Data 162 184 22 13.7% Terminals 20 15 -5 -27.3% Other 10 12 2 20.1%

(1) Underlying revenue excludes the impact from divestments and regulation. (2) Telindus International non-core countries for EUR 69 million, Certipost and Win. Belgacom Annual Report 2009 - 121 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Fixed voice revenue affected by line loss and lower usage per line For full-year 2009, EBU generated a Fixed Voice revenue of EUR 574 million, which is 5.6% lower than for 2008. As of the third quarter 2009, the year-over-year comparison is no longer affected by the carry-over impact of the two price decreases for Fixed-to-Mobile traffic (1 April and 1 July 2008). The positive effect from the two price indexations in July and October 2008 only cover to a limited extent the impact from the continued fixed line loss. Over the full-year 2009, EBU lost a total of 53,000 fixed lines, whereas this was 33,000 lines for 2008. The higher line-loss in 2009 was driven by customers’ search for cost savings and as a result of the increased number of bankruptcies in Belgium. The year-over-year net line loss, and the lower usage per line, affected the total minutes of fixed voice traffic, decreasing year-over-year by 8.4%. The regulation impact over the first half of 2009, and the lower usage per line, leads to a year-over-year ARPU decline of 2.9% to EUR 30.8. Over the last three quarters of 2009, the ARPU remained fairly stable with EUR 30.9 in the fourth quarter.

Fixed data revenue marked by saturation for broadband and ongoing migration to Explore Fixed Data revenue consists of revenue generated by Internet products and Data Connectivity products. The EBU Internet market is saturating and continues to be very competitive. Nevertheless, EBU was able to slightly increase its customer base by 3,000 to a total of 446,000 broadband customers by year-end 2009. The full-year broadband ARPU of EUR 39.9 for 2009 is 1.6% lower compared to 2008, resulting from less connection fees and more promotional activities. Data Connectivity is marked by an ongoing migration from older technology (Leased Lines, Frame Relay, ATM) to the new and more advantageous “Explore”-platform (connectivity and managed services). By end 2009, the Explore platform counted 30,851 lines.

Organic ICT revenue decline for full-year limited, solid fourth quarter Although the ICT-part of the business showed some vulnerability to the economic crisis, EBU could limit -2.4% the 2009 revenue decline -on a comparable basis- to 2.4% versus last year. On a reported level, the ICT organic ICT revenue was impacted by the Telindus International divestment programme, causing a full-year revenue revenue loss of EUR 69 million. Throughout the year, EBU saw larger IT-projects being delayed or spread in time, decision processes taking longer and existing customers asking for contract renegotiations. However, trends did not get worse with a solid revenue in the fourth quarter from Telindus International, supported by a positive seasonality effect, mainly in the public sector. As the IT-business is a typical lower-margin business, and due to the strong focus on sales-related costs, the impact on EBITDA has been limited. Some products in the ICT-portfolio did very well in the crisis. For example, datacenter products, such as housing and hosting services, offer flexible solutions to customers, help them to optimize costs and to realize quick savings. Significant year-over-year revenue growth related to these types of IT-solutions helped to limit, though not fully compensate for, the decline in IT-hardware sales.

Year ended 31 December Variance (EUR million) 2008 2009 2009/2008 Reported ICT revenues 756 670 -11.3% Impact divestments 69 0 ICT excl. divested countries 687 670 -2.4%

Mobile voice revenue down despite sound customer growth, due to regulation and impact of downturn Over the full-year 2009, EBU reports EUR 560 million mobile voice revenues, i.e. 10.2% lower than last year. While benefitting from a growing mobile customer base, EBU’s mobile voice revenue was negatively impacted by regulation and the effect of the economic crisis. Over the full-year 2009, EBU grew its mobile customer base by 96,000. This is a.o. driven by the launch of attractive packages targeting self-employed and independents. Since the third quarter 2009 a number of promotions have been launched on these packages, successfully attracting new customers and limiting the churn. As the last decrease in MTR dates from 1 July 2008, the negative impact on mobile inbound revenue is no longer applicable as of the third quarter 2009. Revenue from Mobile Roaming, however, was impacted by the regulated tariff cut on 1 July 2009, with rates coming down to EUR 0.43 (-6.6%) for retail outgoing and to EUR 0.19 (-13.7%) for retail incoming traffic. As predicted, the economic downturn pressured the level of mobile usage, on top of an ongoing substitution of mobile calling by SMS and e-mail. Over the full-year 2009, the paying MoU decreased by 6.5% to 328 minutes as business customers cut their mobile expenses and reduced business travel, impacting roaming. The downward trend, however, did not accelerate.

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The combined impact from regulation, lower mobile usage and an increased level of promotions in the SME market, results in a lower full-year Mobile Voice ARPU of EUR 39.5, or 17.2% lower than the year before.

Mobile data revenue solidly growing, advanced mobile data up by nearly 20% Revenue from Mobile data grew solidly over 2009, totaling EUR 184 million for the full-year, i.e. a year-over- year growth of 13.7%. The revenue growth is driven by the success of advanced mobile data, growing its revenue in 2009 by 19.8%. Advanced data now represents 68% of the total EBU mobile data revenue, positively impacting the ARPU which increased by 3.5% to EUR 12.8. Regarding data roaming, Belgacom took measures to prevent bill shocks. As of 1 July 2009, customers subscribing to PAYU or a bundle, receive via SMS a real-time notification of their usage of mobile data roaming when they are abroad. This is a step towards compliance with the EU regulation, which needs to be ready as of March 2010. The revenue from SMS grew by 2.4% in 2009. While pricing was pressured by SMS roaming regulation, capping the SMS price to EUR 0.11 as of 1 July 2009, there was a positive elasticity effect resulting in a growing number of SMS per user.

Year ended 31 December Variance (EUR million) 2008 2009 2009/2008 Mobile Data revenue 162 184 13.7% Data - SMS 58 59 2.4% Advanced data 105 126 19.8% % in Mobile Data revenue Data SMS 35% 32% Advanced data 65% 68% EBU operating expenses before depreciation and amortization With revenues being under pressure, EBU managed to reduce its expenses successfully, lowering its full-year operating costs by 11.2% compared to 2008. While the realized divestments of Telindus Interna- tional have contributed significantly to the savings, the organic costs too were reduced by a considerable -11.2% amount. operating costs

Reported Costs of materials and charges to revenue down by 11.4%, organic decline of 4.7% EBU reported for the full-year a total of EUR 748 million in sales-related costs, or a year-over-year decrease of 11.4%. Part of this cost reduction is linked to EBU’s divestment programme. However, on an organic basis, sales-related costs were still 4.7% lower, driven by a favorable impact on costs by regulation (lower MTR and lower fixed interconnect rates to alternative networks as of 1 January 2009) and as a result of the lower revenue from mobile roaming, mobile handsets and ICT.

Personnel expenses nearly 7% lower resulting from reduced personnel base EBU’s personnel expenses for the full-year 2009 were 6.9% lower than for 2008. This was driven by a positive impact of the reduced personnel base by 151 FTEs to a total of 5,328 FTEs and attributable to the Telindus divestment programme. This fully offset the salary indexation impact carried over from 2008.

Other operating expenses lowered significantly, organically nearly 13% lower EBU reduced its non-HR expenses over the year 2009 by 20.2%. This results from the divestments, the company-wide cost reduction programme and a positive one-time effect. The organic other operating expenses, i.e. excluding the positive impact from divestments, were down by 12.8% compared to 2008. EBU operating income before depreciation and amortization (EBITDA) 49.2% EBU reported a full-year EBITDA of EUR 1,231 million. The solid reduction in costs, limited the EBITDA contribution margin decrease to 2.8%, and enhanced the contribution margin, up year-over-year from 47.0% to 49.2%.

Belgacom Annual Report 2009 - 123 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c EBU operating result Year ended 31 December Variance Variance % OPERATIONALS 2008 2009 2009/2008 2009/2008 FROM FIXED Number of access channels (thousands) 1,987 1,937 -51 -2.6% Voice (PSTN/ISDN) 1,538 1,479 -59 -3.8% IP 7 12 5 79.0% ADSL, VDSL 443 446 3 0.6% Traffic (millions of minutes) 3,643 3,336 -307 -8.4% National 2,499 2,278 -221 -8.8% Fixed to Mobile 708 672 -36 -5.1% International 436 386 -50 -11.4% ARPU (EUR) ARPU Voice 31.7 30.8 -0.9 -2.9% ARPU Broadband 40.6 39.9 -0.7 -1.6% FROM MOBILE Number of active customers (thousands) 1,139 1,235 96 8.4% Post-paid 1,139 1,235 96 8.4% Annualized churn rate (blended - variance in p.p.) 10.1% 10.2% Net ARPU (EUR) Postpaid 60.0 52.4 -7.7 -12.8% Postpaid voice 47.6 39.5 -8.2 -17.2% Postpaid data 12.4 12.9 0.5 4.2% UoU (units) 394.8 382.4 -12.3 -3.1% MoU (min) 367.7 346.0 -21.7 -5.9% Normalized MoU (min) 350.5 327.7 -22.9 -6.5% SMS (units) 55.4 69.6 14.1 25.5% Normalized SMS (units) 50.1 54.5 4.3 8.7%

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Service Delivery Engine & Wholesale – SDE&W

P&L Service Delivery Engine & Wholesale Year ended 31 December Variance (EUR million) 2008 2009 2009/2008 TOTAL SEGMENT REVENUE 415 386 -7.0% Costs of materials and charges to revenue -93 -72 -22.3% Personnel expenses and pensions -209 -193 -8.0% Other operating expenses -179 -185 3.0% TOTAL OPERATING EXPENSES before depreciation & amortization -482 -450 -6.6% TOTAL SEGMENT RESULT (1) -67 -64 - Segment contribution margin -16% -17% OPERATING LOSS before depreciation & amortization -67 -64 - Depreciation and amortization -496 -437 -11.8% OPERATING LOSS -563 -502 -10.9% (1) Operating income before depreciation and amortization and before non-recurring revenue and expenses. SDE&W revenue Over the full-year 2009, SDE&W reported a revenue of EUR 386 million or a decrease of 7.0% year-over- year, impacted by: • Lower interconnection revenues due to lower volumes from value-added services following the Royal Decree of April 2008 • Lower Telindus wholesale revenues following the integration within Belgacom • Lower transit traffic volumes to mobile operators • Regulation impact due to a 50% decrease in prices for bitstream transport and due to the Brotsoll regulation • Lower roaming-in revenues due to lower volumes and lower regulated prices as from 1 July 2009.

This was partly offset by an increase in data and capacity revenues driven by increased volumes in 2 Mbps leased lines.

Year ended 31 December Variance Variance % (EUR million) 2008 2009 2008 / 2009 2008 / 2009 Revenue 415 386 -29 -7.0% From Fixed 330 308 -21 -6.5% From Mobile 85 77 -8 -8.9% SDE&W operating expenses before depreciation and amortization Cost of material and charges to revenue down 22.3% Full-year 2009 Cost of Sales decreased 22.3% year-over-year to EUR 72 million. This is mainly driven by -6.6% the decrease in the low-margin transit volumes, lower revenues from interconnection and less Telindus operating costs wholesale revenue.

Personnel expenses declined by 8%, lower headcount offsetting indexation impact of 2008 For 2009, SDE&W reported personnel costs of EUR 193 million or a decline of 8% compared to one year ago. By end 2009, SDE&W had 3,303 FTEs or 150 FTEs less than at the end of 2008 due to natural attrition and headcount reduction programmes. The lower headcount compensated for the increase in wages due to indexation. On top of that, personnel costs experienced a positive impact from special tax reductions granted by the government on night shifts, overtime and research engineers, visibly reducing the HR-cost in the fourth quarter.

Belgacom Annual Report 2009 - 125 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Other operating expenses slightly increased Despite a tight cost control, non-HR costs increased slightly by 3% driven by amongst others an increase in renting costs following a higher number of mobile sites and by the progressive upgrade of the Radio Access Network. SDE&W operating income before depreciation and amortization (EBITDA) Over 2009, SDE&W reported an EBITDA of EUR -64 million. This is a slight improvement compared to 2008, attributable to the good cost control and the fact that the lower revenue had only a slight impact on the direct margin.

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Staff & Support – S&S

P&L Staff and Support Year ended 31 December Variance (EUR million) 2008 2009 2009/2008 TOTAL SEGMENT REVENUE 34 33 -2.0% Costs of materials and charges to revenue -3 -0 -96.1% Personnel expenses and pensions -160 -166 3.8% Other operating expenses -237 -204 -13.9% TOTAL OPERATING EXPENSES before depreciation & amortization -400 -370 -7.4% TOTAL SEGMENT RESULT (1) -366 -337 -7.9% Segment contribution margin - - Non-recurring expenses -54 0 -100.8% OPERATING LOSS before depreciation & amortization -420 -337 -19.8% Depreciation and amortization -92 -77 -16.6% OPERATING LOSS -512 -413 -19.2% (1) Operating income before depreciation and amortization and before non-recurring revenue and expenses. S&S revenue Staff and Support reported a full-year 2009 revenue of EUR 33 million or a slight decrease of 2% compared to one year ago. Revenue was positively impacted by a capital gain realized on the disposal of a building in the second quarter of the year. This did not offset the lower revenues from catering services as a result of the cost efficiency programme. S&S operating expenses before depreciation and amortization Total operating expenses for Staff and Support were down 7.9% or EUR 30 million lower compared to a year ago, clearly showing the benefits from the cost reduction programme.

Other operating expenses were down 13.9% year-over-year to EUR 204 million. This is mainly driven by the lower renting costs and provisions as a result of the vacated Proximus building. Also, the company- -13.9% wide cost reduction programme added to this favorable evolution. other operating costs For 2009, S&S reported personnel costs of EUR 166 million or a 3.8% increase compared to 2008. Year- over-year the S&S headcount was reduced by 33 FTEs. The positive impact, however, covered only partly the negative impact from the 2008 salary indexation.

Belgacom Annual Report 2009 - 127 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c International Carrier Services - ICS • Full-year revenue up 9.9%, EBITDA + 21.7% • Strong volume growth in 2009: >19 billion minutes transported • As expected, revenue trend slowed in Q4’09, while EBITDA increased • ICS-MTN consolidated at 57.6% for December; before at 72%

P&L International Carrier Services Year ended 31 December Variance (EUR million) 2008 2009 2009/2008 TOTAL SEGMENT REVENUE 812 892 9.9% Costs of materials and charges to revenue -685 -749 9.4% Gross margin (1) 127 143 12.6% Personnel expenses and pensions -22 -24 12.1% Other operating expenses -41 -40 -1.3% TOTAL OPERATING EXPENSES before depreciation & amortization -748 -814 8.8% TOTAL SEGMENT RESULT (2) 64 78 21.7% Segment result margin 7.9% 8.7% Non-recurring revenue 0 74 - Non-recurring expenses 0 -1 - OPERATING INCOME before depreciation & amortization 64 151 136.5% Depreciation and amortization -20 -21 9.7% OPERATING INCOME 44 130 192.2% (1) Total segment revenue net of costs of materials and charges to revenue. (2) Operating income before depreciation and amortization and before non-recurring revenue and expenses. ICS revenue up nearly 10% Over the full year 2009, ICS reported a strong revenue growth of 9.9% or EUR 80 million year-over-year to EUR 892 million. The growth is driven by the continued increase in higher-margin premium products, +9.9% up 19.6% year-over-year. This strong performance results from the continued focus of ICS on the mobile revenue growth segment, more specifically growth regions like Asia, Africa and Middle East. Voice direct Routing revenue on the other hand, was negatively impacted by the overall decrease in European MTR rates. The non-voice revenue grew 11.8% year-over-year driven by the continued growth in mobile services such as SMS, MMS and GPRS and by the high-rate bandwidth products.

As expected, the trend of the first three quarters of 2009 showing double-digit year-over-year revenue growth did not continue in the fourth quarter of 2009. This is due to an already strong revenue performance in the last quarter of 2008. Additionally, the 2009 fourth quarter revenue was impacted by a weaker dollar. Following the extension of the cooperation agreement with MTN, the revenues of December have been consolidated at 57.6%, whereas for the period January until November ICS revenues were consolidated at 72%.

Year ended 31 December Variance Variance % (EUR million) 2008 2009 2009 / 2008 2009 / 2008 Voice Direct Routing 236.1 219.7 -16.4 -7.0% Voice Standard Products 85.0 90.7 5.7 6.7% Voice Premium Products 422.3 505.1 82.8 19.6% Non Voice 68.6 76.7 8.1 11.8% Total revenues 812.1 892.2 80.1 9.9%

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ICS detailed gross margin The ICS gross margin increased 12.6% year-over-year, driven by the strong volume growth in both voice and non-voice. Due to six-month commercial agreements, the ICS business is rather cyclical leading to fluctuations in direct margin between quarters.

Year ended 31 December Variance Variance % (EUR million) 2008 2009 2009 / 2008 2009 / 2008 Voice 75.5 84.8 9.2 12.2% Non Voice 51.2 58.0 6.8 13.2% Total Gross Margin 126.8 142.8 16.0 12.6% ICS operating income before depreciation and amortization (EBITDA) ICS Personnel expenses were up 12.2% to EUR 24 million driven on the one hand by the additional headcount as from end 2008 in order to sustain the mobile data growth and on the other by the carry-over impact of the salary indexations. For the full-year 2009 other operating expenses slightly decreased (1.3%) to EUR 40 million. ICS’ EBITDA grew by 21.7% to EUR 78 million, with the EBITDA margin at 8.7% compared to 7.9% at 8.7% the end of 2008. EBITDA margin ICS operating review Year ended 31 December Variance Variance % (Voice volumes in billion of minutes) 2008 2009 2009 / 2008 2009 / 2008 Voice Direct Routing 7.3 7.2 -0.1 -1.2% Voice Standard Products 1.6 2.0 0.4 24.7% Voice Premium Products 7.3 10.1 2.8 38.3% Total 16.2 19.3 3.1 19.1% BICS volumes included at 100%.

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Fixed-line interconnection On 1 January 2009, the premium on fixed termination rates for Telenet and Versatel were lowered to 15%, coming down from a difference with Belgacom of +190% in 2008 and +370% in 2007. In 2009, the fixed termination and collection charges remained unchanged in application of the BIPT decision of 26 Novem- ber 2008 stabilizing Belgacom’s rates until end 2010. MTR regulation On 1 February 2010, the BIPT published a draft decision concerning the evolution of the mobile termination rates (MTR) in the coming years. For Belgacom the proposal is to decrease the MTR per minute from the current 7.2 eurocents to 4.45 eurocents mid-2010, 3.77 eurocents on 1 January 2011, 2.42 eurocents on 1 January 2012 and 1.07 eurocents on 1 January 2013 (final rates will be corrected for inflation). The MTR of Mobistar and KPN Group Belgium (acting under the brand Base) will also be reduced accordingly: the current tariff asymmetry of 25% between Belgacom and Mobistar would be reduced to 9% as from mid 2010. Between Belgacom and KPN Group Belgium, the BIPT proposes to maintain an asymmetry of 26% in 2010, 24% in 2011 and 19% in 2012 (current tariff asymmetry is 59%). Full symmetry between the mobile operators will be reached on 1 January 2013. Any decrease in Belgacom MTRs will have to be reflected in the fixed-to-mobile retail tariffs.

Belgacom challenges the remaining asymmetries since they are not in line with EU practice. International roaming regulation On 1 July 2009, the European Roaming II Regulation amending the first Regulation of June 2007 entered into force. Additional reductions in voice roaming charges (retail and wholesale prices) have been introduced for 2010 and 2011. Per-second billing has been imposed as from 1 July 2009 for retail and wholesale charges but an initial minimum charging period of 30 seconds can be applied to outgoing roaming calls.

A retail cap of 11 eurocents (excl. VAT) combined with a wholesale cap of 4 eurocents has been set for SMS roaming as from 1 July 2009 for outgoing SMS.

Data roaming services are also regulated at wholesale level based on a price cap (calculated on a kilobyte basis), to be decreased gradually in three steps from 1 July 2009 until the end of the regulation. Measures aimed at preventing «bill shocks» were also imposed (setting of maximum financial or volume limits). The Regulation will expire on 30 June 2012. A review is planned for 2011. Renewal of 2G licenses On 20 July 2009, the Brussels Court of Appeal annulled the BIPT’s decision of 25 November 2008 block- ing the tacit renewal of the 2G-licenses of the three mobile operators. Belgacom had challenged this decision due to the late notification by the BIPT. The Brussels Court of Appeal ruled that the Belgacom Mobile license had already been tacitly renewed until April 2015 under the 1995 conditions (i.e. without any additional fee for this extension).

Despite this Court decision, a law voted by the Parliament on 25 February 2010 foresees that the operators will have to pay an additional fee to extend their licenses until 2015 and another fee to extend them until 2021. Belgacom questions the legality of the imposition of these fees. Additional mobile licenses End 2009, the BIPT launched a consultation on the conditions for the granting of a fourth UMTS license and 4G licenses. The fourth UMTS license would be auctioned in 2010 and would end in March 2021. The new operator would also have access to the 2G spectrum (900 and 1800 MHz). A redistribution of this spectrum is foreseen in November 2015 and existing operators would have to surrender a part of their spectrum with a guarantee to keep at least 10 MHz duplex. The 4G spectrum between 2500 MHz and 2690 MHz would also be auctioned in 2010 (15-year licenses), with all existing and new players invited to bid. No coverage obligations will be imposed (only an obligation to publish the effective coverage reached).

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Happy Time case On 29 September 2009, the College of Competition Prosecutors announced that it had submitted a report to the Competition Council alleging that Belgacom abused and still abuses its dominant position by engaging in a margin squeeze in relation to its fixed telephony activities. The margin squeeze allegedly resulted from Belgacom’s Happy Time offer (launched in June 2005). This offer, combined with Belgacom’s tariffs on wholesale markets, would not allow alternative operators to obtain reasonable profit margins. The investigation of the College of Competition Prosecutors is the result of a complaint filed by Tele2 in 2005. A final decision of the Competition Authority is expected in 2010. Belgacom continues to contest the claim of KPN Belgium initially lodged by Tele2. Benefit Excellence case A complaint was filed against Belgacom in 2002 by Codenet, Colt Telecom, Versatel and Worldcom before the Competition Authority for alleged abuse of dominance in relation to its fixed telephony business. The alleged abuse consisted of a margin squeeze and loyalty-enhancing rebates through its ‘Benefit Excel- lence’ offer. On 18 September 2009, the prosecutor of the Competition Authority decided not to pursue further and to close the investigation for priority reasons. No appeal was brought by an interested party against this decision. Fine by Competition Council In May 2009, the Belgian Competition Council fined Belgacom Mobile EUR 66.3 million for abuse of its dominant position during the period 2004-2005. This ruling is the conclusion of a case initiated by Base in 2005, alleging abusive pricing practices on the corporate market. In particular, Belgacom Mobile is blamed for a price squeeze by having applied retail “on-net” (Proximus-to-Proximus) tariffs lower than its mobile termination rates for the period 2004-2005. All other charges of the Prosecutor were rejected. The Group was obliged to pay the fine prior to 30 June 2009. Belgacom filed an appeal against the ruling of the Com- petition Authority with the Court of Appeal of Brussels, contesting a large number of elements of the ruling, including the fact that the market impact was not examined. Damage claims against Belgacom Mobile On 2 October 2009, the two experts appointed in 2007 by the Brussels Commercial Court in the framework of a proceeding between Belgacom Mobile, KPN Group Belgium (former Base) and Mobistar filed a preliminary report. This report concludes, in particular, on the basis of an unprecedented and prospective method, that it could be considered that the alleged impact on Mobistar and KPN Group Belgium the Proximus on-net tariffs during the years 1999-2004 amounted to EUR 1,182 million. The initial damages claim was brought before the court in July 2003 by KPN Group Belgium, with Mobistar joining the legal challenge at a later date. The two operators claimed that Belgacom Mobile applied mobile termination rates that were too high and also abused its dominant position by applying too low prices for on-net calls (calls from Proximus to Proximus). This report is a preliminary report. It will finally be upon the Court (i) to decide whether anti-competitive practices have been committed, (ii) to determine whether Belgacom Mobile is liable for such practices and (iii) to decide upon the amount of the possible damages to be paid. Belgacom continues to contest the claims of both KPN Group Belgium and Mobistar and hence also the content of the preliminary report of the panel of experts in respect of the actual existence of the infringements and in respect of the calculation of the damages. The final report is expected in the second quarter of 2010. Following the report of the Prosecutor, management reassessed the contingent liabilities of the Group, taking into account the current legal status of both litigation files. Belgacom will continue to monitor any further development in both cases and in the meantime vigorously continues to defend its interests.

On 29 October 2009, Belgacom received new summons launched before the Commercial Court of Brus- sels by eight members of the Platform (including Telenet, KPN, BT, Mobistar and COLT). These companies claim that Belgacom Mobile has abused its dominant position since 1998 by exercising a margin squeeze on on-net/off-net & MTR. It is a case on the merits whereby they claim a provisional amount of EUR 1, the appointment of an expert and the request to provide all professional offers, including profitability analyses since 1 January 1998.

Belgacom Annual Report 2009 - 131 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Quarterly results

Group – Financials (EUR million) Q108 Q208 Q308 Q408 2008 Q109 Q209 Q309 Q409 2009 Revenues 1,469 1,485 1,473 1,551 5,978 1,492 1,504 1,476 1,518 5,990 Consumer Business Unit 548 553 560 593 2,253 591 604 602 617 2,414 Enterprise business unit 675 690 651 680 2,696 640 626 602 632 2,501 Service Delivery Engine & Wholesale 110 103 102 99 415 98 94 94 100 386 Staff&Support 9 7 8 10 34 7 12 6 8 33 International Carrier Services 185 190 207 230 812 217 227 228 221 892 Intersegment eliminations -59 -58 -54 -61 -232 -61 -60 -55 -60 -236 Costs of materials and charges to revenues -469 -479 -487 -540 -1,975 -511 -511 -515 -550 -2,087 Personnel expenses and pensions -280 -282 -281 -281 -1,124 -281 -280 -271 -277 -1,108 Other operating expenses -202 -226 -202 -259 -890 -207 -211 -196 -225 -840 Segment result (1) 518 498 503 471 1,990 492 502 494 467 1,955 Segment EBITDA margin 35.3% 33.5% 34.1% 30.4% 33.3% 33.0% 33.4% 33.5% 30.8% 32.6% Non recurring items 0 8 0 -93 -85 0 -62 0 74 12 Ebitda 518 506 503 378 1,905 492 440 494 541 1,967 (1) before non-recurring items Group – Capex (EUR million) Q108 Q208 Q308 Q408 2008 Q109 Q209 Q309 Q409 2009 Group Capex 128 242 135 258 764 135 134 136 192 597 Consumer Business Unit 10 117 29 39 195 26 16 19 29 89 Enterprise business unit 7 3 3 6 19 6 4 4 6 20 Service Delivery Engine & Wholesale 105 108 90 174 477 98 106 100 118 422 Staff&Support 6 12 9 27 54 3 6 8 27 44 International Carrier Services 1 2 3 13 19 2 3 6 12 22

CBU - Financials (EUR million) Q108 Q208 Q308 Q408 2008 Q109 Q209 Q309 Q409 2009 Revenues 548 553 560 593 2,253 591 604 602 617 2,414 From Fixed 283 283 280 298 1,144 309 304 308 317 1,239 Voice 153 149 147 150 599 144 141 138 138 561 Data 76 80 78 80 313 79 78 82 84 323 TV 18 20 23 24 86 29 30 34 40 134 Terminals (excl. TV) 16 14 14 13 57 13 12 13 14 51 Scarlet 0 0 0 9 9 25 24 22 23 95 Other 20 19 19 22 80 19 19 19 19 76 From Mobile 265 270 279 295 1,110 282 300 293 300 1,175 Voice 183 185 180 176 723 170 178 179 176 704 Data 70 69 67 71 277 71 77 75 80 303 Terminals (excl. TV) 9 12 12 18 50 14 18 14 16 62 Tango 0 0 17 26 43 23 23 23 24 93 Other 3 4 4 5 16 4 3 2 4 14 Costs of materials and charges to revenues -124 -127 -139 -164 -553 -166 -174 -178 -205 -723 Personnel expenses and pensions -79 -80 -81 -85 -325 -89 -88 -81 -87 -345 Other operating expenses -58 -71 -67 -86 -282 -68 -75 -73 -81 -297 Segment result 287 275 273 258 1,093 268 260 269 244 1,048 Segment Contribution margin 52.3% 49.8% 48.7% 43.6% 48.5% 45.4% 43.0% 44.8% 39.6% 43.4%

132 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Financials

CBU – Operationals (EUR million) Q108 Q208 Q308 Q408 2008 Q109 Q209 Q309 Q409 2009 FROM FIXED Number of access channels (thousands) 3,136 3,099 3,078 3,068 3,068 3,164 3,130 3,114 3,102 3,102 PSTN 2,223 2,176 2,125 2,071 2,071 2,013 1,979 1,956 1,934 1,934 ISDN 45 43 42 40 40 38 37 36 34 34 IP 15 21 35 54 54 71 70 65 60 60 ADSL, VDSL 854 859 876 902 902 1,042 1,044 1,057 1,075 1,075 Traffic (millions of minutes) 1,263 1,188 1,119 1,231 4,801 1,230 1,124 1,060 1,181 4,594 National 1,063 983 927 1,023 3,996 1,022 918 869 973 3,781 Fixed to Mobile 101 109 100 107 417 105 109 101 108 423 International 99 97 91 102 388 102 97 90 100 390 TV (thousands) 349 391 443 506 506 555 589 663 752 752 TV - households 313 350 389 441 441 486 513 575 652 652 of which second stream users 37 42 54 65 65 70 75 88 100 100 ARPU (EUR) ARPU Voice 21.5 21.3 21.3 22.2 21.6 21.7 21.6 21.5 21.7 21.7 ARPU broadband 29.8 31.0 29.7 29.7 30.0 28.6 28.1 29.1 29.0 28.7 ARPU Belgacom TV 19.3 19.6 20.2 18.5 19.4 20.4 19.2 20.6 21.3 20.4 FROM MOBILE Number of active customers (thousands) 3,648 3,672 3,705 3,777 3,777 3,787 3,809 3,829 3,824 3,824 Pre-paid 2,196 2,199 2,228 2,235 2,235 2,229 2,224 2,235 2,199 2,199 Post-paid 1,364 1,389 1,393 1,431 1,431 1,451 1,488 1,510 1,530 1,530 MVNO 87 84 84 111 111 107 97 84 95 95 Annualized churn rate 19.6% 19.2% 20.4% 18.8% 19.5% 19.6% 20.8% 21.5% 20.5% 20.7% (blended - variance in p.p.)(1) ARPU (EUR)(1) Prepaid 24.2 22.5 21.4 22.9 22.8 22.0 24.5 23.6 26.1 24.3 Postpaid 40.8 40.3 39.8 39.2 40.0 37.3 38.6 38.2 37.6 37.6 Blended 30.0 28.9 28.1 28.7 28.9 27.5 29.5 28.9 30.3 29.1 Blended voice 20.7 19.5 18.8 18.6 19.4 17.5 18.3 18.3 18.3 18.2 Blended data 9.3 9.4 9.3 10.2 9.5 10.0 11.2 10.6 12.0 11.0 Net ARPU (EUR)(1) Prepaid 14.8 14.9 13.9 14.0 14.4 13.3 14.4 13.8 14.6 14.2 Postpaid 38.8 37.9 37.0 36.6 37.6 35.3 36.4 36.5 35.8 35.7 Blended 23.5 23.5 22.5 22.4 23.0 21.6 22.7 22.6 22.8 22.5 Blended voice 17.0 17.2 16.4 16.0 16.6 15.3 15.9 15.9 15.7 15.7 Blended data 6.5 6.3 6.1 6.4 6.3 6.3 6.8 6.7 7.1 6.7 UoU (units) 218.5 224.6 214.4 244.8 225.8 262.9 290.5 275.7 312.4 286.0 MoU (min) 119.3 118.6 111.0 112.0 115.3 107.9 112.9 108.9 111.8 110.5 Normalized MoU (min) 95.9 100.5 94.5 95.4 96.7 93.6 96.5 95.6 96.9 95.6 SMS (units) 100.1 106.9 104.3 133.7 111.4 156.0 178.7 167.8 201.8 176.5 Normalized SMS (units) 58.9 60.0 54.9 66.8 60.2 68.3 72.2 69.0 80.3 73.4 (1) MVNO included.

Belgacom Annual Report 2009 - 133 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c EBU - Financials (EUR million) Q108 Q208 Q308 Q408 2008 Q109 Q209 Q309 Q409 2009 Revenue 675 690 651 680 2,696 640 626 602 632 2,501 From Fixed 470 479 449 482 1,880 444 429 413 443 1,729 Voice 157 155 146 150 608 148 144 139 142 574 Data 101 103 101 103 408 101 100 100 100 401 ICT 187 194 176 199 756 171 166 153 181 670 Terminals 18 19 19 20 77 19 18 18 19 74 Other 7 8 7 10 32 6 1 2 1 10 From Mobile 205 211 202 198 816 196 197 189 189 771 Voice 159 164 153 148 624 146 144 135 135 560 Data 39 40 41 42 162 43 46 48 47 184 Terminals 5 5 5 5 20 4 4 3 4 15 Other 2 3 2 3 10 3 3 3 3 12 Costs of materials and charges to revenues -212 -220 -198 -215 -844 -198 -184 -174 -192 -748 Personnel expenses and pensions -101 -103 -102 -102 -408 -95 -94 -94 -96 -379 Other operating expenses -40 -48 -41 -50 -178 -41 -39 -33 -29 -142 Segment result 324 320 310 313 1,266 306 310 301 315 1,231 Segment Contribution margin 47.9% 46.3% 47.6% 46.1% 47.0% 47.7% 49.4% 50.0% 49.7% 49.2%

EBU – Operationals Q108 Q208 Q308 Q408 2008 Q109 Q209 Q309 Q409 2009 FROM FIXED Number of access channels (thousands) 2,000 1,998 1,993 1,987 1,987 1,974 1,958 1,946 1,937 1,937 PSTN 693 687 682 674 674 664 657 652 649 649 ISDN 874 872 868 864 864 854 847 840 830 830 IP 2 2 4 7 7 11 11 12 12 12 ADSL, VDSL 431 436 439 443 443 445 443 442 446 446 Traffic (millions of minutes) 969 944 841 889 3,643 901 837 770 828 3,336 National 672 645 572 610 2,499 620 569 522 567 2,278 Fixed to Mobile 183 186 165 175 708 176 171 157 169 672 International 114 114 104 105 436 105 97 91 92 386 ARPU (EUR) ARPU Voice 32.7 32.2 30.4 31.6 31.7 31.3 30.9 30.1 30.9 30.8 ARPU Broadband 40.4 41.2 40.4 40.2 40.6 40.1 39.8 40.1 39.7 39.9 FROM MOBILE Number of active customers (thousands) 1,065 1,093 1,116 1,139 1,139 1,170 1,190 1,211 1,235 1,235 Post-paid 1,065 1,093 1,116 1,139 1,139 1,170 1,190 1,211 1,235 1,235 Annualized churn rate 10.2% 9.4% 9.4% 11.4% 10.1% 10.7% 11.0% 9.0% 9.9% 10.2% (blended - variance in p.p.) ARPU (EUR) Postpaid 69.3 69.7 65.0 64.3 67.0 60.8 60.4 58.4 58.3 59.6 Postpaid voice 55.9 56.2 51.5 50.2 53.4 47.1 46.2 43.5 43.7 45.2 Postpaid data 13.4 13.5 13.5 14.1 13.6 13.7 14.3 14.9 14.5 14.4 Net ARPU (EUR) Postpaid 62.6 62.9 58.8 56.1 60.0 54.5 53.6 51.1 50.1 52.4 Postpaid voice 50.3 50.6 46.3 43.7 47.6 42.1 40.7 37.6 37.2 39.5 Postpaid data 12.4 12.3 12.5 12.5 12.4 12.4 12.9 13.4 12.9 12.9 UoU (units) 397.2 411.0 372.7 397.2 394.8 388.5 389.2 365.4 387.8 382.4 MoU (min) 371.9 385.9 347.1 365.6 367.7 355.4 354.5 329.3 346.6 346.0 Normalized MoU (min) 355.6 369.1 329.7 347.5 350.5 337.9 338.9 313.5 327.7 327.7 SMS (units) 52.0 53.8 53.1 62.2 55.4 64.7 68.4 68.6 76.5 69.6 Normalized SMS (units) 49.6 48.8 48.2 53.5 50.1 53.3 54.3 53.8 57.6 54.5

134 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Financials

SDE&W - Financials (EUR million) Q108 Q208 Q308 Q408 2008 Q109 Q209 Q309 Q409 2009 Revenues 110 103 102 99 415 98 94 94 100 386 From Fixed 90 81 81 78 330 79 74 75 81 308 From Mobile 20 22 21 21 85 19 21 19 19 77 Costs of materials and charges to revenues -29 -23 -21 -19 -93 -16 -18 -18 -20 -72 Personnel expenses and pensions -54 -53 -52 -50 -209 -50 -50 -47 -45 -193 Other operating expenses -46 -45 -41 -48 -179 -48 -43 -42 -51 -185 Segment result -20 -18 -11 -18 -67 -16 -18 -13 -18 -64 Segment Contribution margin -18.0% -17.3% -11.0% -18.4% -16.2% -16.5% -18.7% -13.6% -17.6% -16.6%

S&S - Financials (EUR million) Q108 Q208 Q308 Q408 2008 Q109 Q209 Q309 Q409 2009 Revenues 9 7 8 10 34 7 12 6 8 33 Costs of materials and charges to revenues -1 -1 -1 -1 -3 0 -1 -1 1 0 Personnel expenses and pensions -40 -41 -41 -39 -160 -41 -41 -42 -42 -166 Other operating expenses -55 -59 -52 -71 -237 -50 -49 -43 -61 -204 Segment result -86 -94 -86 -100 -366 -84 -79 -80 -94 -337

ICS - Financials (EUR million) Q108 Q208 Q308 Q408 2008 Q109 Q209 Q309 Q409 2009 Revenues 185 190 207 230 812 217 227 228 221 892 Costs of materials and charges to revenues -157 -160 -174 -195 -685 -184 -186 -193 -186 -749 Personnel expenses and pensions -5 -5 -6 -5 -22 -6 -6 -6 -6 -24 Other operating expenses -9 -10 -10 -12 -41 -8 -11 -11 -10 -40 Segment result 14 14 18 18 64 19 23 17 20 78 Segment EBITDA margin 7.6% 7.5% 8.5% 7.8% 7.9% 8.7% 10.0% 7.4% 8.8% 8.7%

ICS – Operationals (Voice volumes in billion of minutes) Q108 Q208 Q308 Q408 2008 Q109 Q209 Q309 Q409 2009 Voice Direct Routing 1.8 1.8 1.8 1.9 7.3 1.8 1.8 1.8 1.8 7.2 Voice Standard Products 0.3 0.4 0.4 0.5 1.6 0.5 0.5 0.5 0.6 2.0 Voice Premium Products 1.5 1.7 1.9 2.2 7.3 2.1 2.4 2.5 3.0 10.1 Total 3.7 3.9 4.1 4.5 16.2 4.5 4.7 4.8 5.4 19.3 Bics volume included at 100%.

Belgacom Annual Report 2009 - 135 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Other information

Rights, commitments and contingencies as of 31 December 2009 Disclosures related to rights, commitments and contingencies are reported in note 33 of the consolidated financial statements. Use of financial instruments Disclosures related to the use of financial instruments are reported in note 31 of the consolidated financial statements. Research and development activities In 2009, the research and development activities covered the following: • Study of the potential of new technologies: -The study of the opportunities raised by IP technology that have become ubiquitous in all types of networks and services e.g.: Eth- ernet backhauling, Access Gateway to replace the old technologies supporting voice services (PSTN, ISDN); -Fibre to the Home study (FTTH) to examine different architecture and deployment scenarios. A first trial was made in the city of Rochefort, other trials are in preparation; -Environment (Green): the environmental impact of the technologies used by Belgacom is studied to define our action plan in order to achieve our CSR objectives; -Smart Metering: new technologies were tested together with a energy service supplier concerning the putting in service of smart meters in the consumer environment.

• Introduction of new technologies: -IMS (IP Multimedia Subsystems): the first developments executed on this platform will support all the future voice services (Voice over IP…); -Mobile Broadband: higher speeds have been deployed in the network to offer a qualitative customer experience; -Mobile Networks: a new supplier has been selected, implying a complete re-engineering of the mobile network; -Important IT projects have been launched aiming at improving the customer experience by offering more interactivity and more flexibility. They also contribute at reducing the troubleshooting time and facilitating the fixed-mobile convergence; -Continuing research in the context of the Belgium HF project to develop ICT means in order to better foresee heart attacks.

• Evolution of the technology in terms of improvement and existing services extension such as: -The IPTV platform (TV over IP) : following on from the High-Definition television, this platform continues to enrich the functionalities to improve the customer experience; -VDSL2: this technology continues to be deployed and additional functionalities are being developed to improve its potential.

• The preparation of the introduction of new services: -Technical pilot projects were deployed in the framework of mobile payment. Different pilot projects in several sectors were set up in order to prepare a commercial launch.

Belgacom collaborates with universities, industrial partners and several other bodies, such as I.B.B.T. (Interdisciplinair Instituut voor Breedband Technologie) and the H.G.I. (Home Gateway Initiative forum). Treasury shares Disclosures related to treasury shares are reported in note 15 of the consolidated financial statements. Major risks and uncertainties Belgacom’s operating profit and net profit may decline if growth in the Belgian telecommunications market continues to slow down. The persistently strong competition in the Belgian market from cable companies and mobile operators who want to push through their «cut-the- fixed-line» strategy could result in a loss of market share.

However, Belgacom is taking the necessary measures to stay competitive. These measures could lead to reduced rates, through additional promotions or other means. Belgacom will also continue to pursue a strict cost control policy.

Moreover, Belgacom attaches great importance to a high-quality network, such as the broadband network, which is being renewed with fiber

136 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Financials

to the street cabinet. This is producing a strong increase in capacity, which allows new products and services, including TV services, to be developed. This in turn will enable Belgacom to retain current customers and attract new ones. The need for the development and implementation of new technologies may oblige Belgacom to make significant additional investments.

Certain rates for fixed-line and mobile telephony are determined by or are subject to the approval of the BIPT, which could have an impact on the pricing, turnover and operating profits.

Although the telecom sector does not appear to be strongly affected by the current economic crisis, it cannot be ruled out that a persistent weakening of the Belgian economy could have an impact on Belgacom’s operating income. Transactions between the Company and its board members, its executive managers and the Belgian State A general policy on conflicts of interest is applicable within the company. It prohibits the possession of financial interests that may affect one’s judgment or professional tasks to the detriment of the Belgacom Group.

In accordance with Article 523 of the Belgian Companies Code, the President & CEO, Mr. Didier Bellens, declared the following: Mr. Didier Bellens declared, during the Board of Directors of March 5, 2009 to have a conflict of interest in connection with the employee incentive plans, item of the agenda of this Board meeting. The minutes of the related Board of Directors’ meeting are the following:

Before starting the next deliberation, Mr. D. Bellens makes the following conflict of interest statement, which is recorded in the minutes, upon which he leaves the room. In accordance with article 523 of the Belgian Companies Code, the President & CEO, Mr. Didier Bellens, declares to have a conflict of interest in connection with the Employee Incentive Plans item of the agenda of the present Board meeting and more especially on the determination of the Short & Long Term Incentives granted to him under the Plan 2008. Mr. D. Bellens requests the Board to take note of his statement in this respect and to include the necessary statements in the management report of Belgacom relating to accounting year 2009. Mr. D. Bellens shall also inform the auditor of Belgacom of this conflict of interest. Mr. D. Bellens voluntarily decides not to participate in the deliberation and voting on such items on the agenda and leaves the meeting for the agenda items impacted by this conflict of interest statement and situation. After discussion and upon recommendation of the Nomination & Remuneration Committee the Board decides to grant an amount of 481.329 € for the short term incentives and an amount of 475.975 € for the long term incentives to the President & CEO. For 2009, the Board mandates the Chairman to discuss the objectives that will determine the individual performance.

At the Board of Directors’ meeting of 30 July 2009, and at the request of Belgacom’s Chairman, the President & CEO, Mr. Didier Bellens, informed the Board that at the time Belgacom decided to launch a public take-over bid on Telindus in the summer of 2005, his estate contained a small investment (14.000 shares) in Telindus. Mr. Bellens declared that : “given the amounts involved, his personal interest was not sufficient enough to influence his voting behaviour at the Board meetings of 29 September 2005 and 15 December 2005, when the decision to launch a take-over bid on Telindus was taken and that, consequently, there was no obligation to apply the rules of Article 523 of the Companies Code. Moreover, these circumstances have had no unfavourable financial impact whatsoever on Belgacom.”

No conflict of interest under Article 524 of the Belgian Companies Code needs to be reported for 2009. Capital management The purpose of the Group’s capital management is to maintain net financial debt and equity ratio’s that allow for security of liquidity at all times via flexible access to capital markets, in order to be able to finance strategic projects and to offer an attractive remuneration to shareholders. The latter is based on a dividend ratio between 50% and 60% of net income (Group share). During the years 2005 to 2009, free cash flow has enabled the Group to offer an additional shareholders remuneration through increased dividends and share buy-backs whilst maintaining net financial debt at an acceptable level. In 2008, the Group also increased the amount of outstanding unsubordinated debentures in order to finance its two main acquisitions of 2008, namely Tango Group and Scarlet Group. Over the two periods presented, the Group didn’t issue new shares or any other dilutive instrument. Post-balance sheet events Disclosures related to post-balance sheet events are reported in note 39 of the consolidated financial statements.

Belgacom Annual Report 2009 - 137 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Definitions

Broadband lines CBU: include the Belgian residential lines of Scarlet as from Q1 2009. Fixed Voice ARPU: total voice revenue, excluding activation and payphone-related revenue, divided by the average voice access channels for the period considered, divided by the number of months in that same period. Broadband ARPU: total ADSL revenue (for CBU including Scarlet ADSL revenue), divided by the average number of ADSL lines for the period considered, divided by the number of months in that same period. Belgacom TV ARPU: includes only customer-related revenue and takes into account promotional offers, divided by the number of households with Belgacom TV. Mobile active customers: customers who have made or received at least one call or sent or received at least one SMS message in the last three months. Prepaid customers and MVNO customers are fully segmented as CBU customers. Annualized mobile churn rate: the total annualized number of SIM cards disconnected from the Belgacom Mobile network (including the total number of port-outs due to mobile number portability) during the given period, divided by the average number of customers for that same period. Mobile net ARPU: calculated on the basis of monthly averages for the period indicated. Monthly net ARPU is equal to total mobile voice and mobile data revenues, divided by the average number of active mobile customers for that period. UoU (Units of Use): voice minutes of use +SMS (where one SMS equals one minute) per active customer per month. MoU (Minutes of Use): duration of all calls from or to Proximus, per active voice customer, per month. Normalized MoU: duration of all calls from or to Proximus, per active voice customer, per month – excluding free minutes SMS: number of SMS per active customer per month. Normalized SMS: number of paying SMS per active customer per month (i.e. excluding free SMS).

138 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Consolidated Financial Statements

Prepared under International Financial Reporting Standards for each of the two years ended 31 December 2009 and 2008

Consolidated income statement 140 Consolidated statement of other comprehensive income 140 Consolidated balance sheet 141 Consolidated cash flow statement 142 Consolidated statement of changes in equity 143 Notes to the consolidated financial statements 144

Note 1. Corporate information 144 Note 2. Significant accounting policies 144 Note 3. Goodwill 152 Note 4. Intangible assets with finite useful life 153 Note 5. Property, plant and equipment 154 Note 6. Investments in subsidiaries, joint ventures and associates 155 Note 7. Other participating interests 162 Note 8. Income taxes 163 Note 9. Assets and liabilities for pensions, other post-employment benefits and termination benefits 164 Note 10. Other non-current assets 169 Note 11. Trade receivables 169 Note 12. Other current assets 169 Note 13. Investments 169 Note 14. Cash and cash equivalents 170 Note 15. Equity 170 Note 16. Interest-bearing liabilities 171 Note 17. Provisions 172 Note 18. Other non-current payables 173 Note 19. Other current payables 173 Note 20. Net revenue 173 Note 21. Other operating revenue 173 Note 22. Non-recurring revenue 173 Note 23. Costs of materials and charges to revenue 174 Note 24. Personnel expenses and pensions 174 Note 25. Other operating expenses 174 Note 26. Non-recurring expenses 174 Note 27. Depreciation and amortization 175 Note 28. Net finance income / (costs) 175 Note 29. Earnings per share 175 Note 30. Dividends paid and proposed 176 Note 31. Additional disclosures on financial instruments 176 Note 32. Related party disclosures 182 Note 33. Rights, commitments and contingent liabilities 184 Note 34. Cross-border lease arrangements 186 Note 35. Share-based Payment 187 Note 36. Relationship with the auditors 188 Note 37. Segment reporting 188 Note 38. Recent IFRS pronouncements 190 Note 39. Post balance sheet events 191

Auditor’s report 192

Belgacom Financial Report 2009 - 139 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c

Consolidated income statement

Year ended 31 December (EUR million) Note 2008 2009

Net revenue 20 5,911 5,922 Other operating revenue 21 67 68 Non-recurring revenue 22 8 74 Total revenue 5,986 6,065

Costs of materials and charges to revenue 23 -1,975 -2,087 Personnel expenses and pensions 24 -1,124 -1,108 Other operating expenses 25 -890 -840 Non-recurring expenses 26 -93 -62 Total operating expenses before depreciation and amortization -4,081 -4,097

Operating income before depreciation and amortization 1,905 1,967

Depreciation and amortization 27 -743 -706

Operating income 1,161 1,261

Finance revenue 29 26 Finance costs -137 -143 Net finance costs 28 -109 -117

Loss from enterprises accounted for using the equity method 6 0 0

Income before taxes 1,053 1,144

Tax expense 8 -254 -241 Net income 799 904

Non-controlling interests 15 -1 -1 Net income (group share) 800 904

Basic earnings per share (in EUR) 29 2.45 EUR 2.82 EUR Diluted earnings per share (in EUR) 29 2.45 EUR 2.82 EUR Weighted average number of ordinary shares 29 326,179,820 320,475,553 Weighted average number of ordinary shares for diluted earnings per share 29 326,287,237 320,686,600

Consolidated statement of other comprehensive income

Year ended 31 December (EUR million) Note 2008 2009

Net income 799 904

Other comprehensive income: Available-for-sale investments: Valuation gain/(loss) taken to equity 7-13 0 1 Cash flow hedges: Gain/(loss) taken to equity 10 Exchange differences on translation of foreign operations 11 Other comprehensive income net of tax 21

Total comprehensive income 801 905

Attributable to: Equity holders of the parent 801 906 Non-controlling interests 0-1

140 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Consolidated balance sheet

As of 31 December (EUR million) Note 2008 2009

ASSETS

NON-CURRENT ASSETS 5,564 5,505 Goodwill 3 2,111 2,088 Intangible assets with finite useful life 4 552 623 Property, plant and equipment 5 2,501 2,420 Investments in associates 602 Other participating interests 711 Deferred income tax assets 8 308 295 Pension assets 952 Other non-current assets 10 85 75

CURRENT ASSETS 2,218 1,945 Inventories 100 86 Trade receivables 11 1,205 1,089 Current income tax assets 8 144 169 Other current assets 12 151 194 Investments 13 53 76 Cash and cash equivalents 14 565 332

TOTAL ASSETS 7,782 7,450

LIABILITIES AND EQUITY

EQUITY 15 2,276 2,528 Shareholders' equity 15 2,271 2,521 Issued capital 1,000 1,000 Treasury shares -517 -509 Restricted reserve 100 100 Remeasurement to fair value 45 Stock compensation 610 Retained earnings 1,675 1,911 Foreign currency translation 34 Non-Controlling interests 15 57

NON-CURRENT LIABILITIES 3,182 3,093 Interest-bearing liabilities 16 2,128 2,128 Liability for pensions, other post-employment benefits and termination benefits 9 777 677 Provisions 17 225 199 Deferred income tax liabilities 84986 Other non-current payables 18 3 3

CURRENT LIABILITIES 2,323 1,830 Interest-bearing liabilities 16 393 59 Trade payables 1,239 1,123 Income tax payables 8 165 137 Other current payables 19 527 511

TOTAL LIABILITIES AND EQUITY 7,782 7,450

Belgacom Financial Report 2009 - 141 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Consolidated cash flow statement

Year ended 31 December (EUR million) Note 2008 2009

Cash flow from operating activities Net income (group share) 800 904 Adjustments for: Non-controlling interests 15 0 -1 Depreciation and amortization on intangible assets and property, plant and equipment 4.5 743 706 Increase of impairment on intangible assets and property, plant and equipment 4.5 12 3 Increase of provisions 36 8 Deferred tax expense 8946 Fair value adjustments on financial instruments 18 2 (Gain) / Loss on disposal of consolidated companies 6 13 -72 Gain on disposal of property, plant and equipment -3 -3 Other non-cash movements 55 Operating cash flow before working capital changes 1,631 1,598

Decrease / (increase) in inventories -2 14 Decrease / (increase) in trade receivables -48 66 Increase in current income tax assets -27 -25 Increase in other current assets -52 -38 Decrease in other non current assets 10 Increase / (decrease) in trade payables 134 -55 Decrease in income tax payables -5 -27 Increase in other current payables 14 11 Decrease in net liability for pensions, other post-employment benefits and termination benefits 9-54-97 Decrease in other non-current payables and provisions -40 -40 Increase in working capital, net of acquisitions and disposals of subsidiaries -79 -192

Net cash flow provided by operating activities (1) 1,552 1,406

Cash flow from investing activities Purchase of intangible assets and property, plant and equipment 3, 4, 5 -764 -597 Cash (paid) / received for consolidated companies, net of cash acquired -390 1 Cash (paid) / received from sales of consolidated companies, net of cash disposed of 6 1 -22 Cash received from sales of intangible assets and property, plant and equipment 13 2 Net cash received from / (paid for) other non-current assets -3 6 Net cash used in investing activities -1,143 -609

Cash flow before financing activities 409 797

Cash flow from financing activities Dividends paid to shareholders 30 -710 -684 Dividends paid to non-controlling interests 15 -1 0 Net acquisition of treasury shares -340 8 Net (purchase) / sale of investments 4-23 Decrease of shareholders' equity -1 -1 Issuance / (repayment) of long term debt 459 -298 Issuance / (repayment) of short term debt 19 -33 Net cash used in financing activities -570 -1,030

Net decrease of cash and cash equivalents -161 -233

Cash and cash equivalents at 1 January 726 565 Cash and cash equivalents at 31 December 14 565 332

(1) Net cash flow from operating activities includes the following cash movements : Interest paid -96 -103 Interest received 26 10 Income taxes paid -259 -221

142 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Consolidated statement of changes in equity

(EUR million) Issued Treasury Restricted Remeasur Foreign Stock Retained Sharehol- Non- Total capital shares reserve ement to currency Compen- Earnings ders' Equity controlling Equity fair value trans- sation interests lation

Balance at 1 January 2008 1,000 -178 100 4 2 5 1,586 2,520 6 2,525

Fair value changes in cash flow hedges - acquired during the year 00010001 0 1 Currency translation differences 0 0 0 0 1 0 0 1 0 1 Equity changes not recognised in the income statement 0 0 0 1 1 0 0 2 0 2 Net income 0 0 0 0 0 0 800 800 0 799 Total recognized income and expense 0 0 0 1 1 0 800 801 0 801

Dividends to shareholders (relating to 2007) 0 0 0 0 0 0 -550 -550 0 -550 Interim dividends to shareholders (relating to 2008) 0 0 0 0 0 0 -160 -160 0 -160 Dividends of subsidiaries to non-controlling interests 00000000 -1 -1 Treasury shares Exercise of stock options 0 9 0 0 0 0 -2 7 0 7 Acquisition of treasury shares 0 -352 0 0 0 0 0 -352 0 -352 Sale of treasury shares under a discounted share purchase plan 04000004 0 4 Stock options Stock options granted and accepted 00000303 0 3 Deferred stock compensation 0 0 0 0 0 -3 0 -3 0 -3 Amortization deferred stock compensation 0 0 0 0 0 2 0 2 0 2 Exercise of stock options 0 0 0 0 0 -1 1 0 0 0 Total transactions with equity holders 0 -340 0 0 0 1 -711 -1,050 0 -1,050

Balance at 31 December 2008 1,000 -517 100 4 3 6 1,675 2,271 5 2,276

Fair value changes in available-for-sale investments 0 0 0 1 0 0 0 1 0 1 Currency translation differences 0 0 0 0 1 0 0 1 0 1 Equity changes not recognised in the income statement 0 0 0 1 1 0 0 1 0 1 Net income 0 0 0 0 0 0 904 904 -1 904 Total recognized income and expense 0 0 0 1 1 0 904 906 -1 905

Dividends to shareholders (relating to 2008) 0 0 0 0 0 0 -538 -538 0 -538 Interim dividends to shareholders (relating to 2009) 0 0 0 0 0 0 -128 -128 0 -128 Acquisition of non-controlling interests 00000000 3 3 Treasury shares 0 Exercise of stock options 02000002 0 2 Sale of treasury shares under a discounted share purchase plan 0 6 0 0 0 0 -1 5 0 5 Stock options Stock options granted and accepted 00000404 0 4 Deferred stock compensation 0 0 0 0 0 -4 0 -4 0 -4 Amortization deferred stock compensation 0 0 0 0 0 4 0 4 0 4 Total transactions with equity holders 0 8 0 0 0 3 -668 -656 3 -653 Balance at 31 December 2009 1,000 -509 100 5 4 10 1,911 2,521 7 2,528

Belgacom Financial Report 2009 - 143 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Notes to the consolidated financial statements

Note 1. Corporate information The consolidated financial statements of Belgacom SA (hereafter “the Group”) at 31 December 2009 were approved by the Board of Directors on 25 February 2010. Belgacom SA is a “Limited Liability Company of Public Law” registered in Belgium. The transformation of Belgacom SA from “Autonomous State Company” into a “Limited Liability Company of Public Law” was implemented by the Royal Decree of 16 December, 1994. Belgacom SA headquarters are located at Boulevard du Roi Albert II, 27 1030 Brussels, Belgium. As from 1 January 2008 onwards, the Board of Directors, the Chief Executive Officer and the Belgacom Management Committee manage the operations of the Belgacom Group based on the new customer-oriented organization structured around the five following reportable operating segments:  The Consumer Business Unit (CBU) sells voice products and services, internet and television, both on fixed and mobile networks, to residential customers, mainly on the Belgian market;  The Enterprise Business Unit (EBU) sells ICT services and products to professional customers, whether they are self-employed persons, small companies or major corporations. These ICT solutions, including telephone services, are marketed mainly under the Belgacom, Proximus and Telindus brands, on both the Belgian and international markets;  The Service Delivery Engine & Wholesale (SDE&W) centralizes all the network and IT services and costs (excluding costs related to customer operations and to the service delivery of ICT solutions), provides services to CBU and EBU and sells these services to other telecom and cable operators;  International Carrier Services (ICS), a joint venture between Belgacom and Swisscom Fixnet, is responsible for international carrier activities;  Staff and Support (S&S) brings together all the horizontal functions (human resources, finance, legal, strategy and corporate communication), internal services and real estate that support the Group’s activities. Further information concerning the operating segments is included under note 37.

The number of employees of the Group (in full time equivalents) amounted to 16,804 at 31 December 2009, and 17,371 at 31 December 2008. For the year 2009, the average number of headcount of the Group was 139 management personnel, 15,221 employees and 2,297 workers.

Note 2. Significant accounting policies Basis of preparation The accompanying consolidated financial statements as of 31 December 2009 and for the year then ended have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted for use in the European Union. The Group did not early adopt any IASB standards or interpretations. The consolidated financial statements have been prepared on an historical cost basis, except for the measurement at fair value of derivatives and available-for-sale financial assets. The carrying values of assets and liabilities that are hedged with fair-value hedges are adjusted to record the change in the fair value attributable to the risks that are being hedged. Changes in accounting policies The accounting policies applied are consistent with those of the previous financial years except that the Group applied the new or revised IFRS standards and interpretations as adopted by the European Union that became mandatory on 1 January 2009 and that are detailed as follows:  The revision of IAS 23 (“Borrowing Costs”),  The application of IFRIC 13 (“Customer Loyalty Programs”), IFRIC 15 (“Agreements for the Construction of Real Estate”) and IFRIC 16 (“Hedges of a Net Investment in a foreign Operation”),  The improvements to IFRS’s issued in May 2008, and April 2009 for those directly applicable,  The amendments to IFRS 2 (“Share-Based Payment”), IAS 1 (“Presentation of Financial Statements”), IAS 27 (“Consolidated and Separate Financial Statements”), IAS 32 (“Financial Instruments : Presentation”) and IFRS 7 (“Financial Instruments: Disclosures”). The application of the interpretations, revisions, amendments or improvements had no significant effect on the financial statements for the current period or each other period presented, except IFRIC 13 that impacted the Group’s financial statements of the year 2009 with EUR 4 million to accrue customer loyalty award credits at fair value (as opposed to cost), and in deduction of “net revenue” (as opposed to “costs of materials and charges to revenue”). Basis of consolidation The consolidated financial statements comprise the financial statements of Belgacom SA and its subsidiaries and joint ventures as well as the Group’s share of results in associates. Note 6 lists the Group’s subsidiaries, joint ventures and associates. Subsidiaries are those entities controlled by the Group. Control exists when Belgacom has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The investments in subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the

144 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Group. Inter-company balances and transactions, and resulting unrealized profits or losses between Group companies are eliminated in consolidation. When necessary, accounting policies of subsidiaries are adjusted to ensure that the consolidated financial statements are prepared using uniform accounting policies. Companies that are jointly controlled (defined as those entities in which the Group has joint control through a contractual arrangement requiring unanimous consent of the parties sharing control) are included using the proportionate consolidation method, from the date on which joint control is established and until the date on which the Group ceases to have joint control over the joint venture. The Group’s share of the assets, liabilities, expenses, income and cash-flow of joint ventures are combined on a line-by-line basis with similar items in the consolidated financial statements. The Group’s proportionate share of the inter-company balance and transactions and resulting unrealized profits or losses between Group companies and jointly controlled entities are eliminated in consolidation. Associated companies in which the Group has a significant influence, defined as an investee in which Belgacom has the power to participate in its financial and operating policy decisions (but not to control the investee), are accounted for using the equity method. Under that method, the investments held in associates are initially recorded at cost and the carrying amount is subsequently adjusted to recognize the Group’s share in the profit or losses of the associate as from the date of acquisition. These investments and the equity share of results for the period are shown in the balance sheet and income statement as investments in enterprises accounted for under the equity method and share in the result of the enterprises accounted for using the equity method, respectively. Subsidiaries and joint ventures acquired and held exclusively with a view of disposal within twelve months are consolidated and presented in the balance sheet as assets and liabilities held for sale. Judgments In the process of applying the Group’s accounting policies, management has made the following judgments, apart from those involving estimations, which have the most significant effect on the amounts recognized in the financial statements:

Cross-border lease arrangements The Group holds several cross-border lease arrangements with foreign investors relating to part of its fixed and mobile switches equipment. The Group determined that these arrangements in substance do not involve a lease and that the related debts and deposits must not be recognized in the financial statements because they do not meet the definition of an asset and a liability under IFRS. More details are given in note 34.

Acquisition of non-controlling interests in Belgacom Mobile The Group acquired in 2006 the remaining non-controlling interests in Belgacom Mobile SA. The Group elected to record the excess of the acquisition price over the balance of non-controlling interests at acquisition date as goodwill in the balance sheet. Estimation uncertainty Estimates that have been made at each reporting date reflect conditions that existed at those dates (e.g. market prices, interest rates and foreign exchange rates). Although these estimates are based on management’s best knowledge of current events and actions that the Group may undertake, actual results may differ from those estimates. The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed in note 3 (Goodwill) and note 9 (Assets and liabilities for pensions, other post-employment benefits and termination benefits). Foreign currency translation

Foreign currency transactions The presentation currency for the Group is the Euro. Foreign currency transactions are translated, on initial recognition, at the foreign exchange rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency of the entity at the balance sheet date using the exchange rate at that date. Net exchange differences on the translation of monetary assets and liabilities are classified in “other operating expenses” in the income statement in the period in which they arise.

Foreign operations Some foreign subsidiaries and joint-ventures operating in non-EURO countries are considered as foreign operations that are integral to the operations of the reporting enterprise. Therefore, monetary assets and liabilities are translated using the exchange rate at balance sheet date, non-monetary assets and liabilities are translated at the historical exchange rate, except for non-monetary items that are measured at fair value in the domestic currency that are translated at the exchange rate when the fair value was determined. Revenue and expenses of these entities are translated at the weighted average exchange rate. The resulting exchange differences are classified in “other operating expenses” in the income statement. For other foreign subsidiaries and joint-ventures operating in non-EURO countries, assets and liabilities are translated using the exchange rate at balance sheet date. Revenue and expenses of these entities are translated at the weighted average exchange rate. The resulting exchange differences are taken directly to a separate component of equity. On disposal of such entity, the deferred cumulative amount recognized in equity relating to that particular foreign operation is recognized in the income statement. All exchange differences arising from a monetary item that forms part of the Group’s net investment in such entity are recognized in the same separate component of equity. Goodwill The excess of consideration paid over the Group’s interest in the net fair value of identifiable assets, liabilities and contingent liabilities acquired in business combinations (“Goodwill”) is recognized as an asset. Goodwill arising from business combinations that occurred prior to 31 March 2004 has been amortized until 31 December 2004 over their estimated lifetime varying from 5 years to 15 years.

Belgacom Financial Report 2009 - 145 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Such goodwill is stated at cost less accumulated amortization and impairment losses. As of 2005, this goodwill is no longer amortized but is subject to an annual impairment test. Goodwill arising from business combinations that occurred after 31 March 2004 is stated at cost less accumulated impairment losses. Intangible assets with finite useful life Intangible assets consist primarily of the Global System for Mobile communication (“GSM”) license, the Universal Mobile Telecommunication System (“UMTS”) licence, internally developed software, customer bases and trade names acquired in business combinations and other intangible assets such as football rights and broadcasting rights and externally developed software. The Group capitalizes certain costs incurred in connection with developing or purchasing software for internal use when they meet the criteria set out in IAS 38. Capitalized software costs are included in internally generated and other intangible assets and are amortized over three to five years. Intangible assets with finite life acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Intangible assets with finite useful life are stated at cost less accumulated amortization and impairment losses. The residual value of such intangible assets is assumed to be zero. Customer bases and trade names acquired in business combinations are amortized on the basis of the expected pattern of economic benefits over their estimated useful life. GSM and UMTS licences, other intangible assets and internally generated assets with finite useful life are amortized on a straight-line basis over their estimated useful life. Amortization commences when the intangible asset is ready for its intended use. The useful life of the GSM and UMTS intangible assets has been determined based on the license terms. The useful life of football rights and broadcasting rights has been determined based on the term of the individual underlying contracts. The useful lives are assigned as follows: Useful life (years)  GSM / UMTS licenses 15 to 20  Customer bases and trade names acquired 3 to 10  Other intangible assets and internally generated assets, including software 3 to 20 The amortization period and the amortization method for an intangible asset with finite useful life are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortization period or method, as appropriate, and treated as changes in accounting estimates. Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. The cost of additions and substantial improvements to property, plant and equipment is capitalized. The cost of maintenance and repairs of property, plant and equipment is charged to operating expenses when they do not extend the life of the asset or do not significantly increase its capacity to generate revenue. The cost of an item of property, plant and equipment includes the costs of its dismantlement, removal or restoration, the obligation for which the Group incurs as a consequence of installing the item. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the year the asset is derecognised. Depreciation of an asset begins when the asset is ready for its intended use. Depreciation is calculated using the straight-line method over the estimated useful life of the asset. The useful lives are assigned as follows: Useful life (years) Land and buildings  Land indefinite  Buildings and constructions 5 to 33 Technical and network equipment  Switches 3 to 10  Cables and Operational support systems 4 to 20  Transmission 4 to 10  Equipment installed at client premises 2 to 5  Equipment for data transfer business and for commercial use 3 to 5  Mobile antennas 6 to 15 Furniture and vehicles  Furniture and office equipment 3 to 10  Vehicles 4 to 5 Other tangible assets 2 to 33

146 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Leasehold improvements are depreciated over the shorter of their estimated useful life or the remaining term of the lease. The asset’s residual values, useful life and depreciation methods are reviewed, and adjusted if appropriate, at each financial year end. Costs of material, personnel expenses and other operating expenses are shown net of work performed by the enterprise that is capitalized in respect of the construction of property, plant and equipment. Borrowing costs are capitalised if they are directly attributable to the acquisition, construction or production of a qualifying asset. Impairment of non-financial assets The Group reviews the carrying value of its non-financial assets at each balance sheet date for any indication of impairment. The Group compares at least once a year the carrying value with the estimated recoverable amount of intangible assets under construction and cash generating units including goodwill. The Group performs this annual impairment test during the fourth quarter of each year. When indication of impairment exists or when annual impairment testing for an asset or a cash generating unit is required, an impairment loss is recognized when the carrying value of the asset or cash generating unit exceeds the estimated recoverable amount, being the higher of the asset’s or cash generating unit’s fair value less costs to sell and its value in use for the Group. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash generating unit. Impairment losses on goodwill, intangible assets and property, plant and equipment are recorded in operating expenses. An assessment is made at each balance sheet date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. If that is the case, impairment losses in respect of assets other than goodwill are reversed in order to increase the carrying amount of the asset to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the income statement in operating expenses. Deferred taxation Deferred taxation is provided for all temporary differences between the carrying amount of assets and liabilities in the consolidated balance sheet and their respective taxation bases. Deferred taxation is not provided on differences relating to goodwill for which amortization is not deductible for taxation purposes. Deferred tax assets associated to deductible temporary differences and unused tax losses carried forward are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary difference or the unused tax losses can be utilized. The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Unrecognized deferred income tax assets are reassessed at each balance sheet date and are recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset will be realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Provision for taxation that could arise if undistributed retained profit of certain subsidiaries is remitted to the parent company, is only recognized where a decision has been taken to remit such retained profit, i.e., where the subsidiary intends to distribute a dividend. Pensions, other post-employment benefits and termination benefits The Group operates several defined benefit pension plans to which the contributions are made through separately managed funds. The Group also agreed to provide additional post-employment benefits to certain employees. The cost of providing benefits under the plans is determined separately for each plan using the projected credit unit actuarial valuation method. Actuarial gains and losses are recognized as income or expense when the cumulative unrecognized gains or losses for an individual plan at the end of the previous reporting period exceed 10% of the higher of the present value of the defined benefit obligation and the fair value of plan assets at the beginning of the year. This excess is recognized over the average remaining service life of the employees participating in the individual plan. The Group also operates several defined contribution plans. Contributions are expensed as incurred. The Group operates several restructuring programs that involve termination benefits or other forms of additional compensation. The actuarial gains and losses on these liabilities are recognized in the income statement when incurred. The total expense recognized in the income statement is classified in personnel expenses and pensions, except non-recurring expenses and the interest cost that is classified as finance cost in respect of the liability for termination benefits and additional compensations resulting from external mobility programs and from the collective labour agreement of 2005. Short term and long term employee benefits The cost of all short-term and long-term employee benefits, such as salaries, employee entitlements to leave pay, bonuses, medical aid and other contributions, are recognized during the period in which the employee renders the related service. The Group recognizes those costs only when it has a present legal or constructive obligation to make such payment and a reliable estimate of the liability can be made.

Belgacom Financial Report 2009 - 147 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Financial instruments

Fair value of financial instruments The following methods and assumptions were used to estimate the fair value of financial instruments:  For investments in quoted companies and mutual funds, the fair value is their quoted price;  For investments in non-quoted companies, fair value is estimated by reference to recent sale transactions on the shares of these non-quoted companies and, in the absence of such transactions, by using different valuation techniques such as discounted future cash flow models and multiples methods;  For investments in non-quoted companies for which no fair value can be reliably determined, fair value is based on the historical acquisition cost, adjusted for impairment losses, if any;  For long term debts carrying a floating interest rate, the amortized cost is assumed to approximate fair value;  for long term debts carrying a fixed interest rate, the fair value is determined based on the market value when available or otherwise based on the discounted future cash flows;  For trade receivables, trade payables, other current assets and current liabilities, the carrying amounts reported in the balance sheet approximate their fair value considering their short maturity;  For cash and cash equivalents, the carrying amounts reported in the balance sheet approximate their fair value considering their short maturity;  For derivatives, fair values have been estimated by using different valuation techniques, in particular the discounting of future cash flows.

Criteria for initial recognition and for de-recognition of financial assets and liabilities Financial instruments are initially recognized when the Group becomes party to the contractual terms of the instruments. Normal purchases and sales of financial assets are accounted for at their settlement dates. Financial assets (or a portion thereof) are de-recognized when the Group realizes the rights to the benefits specified in the contract, the rights expire or the Group surrenders or otherwise loses control of the contractual rights that comprise the financial asset. Financial liabilities (or a portion thereof) are de-recognized when the obligation specified in the contract is discharged, cancelled or expires.

Criteria for offsetting financial assets and liabilities Where a legally enforceable right of offset exists for recognized financial assets and liabilities, and there is an intention to settle the liability and realize the asset simultaneously, or to settle on a net basis, all related financial effects are offset.

Criteria for classifying financial instruments as held to maturity Some financial instruments are classified as held to maturity based on the ability and the intention of the Group to keep these instruments until maturity. The Group has already a large experience of respecting that statement. This is reinforced by the fact that the financial instruments classified as held to maturity are medium to short term.

Criteria for classifying financial instruments as available-for-sale Non-derivative financial assets that the Group has no intention nor ability to keep until maturity, that the Group does not classify as loans and receivables and that the Group does not designate as at fair value through profit and loss at inception, are classified as available-for-sale. Shares in equity of non-consolidated entities are usually classified as available-for-sale financial assets. Shares in mutual funds or similar funds are classified as available-for-sale, if not designated at fair value through profit and loss at inception.

Other participating interests Other participating interests are equity instruments in entities that are not subsidiaries, joint ventures or associates. They are initially recognized at cost, being the fair value of the consideration given and including acquisition costs associated with the investment. These interests are classified as available-for-sale financial assets in the balance sheet. After initial recognition, other participating interests are carried at fair value, with recognition of the changes in fair value directly in equity, until the financial asset is sold, collected or otherwise disposed of, at which time the cumulative gain or loss previously reported in equity is included in income statement.

Other non-current financial assets Other non-current financial assets include derivatives (see below), long-term interest-bearing receivables such as loans to joint- ventures, personnel and cash guarantees and long-term investments such as notes and purchased bonds. Long-term receivables are accounted for as loans and receivables originated by the Group and are carried at amortized cost. Long-term investments are classified as held-to-maturity and are carried at amortized cost.

Trade receivables and other current assets Trade receivables and other current assets are shown on the balance sheet at nominal value (generally, the original invoice amount) less the allowance for doubtful debts.

148 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Investments Investments include shares in funds and mutual funds, fixed income securities and deposits with a maturity greater than three months but less than one year. Shares are initially recognized at cost, being the fair value of the consideration given and including acquisition costs associated with the investment. After initial recognition, shares are treated as available-for-sale, with re-measurement to fair value recorded directly in equity until the investment is sold, collected or otherwise disposed of, at which time the cumulative gain or loss previously reported in equity is included in income statement. Fixed income securities are initially recognized at cost, being the fair value of the consideration given and including acquisition costs associated with the investment. After initial recognition, fixed income securities that are classified as available-for-sale, are measured at fair value, with gains and losses on re-measurement recognized in equity until the investment is sold, collected or otherwise disposed of, at which time the cumulative gain or loss reported in equity is included in income statement. Fixed income securities that are intended to be held-to-maturity are measured at amortized cost, using the effective interest rate method. Deposits are considered as held-to-maturity and measured at amortized cost.

Cash and cash equivalents Cash and cash equivalents include cash, current bank accounts and investments with an original maturity of less than three months, and that are highly liquid. Cash and cash equivalents are carried at amortized cost.

Impairment of financial assets The Group assesses at each balance sheet date whether there is any objective evidence that a financial asset or group of financial assets is impaired. When the carrying amount of the financial asset is greater than its recoverable amount, an impairment loss is recorded. An allowance account is always used to account for impairment losses, whether impairment is caused by credit losses or not. Allowances and impairment losses on financial assets are accounted for as finance costs when the asset relates to financing activities. When the asset relates to operating or investing activities, allowances and impairment losses are accounted for as other operating expenses. Impairment losses on receivables are determined when it is probable that the Group will not be able to collect any amount due, on basis of individualized criteria or based on portfolio statistics and analysis of ageing balances. In case of impairment due to credit losses, the impairment allowance is reversed when it becomes probable that the Group will collect the financial asset, as a result of various indicators such as the receipt of collaterals, a successful capital increase at the customer etc. The impairment allowance will also be reversed when the asset is definitively sold, collected or at the opposite, uncollectible, at what time, the definitive gain (loss) on disposal of the asset is recorded in income statement. Impairment losses on available-for-sale equity instruments are not reversed in income statement. If, as a result of an impairment test, it appears that an existing impairment loss has to be reversed, reversal will be recorded in equity, as a re-measurement to fair value.

Interest-bearing liabilities All loans and borrowings are initially recognized at cost, being the fair value of the consideration received, net of issuance costs associated with the borrowings. After initial recognition, debts not hedged are measured at amortized cost using the effective interest rate method, with amortization of discounts or premiums through the income statement. Debts that are hedged with interest rate swaps (IRS) and interest rate and currency swaps (IRCS) for fair value hedge purposes are re-measured to the extent of the risk being hedged. The gain or loss attributable to the hedged risk resulting from re-measurement to fair value is recognized in income statement.

Derivatives The Group makes use of derivatives such as IRS, IRCS, forward foreign exchange contracts and currency options to reduce its risks associated with interest rate and foreign currency fluctuations on underlying assets, liabilities and anticipated transactions. The derivatives are carried at fair value under the captions other assets (non-current and current), interest-bearing liabilities (non-current and current) and other payables (non-current and current). The Group uses IRS and IRCS to reduce its exposure to interest rate and foreign currency fluctuations on long-term debts. The interest coupons receivable and payable under the terms of these swaps are accrued over the period to which the coupon relates.

Belgacom Financial Report 2009 - 149 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c The table below summarizes the relationship between hedged items and hedging instruments:

Hedging instrument Hedged item Type of hedge relationship Risk(s) being hedged

Fixed rate debt in foreign Interest rate and currency swap Fair value Currency and interest rate risk currency Future issuance of fixed rate Interest rate swap Cash flow Interest rate risk debt Forward foreign exchange Future payments in foreign Cash flow Currency risk contracts currency

Some IRS and forward foreign exchange contracts qualify as cash flow hedge. In this case, the effective portion of the gain or loss on the hedging instrument is recognized directly in equity, while any ineffective portion is recognized immediately in the income statement. Amounts taken to equity are transferred to the income statement when the hedged transaction affects the income statement. The Group does not hold or issue derivative financial instruments for trading purposes but some of its derivative contracts do not meet the criteria set by IAS 39 to be considered as hedges and are therefore treated as derivatives held-for-trading, with changes in fair value recorded in the income statement. The Group uses currency options and forward foreign exchange contracts to manage its foreign currency exposure arising from operational contracts. Nevertheless, since the matching between these instruments and the underlying exposure is not sufficiently effective, or the effectiveness cannot be easily demonstrated, these instruments are not accounted for as hedges and are consequently carried at fair value, with changes in fair value recognized in the income statement. Some debts issued by the Group include embedded derivatives. Such derivatives are separated from their host contract and carried at fair value with changes in fair value recognized in the income statement. The mark-to-market effects on these embedded derivatives is neutralised by those on other derivatives.

Reassessment of embedded derivatives The Group assesses whether an embedded derivative is required to be separated from the host contract and accounted for as a derivative when the Group first becomes a party to this contract. The Group does not reassess further this issue of separation of embedded derivative, unless there is a change in the terms of the contract that significantly modifies the cash flows that otherwise would be required under the contract, in which case reassessment is performed.

Net gains and losses on financial instruments The Group excludes dividends, interest income and interest charges from the net gains and losses on financial instruments. Dividends, interest income and interest charges arising from financial instruments are posted to the finance revenue/(costs). Net gains/(losses) from disposals or settlements of financial instruments are accounted for as finance revenue/(costs) when the instruments relate to financing activities. When the financial instruments relate to operating or investing activities, net gains/(losses) from disposals or settlements are accounted for as other operating revenue/(expenses). Net gains and losses resulting from fair value measurement of derivatives used to manage foreign currency exposure on operating activities that do not qualify for hedge accounting under IAS 39 are recorded as operating expenses. Net gains and losses resulting from fair value measurement of derivatives used to manage interest rate exposure on interest-bearing liabilities that do not qualify for hedge accounting under IAS 39 are recorded in finance revenue/(costs). Inventories Inventories are stated at the lower of cost and net realizable value. Cost is determined based on the weighted average cost method except for IT equipments (FIFO method) and goods purchased for resale as part of specific construction contracts (individual purchase price). For construction contracts, the percentage of completion method is applied. The stage of completion is measured by reference to the amount of contract costs incurred for work performed at balance sheet date in proportion to the estimated total costs for the contract. Contract cost includes all expenditures directly related to the specific contract and an allocation of fixed and variable overheads incurred in connection with contract activities based on normal operating capacity. Leases Leases through which the Group acquires the right to use assets and the leasing company retains substantially all the risks and the benefits of ownership of the asset are classified as operating leases. Operating lease payments are recognized as an expense in the income statement on a straight-line basis over the lease term.

150 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Provisions Provisions are recognized when the Group has a present legal or constructive obligation resulting from past events, for which it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made. A past event is deemed to give rise to a present obligation if, taking into account the available evidence, it is more likely than not that a present obligation exists at the balance sheet date. Certain assets and improvements that are situated on property owned by third parties must eventually be dismantled, and the property must be restored to its original condition. The estimated costs associated with dismantling and restorations are recorded under property, plant and equipment and depreciated over the useful life of the asset. The total estimated cost required for dismantling and restoration, discounted to its present value, is recorded under provisions. Where discounting is used, the increase in the provision due to the passage in time is recognized in financial expense in the income statement. Assets and associated liabilities classified as held for sale Assets and associated liabilities held for sale are recorded at the lower of their carrying value or fair value less costs to sell, and are classified as current assets. Share based payment The fair value of share options issued under the Group’s Employee Stock Option Plans is determined at grant date taking into account the terms and conditions upon which the options are granted, and by using a valuation technique that is consistent with generally accepted valuation methodologies for pricing financial instruments, and that incorporates all factors and assumptions that knowledgeable, willing market participants would consider in setting the price. The fair value of the share options is recognized in personnel expenses over their vesting period, together with an increase of the caption “stock compensation” of the shareholders’ equity for the equity part and an increase of a dividend liability for the dividend part. When the share options give right to dividends declared after granting the options, the fair value of this right is re-measured annually. Revenue and operating expenses Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Specific revenue streams and related recognition criteria are as follows:  Revenue from wireline, carrier and mobile traffic is recognized on usage.  Revenue from connection fees and installation fees is recognized in income at the time of connection or installation.  Revenue from sales of communication equipment is recognized upon delivery to the third party distributors or upon delivery by the own Belgacom shops to the end-customer.  Revenues relating to the monthly rent or access fees, which are applicable to wireline and mobile revenues are recognized in the period in which the services are provided.  Subscription fees are recognized as revenue over the subscription period on a pro-rata basis.  Prepaid revenue such as revenue from pre-paid fixed and mobile phone cards is deferred and recognized based on usage of the cards.  Maintenance fees are recognized as revenue over the maintenance period on a pro-rata basis.  Revenue is recognised net of expenses when the Group acts as an agent, i.e. when the Group does not bear inventory risk and credit risk, does not set the prices nor change or perform part of the services and has no latitude in the supplier’s selection.  The cost of loyalty programs in respect of third party products granted is recorded in deduction of the line item “net revenue”. Accruals for loyalty program awards are recorded at fair value at balance sheet date.  The revenue from sales arrangements with multiple deliverables are allocated to the different components of the arrangements based on their relative fair values. The Group’s consolidated income statement presents operating expenses by nature. Operating expenses are reported net of work performed by the enterprise that is capitalized. The costs of materials and charges to revenues include the costs for purchases of materials and services directly related to revenue. Posts for advertising and other marketing charges are expensed as incurred. In order to reflect the gradual evolution as from 2007 towards more and longer fixed term contracts in excess of one year with mobile post-paid customers, the upfront dealer commissions relating to these contracts are expensed as from 2008 over the estimated contract period. Commissions to dealers for other contracts are expensed as incurred. Non-recurring revenues and non-recurring expenses include gains or losses on the disposal of consolidated companies exceeding individually EUR 5 million, fines and penalties imposed by competition authorities or by the regulator exceeding EUR 5 million and costs of employee restructuring programs including actuarial gains and losses.

Belgacom Financial Report 2009 - 151 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Note 3. Goodwill

(EUR million) Goodwill

As of 1 January 2008 net of accumulated amortization and impairment 1,777

Acquisition of Tango Group 165 Acquisition of Scarlet Group 170 Other acquisitions 4 Disposal of subsidiary -4

As of 31 December 2008 net of accumulated amortization and impairment 2,111

Finalisation of the purchase price allocation of Scarlet Group -19 Finalisation of the purchase price allocation of Tango Group 1 Price adjustments of Tango Group -4 Disposal of subsidiary -1

As of 31 December 2009 net of accumulated amortization and impairment 2,088

(EUR million) Goodwill

As of 31 December 2008 Cost 2,133 Accumulated amortization and impairment -22 Net carrying amount 2,111

As of 31 December 2009 Cost 2,109 Accumulated amortization and impairment -22 Net carrying amount 2,088

In 2008, the acquisition of both Tango Group and Scarlet Group resulted in a combined increase of goodwill of EUR 334 million. The amount of goodwill relating to these two acquisitions was not final as the purchase price allocation was still provisional (Tango Group) or had not yet started (Scarlet Group) as of 31 December 2008 and has been finalised in 2009 (see note 6.4). Goodwill has been tested for impairment at the operating segment level because the performance, financial position (including goodwill) and capital expenditures within the Group are monitored at operating segment level.

The carrying amount of goodwill is allocated to the operating segments as follows: As of 31 December (EUR million) 2008 2009

Consumer Business Unit 1,026 1,003 Enterprise Business Unit 1,085 1,085 Total 2,111 2,088

The recoverable amount at segment level (including goodwill) is based on the value in use estimated through a discounted cash flow model. For the years 2010 to 2014, the free cash flows are based on the Five Year Plan as approved by the management and Board of Directors. For subsequent years, the data of the Five Year Plan are extrapolated based on a growth rate varying between 0% and 1.6% per year. Free cash flows of each segment are discounted at a specific post-tax weighted average cost of capital comprised between 7.0% and 10.1%. Pre-tax weighted average cost of capital, derived from the post-tax weighted average cost of capital via an iterative method, is comprised between 9.6% and 13.9%. The results of this analysis led to the conclusion that none of the goodwill is impaired at 31 December 2009. Sensitivity analysis demonstrates that the value in use still exceeds the net carrying value of the cash generating units (segments) if key assumptions (discount rate and long term growth rate) would deteriorate significantly.

152 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Note 4. Intangible assets with finite useful life

(EUR million) GSM and Internally Customer TV rights Other Total UMTS generated bases and intangible licenses assets trade assets names acquired

As of 1 January 2008 net of accumulated amortization 151 89 34 52 157 482 and impairment

Additions 041 0128 80 249 Acquisition of subsidiary 1 0 37 0 5 43 Disposals 0-3-2 0 1 -4 Reclassifications 0200 -5 -3 Impairment charge 0000 -1 -1 Amortization charge for the year -24 -42 -19 -54 -75 -214

As of 31 December 2008 net of accumulated 128 86 50 125 162 552 amortization and impairment

Additions 0 53 0 17 81 151 Acquisition of subsidiary 021280 0 130 Disposal of subsidiary 0000 -2 -2 Reclassifications -1000 -3 -3 Amortization charge for the year -17 -42 -30 -60 -57 -205

As of 31 December 2009 net of accumulated 111 100 148 83 181 623 amortization and impairment

(EUR million) GSM and Internally Customer TV rights Other Total UMTS generated bases and intangible licenses assets trade assets names acquired

As of 31 December 2008 Cost 379 397 122 201 868 1,967 Accumulated amortization and impairment -251 -311 -71 -76 -706 -1,415 Net carrying amount 128 86 50 125 162 552

As of 31 December 2009 Cost 379 384 249 205 845 2,061 Accumulated amortization and impairment -268 -283 -101 -122 -664 -1,438 Net carrying amount 111 100 148 83 181 623

The increase in 2008 results primarily from the acquisition of Tango Group and Scarlet Group (see note 6.4). The GSM and UMTS licenses relate to the Global System for Mobile communication (“GSM”) and Universal Mobile Telecommunication System (“UMTS”). In 1994, the Group acquired a GSM license (covering the use of 900 MHz spectrum) in Belgium for an amount of EUR 226 million. Amortization started in 1995 over the initial life of the license (15 years). Since 6 April 2008, the GSM license has been prolonged until 8 April 2015 free of charge. On 3 February 2010, the Belgian Government presented to the Parliament a draft of Law aiming at imposing fees in respect of the extension of this license. In March 2001, the Group acquired an UMTS license in Belgium for an amount of EUR 150 million. Amortization started in June 2004 over the initial life of the license that is scheduled to end in 2020. Customer bases and trade names acquired include intangible assets recognized as part of business combinations (see note 6.4). TV rights include football rights and broadcasting rights acquired. Other intangible assets mainly include purchased software and rights of use for cables.

Belgacom Financial Report 2009 - 153 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Note 5. Property, plant and equipment

(EUR million) Land and Technical Other Assets under Total buildings and tangible construction network assets equipment

As of 1 January 2008 net of accumulated depreciation 551 1,617 60 242 2,470 and impairment

Additions 19 385 19 91 515 Acquisition of subsidiary 056 1 0 57 Disposals -3 -3 0 -2 -8 Disposal of subsidiary 0-2-1 0 -3 Reclassifications 9251 1 -258 3 Impairment 0-2 0 0 -3 Depreciation charge for the year -41 -463 -26 0 -530 Exchange adjustment 0-1 0 0 -1

As of 31 December 2008 net of accumulated 534 1,839 55 74 2,501 depreciation and impairment

Additions 17 372 20 37 446 Acquisition of subsidiary 0-18 0 0 -18 Disposals -1 -1 0 1 -2 Disposal of subsidiary 0-6 0 -1 -7 Reclassifications 34456-100 3 Impairment 0-2 0 0 -3 Depreciation charge for the year -41 -438 -22 0 -501

As of 31 December 2009 net of accumulated 512 1,788 109 11 2,420 depreciation and impairment

(EUR million) Land and Technical Other Assets under Total buildings and tangible construction network assets equipment

As of 31 December 2008 Cost 829 10,273 259 74 11,435 Accumulated depreciation and impairment -295 -8,435 -204 0 -8,934 Net carrying amount 534 1,839 55 74 2,501

As of 31 December 2009 Cost 837 10,479 363 11 11,690 Accumulated depreciation and impairment -325 -8,691 -255 0 -9,270 Net carrying amount 512 1,788 109 11 2,420

The increase in 2008 results primarily from the acquisition of Tango Group and Scarlet Group (see note 6.4). During the period from 1996 through 2001, the Group entered into several cross-border lease arrangements of technical and network equipment (see note 34). A couple of these arrangements are still operational.

154 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Note 6. Investments in subsidiaries, joint ventures and associates Note 6.1. Investments in subsidiaries The consolidated financial statements include the financial statements of Belgacom SA and the subsidiaries listed in the following table.

Name Registered office Country of incorporation Group's participating interests

2008 2009

Belgacom SA under Public Law Bld du Roi Albert II 27 Belgium Mother company 1030 Bruxelles VAT BE 0202.239.951 Belgacom Mobile SA Bld du Roi Albert II 27 Belgium 100% 100% 1030 Bruxelles VAT BE 0453.918.428 Belgacom Finance SA Rue de Merl 74 Luxemburg 100% 100% 2146 Luxembourg Belgacom Group International Services SA Geldenaaksebaan 335 Belgium 100% 100% 3001 Heverlee VAT BE 0466.917.220 Finbel Re SA Rue de Merl 74 Luxemburg 100% 100% 2146 Luxembourg Connectimmo SA Bld du Roi Albert II 27 Belgium 100% 100% 1030 Bruxelles VAT BE 0477.931.965 Belgacom Skynet SA Bld du Roi Albert II 27 Belgium 100% 100% 1030 Bruxelles VAT BE 0460.102.672 Skynet iMotion Activities SA Rue Carli 2 Belgium 100% 100% 1140 Evere VAT BE 0875.092.626 Belgacom W SA Rue Marie-Henriette 60 Belgium (2) (3) 100% 100% 5000 Namur VAT BE 0464.163.014 Belgacom Invest SARL Rue de Luxembourg 177 Luxemburg 100% 100% 8077 Bertange Telindus Group NV Geldenaaksebaan 335 Belgium 100% 100% 3001 Heverlee VAT BE 0422.674.035 Telindus NV Geldenaaksebaan 335 Belgium (1) 100% 100% 3001 Heverlee VAT BE 0442.257.642 Telindus Sourcing SA Avenue Thomas Edison 1 Belgium (1) 100% 100% 7000 Mons Telindus BV Krommewetering 7The Netherlands(1) 100% 100% 3543 AP UTRECHT Telindus International BV Krommewetering 7The Netherlands(1) 100% 100% 3543 AP UTRECHT Telindus Networks SA Chemin des Primevères 45 Switzerland (1) (3) 100% 100% 1701 Fribourg Telindus SA Chemin des Primevères 45 Switzerland (1) (3) 100% 100% 1701 Fribourg Telindus SA Plaza Ciudad de Viena 6 Spain (1) 100% 100% 28040 Madrid Telindus SA Route d’Arlon 81– 83 Luxemburg (1) 65% 65% 8009 Strassen Telectronics SA 2 Rue des Mines Luxemburg (1) 65% 65% 4244 Esch sur Alzette Beim Weissenkreuz SA Route d’Arlon 81– 83 Luxemburg (1) 65% 65% 8009 Strassen Telindus PSF SA 2 Rue des Mines Luxemburg (1) 65% 65% 4244 Esch sur Alzette Telindus LTD Hatchwood Place - Farnham Road United Kingdom (1) 100% 100% Odiham, Hants RG29 1AB Telindus Surveillance Solutions Ltd Hatchwood Place - Farnham Road United Kingdom (1) 100% 100% Odiham, Hants RG29 1AB Telindus France SA ZA de Courtaboeuf- 10, Avenue de NorvègeFrance (1) 100% 100% 91962 Les Ulis Groupe Telindus France SA ZA de Courtaboeuf- 10, Avenue de NorvègeFrance (1) 100% 100% 91962 Les Ulis Telindus Ltd (Thailand) Bond Street 473 - Muang Thong Thani 3 Thailand (1) 100% - Pakkred, Nonthaburi 11120 Bangkok Telindus Sweden AB p/a Advokatfirman VINGE Sweden (1) (3) 100% 100% Smarlandsgatan 20 - Box 1107 111 87 Stockholm Casablanca Nearshore Park, 1100 Bd. Al Qods, Telindus Morocco SAS Shore III, Casanearshore, Sidi Maârouf Morocco (1) - 100% Casablanca ISit BV Krommewetering 7The Netherlands(1) 100% 100% 3543 AP UTRECHT ISit ICT Services BV Krommewetering 7The Netherlands(1) 100% 100% 3543 AP UTRECHT ISit Education & Support BV Krommewetering 7The Netherlands(1) 100% 100% 3543 AP UTRECHT ISit NV Culliganlaan 1B Belgium (1) (3) 100% 100% 1831 DIEGEM Euremis SA Chaussée de Nivelles 81 Belgium 100% 100% 1420 Braine-l'Alleud 2146 Luxembourg Belgacom Opal SA Bld du Roi Albert II 27 Belgium 100% 100% 1030 Bruxelles VAT BE 0861.583.672 Belgacom Development SA Rue de Merl 74 Luxemburg 100% 100% 2146 Luxembourg Beldiscom SA Bld d'Avroy 242 Belgium 100% 100% 4000 Liege VAT BE 0440.935.769 Mobile-For SA Bld du Roi Albert II 27 Belgium 100% 100% 1030 Bruxelles VAT BE 0881.959.533

Belgacom Financial Report 2009 - 155 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Name Registered office Country of incorporation Group's participating interests 2008 2009

Tango Mobile SA Rue de Luxembourg 177 Luxemburg (4) 100% 100% 8077 Bertange Tango Fixed SA Rue de Luxembourg 177 Luxemburg (4) 100% 100% 8077 Bertange Tango Services SA Rue de Luxembourg 177 Luxemburg (4) 100% 100% 8077 Bertange All Communications AG Zollstrasse 3 Liechtenstein (4) 100% - Fürstentum Liechtenstein - 9494 Schaan Scarlet NV Ketelmeerstraat 198 The Netherlands (5) 100% 100% 8226JX Lelystad Scarlet Telecom BV Ketelmeerstraat 198 The Netherlands (5) 100% 100% 8226JX Lelystad Cybercomm BV Ketelmeerstraat 198 The Netherlands (5) 100% - 8226JX Lelystad Factium BV Ketelmeerstraat 198 The Netherlands (5) 100% - 8226JX Lelystad Scarlet Belgie Holding BV Ketelmeerstraat 198 The Netherlands (5) 100% 100% 8226JX Lelystad Scarlet Extended NV Belgicastraat 5 Belgium (5) 100% 100% 1930 Zaventem VAT BE 0463.815.792 ST Integration NV Belgicastraat 5 Belgium (5) 100% 100% 1930 Zaventem VAT BE 0472.046.243 Scarlet Business NV Belgicastraat 5 Belgium (5) 100% 100% 1930 Zaventem VAT BE 0463.079.780 Scarlet Luxembourg SARL Rue Jean Piret 3 Belgium (5) 100% 100% 2350 Luxembourg Scarlet Telecom BVBA Belgicastraat 5 Belgium (5) 100% 100% 1930 Zaventem VAT BE 0466.942.657 NetNet BVBA Belgicastraat 5 Belgium (5) 100% 100% 1930 Zaventem VAT BE 0461.549.853 Scarlet Belgium NV Belgicastraat 5 Belgium (5) 100% 100% 1930 Zaventem VAT BE 0447.976.484 Full Telecom NV Belcrownlaan 13i Belgium (5) 100% 100% 2100 Deurne VAT BE 0864.940.684 Sahara International Ventures NV Amstel 108 The Netherlands - 51% 1017 AD Amsterdam Sahara LAC BV Amstel 108 The Netherlands 100% 51% 1017 AD Amsterdam Scarlet BV (Curacao) Fokkerweg 26 Netherlands Antilles (6) 76% 42% Willemstad Curacao Caribbean Satellite Communications Inc 50 Soldado Serrano, Ocean park Puerto Rico (6) 76% 42% San Juan 00911 Scarlet NV (BTS) Kaya J.A. Abraham Boulevard 73 Netherlands Antilles (6) 76% 42% Bonaire Scarlet NV (SNM) 36G Airport Road, Simpson Bay Netherlands Antilles (6) 76% 42% Sintt Maarten Carib - online NV Fokkerweg 26 Netherlands Antilles (6) 76% 42% Willemstad Curacao Scarlet Inc 1334 Redwood Avenue United States (6) 76% 42% Brighton Iowa 52540 Scarlet AARC NV Santa Rosaweg 17 Netherlands Antilles (6) 76% 42% Willemstad Curacao All America Cables and Radio (Sint Maarten) NV 36G Airport Road, Simpson Bay Netherlands Antilles (6) 76% 42% Sint Maarten Scarlet Telecom NV Watapanastraat 7 Aruba (6) 76% 42% Oranjestad Rainbow Internet Services NV Watapanastraat 7 Aruba (6) 76% 42% Oranjestad Scarlet (BVI) Ltd Arias Fabrega & Fabrega Trust Co BVI Ltd WickhamsBritisch Virgin Islands (6) 76% 42% Tortola

(1) Subsidiaries of the Group Telindus (2) Activity classified as held for sale in 2008 and sold in 2009 (3) In liquidation (4) Subsidiaries of the Group Tango (5) Subsidiaries of the Group Scarlet (6) Entity indirectly controlled by the Group

156 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Note 6.2. Investments in joint ventures The Group has a joint-venture interest in the following companies. Name Registered office Country of Group's participating interests incorporation 2008 2009

Allo Bottin SA 101/109, rue Jean-Jurès France (1) 50% 50% 92300 Levalloi-Perret Belgacom International Carrier Services SA Rue Lebeau 4 Belgium (2) 72% 58% 1000 Brussels VAT BE 0866.977.981 Belgacom International Carrier Services Deutschland GMBH Mendelssohnstrasse 87 Germany (2) 72% 58% 60325 Frankfurt Belgacom International Carrier Services UK Ltd Great Bridgewaterstreet 70 United Kingdom (2) 72% 58% M15ES Manchester Belgacom International Carrier Services Nederland BV Weena 674 The Netherlands (2) 72% 58% 3012 CN Rotterdam Belgacom International Carrier Services North America Inc Corporation trust center - 1209 Orange street United States (2) 72% 58% USA - 19801 Willington Delaware Belgacom International Carrier Services Asia Pte Ltd 8 Cross Street - # 11-00 PWC Building Singapore (2) 72% 58% Singapore 048624 Belgacom International Carrier Services (Portugal) SA Avenida da Republica, 50, 10th floor Portugal (2) 72% 58% 1069-211 Lisbon Belgacom International Carrier Services Italia Srl Via San Vito 7 Italy (2) 72% 58% 20123 Milano Belgacom International Carrier Services Spain SL Plaza Pablo Ruiz Picasso Spain (2) 72% 58% Torre Picasso s/n - Planta 4a 28020 Madrid Belgacom International Carrier Services Switzerland AG Papiermülhestrasse 69 Switzerland (2) 72% 58% 3014 Bern Belgacom International Carrier Services Austria GMBH Teinfaltstrasse, 4 Austria (2) 72% 58% 1010 Wien Belgacom International Carrier Services Sweden AB Drottninggaton 30 Sweden (2) 72% 58% 41114 Goteborg Belgacom International Carrier Services JAPAN KK 9th Floor, Prudential Tower Japan (2) 72% 58% 13-10 Nagata-cho 2-chrome Chiyoda-ku - Tokyo 100-0014 Belgacom International Carrier Services China Ltd Three Pacific Place - Level 28 China (2) 72% 58% 1, Queen's road East Hong Kong Belgacom International Carrier Services France SAS Rue du Colonel Moll 3 France (2) 72% 58% 75017 Paris E-Port Communications Systems SA Slijkensesteenweg 2Belgium (3) 50% 50% 8400 Oostende VAT BE 0864.818.940 Beltey SA Bld du Roi Albert II 27 Belgium (4) 50% - 1030 Brussels VAT BE 0886.320.078

(1) In liquidation (2) BICS Group (3) Joint ventures of the Group Telindus (4) Liquidated The contribution of the assets, liabilities, income and expenses of the jointly controlled entities which are included in the consolidated financial statements, is detailed as follows: As of 31 December (EUR million) 2008 2009

Non-current assets 62 133 Current assets 262 226 Total assets 325 359

Non-current liabilities 65 Current liabilities 319 255 Total liabilities 325 260

Year ended 31 December (EUR million) 2008 2009

Net revenue 759 841 Non-recurring revenue 074 Total operating expenses before depreciation and amortization -691 -763 Depreciation and amortization -19 -21 Net finance revenue 00 Income before taxes 48 131 Tax expense -13 -16 Net income 35 114

Belgacom Financial Report 2009 - 157 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Note 6.3. Investments in associates The Group has a significant influence in the following companies.

Name Registered office Country of incorporation Group's participating interests

2008 2009

Tunz.com SA Chaussée de La Hulpe 185 Belgium - 40% 1170 Watermael-Boitsfort VAT BE 0886.476.763 Note 6.4. Acquisitions and disposal of subsidiaries, joint ventures and associates

Contribution in kind of MTN into BICS in 2009 On 30 November 2009, MTN contributed its international carrier assets to BICS in exchange for a 20% ownership in BICS and BICS subsidiaries. These assets were contributed by MTN at fair value and comprised mainly its international carrier customer base. The dilution of the Group’s interest in BICS and BICS subsidiaries from 72% to 57.6% resulted in the disposal of net assets for an amount of EUR 4 million and the recognition of a dilution gain of EUR 74 million disclosed as non-recurring revenue (see note 22). Until year-end 2009, BICS is proportionally consolidated because Belgacom, Swisscom and MTN established joint control on BICS as decisions on operating and financing activities are taken with unanimous consent until 31 December 2009. Effective 1 January 2010, Belgacom obtains the control of BICS as from that date decisions on operating and financing activities are taken by Belgacom together with Swisscom or MTN and Belgacom is entitled to a call option in the event Swisscom and MTN together oppose to a decision proposed by Belgacom. As a result of the acquisition of control in 2010 and in application of the revised IFRS 3, BICS will be fully consolidated as from 1 January 2010 and the previously held interest will be re-measured at fair value on 1 January 2010, with the recognition of a non-recurring gain of EUR 436 million. A purchase price allocation will also be realised leading amongst others to an increase of intangible assets for EUR 484 million and deferred tax liabilities for EUR 164 million. Goodwill will increase with EUR 252 million and non-controlling interests on BICS and subsidiaries will amount to EUR 218 million on 1 January 2010.

Disposals of 2008 In January 2008, the Group sold 100% of its shares of Extenseo SA which resulted in the recognition of a gain of EUR 1 million. In June 2008, the Group sold its shares of Certipost SA which resulted in the recognition of a gain of EUR 8 million classified as non- recurring revenue in the income statement (see note 21). In 2008, the Group decided to divest or liquidate the Telindus entities located in non-strategic countries (Germany, China and Hong- Kong, Italy, Portugal, Switzerland and Sweden). In this context, the Group sold most of the assets of Sweden, launched the liquidation of Switzerland and Sweden and sold its shares in the other countries. This divestment project led to the recognition of a non-recurring expense of EUR 34 million in the income statement of the fourth quarter of 2008 (see note 26), of which EUR 21 million as loss on disposal of subsidiaries and EUR 13 million as loss on liquidation of activities.

158 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Disposals of 2009 In 2009, the Group sold its interest in Telindus Thailand Ltd and in All Communications AG and the WIN activity of Belgacom W SA. These disposals resulted in the recognition of a loss of EUR 2 million. The net assets disposed in respect of the abovementioned subsidiaries during the years 2008 and 2009 are summarised as follows: (EUR million) Disposals of Disposals of 2008 2009

Non-current assets disposed of 10 Current assets disposed of, excluding cash and cash equivalents 40 3 Cash and cash equivalents disposed of 84 Non-current liabilities disposed of -1 0 Current liabilities disposed of -27 -1 Net assets disposed of 21 6

Consideration received, net of transaction costs 8 3

Gain/(loss) on disposal -13 -2 - including non-recurring revenue 80 - including non-recurring expense -21 0

The net cash inflow on disposal is as follows: Cash received 83 Cash and cash equivalents disposed of with the subsidiaries -8 -4 Net cash inflow / (outflow) 0-1

Belgacom Financial Report 2009 - 159 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Acquisition of Tango Group in 2008 In August 2008, the Group acquired the Group Tango (previously owned by Tele 2 Europe), the second mobile operator in Luxembourg. As part of the transaction, the Group also acquired fixed and mobile operations in Liechtenstein. The initial acquisition cost amounted to EUR 213 million but has been reduced in 2009 by EUR 4 million price adjustments. No equity instruments were issued as part of the cost. After deduction of the cash acquired, the net amount of cash paid for the acquisition is EUR 203 million. The fair value of the identifiable assets and liabilities of Tango Group, at the acquisition date, has been determined definitively 12 months after acquisition and led to the recognition of a goodwill of EUR 162 million. The Group has identified and included in the non- current assets, intangible assets that can be individually separated and reliably measured due to their nature. Those intangible assets consist in a customer base, for an amount of EUR 24 million and a trade name for an amount of EUR 9 million. The Group has not identified intangible assets that can’t be individually separated and reliably measured due to their nature. The goodwill mostly represents the future synergies with the Group. The revenue and expenses of Tango Group have been incorporated into the consolidated financial statements from 1 August 2008, contributing EUR 43 million to the total revenue of the year 2008 and EUR 19 million to the operating income before depreciation and amortization of the year 2008. The fair value of the identifiable assets and liabilities of Tango Group at the date of acquisition and the corresponding carrying amounts immediately prior to the acquisition were:

Fair value recognised Carrying (EUR million) on value acquisition

Non-current assets 61 28 Current assets 28 28 Total assets 89 57 Non-current liabilities -11 0 Current liabilities -31 -29 Total non-controlling interests and liabilities -42 -29

Net assets acquired 47 28

Goodwill arising on acquisition 162

Consideration 209

The consideration is detailed as follows:

Cash paid to shareholders 209 Cash to be paid to shareholders 0 Costs associated with the acquisition 0 Consideration 209

The cash outflow on acquisition is as follows:

Consideration paid 209 Net cash acquired of the subsidiary -7 Net cash outflow 203

160 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Acquisition of Scarlet Group in 2008 On 28 November 2008, the Group acquired Scarlet Group, an infrastructure based communication provider, for an amount of EUR 176 million, or EUR 172 million after deduction of the cash acquired. No equity instruments were issued as part of the cost. At 31 December 2008, the fair value of the identifiable assets and liabilities of Scarlet Group had not been determined (even provisionally), which led to the recognition of a preliminary goodwill of EUR 170 million. At 31 December 2009, the purchase price allocation exercise has been finalized definitively, thereby reducing the preliminary goodwill by EUR 20 million. The Group has identified and included in the non-current assets, intangible assets that can be individually separated and reliably measured due to their nature. Those intangible assets consist in a customer base, for an amount of EUR 49 million and a trade name for an amount of EUR 5 million. The Group has not identified intangible assets that can’t be individually separated and reliably measured due to their nature. The goodwill mostly represents the future synergies with the Group. For materiality reasons, the financial statements of the year 2008 have not been restated to include the impacts of the purchase price allocation on the depreciation and amortisation expense. The revenue and expenses of Scarlet Group have been incorporated into the consolidated financial statements from 1 December 2008, contributing EUR 9 million to the total revenue of the year 2008 and EUR -1 million to the operating income before depreciation and amortization for the year 2008. The fair value of the identifiable assets and liabilities of Scarlet Group at the date of acquisition and the corresponding carrying amounts immediately prior to the acquisition were:

Fair value recognised Carrying (EUR million) on value acquisition

Non-current assets 85 36 Current assets 20 22 Total assets 105 58 Non-current liabilities -28 -5 Current liabilities -51 -46 Total non-controlling interests and liabilities -78 -51

Net assets acquired 26 7

Goodwill arising on acquisition 150

Consideration 177

The consideration is detailed as follows:

Cash paid to shareholders 176 Cash to be paid to shareholders 0 Costs associated with the acquisition 0 Consideration 177

The cash outflow on acquisition is as follows:

Consideration paid 177 Net cash acquired of the subsidiary -4 Net cash outflow 172

Belgacom Financial Report 2009 - 161 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Other acquisitions in 2008 In 2008, the Group acquired Beldiscom SA, dealer of fixed and mobile phones, and Mobile-For SA, specialist in mobile payments for parking services, for an aggregate amount of EUR 5 million.

The fair value of the identifiable assets and liabilities of these acquisitions at the date of acquisition and the corresponding carrying amounts immediately prior to the acquisition were: Fair value recognised Carrying (EUR million) on value acquisition

Non-current assets 20 Current assets 11 Total assets 42 Non-current liabilities -1 0 Current liabilities -1 -1 Total non-controlling interests and liabilities -2 -2

Net assets acquired 20

Goodwill arising on acquisition 3

Consideration 5

The consideration is detailed as follows:

Cash paid to shareholders 5 Cash to be paid to shareholders 0 Costs associated with the acquisition 0 Consideration 5

The cash outflow on acquisition is as follows:

Consideration paid 5 Net cash acquired of the subsidiary 0 Net cash outflow 5

No other significant acquisitions, disposals or changes in participating interests of subsidiaries, joint ventures or associates occurred in each of the two years presented.

Note 7. Other participating interests Other participating interests only include participating interests for which the Group does not exercise control, joint control or significant influence. Other participating interests comprise the following interests: As of 31 December (EUR million) 2008 2009

Unlisted shares 11

Total 11

162 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Note 8. Income taxes Gross deferred income tax assets / (liabilities) relate to the following: As of 31 December (EUR million) 2008 2009

Deferred income tax liabilities Accelerated depreciation for tax purposes -19 -41 Fair value adjustments on acquisition -17 -25 Excess liabilities -14 -14 Remeasurement of financial instruments to fair value -2 -1 Deferred taxation on sales of property, plant and equipment -5 -5 Other -18 -25 Gross deferred income tax liabilities -75 -111

Deferred income tax assets Accelerated depreciation for tax purposes 40 43 Remeasurement of financial instruments to fair value 6 7 Liability for post-employment and termination benefits 191 158 Tax losses carried forward 72 55 Capital losses on investments in subsidiaries 141 Other 23 18 Gross deferred income tax assets 334 321

Net deferred income tax assets / (liabilities), when grouped per taxable entity, are as follows :

Net deferred income tax liability -49 -86 Net deferred income tax asset 308 295

The Group has tax losses carried forward arising in Belgium that are available indefinitely to offset future taxable profits of the companies in which these losses arose. Belgacom SA has accumulated tax losses amongst others as a result of the non-recurring expenses related to employee restructuring programs and the transfer of the pension obligations for statutory employees in 2003. Based on the current business plan of Belgacom SA, future taxable profit will be available against which the tax losses and other deferred tax assets can be further utilized. Tax losses carried forward of Belgacom SA are expected to be fully utilized in 2010. Deferred tax assets have not been recognized in respect of the losses of subsidiaries that have been loss-making for several years. Cumulative tax losses carried forward and tax credits available for such companies amounted to EUR 255 million at 31 December 2008 and EUR 306 million at 31 December 2009. The share of Belgacom in the undistributed retained profit of subsidiaries amounts to EUR 4,930 million at 31 December 2009 and is taxable at an effective tax rate of 1.7% upon remittance to the parent company. No deferred tax liability is recorded for such undistributed earnings except when a decision has been taken to remit such retained profit i.e. when the subsidiary intends to distribute a dividend. In the income statement, deferred tax income/ (expense) relate to the following: Year ended 31 December (EUR million) 2008 2009

Relating to deferred income tax liabilities Accelerated depreciation for tax purposes 9-23 Fair value adjustments on acquisition 89 Remeasurement of financial instruments to fair value -1 1 Other -12 -6

Relating to deferred income tax assets Accelerated depreciation for tax purposes 23 Remeasurement of financial instruments to fair value 4 1 Liability for post-employment and termination benefits 158 -33 Tax losses carried forward -179 -31 Capital losses on investments in subsidiaries 040 Other 1-6

Deferred tax expense of the year -9 -46

The deferred income tax liabilities increased by EUR 11 million in 2008 and EUR 4 million in 2009 through business combinations, as a result of the purchase price allocation.

Belgacom Financial Report 2009 - 163 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c The consolidated income statement includes the following tax expense: As of 31 December (EUR million) 2008 2009

Current income tax Current income tax expense -244 -200 Adjustments in respect of current income tax of previous periods -1 5

Deferred income tax Expense resulting from changes in temporary differences -9 -46

Income tax expense reported in consolidated income statement -254 -241

Thereconciliationofincometaxexpenseapplicabletoincomebeforetaxesatthestatutoryincometaxratetoincometax expense at the group's effective income tax rate for each of the two years ended is as follows: As of 31 December (EUR million) 2008 2009

Income before taxes 1,053 1,144

At Belgian statutory income tax rate of 33.99% 358 389 Lower income tax rates of other countries -3 -4 Income tax consequences of disposal of subsidiaries and other participating interests 6 -25 Income tax consequences of capital losses on investments in subsidiaries -1 -40 Non-taxable income from subsidiaries -142 -96 Non-deductible expenditures for income tax purposes 34 54 Other 2-37 Income tax expense 254 241 Effective income tax rate 24.09% 21.03%

The non-taxable income from subsidiaries primarily relates to the income of Belgacom Group International Services, which is subject to a tax regime that is not based on taxable income, and to the notional interest deduction applicable in Belgium. Income tax consequences of disposal of subsidiaries and other participating interests relate to the tax exemption of the capital gain the Group recognized as a result of the contribution in kind by MTN into BICS (see notes 6.4 and 22). Income tax consequences of capital losses on investments in subsidiaries relate primarily to the recognition of tax assets not recognized in previous years for subsidiaries in liquidation. Non-deductible expenditures for income tax purposes primarily relate to various expenses that are disallowed for tax purposes and unrecognized tax losses carried forward. Other adjustments for the year 2009 relate primarily to the recognition of tax losses as a result of a decision of the European Court of Justice in the respect of the taxation regime for dividends received from subsidiaries.

Note 9. Assets and liabilities for pensions, other post-employment benefits and termination benefits The Group has several plans that are summarized below: As of 31 December (EUR million) 2008 2009

Termination benefits and additional compensations in respect of restructuring programs 569 469 Defined benefit plans for complementary pension plans (net liability) 51 Post-employment benefits other than pensions 185 191 Other liabilities 18 16 Net liability recognized in the balance sheet 777 677 Defined benefit plans for complementary pension plans (net asset) -5 -2 Net asset recognized in the balance sheet -5 -2

The calculation of the net liability is based on the assumptions established at the balance sheet date. The assumptions for the various plans have been determined based on both macro-economic factors and the specific terms of each plan relating to the duration and the beneficiary population, in order to apply the most relevant measure of estimated outflow of resources.

164 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Note 9.1. Termination benefits and additional compensations in respect of restructuring programs Termination benefits and additional compensations included in this chapter relate to employee restructuring programs. No plan assets are accumulated for these benefits. In 2002, Belgacom SA implemented the Belgacom E-Strategic Transformation (“BeST”) employee restructuring program. Under the terms of the plan, the Group will pay guaranteed salary allowances until the year 2012. In 2005, the Group implemented a leave program and a career outphasing program (tutorship). Under the terms of the plan, the Group will pay benefits until the year 2015. In 2007, the Group implemented a voluntary external mobility program to the Belgian State for its statutory employees. In 2008, the Group increased its liability for restructuring programs by an amount of EUR 53 million, disclosed as non-recurring expenses (see note 26). This increase reflects the impact of the evolution of the index during 2008 on all the salary components of all restructuring programs (EUR 19 million), and the success of the external mobility program started in 2007 (EUR 34 million). At the end of 2008, 219 employees had transferred to State Departments or were in their trial period. The Group determined the liability at 31 December 2008 on the assumption that on a cumulative basis 310 employees will be hired by the Belgian State. At 31 December 2009, 259 of the estimated 310 employees were already transferred to Belgian State Departments. The timing of the remaining 51 transfers depends on the outcome of the ongoing selection process and trials periods. In 2009, the Group implemented restructuring programs for employees in subsidiaries that resulted in a non-recurring expense of EUR 7.5 million (see note 26). Any subsequent re-measurement of the liability for termination benefits and additional compensations is recognized immediately in the income statement. The funded status of the plans for termination benefits and additional compensations is as follows : As of 31 December (EUR million) 2008 2009

Defined Benefit Obligation 569 469 Plan assets at fair value 00 Benefit obligation in excess of plan assets 569 469

The components of the expense recognized in the income statement are as follows : Year ended 31 December (EUR million) 2008 2009

Interest cost 23 20 Actuarial loss recognized 80 Expense recognized in the income statement, before curtailment, settlement and special 31 20 termination benefits Special termination benefits 46 7 Expense recognized in the income statement 76 27

The movement in the net liability recognized in the balance sheet is as follows : As of 31 December (EUR million) 2008 2009

At the beginning of the year 627 569 Expense for the period 76 27 Actual employer contribution -135 -126 At the end of the year 569 469

Change in plan assets : As of 31 December (EUR million) 2008 2009

At the beginning of the year 00 Actual employer contribution 135 126 Distributions to beneficiaries -135 -126 At the end of the year 00

Change in the defined benefit obligation : As of 31 December (EUR million) 2008 2009

At the beginning of the year 627 569 Interest cost 23 20 Actuarial (gain) / loss recognized 80 Special termination benefits 46 7 Distributions to beneficiaries -135 -126 At the end of the year 569 469

Belgacom Financial Report 2009 - 165 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c The liability for termination benefits and additional compensations was determined using the following assumptions: As of 31 December 2008 2009 Discount rate 4.50% 2.6 %- 4.5% Future price inflation 2.00% 2.00%

Sensitivity analysis An increase or decrease of 0.5% in the effective discount rate involves a fluctuation of the liability by approximately EUR 4 million. The Group expects to pay an amount of EUR 132 million for termination benefits and additional compensations in 2010. Note 9.2. Defined benefit plans for complementary pensions Belgacom SA and some subsidiaries have a joint complementary defined benefit pension plan for their employees. This plan provides pension benefits for services as of 1 January 1997. The related separately administrated pension fund was created in 1998. Belgacom Mobile, a subsidiary of Belgacom, has a complementary defined benefit pension plan for its employees. The related separately administered fund was created in 2001. In 2009, these two pension funds merged. Telindus BV, a subsidiary established in the Netherlands, has a complementary defined benefit pension plan for its employees financed through an insurance company. The funded status of the pension plans is as follows : As of 31 December (EUR million) 2008 2009

Defined Benefit Obligation 168 196 Plan assets at fair value -131 -172 Deficit / (surplus) 37 23 Unrecognized actuarial gain / (loss) -37 -24 Deficit / (surplus) after unrecognized actuarial gain / (loss) composed of : 0-1 Net liability recognized in the balance sheet 51 Net assets recognized in the balance sheet -5 -2

The history of the experience adjustments is as follows : As of 31 December (EUR million) 2008 2009

Defined Benefit Obligation 168 196 Plan assets at fair value -131 -172 Deficit / (surplus) 37 23 Experience adjustment on plan liabilities : gain / (loss) 10 2 Experience adjustments on plan assets : gain / (loss) -45 10

The components of the expense recognized in the income statement are as follows : Year ended 31 December (EUR million) 2008 2009

Current service cost - employer 24 24 Interest cost 89 Expected return on plan assets -12 -10 Actuarial loss / (gain) recognized 01 Expense recognized in the income statement 20 24

The movement in the net liability/(assets) recognized in the balance sheet is as follows : As of 31 December (EUR million) 2008 2009

At the beginning of the year 00 Expense for the period 20 24 Actual employer contribution -20 -25 Deficit / (surplus) after unrecognized actuarial gain / (loss) composed of : 0-1 Net liability at the end of the year 51 Net assets at the end of the year -5 -2

Change in plan assets : As of 31 December (EUR million) 2008 2009

At the beginning of the year 147 131 Expected return on plan assets 12 10 Actuarial gains / (losses) on plan assets -45 10 Actual employer contribution 20 25 Benefits payments and expenses -3 -3 At the end of the year 131 172

166 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Change in the defined benefit obligation : As of 31 December (EUR million) 2008 2009

At the beginning of the year 149 168 Service cost 24 24 Interest cost 89 Benefits payments and expenses -3 -3 Actuarial loss / (gain) -10 -2 At the end of the year 168 196

The pension liability was determined using the following assumptions : As of 31 December 2008 2009 Discount rate 5.50% 5.50%

Expected rate of return on plan assets 4.25% - 7.20% 3.25% - 6.20% Future price inflation 2.00% 2.00% Nominal future salary increase 2.00% - 4.75% 2.00% - 4.50% Nominal future baremic salary increase 2.00% - 3.95% 2.00% - 3.95%

The expected return on plan assets is an assumption based on market data and future long term expectations. It takes into account the asset allocation of the respective pension plans that may evolve over time depending on achieved and future expected returns.

The assets of the pension plans are detailed as follows: As of 31 December 2008 2009 Equities 41% 45% Fixed income : bonds and cash 55% 52% Insurance deposits (for the plan of Telindus BV) 4% 3%

The actual return on plan assets is as follows: As of 31 December (EUR million) 2008 2009

Actual return on plan assets -33 20

The Group expects to contribute an amount of EUR 25 million to these pension plans in 2010. Note 9.3. Post-employment benefits other than pensions Historically, the Group grants to its retirees post-employment benefits other than pensions in the form of train ticket discounts, hospitalization insurance, reimbursement of medical expenses and a socio-cultural aid premium. All post-employment benefits other than pensions are directly paid by the Group to the retirees and therefore no plan assets are accumulated for such benefits. The funded status of the plans is as follows : As of 31 December (EUR million) 2008 2009

Defined Benefit Obligation 235 238 Plan assets at fair value 00 Benefit obligation in excess of plan assets 235 238 Unrecognized actuarial loss -47 -45 Unrecognized past service cost -2 -2 Net liability recognized in the balance sheet 185 191

The history of the experience adjustments is as follows : As of 31 December (EUR million) 2008 2009

Defined Benefit Obligation 235 238 Plan assets at fair value 00 Benefit obligation in excess of plan assets 235 238 Experience adjustment on plan liabilities : gain / (loss) 20

The components of the expense recognized in the income statement are as follows : Year ended 31 December (EUR million) 2008 2009

Current service cost - employer 22 Interest cost 12 13 Actuarial loss recognized 22 Expense recognized in the income statement 17 17

Belgacom Financial Report 2009 - 167 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c The movement in the net liability recognized in the balance sheet is as follows : As of 31 December (EUR million) 2008 2009

At the beginning of the year 179 185 Expense for the period 17 17 Actual employer contribution -11 -11 At the end of the year 185 191

Change in plan assets : As of 31 December (EUR million) 2008 2009

At the beginning of the year 00 Actual employer contribution -11 -11 Distributions to beneficiaries 11 11 At the end of the year 00

Change in the defined benefit obligation : As of 31 December (EUR million) 2008 2009

At the beginning of the year 233 235 Service cost 22 Interest cost 12 13 Distributions to beneficiaries -11 -11 Actuarial (gain)/loss -2 0 At the end of the year 235 238

The liability for post-employment benefits other than pensions was determined using the following assumptions : As of 31 December 2008 2009 Discount rate 5.50% 5.50% Future cost trend 2.00% - 4.00% 2.00% - 4.00% Future price inflation 2.00% 2.00%

The liability for post-employment benefits other than pensions is determined using the Belgian official mortality tables, adjusted for mortality experience of the statutory retirees.

Sensitivity analysis An increase or decrease of 1% in the medical cost trend would result in an increase of EUR 18 million respectively a decrease of EUR 15 million of the defined benefit obligation, and in an increase or decrease of the expense (service and interest cost) of the year of EUR 1 million. The Group expects to contribute an amount of EUR 13 million to these plans in 2010. Note 9.4. Other liabilities The Group has a legal obligation to pay child allowance benefits to a limited number of statutory retirees and to the beneficiaries of the employee restructuring programs. Telindus France has a legal obligation to pay a one-time post-employment benefit in accordance with local law in France. Those amounts are directly paid by the Group and therefore no plan assets are accumulated for such benefits. Any subsequent re- measurement of the liability is recognized immediately in the income statement. The funded status is as follows : As of 31 December (EUR million) 2008 2009

Defined Benefit Obligation 18 16 Plan assets at fair value 00 Net liability recognized in the balance sheet 18 16

The liability was determined using the following assumptions : 2008 2009 Discount rate 4.00% - 5.00% 4.00% - 5.00% Future price inflation 2.00% 2.00%

168 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Note 10. Other non-current assets As of 31 December (EUR million) Note 2008 2009

Other derivatives 31 62 58 Non-current investments 55 Other financial assets 18 12 Total 85 75 Note 11. Trade receivables Most trade receivables are non-interest bearing and are usually on 30-90 days terms. Terms are somehow longer for the receivables of the International Carrier Services segment, since major part of its trade receivables on other Telco operators are paid via netting agreements and compensation Chambers.

The analysis of trade receivables that were past due but not impaired is as follows: Allowance for Neither past As of 31 Gross Net carrying doubtful due nor Past due but not impaired December receivables amount debtors impaired (EUR million) < 30 days 30-60 days 60-90 days 90-180 days 180-360 days > 360 days

2008 1,350 -145 1,205 933 125 29 18 31 34 35 2009 1,209 -120 1,089 858 102 34 15 28 14 37

As of 31 December 2008 and 2009, 77% and 79% respectively of the total of trade receivables were neither past due nor impaired. For the two years presented, no trade receivables were pledged as collaterals. In 2009, Belgacom Group received collaterals of EUR 19 million (in 2008 EUR 22 million) as securities for the payment of outstanding invoices. Collaterals are either cash collaterals such as bank guarantees or financial instruments readily convertible into cash such as parent guarantees, as soon as the payment of receivables is past due. At balance sheet date, these cash collaterals have neither been sold nor transferred as collaterals. The evolution of the allowance for doubtful debtors is as follows: (EUR million) Note 2008 2009

As of 1 January -138 -145

(Increase) / decrease posted in operating expenses 25 -4 2 Acquisition of subsidiary -9 0 Disposal of subsidiary 56 Other movements 016

As of 31 December -145 -120

Note 12. Other current assets

As of 31 December (EUR million) Note 2008 2009

VAT receivables 13 22 Derivatives held-for-hedging 31 1 0 Other derivatives 02 Prepaid expenses 96 108 Accrued income 16 18 Other receivables 26 45 Total 151 194

Note 13. Investments

As of 31 December (EUR million) 2008 2009 Shares 53 76 Total 53 76

Shares include sicavs and funds invested mainly in money markets instruments, euro-bonds and equity instruments.

Belgacom Financial Report 2009 - 169 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c On the two years presented, the net carrying amount of investments evolved on the following way: As of 31 December (EUR million) Note 2008 2009

Net carrying amount as of 1 January 59 53

Additions 034 Disposals 0-12 Disposal of subsidiary -2 0 Impairment -5 0 Re-measurements to fair value To equity 01

Net carrying amount as of 31 December 53 76

As of 31 December (EUR million) 2008 2009

Cost 52 71 Accumulated re-measurements to fair value 67 Accumulated impairment losses -5 -1 Net carrying amount 53 76

Note 14. Cash and cash equivalents As of 31 December (EUR million) 2008 2009

Fixed income securities 269 208 Short-term deposits 199 66 Cash at bank and in hand 97 58 Total 565 332

The Group invests part of its liquidities in treasury certificates held-to-maturity. Short-term deposits are made for periods varying between one month and three months, depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates. Cash at bank earns interest at floating rates based on daily bank deposit rates. Note 15. Equity Note 15.1 Shareholders’ equity At 31 December 2009, the share capital of Belgacom SA amounted to EUR 1 billion (fully paid up), represented by 338,025,135 shares, with no par value and all having the same rights, provided such rights are not suspended or cancelled in the case of treasury shares. The Board of Directors of Belgacom SA is entitled to increase the capital for a maximum amount of EUR 200 million. Distribution of retained earnings of Belgacom SA, the parent company, is limited by a restricted reserve built up in prior years in accordance with Belgian Company Law up to 10% of Belgacom’s issued capital. Belgacom SA has a statutory obligation to distribute 5% of the parent company income before taxes to its employees. In the accompanying consolidated financial statements, this profit distribution is accounted for as personnel expenses. On 18 October 2007, the Board of Directors decided to conduct a share buy-back for a maximum amount of EUR 230 million that started in November 2007. On 31 December 2007, 2,275,112 shares were bought back for a total amount of EUR 78 million at an average price per share of EUR 34.23. The Group finalized this buy-back on 3 March 2008, through the acquisition of 4,763,653 shares in 2008 for a total amount of EUR 152 million. On 24 July 2008, the Group decided to conduct a share buyback for a maximum amount of EUR 200 million. The program was launched on 4 August 2008 and finalized on 26 November 2008. The Group bought back 7,379,925 shares at an average price of EUR 27.10. On 31 December 2009, the number of treasury shares amounts to 17,410,452, of which 3,137,618 with suspended dividend rights and 14,272,834 without dividend rights. Dividends allocated to treasury shares for which the dividend rights are suspended are accounted for under the caption “Reserves not available for distribution” in the statutory financial statements of Belgacom SA. In 2008 and 2009, the Group sold respectively 125,143 and 221,238 treasury shares to its senior management for EUR 3 million each year under discounted share purchase plans at a discount of 16.67% (see note 35). During the years 2008 and 2009, employees exercised respectively 280,920 and 59,184 share options. In order to honour its obligation in respect of these exercises, Belgacom used treasury shares (see note 35). In 2008, the Group granted 796,197 share options to its key management and senior management with an exercise price of EUR 29.14. In 2009, the Group granted 1,008,021 share options to its key management and senior management with an exercise price of EUR 22.71 (see note 35).

170 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Number of shares (including treasury shares): 2008 2009

As of 1 January 338,025,135 338,025,135 Cancellation 00 As of 31 December 338,025,135 338,025,135

Number of treasury shares: 2008 2009

As of 1 January 5,953,359 17,690,874 Acquisition 12,143,578 0 Sale under a discounted share purchase plan -125,143 -221,238 Exercice of stock option -280,920 -59,184 As of 31 December 17,690,874 17,410,452 Note 15.2 Non-controlling interests Non-controlling interests include primarily the 49% stake of the minority shareholder Pantheres in the equity and net income of Sahara International Venture NV (see note 6) and the 35% stake of the minority shareholder Arcelor Mittal in the equity and net income of Telindus SA (established in Luxembourg) and subsidiaries (see note 6).

Note 16. Interest-bearing liabilities Note 16.1 Non-current interest-bearing liabilities As of 31 December (EUR million) Note 2008 2009

Unsubordinated debentures 2,077 2,077 Leasing and similar obligations 64 Credit institutions 16 13 Other derivatives 31 29 33 Total 2,128 2,128

In order to finance its acquisition of Tango Group and Scarlet Group, the Group increased its debentures by EUR 375 million in November 2008 and issued a non-current unsubordinated debenture for a nominal amount of EUR 125 million in December 2008. All long term debt is unsecured. Over the two years presented, interest rate swaps (IRS) and interest rate and currency swaps (IRCS) were used to manage the currency and interest rate exposure on the JPY unsubordinated debentures. The swaps enabled the Group to transform the interest rate on these debentures from a fixed interest rate to a floating interest rate or vice versa. Taking into account the impact of these IRS and IRCS, non-current interest-bearing liabilities as of 31 December 2009 are summarised as follows: Carrying amount Nominal Measurement Maturity date Interest Interest rate Effective amount under IAS 39 payment / payable interest rate repriceable (EUR million) (EUR million) (b)

Unsubordinated debentures Floating rate borrowings JPY (a) (1) 85 73 Amortized cost Dec-26 Semi-annually 0.83% 0.83% Fixed rate borrowings EUR 599 600 Amortized cost Nov-11 Annually 4.13% 4.24% EUR 745 750 Amortized cost Nov-16 Annually 4.38% 4.50% EUR 170 175 Amortized cost Nov-11 Annually 4.13% 5.91% EUR 171 200 Amortized cost Nov-16 Annually 4.38% 7.16% EUR 125 125 Amortized cost Dec-13 Annually 6.00% 6.11% 1,808 1,850

JPY (a) (1) 88 73 Amortized cost Nov-15 Annually 6.18% 6.18% JPY (a) (1) 96 72 Amortized cost Dec-15 Annually 6.21% 6.21% 184 145

Total unsubordinated debentures 2,077 2,067 Credit institutions Fixed rate borrowings EUR 13 13 Amortized cost Nov-13 Semi-annually 3.78% 3.78% Leasing and similar obligations 4 4 Amortized cost 2012 Quarterly 6.14% 6.14%

Total non-current financial liabilities (derivatives excluded) 2,095 2,085

Derivatives Derivatives held-for-trading 33 0 Fair value

Total 2,128 2,085 (a) converted into a loan in EUR via currency interest rate swap (b) for floating rate borrowings, interest rate is the one prevailing at the last repricing date before 31 December 2009 (1) measured at fair value until 30 September 2008 and then at amortized cost

Unsubordinated debentures in EUR and in JPY are issued by Belgacom SA. The capital is repayable in full on the maturity date. The foreign currency exposure on liabilities in JPY is fully hedged by interest rate and currency swaps converting these liabilities in JPY into liabilities in EUR (see note 31). The credit institution in EUR is primarily a loan granted to Telindus NV by a bank for which interests are payable semi-annually and the capital is amortized semi-annually. An amount of EUR 4 million of the total nominal amount is reimbursed annually.

Belgacom Financial Report 2009 - 171 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Note 16.2 Current interest-bearing liabilities As of 31 December (EUR million) 2008 2009

Unsubordinated debentures - current portion 300 0 Leasing and similar obligations - current portion 43 Credit institutions - current portion 44 Credit institutions 52 Other loans 80 49 Total 393 59

As of 31 December 2008, the current interest-bearing liabilities mainly consisted of the EUR 300 million unsubordinated debenture issued in 2006 and maturing in November 2009, and of debts towards third parties in EUR with an average remaining maturity of less than 1 month. As of 31 December 2009, the current interest-bearing liabilities mainly consisted of debts towards third parties in EUR with an average remaining maturity of less than 1 month.

Note 17. Provisions (EUR million) Worker's Litigation Illness days Other risks Total accidents

As of 1 January 2008 45 98 34 52 229 Additions 22613 8 49 Utilisations -3 -20 -12 -6 -41 Withdrawals 0 -10 0 -1 -12 As of 31 December 2008 44 93 36 52 225

Additions 21604 21 Utilisations -3 -17 -7 -12 -38 Withdrawals -2-4-1-3 -9 As of 31 December 2009 41 89 29 41 199

The provision for workers’ accidents relates to compensation that Belgacom SA could pay to members of personnel injured (including professional illness) when performing their job and on their way to work. Until 31 December 2002, according to the law of 1967 (public sector) on labor accidents, compensation was funded and paid directly by Belgacom. This provision (annuities part) is based on actuarial data including mortality tables, compensation ratios, interest rates and other factors defined by the law of 1967 and calculated with the support of a professional insurer. Taking into account the mortality table, it is expected that most of these costs will be paid out until 31 December 2053. As from 1 January 2003, contractual employees are subject to the law of 1971 (private sector) and statutory employees remain subject to the law of 1967 (public sector). For both the contractual and statutory employees, Belgacom is covered as from 1 January 2003 by insurance policies for workers’ accidents and therefore will not pay directly members of personnel. The provision for litigation represents management’s best estimate for probable losses due to pending litigation where the Group has been sued by a third party or is subject to a judicial or tax dispute. The expected timing of the related cash outflows depends on the progress and duration of the underlying judicial procedures. The provision for illness days represents management’s best estimate of probable charges related to the granting by Belgacom of accumulating non-vesting illness days to its statutory employees. The provision has been determined based on statistical data. The provision for other risks primarily includes the provision for the incurred risks from the re-insurance company, the expected costs for dismantling and restoration of mobile antenna sites and buildings, environmental risks and sundry risks. It is expected that most of these costs will be paid during the period 2009-2024. The provision for restoration costs is estimated at current prices and discounted using a discount rate that varies between 2.75% and 5.64%, depending when the expenditures are expected to be required to settle the obligation.

172 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Note 18. Other non-current payables

(EUR million) Note 2008 2009

Other amounts payable 33 Total 33

Note 19. Other current payables As of 31 December (EUR million) Note 2008 2009

VAT payables 16 22 Payables to employees 88 93 Accrual for holiday pay 80 79 Accrual for social security contributions 50 55 Taxes withheld on remunerations 17 16 Deferred income 177 189 Other derivatives 31 3 1 Accrued expenses 33 26 Other amounts payable 64 30 Total 527 511

Note 20. Net revenue Year ended 31 December (EUR million) 2008 2009

Sales of goods 605 545 Rendering of services 5,306 5,378 Total 5,911 5,922

Note 21. Other operating revenue Year ended 31 December (EUR million) 2008 2009

Gain on disposal of intangible assets and property, plant and equipment 4 4 Gain on disposal of consolidated companies 11 Gains on realization of trade debtors 11 Other income 61 62 Total 67 68

Note 22. Non-recurring revenue

Year ended 31 December (EUR million) 2008 2009

Gain on dilution of shareholding in BICS 074 Gain on sale of Certipost SA 80 Total 874

Gains on the disposal of subsidiaries and joint-ventures are reported as non-recurring revenue when they individually exceed EUR 5 million. In 2008, the Group sold its jointly controlled interest in Certipost SA resulting in the recognition of a gain of EUR 8 million (see note 6.4). In 2009, the contribution by MTN of international carrier assets (mainly its customer base) in exchange of an interest of 20% in BICS resulted in the recognition of a non-recurring gain of EUR 74 million (see note 6.4).

Belgacom Financial Report 2009 - 173 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Note 23. Costs of materials and charges to revenue

Year ended 31 December (EUR million) 2008 2009

Purchases of materials 463 413 Purchases of services 1,511 1,674 Total 1,975 2,087

Purchases of materials are shown net of work performed by the enterprise that is capitalized for an amount of EUR 61 million in 2008 and EUR 65 million in 2009. Note 24. Personnel expenses and pensions

Year ended 31 December (EUR million) 2008 2009

Salaries and wages 845 827 Social security expenses 200 203 Pension costs 20 24 Post-employment benefits other than pensions and termination benefits 28 23 Other personnel expenses 31 31 Total 1,124 1,108

Salaries and wages and social security expenses are shown net of work performed by the enterprise that is capitalized for an amount of EUR 51 million in 2008 and EUR 57 million in 2009.

Note 25. Other operating expenses

Year ended 31 December (EUR million) 2008 2009

Rent expense 111 113 Maintenance and utilities 186 192 Advertising and public relations 120 113 Consultancy 205 149 Administration and training 61 66 Telecommunications, postage costs and office equipment 40 43 Outsourcing 54 89 Allowances for trade debtors 4-2 Loss on realization of trade debtors 34 29 Impairment on intangible assets and property, 4 3 plant and equipment Taxes other than income taxes 56 57 Other operating charges (1) 16 -11 Total 890 840

Other operating expenses are shown net of work performed by the enterprise that is capitalized for an amount of EUR 138 million in 2008 and EUR 108 million in 2009.

Note 26. Non-recurring expenses

Year ended 31 December (EUR million) 2008 2009

Divestment of Telindus International in non-strategic countries 34 0 Expected loss on subsidiaries classified as held for sale 6 0 Termination benefits and additional compensation 53 7 Fines and penalties imposed by competition authorities or by the regulator 0 56 Total 93 62

Losses on the disposal of subsidiaries and joint-ventures that individually exceed EUR 5 million, fines and penalties imposed by the regulator or completion authorities exceeding EUR 5 million and costs of restructuring programs (including actuarial gains and losses) are recorded as non-recurring expenses. In 2008, the Group recorded termination benefits and additional compensation benefits for voluntary leaves of employees for EUR 53 million in respect of restructuring programs and the external mobility offer with the Belgian State (see note 9.1). In 2008, the Group decided to divest or liquidate the Telindus entities located in non-strategic countries (Germany, China and Hong- Kong, Italy, Portugal, Switzerland and Sweden) (see note 6.4). This divestment project led to the recognition of a non-recurring expense of EUR 34 million in the income statement of 2008.

174 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c In 2008, the Group decided to dispose all the assets and liabilities of Win SA to Tecteo. At year-end 2008, this transaction was subject to the approval of the Walloon Region that has been received in January 2009. The Group expected a loss of EUR 6 million from this transaction that has been recognised as non-recurring expense in the income statement of the year 2008. In 2009, the Belgian Competition Authority imposed a penalty of EUR 66.3 million on Belgacom Mobile for abuse of a dominant market position during the years 2004 and 2005 in the case initiated by KPN Group Belgium (former Base) in October 2005 (see note 33). The Group recognized this charge (net of existing provisions) as a non-recurring expense in the income statement of the second quarter 2009. In 2009, the Group implemented restructuring programs for employees of subsidiaries that resulted in an expense of EUR 7 million (see note 9.1).

Note 27. Depreciation and amortization

Year ended 31 December (EUR million) 2008 2009

Amortization of licenses and other intangible assets 214 205 Depreciation of property, plant and equipment 530 501 Total 743 706

Note 28. Net finance income / (costs)

Year ended 31 December (EUR million) 2008 2009

Finance income

Interest income on financial instruments At amortized cost 22 14 At fair value through income statement 74 Discounting income On long term receivables 01 Fair value adjustments of financial instruments Not in a hedge relationship 07 Other finance income 01

Finance costs

Interests and debt charges on financial instruments At amortized cost -85 -102 At fair value through income statement -19 -14 Discounting charges On provisions 0-1 On termination benefits -14 -14 On long term payables 0-3 Impairment losses On cash and cash equivalents -5 -1 Fair value adjustments of financial instruments Not in a hedge relationship -14 -8

Total -109 -117

Note 29. Earnings per share Basic earnings per share are calculated by dividing the net income for the year attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share is calculated by dividing the net income for the year attributable to ordinary shareholders, by the weighted average number of ordinary shares outstanding during the year, both adjusted for the effects of dilutive potential ordinary shares.

Belgacom Financial Report 2009 - 175 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c The following table reflects the income and share data used in the computation of basic and diluted earnings per share. Year ended 31 December (in millions, except per share amounts) 2008 2009

Net income attributable to ordinary shareholders (EUR million) 800 904

Adjustments for dilutive potential ordinary shares (EUR million) 0

Adjusted net income for calculating diluted earnings per share (EUR million) 800 904

Weighted average number of ordinary shares 326,179,820 320,475,553

Adjustment for share options 107,417 211,047

Weighted average number of ordinary shares for diluted earnings per share 326,287,237 320,686,600

Basic earnings per share (EUR) 2.45 2.82

Diluted earnings per share (EUR) 2.45 2.82

The stock options granted in 2007 and 2008 are anti-dilutive and hence not included in the calculation of diluted earnings per shares, while the other options granted are dilutive. Note 30. Dividends paid and proposed Year ended December 31 (in millions, except per share amounts) 2008 2009

Dividends on ordinary shares: Proposed dividends (EUR million) 544 544

Number of shares with dividend rights 323,515,152 323,752,301

Dividend per share (EUR) 1.68 1.68

Interim dividend paid to the shareholders (EUR million) 160 128

Interim dividend per share (EUR) 0.50 0.40

The proposed dividends for 2008 have been effectively paid in April 2009. The interim dividend of 2008 has been paid in December 2008. The interim dividend of 2009 has been paid in December 2009. Note 31. Additional disclosures on financial instruments Note 31.1 Derivatives As of 31 December (EUR million) Note 2008 2009

Non-current assets Other derivatives 10 62 58

Current assets Derivatives held-for-hedging 12 1 0 Other derivatives 12 0 2 Total assets 63 60

Non-current liabilities Other derivatives - interest-bearing liabilities 16 29 33 Current liabilities Other derivatives - non-interest-bearing liabilities 19 3 1 Total liabilities 32 33

The Group makes use of derivatives such as interest rate swaps (IRS), interest rate and currency swaps (IRCS), forward foreign exchange contracts and currency options. The tables below show the positive and negative fair value of derivatives, included in the balance sheet respectively as current/non- current assets or liabilities, together with the notional amounts presented by the term of maturity.

176 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c As of 31 December 2008 Fair value Notional amount (EUR million) Within 3 - 12 1 - 5 over 5 Total Positive Negative 2 months months years years

Forward foreign exchange contracts 1 0 0430 8 Derivatives held as cash flow hedges 1 0 0 4 3 0 8

Interest rate swaps -24 0 0 0 144 144 Interest rate and currency swaps 62 -5 0 0 0 217 217 Forward foreign exchange contracts -3 51 10 2 63 Derivatives not qualifying as hedges (1) 62 -32 51 10 2 361 424

Total 63 -32 51 14 5 361 431 (1) Includes discontinued fair value hedge derivatives

As of 31 December 2009 Fair value Notional amount (EUR million) Within 3 - 12 1 - 5 over 5 Total Positive Negative 2 months months years years

Forward foreign exchange contracts 0 0 2200 3 Derivatives held as cash flow hedges 0 0 2200 3

Interest rate swaps 0 -25 0 0 0 144 144 Interest rate and currency swaps 52 0 0 0 0 217 217 Derivatives held-for-trading (2) 6 -8 0000 0 Forward foreign exchange contracts 2 -1 43 24 1 0 68 Derivatives not qualifying as hedges (1) 60 -33 43 24 1 361 429

Total 60 -33 45 25 1 361 433 (1) Includes discontinued fair value hedge derivatives (2) Embedded derivatives created upon discontinuation of Fair Value Hedge in 2008. Their values tend to 0 as maturity date of the related discontinued hedge loans nears. Note 31.2 Financial risk management objectives and policies The Group’s main financial instruments comprise unsubordinated debentures, trade receivables and trade payables. The main risks arising from the Group’s use of financial instruments are interest rate risk, foreign currency risk, liquidity risk and credit risk. The Group is also exposed to financial risks associated with forecasted transactions. All financial activities are subject to the principle of risk minimisation. To achieve this, all matters related to funding, foreign exchange, interest rate and counterparty risk management are handled by a centralised Group Treasury department. Simulations are performed using different market (including worst case) scenarios with a view to estimating the effects of varying market conditions. All financial transactions and financial risk positions are managed and monitored in a centralised treasury management system. Group Treasury operations are conducted within a framework of policies and guidelines approved by the Board of Directors. Group Treasury is responsible for implementing these policies. According to the policies, derivatives are used to hedge interest rate and currency exposures. Derivatives are used exclusively as hedging instruments, i.e., not for trading or other speculative purposes. Derivatives used by the Group mainly include forward exchange contracts, interest rate swaps, interest rate and currency swaps and future rate agreements (FRA’s). The Group’s internal auditors regularly review the internal control environment at Group Treasury. No material changes occurred during the period 2008 - 2009 in the nature of the exposure of the Group to financial risks nor in the Group’s policies and processes for managing financial risk.

Interest rate risk The Group’s exposure to changing market interest rates primarily relates to its long-term financial obligations. Group Treasury manages exposure of the Group to changes in interest rates and the overall cost of financing by using a mix of fixed and variable rate debts, in accordance with the Group’s financial risk management policies. The aim of such policies is to achieve an optimal balance between total cost of funding, risk minimisation and avoidance of volatility in financial results, whilst taking into account market conditions and opportunities as well as overall business strategy. Accordingly, the company entered into several interest rate swaps (IRS) and interest rate and currency swaps (IRCS) to transform the interest rate exposure on certain financial liabilities from a fixed interest rate to a floating interest rate mechanism or vice versa. The tables below summarise the non-current interest-bearing liabilities (excluding leasing and similar obligations), the interest rate and currency swap agreements (IRCS), the interest rate swap agreements (IRS) and the net currency obligations of the Group at 31 December 2008 and 2009.

Belgacom Financial Report 2009 - 177 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c As of 31 December 2008 Direct borrowing IRCS agreements IRS agreements Net currency obligations Weighted Weighted Weighted Weighted Average Amount Average Amount Average Average Notional average average average Amount payable average time to payable time to payable time to time to amount interest rate interest rate interest rate (receivable) interest rate maturity (receivable) maturity (receivable) maturity maturity (1) (1) (1) (1)

(EUR million) (in years) (EUR million) (in years) (EUR million) (in years) (EUR million) (in years)

EUR Fixed 1,866 4.41% 6 144 6.20% 7 2,010 4.54% 6 Variable 0 217 3.81% 11 -144 4.13% 7 73 3.16% 18

JPY Fixed 217 4.99% 11 -217 -4.99% 11 0

Total 2,083 4.47% 6 0 0 2,083 4.49% 6 (1) Weighted average interest rate taking into account last repriced interest rates for floating borrowings.

As of 31 December 2009 Direct borrowing IRCS agreements IRS agreements Net currency obligations Weighted Weighted Weighted Weighted Average Amount Average Amount Average Average Notional average average average Amount payable average time to payable time to payable time to time to amount interest rate interest rate interest rate (receivable) interest rate maturity (receivable) maturity (receivable) maturity maturity (1) (1) (1) (1)

(EUR million) (in years) (EUR million) (in years) (EUR million) (in years) (EUR million) (in years)

EUR Fixed 1,864 4.41% 5 144 6.20% 6 2,008 4.54% 5 Variable 217 0.89% 10 -144 1.00% 6 73 0.66% 17

JPY Fixed 217 4.99% 10 -217 -4.99% 10 0

Total 2,081 4.47% 5 0 0 0.00% 0 0 2,081 4.41% 5 (1) Weighted average interest rate taking into account last repriced interest rates for floating borrowings.

The Group expects immaterial impacts for 2010 on the income statement resulting from interest payable on floating rate borrowings on the one hand and from measurement at fair value in income statement of some IRS derivatives that do not qualify as hedging instruments on the other hand1.

Foreign currency risk The Group’s main currency exposures result from its operating activities. Such exposure arises from sales or purchases by operating units in currencies other than their respective functional currency. Transactions in currencies other than the functional currency mainly occur in the International Carrier Services (“ICS”) segment whose international carrier activities generate payments to and receipts from other telecommunications operators in various foreign currencies, as well as in some affiliates of the Telindus subgroup running USD denominated operating activities and finally also, albeit to a limited extent, in relationship with international activities (roaming, capital and operating expenditure) of the Group. Risks from foreign currencies are hedged to the extent that they are liable to influence the Group’s cash flows. Foreign currency risks that do not influence the Group’s cash flows (i.e., the risks resulting from the translation of assets and liabilities of foreign operations into the Group’s reporting currency) as a rule are not hedged. However, the Group could envisage hedging such so-called translation differences should their potential impact become material to the Group’s consolidated financial statements. The typical financial instruments used to hedge foreign currency risk are forward foreign exchange contracts. In 2008 and 2009, the Group only incurred currency exposures relative to its operating activities. Any re-measurement to fair value of underlying open trade positions in foreign currencies is recorded via the income statement and reduced or offset by the accompanying re-measurement to fair value of derivatives used to hedge such underlying exposures. The Group performed a sensitivity analysis on the exchange rates EUR/USD, EUR/SDR2 EUR/GBP, and EUR/CHF, four currency pairs to which it is typically exposed in its operating activities, for the years 2008, 2009 and 2010. For 2008 and 2009, there was no material impact on the Group’s income statement. For 2010, the Group does not expect any material impact of currency fluctuations on its overall financial performance either. This results on the one hand from the fact that overall the Group continues to have relatively limited ( albeit increasing in light of the growing ICS activities) foreign currency exposures and on the other hand from timely and adequately hedging such exposures as they surface in the course of business.

Credit risk and significant concentrations of credit risk Belgacom is exposed to credit risk from its operating activities and from its financing activities (financial investments done to manage cash of the Group). Credit risk encompasses all forms of counterparty exposure, i.e. where counterparties may default on their obligations to Belgacom in relation to lending, hedging, settlement and other financial activities. The Group’s maximum exposure to credit risk (not taking into account the value of any collateral or other security held) in the event the counterparties fail to perform their obligations in relation to each class of recognized financial assets, including derivatives with positive market value, is the carrying amount of those assets in the balance sheet. To reduce the credit risk in respect of financing activities and cash management of the Group, transactions as a rule are only entered into with leading financial institutions whose credit rating equals at least A (S&P) and/or A2 (Moody’s). Credit risk on operating activities with significant clients is managed and controlled on an individualised basis. When needed, the Group requests additional collaterals. These significant customers are however not material to the Group, since the client portfolio of the Group is mainly composed of a large numbers of small customers. Hence, credit risk and concentration of credit risk on trade

1 The volatility on the financial income/(costs) depends on the fluctuations of the EURIBOR at three months (EURIBOR 3M) for the interest payable on the floating rate borrowings and of the IRS-EURIBOR at seven years (IRS-EURIBOR 7 years) for the measurement at fair value of the IRS derivatives. 2 SDR: Special Drawing Rights: basket of currencies, transactional money used in netting agreements between telecom operators

178 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c receivables is limited. For amounts receivable from other telecommunication companies, the concentration of credit risk is also limited due to netting agreements with accounts payable to these companies, prepayment obligations, bank guarantees, parent guarantees and the use of credit limits obtained via credit insurance. The Group is exposed to credit loss in the event of non-performance by a counterparty on financial derivatives (see note 31.1) and cross-border lease arrangements (see note 34). However, the Group does not anticipate non-performance by any of these counterparties, nor does it require collateral or other security from them, seeing it only deals with prime financial institutions. In addition, the Group is exposed to credit risk by occasionally granting financial guarantees. At 31 December 2009, it had granted bank guarantees for an amount of EUR 36 million.

Liquidity risk In accordance with the treasury policy, Group Treasury manages its overall cost of financing by using a mix of fixed and variable rate debts. A liquidity reserve in the form of credit lines and cash is maintained to guarantee the solvency and financial flexibility of the Group at all times. For this purpose, Belgacom SA entered into bilateral credit agreements with different maturities and into two separate Syndicated Revolving Facilities. For medium to long-term funding, the Group uses bonds and medium term notes. The maturity profile of the debt portfolio is spread over several years. Group Treasury frequently assesses its funding resources taking into account its own credit rating and general market conditions. The table below summarizes the maturity profile of the Group’s interest bearing financial liabilities at each reporting date. This maturity profile is based on contractual undiscounted interests payments and capital reimbursements and takes into account the impact on cash flows of interest rate derivatives used to convert fixed interest rate liabilities into floating interest rate liabilities and vice versa. For floating rate liabilities, interest rates used to determine cash outflows are the ones prevailing at their last price fixing date before reporting date (as of 31 December 2008 and 2009, respectively).

(EUR million) 2009 2010 2011 2012 2013 2014-2028

As of 31 December 2008 Non-current interest-bearing liabilities 93 99 868 65 189 1,335 Current interest-bearing liabilities 402 0 0 0 0 0 Total 495 99 868 65 189 1,335

As of 31 December 2009 Non-current interest-bearing liabilities - 91 869 64 188 1,314 Current interest-bearing liabilities - 60 0 0 0 0 Total - 151 869 64 188 1,314

Bank credit facilities at 31 December 2009 In addition to the interest-bearing liabilities disclosed in notes 16.1 and 16.2, the Group is backed by long term credit facilities of EUR 755 million and short term credit facilities of EUR 112 million. These facilities are provided by a diversified group of banks. As at 31 December 2009, there was no outstanding balance under the long term facilities and an outstanding balance of EUR 2 million under the short term facilities. A total of some EUR 865 million of credit lines was therefore available for drawdown as at 31 December 2009. The Group has also established a EUR 2.5 billion Euro Medium Term Note (“EMTN”) Program and a EUR 1 billion Commercial Paper (“CP”) Program. As at 31 December 2009, there was an outstanding balance under the EMTN Program of EUR 1,850 million and no outstanding balance under the CP Program. Note 31.3 Net financial position of the Group The Group defines the net financial position as the net amount of investments, cash and cash equivalents minus any interest-bearing liabilities and related derivatives (including re-measurement to fair value).

As of 31 December (EUR million) Note 2008 2009

Assets Non-current investments (1) 10 5 5 Current investments (1) 13 53 76 Cash and cash equivalents (1) 14 565 332 Non-current derivatives 10 62 58 Current derivatives 12 1 0 Liabilities Non-current interest-bearing liabilities (1) 16 -2,128 -2,128 Current interest-bearing liabilities (1) 16 -393 -59 Net financial position -1,835 -1,716 (1) after remeasurement to fair value, if applicable.

Non-current interest-bearing liabilities include non-current derivatives at fair value amounting to EUR 29 million in 2008 and EUR 33 million in 2009 (see note 16.1).

Belgacom Financial Report 2009 - 179 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c The purpose of the Group’s capital management is to maintain net financial debt and equity ratio’s that allow for security of liquidity at all times via flexible access to capital markets, in order to be able to finance strategic projects and to offer an attractive remuneration to shareholders. The latter is based on a dividend ratio between 50% and 60% of net income (Group share). During the years 2005 to 2009, free cash flow has enabled the Group to offer an additional shareholders remuneration through increased dividends and share buy-backs whilst maintaining net financial debt at an acceptable level. In 2008, the Group also increased the amount of outstanding unsubordinated debentures in order to finance its two main acquisitions of 2008, namely Tango Group and Scarlet Group. Over the two years presented, the Group did not issue new shares or any other dilutive instruments. Note 31.4 Categories of financial instruments The Group has interest rate and currency swaps (IRCS) to manage the exposure to interest rate risk and to foreign currency risk on its non-current interest bearing liabilities (see note 31.2). The following tables present the Group’s financial instruments per category defined under IAS 39, as well as gains and losses resulting from re-measurement to fair value (attributable to the risks hedged) of hedged liabilities and hedging IRCS, in fair value hedges.

As of 31 December 2008 (EUR million) Note Category Carrying Amounts recognized in balance sheet according to IAS 39 according amount Amortized cost Acquisition cost Fair value Fair value to IAS 39 net of impairment adjustment adjustment (1) losses, if any recognized in recognized in equity income statement ASSETS

Non-current assets Other participating interests 7 AFS 1 1 0 Other non-current assets Non-current investments 10 AHTM 5 5 Other derivatives 10 FAHfT 62 62 Other financial assets 10 LaR 18 18

Current assets Trade receivables 11 LaR 1,205 1,205 Other current assets VAT and other receivables 12 LaR 38 38 Prepaid expenses 12 LaR 97 97 Accrued income 12 LaR 16 16 Derivatives held-for-hedging 12 n.a. 1 1 Other derivatives 12 FAHfT 0 0 Investments 13 AFS 53 47 6 Cash and cash equivalents 14 LaR 565 565

LIABILITIES

Non-current liabilities Interest-bearing liabilities Unsubordinated debentures not in a hedge relationship 16 FLAC 2,077 2,016 61 Leasing and similar obligations 16 FLAC 6 6 Credit institutions 16 FLAC 16 16 Other derivatives 16 FLHfT 29 29 Other non-current payables 18 FLAC 3 3

Current liabilities Interest-bearing liabilities, current portion Unsubordinated debentures not in a hedge relationship 16 FLAC 300 300 Leasing and similar obligations 16 FLAC 4 4 Credit institutions 16 FLAC 4 4 Interest-bearing liabilities Credit institutions 16 FLAC 5 5 Other loans 16 FLAC 80 80 Trade payables FLAC 1,239 1,239 Other current payables Accrued expenses 19 FLAC 33 33 V.A.T. and other amounts payable 19 FLAC 317 317 (1) The categories according to IAS 39 are the following : AFS: Available-for-sale financial assets AHTM: Financial assets held-to-maturity FAHfT: Financial assets held-for-trading LaR: Loans and Receivables financial assets FLAC: Financial liabilities at amortized costs FLHfT: Financial liabilities held-for-trading

180 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c As of 31 December 2009 (EUR million) Note Category Carrying Amounts recognized in balance sheet according to IAS 39 according amount Amortized cost Acquisition cost Fair value Fair value to IAS 39 net of impairment adjustment adjustment (1) losses, if any recognized in recognized in equity income statement ASSETS

Non-current assets Other participating interests 7 AFS 1 1 0 Other non-current assets Non-current investments 10 AHTM 5 5 Other derivatives 10 FAHfT 58 58 Other financial assets 10 LaR 12 12

Current assets Trade receivables 11 LaR 1,089 1,089 Other current assets VAT and other receivables 12 LaR 67 67 Prepaid expenses 12 LaR 108 108 Accrued income 12 LaR 18 18 Other derivatives 12 FAHfT 2 2 Investments 13 AFS 76 71 7 -1 Cash and cash equivalents 14 LaR 332 332

LIABILITIES

Non-current liabilities Interest-bearing liabilities Unsubordinated debentures not in a hedge relationship 16 FLAC 2,077 2,077 Leasing and similar obligations 16 FLAC 4 4 Credit institutions 16 FLAC 13 13 Other derivatives 16 FLHfT 33 33 Other non-current payables 18 FLAC 3 3

Current liabilities Interest-bearing liabilities, current portion Leasing and similar obligations 16 FLAC 3 3 Credit institutions 16 FLAC 4 4 Interest-bearing liabilities Credit institutions 16 FLAC 2 2 Other loans 16 FLAC 49 49 Trade payables FLAC 1,123 1,123 Other current payables Other derivatives 19 FLHfT 1 1 Accrued expenses 19 FLAC 26 26 V.A.T. and other amounts payable 19 FLAC 296 296 (1) The categories according to IAS 39 are the following : AFS: Available-for-sale financial assets AHTM: Financial assets held-to-maturity FAHfT: Financial assets held-for-trading LaR: Loans and Receivables financial assets FLAC: Financial liabilities at amortized costs FLHfT: Financial liabilities held-for-trading

Belgacom Financial Report 2009 - 181 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Note 31.5 Assets and liabilities measured at fair value The Group held as at 31 December 2009 financial instruments measured at fair value. Those instruments are disclosed in the table below according to the valuation technique used. The hierarchy between the techniques reflects the significance of the inputs used in making the measurements:  Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;  Level 2: valuation techniques for which all inputs which have a significant effect on the recorded fair value are observable for the asset or liability, either directly or indirectly;  Level 3: valuation techniques for which all inputs which have a significant effect on the recorded fair value are not based on observable market data.

(EUR million) Category Balance at 31 Fair values measurement at end of the reporting period using : according to IAS December 2009 Note 39 (1) Level 1 Level 2 Level 3

ASSETS

Non-current assets Other participating interests 7 AFS 1 1 Other non-current assets Other derivatives 10 FAHfT 58 58

Current assets Other current assets Other derivatives 10 FAHfT 2 2 Investments 13 AFS 76 76

LIABILITIES

Non-current liabilities Interest-bearing liabilities Other derivatives 16 FLHfT 33 33

Current liabilities Other derivatives 19 FLHfT 1 1 (1) The categories according to IAS 39 are the following : AFS: Available-for-sale financial assets AHTM: Financial assets held-to-maturity FAHfT: Financial assets held-for-trading LaR: Loans and Receivables financial assets FLAC: Financial liabilities at amortized costs FLHfT: Financial liabilities held-for-trading

Note 32. Related party disclosures Note 32.1. Consolidated companies Subsidiaries, joint-ventures and associates are listed in note 6. Commercial terms and market prices apply for the supply of goods and services between Group companies.

Joint-ventures Belgacom International Carrier Services SA and subsidiaries Until 30 November 2009, the Group held a joint venture interest of 72% in Belgacom International Carrier Services SA and subsidiaries (hereafter “BICS”); the remaining 28% shares being held by Swisscom Belgium SA. BICS is involved in international carrier activities towards Belgacom SA and subsidiaries, Swisscom Group and other telecom operators. As from 30 November 2009, the Group holds an interest of 57.6% in BICS, Swisscom 22.4% and MTN 20% (see note 6.4). For the year 2008, sales and purchases from BICS to the Group amounted to EUR 21 million and EUR 15 million respectively. At 31 December 2008, BICS had trade receivables of EUR 5 million, trade payables of EUR 3 million and short-term deposits of EUR 51 million towards the Group. For the year 2009, sales and purchases from BICS to the Group amounted to EUR 21 million and EUR 15 million respectively. At 31 December 2009, BICS had trade receivables of EUR 6 million, trade payables of EUR 4 million and short-term deposits of EUR 49 million towards the Group.

Associates Tunz.com SA In 2009, the Group acquired 40% of Tunz.com SA but the Group had no significant transactions with this minority participation in 2009.

182 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Note 32.2. Relationship with shareholders The Belgian State is the majority shareholder of the Group, with a stake of 53.5%. The Group holds treasury shares for 5.2%. The remaining 41.3% are traded on the First Market of Euronext Brussels.

Relationship with the Belgian State The Group supplies telecommunication services to the Belgian State and various administrations of the Belgian State. All such transactions are made within normal customer/supplier relationships on terms and conditions that are not more favourable than those available to other customers and suppliers. The services provided to those administrations do not represent a significant component of the Group’s net revenue.

Relationship with the minority shareholders of Belgacom International Carrier Services SA and subsidiaries Until 30 November 2009, Swisscom Belgium SA held a 28% stake in BICS that afterwards decreased to 22.4% The Group enters into transactions with Swisscom Group (hereafter “Swisscom”) in the framework of its international carrier activities. Swisscom is using BICS’s network to handle their outgoing international voice and data traffic while BICS is using Swisscom’s national network to terminate international voice and data traffic to Switzerland. These transactions are done at normal customer/supplier relationships on terms and conditions that are not more favourable than those available to other customers/suppliers. The Group sold services to Swisscom for EUR 74 million in 2008 and EUR 59 million in 2009. Swisscom sold services to the Group for EUR 59 million in 2008 and EUR 47 million in 2009. Accounts receivable from Swisscom amounted to EUR 10 million at 31 December 2008 and EUR 13 million at 31 December 2009. Trade payables to Swisscom amounted to EUR 14 million at 31 December 2008 and EUR 10 million at 31 December 2009. As from 30 November 2009, MTN holds a 20% stake in BICS. The Group sold services to MTN Group (hereafter “MTN”) for EUR 2 million in December 2009. MTN sold services to the Group for EUR 7 million in December 2009. Accounts receivable from MTN amounted to EUR 9 million at 31 December 2009. Trade payables to MTN amounted to EUR 14 million at 31 December 2009. Note 32.3. Relationship with other State-controlled enterprises The Group supplies telecommunication services to various State-controlled enterprises. All such transactions are made within normal customer/supplier relationships on terms and conditions that are not more favourable than those available to other customers and suppliers. The services provided to State-controlled enterprises do not represent a significant component of the Group’s net revenue. Note 32.4. Relationship with key management personnel Compensation of the directors is as follows: an annual fixed compensation of 50,000 EUR for the Chairman of the Board of Directors and of 25,000 EUR for the other members of the Board of Directors, with the exception of the President and Chief Executive Officer. All members of the Board of Directors, with the exception of the President and Chief Executive Officer, have the right to an attendance fee of 5,000 EUR per attended meeting of the Board of Directors. Attendance fees of 2,500 EUR per meeting are granted to each member of an advising committee to the Board of Directors, with the exception of the President and Chief Executive Officer. For the Chairman these attendance fees are doubled. The total remuneration for the directors amounts to EUR 1,063,250 for 2008 and EUR 942,000 for 2009. The directors have not received any loan or advance from the Group. The number of meetings of the Board of Directors and advising committees are detailed as follows: 2008 2009 Board of Directors 65 Audit and Compliance Committee 55 Nomination and Remuneration Committee 7 5 Ad hoc Committee 1 (1) 1 (2) Strategic and Business Development Committee 2 1

(1) The Board of Directors in its meeting of 24 July 2008 decided to create an ad hoc Committee, consisting of the members of the Nomination and Remuneration Committee extended with Mr. Philip Hampton (Chairman of the Audit and Compliance Committee) and Mr. Pierre-Alain De Smedt in order to review the relationship between the Board and Management (2) The Board of Directors in its meeting of July 30, 2009 decided to create an ad hoc Committee, consisting of the members of the Nomination and Remuneration Committee extended with the Chairman of the Audit & Compliance Committee in order to confirm its position and not to conduct an investigation or take position with respect to the misuse of privileged information before the outcome of the investigation of the CBFA.”

For the year ended 31 December 2008, a total amount of EUR 7,261,682 (social security costs included) was paid in aggregate to the members of the “Belgacom Management Committee” (BMC), Chief Executive Officer included. In 2008, the members of the Belgacom Management Committee were A. De Lathauwer, D. Bellens, R. Stewart, S. Alcott, M. Georgis, M. De Coster (7 months), G. Dallemagne (5.5 months) and W. Mosseray (3 months). For the year ended 31 December 2009, a total amount of EUR 6,879,890 (social security costs included) was paid in aggregate to the members of the “Belgacom Management Committee” (BMC), Chief Executive Officer included. In 2009, the members of the Belgacom Management Committee were A. De Lathauwer, D. Bellens, R. Stewart, S. Alcott, M. Georgis, M. De Coster and G. Dallemagne.

Belgacom Financial Report 2009 - 183 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c These total amounts of key management compensation include the following components:  Basic remuneration: base salary earned in their position for the reported year, included social security contributions paid on these benefits;  Variable remuneration: actual bonus paid in the reported year for the performance of prior year. There are different pay-out forms: for example in cash, under the “Discounted Share Purchase Plan”, or in a complementary pension plan;  Group insurance premiums: insurance premium (invalidity, decease, post-retirement pension plan) paid by the Group;  Other benefits: benefits such as medical insurance, private use of management car, luncheon vouchers. Year ended 31 December EUR 2008 (*) 2009 Basic remuneration 4, 651,218 4, 453,935 Variable remuneration 1,763,159 1,549,084 Group insurance premiums 632,507 658,741 Other benefits 214,797 218,130 Total 7,261,682 6,879,890

(*) The 2008 figures have been restated following the new Corporate Governance disclosure guidelines. The 'short-term employee benefits' mentioned in the annual report of 2008 are split up in 'basic remuneration', 'other benefits' and 'bonus'. In 2009, the 'bonus' part is included in the 'variable remuneration'. In 2008, 'post-employment benefits' included 'group insurance premiums' and 'complementary pension plans' paid in the f ramework of the bonus. This last part is included in 2009 in the 'v ariable remuneration'.

In addition to these pecuniary advantages, equity compensation benefits have been granted to the BMC members through stock option plans. The BMC members had the opportunity to participate to an Employee Stock Option Plan whereby they were granted 314,866 share options in 2008 and 312,719 share options in 2009. Note 32.5. Regulations The telecommunications sector is regulated through the legislation adopted in the Belgian parliament, through a series of Royal and Ministerial Decrees, and also through decisions of the Belgian Institute for Postal services and Telecommunications, commonly referred to as the “BIPT/IBPT”. The Belgian licensing regime provides for individual licenses for the provision of public fixed voice telephony services, public network infrastructure services and mobile telecommunications services. The company is also governed by certain provisions and principles of Belgian public and administrative law whereby Belgacom has obligations such as the delivery of regulated services and public services.

Note 33. Rights, commitments and contingent liabilities Operating lease commitments The Group rents sites for its telecom infrastructure and leases buildings, technical and network equipment, as well as furniture and vehicles under operating leases with terms of one year or more. Rental expenses in respect of these operating leases amounted EUR 129 million in 2008 and EUR 132 million in 2009.

Future minimum rentals payable under the non-cancellable operating leases are as follows at 31 December 2009: Within one From 1 to 3 From 3 to 5 More than 5 (EUR million) Total year years years years

Buildings 19 28 13 7 66 Sites 19 36 34 63 152 Technical and network equipment 19 3 2 2 26 Vehicles 25 35 13 0 74 Other material 2 2 1 1 7 Total 84 104 63 73 325 Claims and legal proceedings From time to time Belgacom has been, and expects to continue to be, subject to legal, regulatory and tax proceedings and claims arising in the ordinary course of its business. The Group is currently involved in various judicial and regulatory proceedings, including those for which a provision has been made (see note 17) and those described below for which no or limited provisions have been accrued, in the jurisdictions in which it operates concerning matters arising in connection with the conduct of its business. These include also proceedings before the Belgian Institute for Postal services and Telecommunications ("BIPT"), appeals against decisions taken by the BIPT, and proceedings with the Belgian tax administrations with respect to real estate withholding taxes and corporate income taxes. In September 2002, Codenet, Versatel, Colt and Worldcom filed a complaint with the Belgian Competition Council alleging that Belgacom’s “Benefit Excellence Program” constitutes an abuse of an alleged dominant position in the market through pricing and loyalty rebates. The plaintiffs also filed a request for interim relief measures with the President of the Competition Council requesting, among other things, the suspension of the program. Belgacom’s “Benefit Excellence Program”, which was launched in March 2002, is a voice telephony tariff plan aimed at large corporate users offering specific base rates for national telephony and for fixed-to-mobile calls as well as an additional discount scheme. On 22 December 2004, the President of the Competition Council rejected the plaintiffs’ request for interim relief measures because Belgacom had clarified the way the volume discounts are applied, and stated that there

184 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c was, in his opinion, no serious risk that other licensed operators would disappear because of the ‘Benefit Excellence’ tariffs (and especially the volume discount). The issue of interim relief measures having been closed successfully for Belgacom, the case on the merits with respect to the alleged infringement is still pending and no calendar for the proceedings has been set. On 7 March 2006, Belgacom received a “statement of objections” from the Corps des Rapporteurs (College of Examiners), which is conducting the ongoing investigation for the “Benefit Excellence” complaint. The statement of objections, to which Belgacom responded on 23 May 2006, considers that various Belgacom pricing plans for business customers involve infringements of the competition rules. These infringements allegedly date back to October 2000, and some of them, in particular the loyalty rebates and the so-called discriminatory pricing conditions, are considered to be still in place to date. The Corps des Rapporteurs heard Belgacom on this matter on 6 June 2006. Once the investigation is completed, the College of Auditors (formerly the Corps des Rapporteurs) will submit a reasoned report to the Belgian Competition Council, which will then have to rule on the objections raised against the Belgacom pricing schemes in question. Belgacom may be subject to an obligation to increase the retail tariffs that are the subject of the claim and if it would ultimately be found to have committed an abuse of dominant position, it may be subject to a maximum fine of up to 10% of the Group’s annual turnover. On 18 September 2009, the College of Auditors decided not to pursue the investigation further and therefore to close the investigation in light of the resources that would be required further to bring the investigation to an end and submit a report to the Competition Council. No appeal was brought by an interested party against this decision. After the launch on 1 June 2005 of the Happy Time tariff scheme by Belgacom on 1 June 2005, Tele2 filed a complaint with the Belgian Competition Authority i) alleging that said tariffs constitute an abuse of dominant position (27 June 2005) and ii) requesting interim measures, i.e. suspension of the Happy Time offer, pending the procedure (5 July 2005). On 1 September 2006, Tele2’s request for interim measures was initially rejected by the President of the Competition Council. Following an appeal by Tele2, the Court of Appeal, on 18 December 2007, nullified the aforementioned decision, arguing a.o. a lack of reasoning. However, Tele2 did not ask the President to adopt a new decision on its request for interim measures but initiated a damage claim based on an alleged abuse of dominance (the Happy Time plan) on 18 April 2008 (claim for €1 provisional and request for appointment of an expert to compute the precise damage). This case on the merits is still pending before the Court and the timing for a decision on the merits is unknown. In the case on the merits with the Competition Authority, the Prosecutor issued on 29 September 2009 his reasoned report proposing to the Competition Council that Belgacom abused and still abuses its dominant position, retaining the allegation of price squeeze. Belgacom continues to contest both claims of Tele2. Following the report of the Prosecutor, management reassessed the contingent liabilities of the Group, taking into account the current legal status of both litigation files. Belgacom will continue to monitor any further development in both cases and in the meantime vigorously continues to defend its interests. In June 2003, KPN Group Belgium (former BASE) filed an action against Belgacom Mobile before the Commercial Court of Brussels. KPN Group Belgium alleges that Belgacom Mobile’s termination rates since 1 October 2000 are not in accordance with the official telecommunications regulations requiring cost oriented pricing and that Belgacom Mobile’s Proximus-to-Proximus tariffs constitute an abuse of Belgacom Mobile’s alleged dominant position in the Belgian market. KPN Group Belgium’s provisional estimate of the claim for compensation based upon KPN Group Belgium's briefs in August 2004, amounted to approximately EUR 700 million in reimbursement and damages, representing the amount of lost revenue that KPN Group Belgium allegedly suffered as a result of these practices. This amount has been changed by BASE during the procedure: the provisional estimate from KPN Group Belgium related to the claim of compensation, based on the last documents in the file, amounts to approximately EUR 1 billion. On 1 March 2004, Mobistar filed a request to intervene voluntarily in the action brought by KPN Group Belgium against Belgacom Mobile. Mobistar alleges that if the Commercial Court of Brussels were to find that Belgacom Mobile’s termination rates were not in accordance with the obligation of cost-oriented pricing, Mobistar should be awarded damages provisionally estimated by Mobistar to range between EUR 967,000 and EUR 56,000,000 depending on the termination rates upheld by the Court. Furthermore, Mobistar alleges that in addition to the Proximus-to-Proximus tariffs, certain tariff schemes offered by Belgacom Mobile to business and corporate customers constitute an abuse of Belgacom Mobile’s allegedly dominant position. Mobistar requests the Court to appoint a court expert to calculate the amount of alleged damages and seeks compensation for such damages, provisionally estimated at a minimum of EUR 50,000,000. On 29 May 2007, the Commercial Court of Brussels pronounced in a first judgment that Belgacom Mobile did not infringe the obligation requiring cost oriented pricing for its termination rates. Furthermore, it did not find any proof for the existence of a dominant position during 2005. With regard to former years (from 1999 to 2004), the Court considered Belgacom Mobile as being in a dominant position and requested a panel of experts, composed of Mr. Robert Wtterwulghe and Mr. Cyril Nourissant (i) to determine whether the criticized pricing plans of Belgacom Mobile containing an off-net/on-net differential have an anti-competitive effect due to a network effect and whether there was a price squeeze and (ii) to determine the possible damage. On 2 October 2009, the panel of experts filed their preliminary report and concludes:  The existence of the alleged competition law infringements;  On the basis of an unprecedented and prospective method, leading in particular to a calculation of the theoretical market share KPN Group Belgium and Mobistar should have had under conditions of perfect competition, that it could be considered that the alleged impact of the Proximus on-net tariffs during the years 1999-2004 amounted to EUR 1.18 billion. Belgacom Mobile stresses that this is a preliminary report, which will be the object of a thorough analysis. As foreseen in the proceedings, Belgacom Mobile will submit its detailed observation and criticisms that will cover all aspects of the pending matter. Indeed this matter does not only involve a debate on the possible damages that would have been caused, but first the existence of the alleged anti-competitive practices is to be demonstrated. The experts will need to take these observations into account when drawing up their final report (expected in Q2 2010). The latter will then have to be examined by the Commercial Court in the context of the further legal proceedings. It will finally be upon the court (i) to decide whether anti-competitive practices have been committed, (ii) to determine whether Belgacom Mobile is liable for such practices and (iii) to decide upon the amount of the possible damages to be paid. Belgacom Mobile continues to contest the claims of both KPN Group Belgium and Mobistar and hence also the content of the preliminary report of the panel of experts in respect of the existence of the infringements itself as in respect of the calculation of the damages.

Belgacom Financial Report 2009 - 185 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c In the proceedings following a complaint by KPN Group Belgium in 2005 with the Belgian Competition Authority the latter confirmed on 26 May 2009 one of the five charges of abuse of dominant position put forward by the Prosecutor on 22 April 2008, i.e. engaging in 2004-2005 in a “price-squeeze” on the professional market. Belgian Competition Authority considered that the rates for calls between Proximus customers (“on-net rates”) were lower than the rates it charged competitors for routing a call from their own networks to that of Proximus (=termination rates), increased with a number of other costs deemed relevant. All other charges of the Prosecutor were rejected. The Competition Authority also imposed a penalty of EUR 66.3 million on Belgacom Mobile for abuse of a dominant position during the years 2004 and 2005. The Group was obliged to pay the penalty prior to 30 June 2009 and recognized this charge (net of existing provisions) as a non-recurring expense in the income statement of the second quarter 2009. Belgacom Mobile filed an appeal against the ruling of the Competition Authority with the Court of Appeal of Brussels, contesting a large number of elements of the ruling: a.o. the fact that the market impact was not examined. Also KPN Group Belgium and Mobistar filed an appeal against said ruling. Following the aforementioned ruling of the Belgian Competition Authority of 26 May 2009 and the Preliminary report of the panel of experts in the aforementioned litigation case initiated by KPN Group Belgium in June 2003 and voluntarily joined by Mobistar on 1 March 2004 (considering an alleged damage amounting to EUR 1.18 billion), management reassessed the contingent liabilities of the Group, taking into account the current legal status of those litigations. The Group will continue to monitor any further developments in these cases including the impact it may have on the accounting provisions. In the meantime the Group will vigorously continue to defend its interests. The Belgian tax authorities notified a foreign subsidiary of the Group in 2007 to be considered as a tax resident of Belgium rather than of Luxembourg and therefore to be subject to Belgian corporate income tax for the year 2004. In 2008, the Belgian tax authorities maintained their 2004 assessment and assessed the Belgian corporate income tax for the subsequent years 2005 and 2006. Belgacom has strong arguments to ward off the cumulative proposed tax assessment of EUR 69 million (years 2004, 2005 and 2006 together) and contests the assessment. Since 2003, Belgacom considers its payments of real estate tax on telecom equipment as undue and therefore recognizes an asset against the tax authorities in the ‘current income tax asset’ caption of the balance sheet for an amount of EUR 122 million at 31 December 2008 and EUR 146 million at 31 December 2009. Capital expenditure commitments At 31 December 2009, the Group has contracted commitments of EUR 52 million, mainly for the acquisition of intangible assets and technical and network equipment. Other rights and commitments At 31 December 2009, the Group has the following other rights and commitments:  The Group received guarantees for EUR 19 million from its customers to guarantee the payment of its trade receivables and guarantees for EUR 7 million from its suppliers to ensure the completion of contracts or works ordered by the Group;  The Group granted guarantees for an amount of EUR 42 million (including the bank guarantees mentioned in note 31.2) to its customers and other third parties to guarantee, among others, the completion of contracts and works ordered by its clients and the payment of rental expenses related to buildings and sites for antennas installation;  Belgacom has a right, established by Belgian legislation with respect to Universal Services, to receive compensation from the Universal Services Obligation fund for offering Social Tariffs for the period 2005-2009. Taking into account that this right is contested by some operators, and taking into account that the European Commission attacks Belgium before the European Court in respect of potential non-compliance of the Belgian legislation, the Group qualifies the compensation receivable as a contingent asset.

Note 34. Cross-border lease arrangements During the period 1996 through 2001, the Group entered into several cross-border lease arrangements with foreign investors relating to part of its fixed and mobile switches equipment. Under the terms of these agreements, which range in duration from 13 to 16 years, the Group received at the inception date of the arrangements a total amount of USD 681 million and placed a total amount of USD 652 million on deposit. The Group entered, in respect of the deposits, into non-refundable payment undertaking agreements with highly rated banks. In respect of these arrangements, the Group received fees from the foreign investors or realized gains for a total amount of EUR 23 million. These fees or gains are recognized in the income statement under the caption “other operating revenue” over the lifetime of the respective agreements. The fees effectively recognized in income amount to EUR 2.9 million in 2008 and EUR 0.3 million in 2009. On 25 September 2002, the Group sold its investment in Ben Nederland Group but agreed it will continue to guarantee the payment of leasing debts amounting at 31 December 2009 to USD 36 million (EUR 25 million), in case the payment undertakers on the related cross-border lease arrangement would become insolvent. The risk that this guarantee will result in a payment by the Group is mitigated by the fact that the deposit institutions involved are rated AAA or A+ by Standard & Poor’s. The term of the related leasing debt expires in 2012. At 31 December 2009, the other remaining open arrangements amount to USD 45 millions and include an early by-out option in 2012.

186 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Note 35. Share-based Payment Discounted Share Purchase Plans In 2008 and 2009, the Group launched Discounted Share Purchase Plans (hereafter “DSPP”). Under the 2008 and 2009 plans, Belgacom sold respectively 125,143 and 221,238 shares to the senior management of the Group at a discount of 16.67% compared to the market price (respectively EUR 29.14 and EUR 22.71 per share). The cost of the discount amounted to EUR 0.6 million in 2008 and EUR 0.8 million in 2009 and was recorded in the income statement as personnel expenses (see note 24). Employee Stock Option Plans In 2008 and 2009, Belgacom launched Employee Stock Option Plans (hereafter “ESOP”) whereby respectively 796,197 and 1,008,021 share options were granted to the key management and senior management of the Group. The Group has early adopted IFRS 2 (“Share-based Payments”) in 2004, as issued on 19 February 2004 by recognizing the fair value of the equity portion of the share options at inception date over their vesting period (three years) in accordance with the graded vesting method and periodic re-measurement of the liability component. Such fair value amounts to EUR 3 million for the 2008 plan and EUR 4 million for the 2009 plan. The annual charge of the graded vesting including the liability component re-measurement is recognized as personnel expenses and amounts to EUR 5 million in 2008 and in 2009. At the moment of exercise, the employee will pay the exercise price of 29.14 EUR per share for the 2008 plan and 22.71 EUR per share for the 2009 plan, with physical delivery of the share. The share options are exercisable until 20 April 2015 for the 2008 plan and 19 April 2016 for the 2009 plan at the latest. The plans granted in 2004, 2005, 2006 and 2007 are still open. All the plans except the 2004 plan provide the beneficiaries with a right to the dividends declared after granting the options. n 2009, the Group gave the opportunity to its option holders to voluntary extend the exercise period of all the plans (except the plan 2009) with 5 years, within the guidelines as established by the law. For all the plans except the 2004 plan, in case of voluntary leave of the employee, all unvested options forfeit except during the first year, for which the first third of the options vests immediately and must be exercised within two years as from the date of leave. In case of involuntary leave of the employee, all unvested options vest immediately and must be exercised within two years as from the date of leave or as a minimum 3 years as from 1 January of the year following the grant date.

The evolution of the stock option plans is as follows: Number of stock options

Plan 2004 Plan 2005 Plan 2006 Plan 2007 Plan 2008 Plan 2009

Outstanding at 1 January 2004 0 Movements during the year 2004 0 Granted 1,128,500 Forfeited 0 Exercised 0 Expired 0 Outstanding at 31 December 2004 1,128,500--- Exercisable at 31 December 2004 0 - - - Movements during the year 2005 Granted 538,541 Forfeited -21,114 - Exercised -169,435 - Expired -- Total -190,549 538,541 Outstanding at 31 December 2005 937,951 538,541 - - Exercisable at 31 December 2005 210,255 0 - - Movements during the year 2006 Granted --608,928 Forfeited -5,583 -1,600 - Exercised -196,188 -5,562 -9,265 Expired --- Total -201,771 -7,162 599,663 Outstanding at 31 December 2006 736,180 531,379 599,663 - Exercisable at 31 December 2006 386,879 177,562 31,722 - Movements during the year 2007 Granted -- 475,516 Forfeited -5,255 -5,491 -5,341 -1,236 Exercised -140,292 -29,373 -81,096 - Expired ---- Total -145,547 -34,864 -86,437 474,280 Outstanding at 31 December 2007 590,633 496,515 513,226 474,280 Exercisable at 31 December 2007 590,633 341,739 211,182 30,742 Movements during the year 2008 Granted ----796,197 Forfeited -2,310 -3,800 -4,096 -5,070 - Exercised -269,776 -1,786 -9,358 - - Expired - - Total -272,086 -5,586 -13,454 -5,070 - Outstanding at 31 December 2008 318,547 490,929 499,772 469,210 796,197 Exercisable at 31 December 2008 318,547 490,929 354,825 183,044 21,584 Movements during the year 2009 Granted 1,008,021 Forfeited -6,750 -18,735 -180 -617 - - Exercised -15,911 -31,496 -11,777 - - - Expired ------Total -22,661 -50,231 -11,957 -617 - 1,008,021 Outstanding at 31 December 2009 295,886 440,698 487,815 468,593 796,197 1,008,021 Exercisable at 31 December 2009 295,886 440,698 487,815 334,171 297,619 3,621

Belgacom Financial Report 2009 - 187 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c The following assumptions were applied for determining the weighted average fair value of the stock options at grant date:

Plan 2004 Plan 2005 Plan 2006 Plan 2007 Plan 2008 Plan 2009 Option pricing model Binomial Black Scholes Black Scholes Black Scholes Black Scholes Black Scholes Grant Date 22/03/2004 25/04/2005 24/04/2006 23/04/2007 21/04/2008 20/04/2009 Dividend rights as from grant date no yes yes yes yes yes Contractual life of the options 7 years 7 years 7 years 7 years 7 years 7 years Extension of the contractual period during 2009 5 years 5 years 5 years 5 years 5 years - Expected life 5 (to 6) years 6 years 6 years 6 years 6 years 6 years Expected life for the extended plans 11 years 11 years 10 years 10 years 10 years - Exercise price (EUR) 24.50 29.92 25.94 32.71 29.14 22.71 Expected volatility (compared to peer group volatility) 27.50% 18.00% 21.00% 19.83% 27.00% 38.50% Expected dividend pay-out ratio 50% - 60% 50% - 60% 50% - 60% 50% - 60% 50% -60% 50% -60% Risk free interest rate Euro swap annual rate Euro swap annual rate Euro swap annual rate Euro swap annual rate Euro swap annual rate Euro swap annual rate Fair value of options granted (EUR) 4.29 4.15 4.02 6.25 6.68 6.90 Weighted average share price at exercise during the year (EUR): - 2005 32.96------2006 31.87 32.67 31.98 - - - - 2007 33.86 33.87 34.13 - - - - 2008 27.11 26.80 28.63 - - - - 2009 26.07 25.64 26.81 - - - Weighted average remaining contractual life (years) 345676

The volatility has been estimated based on the actual trading statistics of the share and taking into account alignment to certain peers, comparable in terms of risk profile.

Note 36. Relationship with the auditors The Group expensed for the Group’s auditors during the year 2009 an amount of EUR 1,813,367 for the annual audit mandate fees and EUR 618,210 for non-mandate fees. This last amount is detailed as follows: Network of EUR Auditor auditor

Other legal missions 202,406 54,083 Tax advice 6,000 10,000 Other missions 296,569 49,152 Total 504,975 113,235

Note 37. Segment reporting As from 1 January 2008 onwards, the Board of Directors, the Chief Executive Officer and the Belgacom Management Committee managed the operations of Belgacom Group based on the new client-oriented organization structured around the five following reportable operating segments:  The Consumer Business Unit (CBU) sells voice products and services, internet and television, both on fixed and mobile networks, to residential clients, mainly on the Belgian market;  The Enterprise Business Unit (EBU) sells ICT services and products to professional clients, whether they are independent workers, smaller firms or major companies. These ICT solutions, including telephone services, are marketed mainly under the Belgacom, Proximus and Telindus brands, on both the Belgian and international markets;  The Service Delivery Engine & Wholesale (SDE&W) centralizes all the network and IT services and costs (excluding costs related to customer operations and to the service delivery of ICT solutions), provides services to CBU and EBU and sells these services to other telecom and cable operators;  International Carrier Services (ICS), a joint venture between Belgacom and Swisscom Fixnet and with MTN as from 30 November 2009, is responsible for international carrier activities;  Staff and Support (S&S) brings together all the horizontal functions (human resources, finance, legal, strategy and corporate communication), internal services and real estate supporting the Group’s activities. No operating segments have been aggregated to form the above reportable operating segments. The Group monitored the operating results of its reportable operating segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance was evaluated on the following basis:  The operating income before depreciation and amortization and before non-recurring revenue and expenses; and  The capital expenditures. Group financing (including finance costs and finance revenue) and income taxes were managed on a group basis and are not allocated to operating segments. For the purpose of allocating resources to reportable operating segments, the Group monitored segment assets at the level of property, plant and equipment, intangible assets and goodwill. Other non-current assets and current assets are not allocated to operating segments. The accounting policies of the operating segments are the same as the significant accounting policies of the Group. Segment results are therefore measured on a similar basis as the operating result in the consolidated financial statements. Inter-company transactions between legal entities of the Group are invoiced on an arm’s length basis.

188 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Year ended 31 December 2008 (EUR million) Consumer Enterprise Service Staff & International Inter- Total Business Unit Business Delivery Support Carrier segment Unit Engine & Services eliminations Wholesale

Net revenue 2,187 2,628 339 1 756 - 5,911 Other operating revenue 15 15 14 21 2 - 67 Intersegment revenue 51 53 62 11 55 -232 0 TOTAL SEGMENT REVENUE 2,253 2,696 415 34 812 -232 5,978

Costs of materials and charges to revenue -553 -844 -93 -3 -685 204 -1,975 Personnel expenses and pensions -325 -408 -209 -160 -22 0 -1,124 Other operating expenses -282 -178 -179 -237 -41 28 -890

TOTAL OPERATING EXPENSES before depreciation & amortization -1,160 -1,430 -482 -400 -748 232 -3,988

TOTAL SEGMENT RESULT (1) 1,093 1,266 -67 -366 64 -0 1,990

Non-recurring revenue -8 - - - - 8 Non-recurring expenses --39 --54 - - -93

OPERATING INCOME / (LOSS) before depreciation & amortization 1,093 1,235 -67 -420 64 -0 1,905

Depreciation and amortization -105 -32 -496 -92 -20 0 -743

OPERATING INCOME / (LOSS) 988 1,203 -563 -512 44 -0 1,161

Net finance costs -109 Loss from enterprises accounted for using the equity method 0

INCOME BEFORE TAXES 1,053

Tax expense -254

NET INCOME 799

Non-controlling interests -1 Net income (Group share) 800 (1) Operating income before depreciation and amortization and before non-recurring revenue and expenses

As of 31 December 2008 (EUR million) Consumer Enterprise Service Staff & International Inter- Total Business Unit Business Delivery Support Carrier segment Unit Engine & Services eliminations Wholesale

Goodwill 1,026 1,085 - - - - 2,111 Segment assets 286 52 1,956 698 64 -3 3,054 Unallocated assets -- -- -2,617 2,617 Total assets 1,313 1,136 1,956 698 64 2,614 7,782

Year ended 31 December 2008 (EUR million) Consumer Enterprise Service Staff & International Inter- Total Business Unit Business Delivery Support Carrier segment Unit Engine & Services eliminations Wholesale

Capital expenditure 195 19 477 54 19 - 764

Belgacom Financial Report 2009 - 189 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Year ended 31 December 2009 (EUR million) Consumer Enterprise Service Staff & International Inter- Total Business Unit Business Delivery Support Carrier segment Unit Engine & Services eliminations Wholesale

Net revenue 2,344 2,451 287 2 838 - 5,922 Other operating revenue 15 14 17 20 3 - 68 Intersegment revenue 55 36 82 11 52 -236 0 TOTAL SEGMENT REVENUE 2,414 2,501 386 33 892 -236 5,990

Costs of materials and charges to revenue -723 -748 -72 -0 -749 206 -2,087 Personnel expenses and pensions -345 -379 -193 -166 -24 0 -1,108 Other operating expenses -297 -142 -185 -204 -40 29 -840

TOTAL OPERATING EXPENSES before depreciation & amortization -1,366 -1,270 -450 -370 -814 236 -4,035

TOTAL SEGMENT RESULT (1) 1,048 1,231 -64 -337 78 -0 1,955

Non-recurring revenue -- -- 74 - 74 Non-recurring expenses -7 -56 - 0 -1 - -62

OPERATING INCOME / (LOSS) before depreciation & amortization 1,041 1,176 -64 -337 151 -0 1,967

Depreciation and amortization -144 -27 -437 -77 -21 0 -706

OPERATING INCOME / (LOSS) 897 1,149 -502 -413 130 -0 1,261

Net finance costs -117

INCOME BEFORE TAXES 1,144

Tax expense -241

NET INCOME 904

Non-controlling interests -1 Net income (Group share) 904 (1) Operating income before depreciation and amortization and before non-recurring revenue and expenses

As of 31 December 2009 (EUR million) Consumer Enterprise Service Staff & International Inter- Total Business Unit Business Delivery Support Carrier segment Unit Engine & Services eliminations Wholesale

Goodwill 1,003 1,085 - - - - 2,088 Segment assets 256 43 1,952 659 134 -2 3,043 Unallocated assets - - - - - 2,320 2,320 Total assets 1,259 1,127 1,952 659 134 2,318 7,450

Year ended 31 December 2009 (EUR million) Consumer Enterprise Service Staff & International Inter- Total Business Unit Business Delivery Support Carrier segment Unit Engine & Services eliminations Wholesale

Capital expenditure 89 20 422 44 22 - 597

In respect of geographical areas, the Group realized EUR 4,534 million net revenue in Belgium in 2008 and EUR 4,495 million in 2009, based on the country of the customer. The net revenue realized in other countries amounted to EUR 1,377 million in 2008 and EUR 1,427 million in 2009. More than 90% of the segment assets are located in Belgium.

Note 38. Recent IFRS pronouncements The Group does not early adopt the standards or interpretations that are not yet effective at 31 December 2009. This means that the Group did not apply the following standards or interpretations that are applicable for the Group as from 1 January 2010:  Revised IFRS 3 (“Business Combinations”),  Amendments to IAS 27 (“Consolidated and Separate Financial Statements”) and to IFRS 2 (“Share based Payments”),  IFRIC 17 (“Distribution of Non Cash Assets to Owners”), and  Improvements to IFRS’s issued in 2009. This also means that the following standards or interpretations that are applicable for the Group as from 1 January 2011 or later are not applied yet:  IFRS 9 (“Financial Instruments”),  IFRIC 19 (“Extinguishing Financial Liabilities”),  Amendments to IFRIC 14 (“Prepayment of a Minimum Funding Requirement”),  Revised IAS 24 (“Related Party Disclosures”), and  Amendments to IAS 32 (“Classification of Rights Issue”). The Group will investigate the possible impacts of the application of these new standards and interpretations on the Group’s financial statements in the course of 2010.

190 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Note 39. Post balance sheet events On 4 January 2010, in order for Belgacom SA to become one fully integrated company, in the context of the FMS convergence process launched in 2006, the following transactions have been realized:  Capital reduction of Belgacom Invest Sarl by distribution of Belgacom Mobile SA shares to Belgacom SA;  Transfer of all shares held by Telindus Group SA in Telindus SA and Telindus Sourcing SA to Belgacom SA;  Merger by absorption of Belgacom Mobile SA, Telindus SA and Telindus Sourcing SA into Belgacom SA; and  Partial demergers for Belgacom Skynet SA and Telindus Group SA (for the national activity) into Belgacom SA. Since these transactions are 100% intra-group operations, they will not affect the Group’s financial statements in 2010.

Belgacom Financial Report 2009 - 191 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Auditor’s report

192 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c

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Extract from the Belgian GAAP non-consolidated financial statements of Belgacom SA under public law

Income Statement 194

Balance Sheet after Appropriation 196

Appropriation Statement 198

The financial information presented in this caption is an extract of the non-consolidated financial statements of Belgacom SA under public law as approved by the General Assembly on 14 April 2010 and as communicated to the National Bank of Belgium (in Dutch and French) in the month following the General Assembly. These financial statements were prepared in conformity with the accounting and reporting laws and regulations applicable in Belgium (“Belgian GAAP”). The Joint Auditors of Belgacom SA de droit public/ Belgacom NV van publiek recht have issued an unqualified opinion with respect to such non-consolidated financial statements. A full set of the financial statements of Belgacom SA under Public Law is available in the "investor corner" section of the Belgacom Group website (www.belgacom.com) as soon as they will be filed at the National Bank of Belgium.

Belgacom Financial Report 2009 - 193 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Income statement

(in EUR million - year ended 31 December) 2007 2008 2009

I. Operating income 2,956 2,889 2,881

A. Turnover 2,735 2,620 2,596 B. Increase (+); Decrease (-) in stocks of finished goods, 000 work and contracts in progress C. Own construction capitalised 174 198 178 D. Other operating income 46 72 108

II. Operating charges -2,328 -2,279 -2,300

A. Raw materials, consumables and goods for resale 218 251 237 1. Purchases 217 246 231 2. Increase (-); Decrease (+) in stocks 147 B. Services and other goods 966 917 919 C. Remuneration, social security costs and pensions 715 733 753 D. Depreciation of and other amounts written off 401 363 369 formation expenses, intangible and tangible fixed assets E. Increase (+); Decrease (-) in amounts written off 1-9-5 stocks, contracts in progress and trade debtor F. Increase (+); Decrease(-) in provisions for liabilities 6-9-2 and charge G. Other operating charges 21 33 28 H. Operating charges capitalised as reorganization costs 000

III. Operating profit 628 610 582

IV. Financial income 10 141 83

A. Income from financial fixed assets 0130 77 B. Income from current assets 321 C. Other financial income 795

V. Financial Charges -412 -527 -354

A. Interest and other debt charges 399 478 306 B. Increase (+); Decrease(-) in amounts written off 03434 current assets other than mentioned under II.E. C. Other financial charges 13 15 14

VI. Profit on ordinary activities before taxes 226 224 311

194 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c

(in EUR million - year ended 31 December) 2007 2008 2009

VI. Profit on ordinary activities before taxes 226 224 311

VII. Exceptionnel income 80 4 13

A. Adjustments to depreciation of and to other amounts 0 0 0 written off intangible and tangible fixed assets B. Adjustments to amounts written off financial fixed assets 0 3 12 C. Adjustments to provisions for extraordinary liabilities 0 0 0 and charges D. Gain on disposal of fixed assets 73 0 0 E. Other exceptionnel income 7 1 1

VIII. Extraordinary charges -90 -88 -79

A. Extraordinary depreciation of and extraordinary amounts 0 0 0 written off formation expenses, intangible and tangible fixed assets B. Amounts written off financial fixed assets 0 0 47 C. Provisions for extraordinary liabilities and charges -53 -72 -109 (increase+, decrease -) D. Loss on disposal of fixed assets 0 0 0 E. Other extraordinary charges 142 159 140 F. Extraordinary charges capitalised as reorganization costs 0 0 0

IX. Profit for the period before taxes 217 140 244

Ixbis. A. Transfer from deffered taxation 0 0 0 B. Transfer to deffered taxation 0 0 0

X. Income taxes 0 0 0

A. Income taxes 0 0 0 B. Adjustment of income taxes and write-back of 0 0 0 tax provisions

XI. Profit for the period 217 141 244

XII. Transfer from untaxed reserve 1 1 1 Transfer to untaxed reserve 0 0 0

XIII. Profit for the period available for appropriation 218 141 246

Belgacom Financial Report 2009 - 195 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Balance sheet after appropriation

(in EUR million - as of 31 December) 2007 2008 2009 ASSETS

FIXED ASSETS 14,874 15,130 11,129

I. Formation expenses 0 0 0

II. Intangible assets 66 89 131

III. Tangible assets 1,575 1,613 1,592

A. Land and buildings 207 200 191 B. Plant, machinery and equipment 1,134 1,360 1,363 C. Furniture and vehicles 21 24 23 D. Leasing and other similar rights 31 0 0 E. Other tangible assets 19 17 15 F. Assets under construction and advance payments 163 13 0

IV. Financial assets 13,233 13,428 9,406

A. Affiliated enterprises 13,233 13,428 9,404 1. Participating interests 13,233 13,311 9,404 2. Amounts receivable 0 117 0 B. Other enterprises linked by participating interests 0 0 2 1. Participating interests 0 0 2 2. Amounts receivable 0 0 0 C. Other financial assets 0 0 0 1. Shares 000 2. Amounts receivable and cash guarantees 0 0 0

CURRENT ASSETS 806 1,184 5,062

V. Amounts receivable after more than one year 2 2 1

A. Trade debtors 0 0 0 B. Other amounts receivable 2 2 1

VI. Inventories and contracts in progress 48 44 38

A. Inventories 48 44 38 1. Raw materials and consumables 27 23 21 2. Work in progress 0 0 0 4. Goods purchased for resale 21 20 17 B. Contracts in progress 0 0 0

VII. Amounts receivable within one year 525 564 4,516

A. Trade debtors 494 531 498 B. Other amounts receivable 30 33 4,018

VIII. Investments 186 493 452

A. Own shares 178 483 441 B. Other investments and deposits 8 9 11

IX. Cash at bank and in hand 27 24 3

X. Deferred charges and accrued income 18 57 52

Total assets 15,680 16,314 16,191

196 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c

(in EUR million - as of 31 December) 2007 2008 2009 LIABILITIES AND SHAREHOLDERS' EQUITY

SHAREHOLDERS' EQUITY 3,397 2,840 2,405

I. Capital 1,000 1,000 1,000

II. Share premium account 000

III. Revaluation surplus 0 0 0

IV. Reserves 2,397 1,840 1,405 A. Legal reseve 100 100 100 B. Reserve not available for distribution 202 514 478 1. In respect of own shares held 202 514 478 2. Other 000 C. Untaxed Reserves 16 15 14 D. Reserves available for distribution 2,079 1,210 813

V. Profit (loss) carried forward 0 0 0

VI. Investment grants 0 0 0

PROVISION AND DEFERRED TAXATION 1,005 924 814

VII.A. Provisions for liabilities and charges 999 919 809 4. Other liabilities and charges 999 919 809

B. Deferred taxation 6 5 5

LIABILITIES 11,278 12,549 12,659

VIII. Amounts payable after more than one year 5,288 4,509 4,822

A. Financial debts 5,288 4,509 4,822 1. Subordinated debentures 000 2. Unsubordinated debentures 1,867 2,067 2,067 3. Leasing and similar obligations 0 0 0 4. Credit institutions 3,062 2,442 2,396 5. Other loans 359 0 359

IX. Amounts payable within one year 5,854 7,917 8,046

A. Current portion of amounts payable after more than 1 year 729 1,279 46 B. Financial debts 3,959 5,490 6,906 1. Credit institutions 3,959 5,490 6,906 2. Other loans 000 C. Trade creditors 424 392 348 1. Suppliers 424 392 348 2. Suppliers bills 0 0 0 D. Advances received on contracts in progress 10 20 21 E. Taxes, remuneration and social security 140 160 169 1. Taxes 24 29 32 2. Remuneration and social security 116 131 137 F. Other amounts payable 592 576 556

X. Accrued charges and deferred income 137 124 105

Total liabilities and shareholders' equity 15,680 16,314 16,191

Belgacom Financial Report 2009 - 197 WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Appropriation Statement

(in EUR million - year ended 31 December) 2007 2008 2009

A. PROFIT (LOSS) TO BE APPROPRIATED 218 141 246

B. TRANSFERS FROM CAPITAL AND RESERVES 525 571 440

C. TRANSFERS TO CAPITAL AND RESERVES -7 -15 -7

F. DISTRIBUTION OF PROFIT -736 -698 -679

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WorldReginfo - 93c8fa12-fead-4185-bbb8-8d1e4f1abf9c Highlights General information