Annual report 2008

annual report

08

highlights > January 2008

• The EDS-Telindus consortium wins the new ICT contract of the Flemish administration. This outsourcing contract for seven years, worth an estimated EUR 582 million, is the most important contract ever awarded in Flanders.

> February 2008 • Belgacom announces the acquisition of Scarlet S.A. This deal required the approval of the competent competition authorities.

• The Belgian Post and Belgacom conclude an agreement whereby the former acquires 50% of Belgacom’s holdings in Certipost, to secure 100% ownership of the company’s shares.

• Belgacom announces the acquisition of Poncin Ltd, a telecom services reseller. Its aim is to strengthen the Group’s position in the Liège region.

> March 2008 • Belgacom and Proximus launch Together, a new calling package which allows customers to call free of charge on weekends.

• The Belgacom Group announces the appointment of Michel De Coster as Executive Vice President of the Enterprise Business unit.

• Belgacom ICS and Omantel reinforce their partnership by investing in the Europe India Gateway (EIG).

> June 2008

Visit Belgacom’s website: www.belgacom.com Belgacom’s Annual Report is also published in Dutch and in French.

• Belgacom breaks the silence and isolation by launching visiophone 9000 and the Video Talk service, both specially designed for the elderly and the deaf.

> October 2008 • Proximus improves internet browsing on mobile phones by offering the Google search engine on Vodafone live!

• Maurice Lippens retires from his post on the Belgacom Board of Directors.

> November 2008 • Belgacom celebrates 10 years of ADSL and highlights that it was one of the first operators in the world to launch this technology.

• Belgacom announces the issuance of a public bond in Belgium and the Grand Duchy of Luxembourg worth EUR 125 million.

• Belgacom International Carrier Services is elected Best Wholesale Carrier.

> December 2008

> May 2008

Ingvild Van Lysebetten Vice President Group Communication Bd du Roi Albert II/Koning Albert II-laan, 27 B - 1030 Brussels Tel: + 32 2 202 40 23 Fax: + 32 2 203 65 93 E-Mail: about@belgacom.be

• Belgacom renews the management of its subsidiary, Euremis SA, by appointing Ulrik Van Schepdael to the position of CEO.

> April 2008 • The Belgacom Group announces the appointment of Grégoire Dallemagne as Executive Vice President Strategy.

For further information, please contact

by offering its customers 14 channels and numerous movies in its video-on-demand catalog.

• Belgacom finalizes the acquisition of Scarlet.

channels in High Definition.

Nancy Goossens Vice President Investor Relations Bd du Roi Albert II/Koning Albert II-laan, 27 B - 1030 Brussels Tel: + 32 2 202 82 41 Fax: + 32 2 201 54 94 E-Mail: investor.relations@belgacom.be

• Belgacom enhances its high-definition television offer

• Belgacom concludes an agreement with Twentieth Century Fox to offer Fox movies in Belgacom TV’s on-demand catalog.

• Belgacom TV launches video on demand and TV

For financial information, please contact

> September 2008

• Belgacom acquires the broadcasting rights of the Jupiler League for the 2008-2011 seasons.

• Belgacom offers its customers more browsing convenience by increasing the speeds and monthly volumes of its ADSL subscriptions.

> July 2008 • Belgacom acquires Mobile-for, a company which specializes in pay-by-SMS parking.

> August 2008 • Belgacom strengthens its presence in Luxembourg and finalizes the acquisition of Tango, the second mobile operator in Luxembourg.

• Belgacom takes note of the IBPT’s decision to waive the tacit renewal of Proximus’s GSM (2G) license.

• Belgacom grants an interim dividend of EUR 0.50 per share.

> January 2009 • Scarlet announces its “strategic business plan” for 2009-2013, and the sale of its network.

> February 2009 • Belgacom launches Happy Time One, a calling package which combines fixed and mobile tele­phony and allows the customer to call free of charge in the evening and on weekends, from a fixed line or mobile phone, to all fixed and mobile numbers in Belgium.

> March 2009 • Belgacom presents its annual results and confirms the stability of its financial and operational profile.

• Belgacom acquires a 40% share in TUNZ, a company specialized in mobile payments.

annual report

08

highlights > January 2008

• The EDS-Telindus consortium wins the new ICT contract of the Flemish administration. This outsourcing contract for seven years, worth an estimated EUR 582 million, is the most important contract ever awarded in Flanders.

> February 2008 • Belgacom announces the acquisition of Scarlet S.A. This deal required the approval of the competent competition authorities.

• The Belgian Post and Belgacom conclude an agreement whereby the former acquires 50% of Belgacom’s holdings in Certipost, to secure 100% ownership of the company’s shares.

• Belgacom announces the acquisition of Poncin Ltd, a telecom services reseller. Its aim is to strengthen the Group’s position in the Liège region.

> March 2008 • Belgacom and Proximus launch Together, a new calling package which allows customers to call free of charge on weekends.

• The Belgacom Group announces the appointment of Michel De Coster as Executive Vice President of the Enterprise Business unit.

• Belgacom ICS and Omantel reinforce their partnership by investing in the Europe India Gateway (EIG).

> June 2008

Visit Belgacom’s website: www.belgacom.com Belgacom’s Annual Report is also published in Dutch and in French.

• Belgacom breaks the silence and isolation by launching visiophone 9000 and the Video Talk service, both specially designed for the elderly and the deaf.

> October 2008 • Proximus improves internet browsing on mobile phones by offering the Google search engine on Vodafone live!

• Maurice Lippens retires from his post on the Belgacom Board of Directors.

> November 2008 • Belgacom celebrates 10 years of ADSL and highlights that it was one of the first operators in the world to launch this technology.

• Belgacom announces the issuance of a public bond in Belgium and the Grand Duchy of Luxembourg worth EUR 125 million.

• Belgacom International Carrier Services is elected Best Wholesale Carrier.

> December 2008

> May 2008

Ingvild Van Lysebetten Vice President Group Communication Bd du Roi Albert II/Koning Albert II-laan, 27 B - 1030 Brussels Tel: + 32 2 202 40 23 Fax: + 32 2 203 65 93 E-Mail: about@belgacom.be

• Belgacom renews the management of its subsidiary, Euremis SA, by appointing Ulrik Van Schepdael to the position of CEO.

> April 2008 • The Belgacom Group announces the appointment of Grégoire Dallemagne as Executive Vice President Strategy.

For further information, please contact

by offering its customers 14 channels and numerous movies in its video-on-demand catalog.

• Belgacom finalizes the acquisition of Scarlet.

channels in High Definition.

Nancy Goossens Vice President Investor Relations Bd du Roi Albert II/Koning Albert II-laan, 27 B - 1030 Brussels Tel: + 32 2 202 82 41 Fax: + 32 2 201 54 94 E-Mail: investor.relations@belgacom.be

• Belgacom enhances its high-definition television offer

• Belgacom concludes an agreement with Twentieth Century Fox to offer Fox movies in Belgacom TV’s on-demand catalog.

• Belgacom TV launches video on demand and TV

For financial information, please contact

> September 2008

• Belgacom acquires the broadcasting rights of the Jupiler League for the 2008-2011 seasons.

• Belgacom offers its customers more browsing convenience by increasing the speeds and monthly volumes of its ADSL subscriptions.

> July 2008 • Belgacom acquires Mobile-for, a company which specializes in pay-by-SMS parking.

> August 2008 • Belgacom strengthens its presence in Luxembourg and finalizes the acquisition of Tango, the second mobile operator in Luxembourg.

• Belgacom takes note of the IBPT’s decision to waive the tacit renewal of Proximus’s GSM (2G) license.

• Belgacom grants an interim dividend of EUR 0.50 per share.

> January 2009 • Scarlet announces its “strategic business plan” for 2009-2013, and the sale of its network.

> February 2009 • Belgacom launches Happy Time One, a calling package which combines fixed and mobile tele­phony and allows the customer to call free of charge in the evening and on weekends, from a fixed line or mobile phone, to all fixed and mobile numbers in Belgium.

> March 2009 • Belgacom presents its annual results and confirms the stability of its financial and operational profile.

• Belgacom acquires a 40% share in TUNZ, a company specialized in mobile payments.

general information

key performance indicators

Financials Revenues (before non-recurring items) (in EUR million)

Workforce 2008 (in Full Time Equivalents)

Basic earnings per share (in EUR)

Year ended 31 December

3

2007

2008

6,065

5,978

0

8

Total revenue

6,065

5,986

EBITDA(1) before non-recurring items

2,077

1,990

EBITDA(1)

2,031

1,905

-774

-743

1,256

1,161

1

-109

1,258

1,053

-300

-254

958

800

Key figures (in EUR million) 2

Total revenue before non-recurring items CBU: 2,253 EBU: 2,696 SDE: 415 S&S: 34 ICS: 812

Net income (Group share) (in EUR million) 1,000

CBU: 5,979 EBU: 5,479 SDE: 3,421 S&S: 2,263 ICS: 229

800

Operating income (EBIT)

600

Net finance revenue / (costs)

400

Income before taxes

200

Tax expense

0 08

08

1,500

500

07

07

Depreciation and amortization

200 0

0

Investments (in EUR million)

1,000

400

Non-recurring revenue

Free Cash Flow (in EUR million)

800 600

1

07

08

0 07

08

Net income (Group share) (1) Earnings Before Interests, Taxes, Depreciation and Amortization.

“2008 proved to be a challenging year marked by competitive and regulatory pressure.

Nevertheless Belgacom met its 2008 full-year guidance on all key metrics and confirmed its solid operating and financial profile.”

Corporate name and legal form

Objects of the Company

The autonomous public-sector company Belgacom is a Société anonyme de droit public/Naamloze vennootschap van publiek recht (limited liability company under public law) as defined by the Law of 21 March 1991 on the reform of certain public-sector commercial undertakings and organized under the laws of Belgium.

As described in the Article 3 of the Articles of Association, the Company’s objects are:

The Company is subject to the statutory and regulatory provisions of commercial law applicable to companies limited by shares in all matters not expressly determined by (or by virtue of) the Law of 21 March 1991 or specific legislation of any kind.

Registered Office Belgacom SA under public law Bd. du Roi Albert II 27 B-1030 Brussels VAT BE 0202.239.951 Brussels Register of Legal Entities

Consultation of the issuer’s documents The public documents concerning the issuer can be consulted at the registered office.

Date of constitution The company was established as an autonomous public sector company, governed by the Law of 19 July 1930 setting up the Belgian National Telephone and Telegraph Company, the RTT (Régie des Téléphones et Télégraphes/ Regie van telegraaf en -telefoon). The transformation of Belgacom into a SA of public law was implemented by the Royal Decree of 16 December 1994, which was published in the Belgian Official Gazette on 22 December 1994, and went into effect on the same day.

1. to develop services within the field of telecommunications in Belgium or elsewhere; 2. to take all actions aimed at promoting, directly or indirectly, its activities or ensuring optimal use of its infrastructure; 3. to acquire participating interests in bodies, companies or associations – whether existing or to be created, Belgian, foreign or international, and public or private sector – that may contribute, directly or indirectly, to the achievement of its corporate objects; 4. to provide radio and television broadcasting services.

Disclaimer This communication contains forward-looking statements, including statements about the Company’s beliefs and expectations. These statements are based on the Company’s current plans, estimates and projections, as well as its expectations of external conditions and events. Forward-looking statements involve inherent risks and uncertainties and speak only as of the date they are made. The Company undertakes no duty to and will not necessarily update any of them in light of new information or future events, except to the extent required by Belgian law. The Company cautions investors that a number of important factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements.

Editor-in-chief: Ingvild Van Lysebetten Vice President Group Communication Bd du Roi Albert II/Koning Albert II-laan, 27 B - 1030 Brussels Conception and coordination: Frédéric Herzeele - Corporate Communication Manager Franck Vanbelle - Corporate Content & Publication Manager

Operationals

Design and prepress: Chris Communications www.chriscom.be Printing: Snel

2008 proved to be a successful year for Belgacom TV, with the customer growth exceeding previous year.

The Belgacom Group launched several initiatives to acquire new mobile customers in an increasingly competitive environment.

The launch of convergent bundled offers in the form of packs increased the success of multiplay.

Explore offers services and applications that allow professional customers to benefit from flexible, convergent solutions.

Pictures: Jean-Michel Byl, Reporters and Belgacom

Printed on certified

paper.

general information

key performance indicators

Financials Revenues (before non-recurring items) (in EUR million)

Workforce 2008 (in Full Time Equivalents)

Basic earnings per share (in EUR)

Year ended 31 December

3

2007

2008

6,065

5,978

0

8

Total revenue

6,065

5,986

EBITDA(1) before non-recurring items

2,077

1,990

EBITDA(1)

2,031

1,905

-774

-743

1,256

1,161

1

-109

1,258

1,053

-300

-254

958

800

Key figures (in EUR million) 2

Total revenue before non-recurring items CBU: 2,253 EBU: 2,696 SDE: 415 S&S: 34 ICS: 812

Net income (Group share) (in EUR million) 1,000

CBU: 5,979 EBU: 5,479 SDE: 3,421 S&S: 2,263 ICS: 229

800

Operating income (EBIT)

600

Net finance revenue / (costs)

400

Income before taxes

200

Tax expense

0 08

08

1,500

500

07

07

Depreciation and amortization

200 0

0

Investments (in EUR million)

1,000

400

Non-recurring revenue

Free Cash Flow (in EUR million)

800 600

1

07

08

0 07

08

Net income (Group share) (1) Earnings Before Interests, Taxes, Depreciation and Amortization.

“2008 proved to be a challenging year marked by competitive and regulatory pressure.

Nevertheless Belgacom met its 2008 full-year guidance on all key metrics and confirmed its solid operating and financial profile.”

Corporate name and legal form

Objects of the Company

The autonomous public-sector company Belgacom is a Société anonyme de droit public/Naamloze vennootschap van publiek recht (limited liability company under public law) as defined by the Law of 21 March 1991 on the reform of certain public-sector commercial undertakings and organized under the laws of Belgium.

As described in the Article 3 of the Articles of Association, the Company’s objects are:

The Company is subject to the statutory and regulatory provisions of commercial law applicable to companies limited by shares in all matters not expressly determined by (or by virtue of) the Law of 21 March 1991 or specific legislation of any kind.

Registered Office Belgacom SA under public law Bd. du Roi Albert II 27 B-1030 Brussels VAT BE 0202.239.951 Brussels Register of Legal Entities

Consultation of the issuer’s documents The public documents concerning the issuer can be consulted at the registered office.

Date of constitution The company was established as an autonomous public sector company, governed by the Law of 19 July 1930 setting up the Belgian National Telephone and Telegraph Company, the RTT (Régie des Téléphones et Télégraphes/ Regie van telegraaf en -telefoon). The transformation of Belgacom into a SA of public law was implemented by the Royal Decree of 16 December 1994, which was published in the Belgian Official Gazette on 22 December 1994, and went into effect on the same day.

1. to develop services within the field of telecommunications in Belgium or elsewhere; 2. to take all actions aimed at promoting, directly or indirectly, its activities or ensuring optimal use of its infrastructure; 3. to acquire participating interests in bodies, companies or associations – whether existing or to be created, Belgian, foreign or international, and public or private sector – that may contribute, directly or indirectly, to the achievement of its corporate objects; 4. to provide radio and television broadcasting services.

Disclaimer This communication contains forward-looking statements, including statements about the Company’s beliefs and expectations. These statements are based on the Company’s current plans, estimates and projections, as well as its expectations of external conditions and events. Forward-looking statements involve inherent risks and uncertainties and speak only as of the date they are made. The Company undertakes no duty to and will not necessarily update any of them in light of new information or future events, except to the extent required by Belgian law. The Company cautions investors that a number of important factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements.

Editor-in-chief: Ingvild Van Lysebetten Vice President Group Communication Bd du Roi Albert II/Koning Albert II-laan, 27 B - 1030 Brussels Conception and coordination: Frédéric Herzeele - Corporate Communication Manager Franck Vanbelle - Corporate Content & Publication Manager

Operationals

Design and prepress: Chris Communications www.chriscom.be Printing: Snel

2008 proved to be a successful year for Belgacom TV, with the customer growth exceeding previous year.

The Belgacom Group launched several initiatives to acquire new mobile customers in an increasingly competitive environment.

The launch of convergent bundled offers in the form of packs increased the success of multiplay.

Explore offers services and applications that allow professional customers to benefit from flexible, convergent solutions.

Pictures: Jean-Michel Byl, Reporters and Belgacom

Printed on certified

paper.

contents w w w .r un ar ou nd th e

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Who are we?

02 >

the Belgacom Group

04 >

letter from the Chairman of the Board

06 >

letter from the President & CEO

08 >

an evolving Group

10 >

strategy and innovation

Our assets 12 >

our customers

18 >

our people

24 >

our network

30 >

Consumer Business Unit

32 >

Enterprise Business Unit

34 >

International Carrier services

35 >

shareholder information

ee

t

m

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at

at

th

Our performance

M

Our responsibilities Consult our glossary at www.belgacom.com

39 >

corporate social responsibility

40 >

corporate governance

2

> who are we?

the Belgacom Group Combining its strong background as a telecoms operator and the multiple talents of its teams, Belgacom Group is the principal supplier of integrated telecommunications services in Belgium. As a result of our continuous investments in leading-edge technology, we are able to offer our clients high-capacity solutions on all networks, fixed or mobile.

Our mission We want to be the preferred provider offering intuitive end-to-end solutions; combining fixed and mobile telecom, IT and media; and empowering its customers to master and enrich their professional and private lives.

Our organisation Our operating structure is based on four pillars: > residential clients are taken care of by the Consumer Business Unit (CBU), > professional clients are entitled to the services of the Enterprise Business Unit (EBU), > networks and IT services are centralised within a single unit: the Service Delivery Engine (SDE); > Staff and Support (S & S) brings together all the horizontal functions that support the Group’s activities.

Alongside, Belgacom ICS, a joint venture between Belgacom and Swisscom Fixnet, is responsible for international carrier activities. Since 2005, it has been amongst the world’s top ten in this sector.

Our key brands

Discover our brands on www.belgacom.com

the Belgacom Group

Consumer Business Unit (CBU)

+65.7% increase in the number of Belgacom TV customers

Overview The Consumer Business Unit aims to be the preferred and easy to deal with communication and entertainment provider translating cutting-edge technologies into reliable and personalized solutions, enabling consumers to manage and enjoy their life on demand, any place, any time on any device.

Strategic Priorities > Deliver superior end-to-end customer experience; > Expand number of services per customer; > Offer solutions anywhere, any time, on any device; > Do everything ďŹ rst time right and optimize cost allocation.

Enterprise Business Unit (EBU)

+101,000 new EBU mobile customers

EBU mobile customers

Overview The Enterprise Business Unit aims to be the leading network-centric ICT partner offering professional customers end-to-end managed solutions, and to be a reference in its European footprint.

Strategic Priorities > Deliver superior service to keep low churn; > Cross-sell telecom, mobile data and network IT; > Shift to network-centric ICT; > Ensure proďŹ tability & industrialize solutions.

(in million) 1.2 1.0 0.8 0.6 0.4 0.2 0.0

07

08

3

Number of Belgacom TV customers (in thousands) 600 500 400 300 200 100 0 07

08

4

> who are we?

letter from the Chairman of the Board In 2008, the Belgacom Group continued to meet the challenges of convergence and to offer innovative solutions to its clients.

Despite a world economy disrupted by the financial crisis, the Group can be proud of its successes.

Innovation and development of our network remain at the heart of our strategic reflection. These are the guarantees of our future success.

By uniting our efforts, we will continue to meet the immediate and longer-term challenges for our Group.

With the strength of our strategy as a base, we confront the future with serenity, and we are ready to seize new opportunities while keeping our costs under control.

Putting clients at the centre of our actions 2008 saw the world economy badly hit by the financial crisis. Against this background, the telecommunications sector has not been spared, even if it has not been the worst affected. The Belgacom Group can nevertheless be proud of its success.

We have focused our efforts on reinforcing our service to our clients – making customer satisfaction one of the cornerstones of our strategy. It is in continuing our efforts to match expectations and needs of our customers as closely as possible that we will maintain our leadership position and reinforce our market shares.

A single strategy: convergence The operating successes recorded during 2008 demonstrate that our strategic vision is right.

“These successes are the proof that the convergence strategy backed by the Board and carried out by the management is the right one. Our vision is soundly based and allows us to exploit synergies and new centres of growth.”

Within the Group, we have continued to ensure that our structure evolves so as to work even more as an integrated group, and to offer our clients ever more advanced forms of convergence.

The acquisition of Scarlet reinforces our domestic footprint in Belgium, allowing us to address a new client segment that the Group has not until now reached. And Tele2 Tango provides us with a gateway to the Luxembourg market and offers our Telindus and Belgacom ICS subsidiaries attractive prospects for synergy on the professional and business market.

In the television sector, Belgacom TV continues to record successes with more than 500,000 subscribers and a content offer that continues to evolve.

These successes are the proof that the convergence strategy backed by the Board and carried out by the management is the right one. Our vision is soundly based and allows us to exploit synergies and new centres of growth.

Innovation at the heart of our reflections Throughout the last decade, the Group has steadily developed its networks and associated systems. The proof is that two-thirds of our revenue now

letter from the Chairman of the Board

come from products which did not exist fifteen years ago. This is the perfect demonstration of the dynamism that drives the telecommunications sector.

It also proves the innovative capacity of the Belgacom Group, and its ability to adapt in response to the needs of its clients.

Further examples of the Group’s capacity for growth are the development of its digital applications linked to e-health, or to payment via mobile phone, or that provide real-time information on energy consumption in homes and businesses.

The balance found 2008 was also the year that a new balance was found. The serenity that now reigns in the shared actions of the Board and the management is the fruit of an intense and constructive dialogue.

Our strategy of convergence and innovation, together with the operational successes of the Group, prove that we are capable of working, on a daily basis, in a way that allows Belgacom to continue to increase its market share.

In this connection, I would like to thank the members of the Board for the accuracy of their strategic decisions. Thanks also to the Belgacom management and to Didier Bellens, whose mandate has just been renewed. He and his team are working every day to make Belgacom a reference in the world of telecommunications.

If we are able to meet the challenges of the Belgacom Group, it is also thanks to the help of our social partners. Their readiness to cooperate makes it possible to develop social agreements, and to offer working conditions that meet the expectations of the various actors in the negotiations.

The satisfaction of our shareholders The confidence of the financial markets has been shaken by the financial crisis. The Belgacom Group has maintained its attraction in the context of a worldwide fall in share indices. Despite the difficult economic climate, the Belgacom Group has no intention of reviewing its policy on dividends.

The confidence that our shareholders have in us is of the greatest importance. Their satisfaction is for us the most telling proof of our success.

Our challenges for 2009 There is no doubt that 2009 will be difficult for all sectors of the economy.

The tangible effects of the crisis are going to continue to make themselves felt.

We must remain vigilant and continue to respect the strategic objectives that we have set ourselves. It is in continuing to combine discipline, rigour and cost control that we will maintain the solidity of our Group. That way, we will be best placed to take advantage of the opportunities generated by the crisis.

Unite our efforts and maintain trust If the Belgacom Group is today able to view the future with serenity, it is as a result not only of its strategy, but also because of the men and women who work every day for the success of the Group.

The efforts that our staff has made are huge, and the engagement of each of them contributed to the ongoing success, and allows our company to keep its place among the leaders.

This is why I particularly want to thank our personnel for their dedication and their flexibility.

Theo Dilissen Chairman of the Board of Directors

5

6

> who are we?

letter from the President & CEO

Our strategy is realising the Belgacom dream of full convergence and constant innovation. From these challenging times, Belgacom will emerge even stronger.

“Our ceaseless attention to convergence, innovation and added shareholder value – together with our resolute efforts towards integration – has positioned us to seize the opportunities of a rapidly-changing world.”

Credibility built on strategy 2008 proved once again that we have been implementing the right strategy. Thanks to our solid basis, we have emerged from a tough year in good shape. We are now ready to face a difficult 2009 with all of its challenges.

Our ceaseless attention to convergence, innovation and added shareholder value – together with our resolute efforts towards integration – has positioned us to seize the opportunities of a rapidly-changing world.

Our 2008 results demonstrate the success of our strategic focus on Belgium. Our strengths in our home market have delivered consistent revenues, despite the general downturn and despite tough new regulation in our sector. We continue to monitor our costs. Our cash flow is good, we have low debt liabilities, and our figures show that our range of products and services presents an increasingly attractive offer.

Beyond Belgium too, we have made the right choices. New priorities have been established in our international activities, with an emphasis on core markets and on ensuring the best match between high-quality service and our profitability. Telindus is now focused on five countries, and our enterprise unit is concentrating on six core countries which have the critical mass needed to grow a profitable business: Belgium, the Netherlands, France, Luxembourg, Spain and the UK. Our strategy is constructed on the medium and long term, and will not be derailed by short-term impacts. We are now a fully-integrated supplier, and this empowers us to provide the perfect match of products. We remove the stress when our customers are at work. We offer entertainment at home. We keep our customers in touch wherever they are. And our services range from e-health to remote payment of parking meters.

Every day we are closer to our dream of supplying an ever wider range of customers with an ever more precise solution for each of them.

letter from the President & CEO

Leading with convergence

The will to succeed

Convergence is key – offering more products and solutions to each customer, with a guarantee of ease of use: “Anywhere, any time on any device”.

We are now providing real convergence in a way that no other Belgian supplier can. Our ability to combine offers - of fixed and mobile telephone services, high-speed internet, business services, and entertainment – is the mechanism that permits us to stay ahead of the market. Novel forms of consumer interaction are now within reach – transferring music, photos and broadcasts to internet or mobile, staying in touch with what’s happening at home while away. Many innovative services like mobile payment, e-security or smart metering allow us to surprise the market and prepare the future.

Our strong position in our key markets is coupled with creativity and adaptability – and, crucially, with the determination to succeed.

Thanks to our network, which is one of the best in Europe, our customers can enjoy the best possible end-to-end experience: triple-play at home, offering video-on-demand and exclusive tv content. And the shift is continuing towards fully mobile services, opening up unparalleled opportunities for us to exploit our knowhow and reputation in integrated service platforms. As recognised world champions in iptv, we have an expertise that attracts potential partnerships for us at home and abroad, in technology and above all, in attractive and exclusive content.

Similarly, our service to businesses has gone far beyond providing telecommunications. Now we offer creative solutions to entire IT-related challenges at a price that companies appreciate. In 2009, our focus will be to win the loyalty of SMEs with little in-house technical capacity, by offering them a new simple integrated approach.

Tactical acquisitions at home and abroad in 2008 are built on the same logic of synergy and segmentation. The purchase of Scarlet allows us to tap into another segment of customers in Belgium, improving our competitive position in the mass market. The purchase of Tango in Luxembourg neatly complements our operations with Telindus and Belgacom ICS, and offers us new opportunities on the business market. We have also demonstrated that we can react sharply to the right opportunity if it makes sense in our strategy.

We will innovate and strike deals and make investments where it enhances shareholder value, because we are in a good position to seize opportunities and take ambitious initiatives even in an economic downturn.

This has always been our strategy.

But we know that nothing can be taken for granted. We know that to be credible is to be realistic. So in tougher times, we will become ever more efficient, and be able to do more and better with less. Alert to new opportunities, we will use all our expertise and energy to exploit them properly.

Where we were good last year, we must be better. And where we were not as good as we should be, we must be much better. We have a loyal workforce increasingly aware of the value they bring to our customers.

We will work together to emerge stronger than the competition.

At the same time, we will maintain our commitment to society at large.

Our own people in our own organisation are increasingly aware of our corporate social responsibility in every aspect of our work. For us, this is part of the creative approach we have to our entire business, and is consistent with our vision of long term sustainability.

2008 has shown the benefits of six years of steady progress and preparation. We can be proud of what we have done. Belgacom is secure. But we know how much more there is to be done. Our dream for 2009 is to provide our customers with fully-integrated communication and entertainment services across all platforms. We are determined to make that dream come true.

Didier Bellens President & CEO

7

8

> who are we?

an evolving Group

Five key countries for Telindus International The Belgacom Group refocused its ICT activities in 2008 through its international presence at the level of Belgacom ICS and Telindus subsidiaries.

From now onwards, Telindus is to concentrate its activities on five key countries (France, Luxembourg, Spain, the UK, and the Netherlands). In parallel, it has reached collaboration agreements with local partners in countries where it no longer has direct representation.

In addition, the Group wants to multiply the synergies between its two subsidiaries, and started in 2008 the first tests for launching its international platform, Explore. The objective is clear: to become a key partner at European level in ICT and in connectivity.

Scarlet, the story of a strategic acquisition reinforce its multiplay offer in Belgium. Alongside the “premium” offers of Belgacom and Proximus, Scarlet offers Belgian and international clients basic and no-frill services in fixed line, mobile and internet.

The Belgacom Group is continually monitoring possibilities to develop its activities on its domestic market. This development of its activities can only be considered within a strategy for creating value for the Group. Against this background, Belgacom announced on 15 February the acquisition of Scarlet S.A. The purchase was finalised on 28 November 2008 after approval by the competition authorities. They imposed some remedies, including the sale of its own network.

Scarlet will continue to exist as a separate and complementary brand and will continue its activities as a distinct entity within the Group, while benefiting from synergies in terms of network and operations.

The acquisition of Scarlet allows the Group to penetrate a new segment of the market and to

In addition, the current customers will continue to benefit from their contracts and advantages.

Meeting business needs more rapidly The Belgacom Group evolves in an environment of perpetual change. To stay competitive and to meet the challenges that arise every day, we have to continually develop the structure of the Group. The current economic environment forces us to increase our customer orientation, our flexibility and our profitability.

2008 allowed us to take a new step in the transformation of the Group. A further move towards full convergence was made possible by the integration of the Staff & Support division on 1 October 2008.

This project has allowed us to bring together all the transversal functions that support the activity of the Group (human resources, finance, legal affairs, strategy and corporate communications) and affected our staff working in Skynet, Telindus, Proximus and Belgacom s.a.

Thanks to this evolution, the Belgacom Group benefits from increased flexibility to reach the ambitious objectives it has set for itself.

an evolving Group

The Group gets stronger and the brands evolve Three questions to Vincent Crabbé, Belgacom Group Brand and Communication Director

Opening up to new markets…

Tango

The Belgacom Group has strong brands. Why is it necessary

The Belgacom Group remains alert to opportunities that allow it to expand its activities.

That is why we seized the opportunity to acquire the mobile brand Tango.

review our approach towards our brands, so as to translate this

Tango fits perfectly into the Belgacom Group strategy. This acquisition, finalised in August 2008, has allowed the Group to gain 10,100 broadband customers, 23,500 fixed line customers, and above all, 238,000 mobile phone customers, representing 39% of the Luxembourg mobile market.

In concrete terms, how do we make links between our

This is a significant acquisition which makes it possible to create opportunities for a better penetration of the professional market in Luxembourg thanks to the existing presence of Telindus International.

At the residential level, Proximus and Tango already work closely together, particularly in exchanging best practices on marketing and in putting in place services with added value.

to work on their repositioning ?

V.C.: It’s true that our brands are one of our major assets. The evolution of the Group’s strategic direction has pushed us to strategy into a coherent message for the consumer. That is why we decided in 2008 to capitalise on the strengths and values that our brands reflect and to define the links that connect them together. brands?

V.C.: Each of the Group’s brands has its own specific qualities, such as technological expertise, credibility or reliability. Each brand also has its own level of sympathy among its clients. The objective is to get our brands to interact so that they allow customers to share a common experience across all the products and services of the Group, while ensuring that each of them remains sufficiently competitive on its own market. Just like the members of a family, who are united by their surname, but who affirm their own personality through their first name and their behaviour, the Proximus and Telindus brands continue to offer their expertise while still affirming more clearly that they belong to the Belgacom family.

How has this evolution of our brands been seen in reality?

V.C.: The concrete translation has been studied by a multidisciplinary working group which produced its first output during 2008.

Bringing the brands together is in fact visible through all our communication initiatives and will be reinforced further through the launch of more converged offers. In addition, we have put in place a process to evaluate the perception of our brands and the links between them on a regular basis, to keep our branding strategy in line with the expectations of our customers and the evolution of the market. The evolution of the baselines for Belgacom (Belgacom takes your there) and for Proximus (And everything becomes so close) go in the same direction.

Fiber To The Home: first trials in Rochefort The Belgacom Group began its first trials in the deployment of Fiber To The Home (FTTH) in November 2008 in Rochefort.

Thanks to this pilot project, unique in Belgium, some fifty homes have the possibility of testing very high speed internet and High Definition television on four channels simultaneously.

A unique project which puts Belgacom once more ahead of the most innovative telecommunications operators in Europe.

At the end of this test, the Group will study the possibility of further deployments of this technology across wider areas of Belgium.

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strategy & innovation

Our strategic vision is based on four pillars which will guide our actions until 2013. In this chapter, we will deal with the definition of innovation within the Belgacom Group, and how we intend to translate it into our activities. You will find our vision of customer satisfaction, profitable growth and operational excellence in the chapter on “our assets”.

Mobile-for In July 2008, Belgacom acquired Mobile-for, the leading mobile payments provider in Belgium.

Mobile-for had a resounding success with its “parking by SMS” system, which has already been launched in several cities. Mobile-for has thrived on its SMS parking solution, which the company has successfully launched in a number of cities.

Belgacom’s takeover of Mobile-for fits in with its strategy to invest even more in the growing mobile payments market and expand its offer. In September 2006, Proximus and Mobile-for launched SMS (4411) parking in Antwerp. At the end of 2008, more than 35% of parking places in Antwerp were paid via SMS. Mobile-for also introduced SMS parking in Hasselt, Tienen, Lokeren, Wetteren, Turnhout, Diest and Bruges. Schaerbeek and Leuven will soon follow.

More info: www.mobile-for.be www.4411.be

Customer satisfaction

Become the preferred supplier

Profitable growth

Capture value through cross-selling

Innovation & transformation

Strengthen leadership through innovation

Operational excellence

Excel in efficiency and implement a lean model

Innovation, a must For the Belgacom Group, which is active in sectors which are constantly evolving, innovation is not just a buzzword but a state of mind. As a fundamental part of our company culture, innovation is not imposed but incorporated into our daily tasks. It is not confined to research and development labs, but drives each of our Group’s departments. It is the obligation never to rest on one’s laurels, to continuously reinvent oneself, and to experiment and be prepared to make mistakes. It is also the principle which has guided, guides and will continue to guide our ceaseless attempts to respond better to the needs of our customers, employees and shareholders.

Innovative products and services In the past, the Group demonstrated its capacity to innovate by launching products and services such as ADSL, which celebrated its 10th anniversary in 2008, mobile telephony and, more recently, Belgacom TV. These success stories were made possible by a visionary investment policy in the area of fixed and mobile networks. A strategy which seems to be paying off, since two thirds of our current revenues are generated by products or services which did not exist 15 years ago.

Today, the richness of our IDTV offer places us among

Be a major contributor to an e-inclusive, responsible and environmentallyfriendly society

the pioneers in this sector, and the scope of our unified connectivity platform for the professional market (Explore), which we hope to extend in the coming months, is unique in Belgium.

Everyone has a role to play But we have to go further. Before, innovation was mainly managed by specialized units, spread across the various Group entities. These different teams have now been merged into a single Innovation unit within the Strategy department. Its mission is to develop the products and services of tomorrow, as defined in the framework of our 2009-2013 strategic plan, and to promote an entrepreneurial spirit within the Group. After all, being innovative is not the prerogative of one department, but of all employees. Finally, the unit will increase the Group’s capacity to act more quickly and effectively.

Technology and infrastructures Our networks are the backbone of our technical infrastructures. The engineers of the Service Delivery Engine (SDE) entity continuously study technological developments to offer the best possible service and anticipate future needs. You will find more information on our infrastructure on page “our network” of this report (p. 24).

strategy & innovation

Smart Meter In today’s world, it has become crucial to control energy expenses. The “Smart Meter” project aims to provide substantial energy savings, thanks to a real-time control of usage.

In October 2007, the Belgacom Group and the energy supplier Nuon began “Smart Meter”, a pilot project with 150 households, for electricity and natural gas. The Group provides the “end-to-end” solution, including the intelligent measuring devices, the software and the application which can be consulted via the Internet, to determine the level of usage. In practice, the sensors installed in the households communicate in real-time with the data processing center via the Proximus network. Customers can consult their usage via a secure Web page, but can also receive alerts by SMS or e-mail. This allows any abnormal energy consumption or loss to be detected.

Via this monitoring, the energy supplier can optimize its production and offer the most suitable rate to its customers.

Actual projects for our customers Actions speak louder than words. Besides expanding our current portfolio of products and services, we also explore new areas in which our capacity to offer global solutions can provide added value for our residential and corporate customers.

CBU - residential segment For the residential segment (CBU), the priority is real convergence. To get closer to this objective, in 2009 we will offer the same content on three screens (PC, TV and mobile telephone), converged internet and interactive services on the TV screen, and the possibility to watch video-on-demand on your computer. We will also keep in mind the need to facilitate access to technology. Furthermore, the distribution of devices will play a more important role in our offer (netbooks and other flat screens), with a view to giving convergence an actual shape.

EBU - enterprise segment At the enterprise level, our objective is to develop end-to-end service platforms in various fields: smart metering of gas or electricity, electronic road pricing, machine-to-machine solutions, mobilization of sales or logistical applications, payment or sale of tickets via mobile phone - these are only some of the initiatives on which we are currently working. Our objective is to become a partner which can not only offer ICT solutions but can also speed up business by exploiting the assets of each individual.

Euremis nv Euremis, the competence centre for mobile applications within the Belgacom Group, has a service portfolio that covers sales and field force automation, mobile device management services and mobile collaboration services such as BlackBerry installation services.

The service goes well beyond a simple digitalization or mobilization of an existing business process, it offers instant and real-time information to all the people in the field such as stock information and appointment updates, but also the other way around. The sales and field management receives a real-time dashboard of all activities and detailed reporting.

More info: www.euremis.com

E-health Localizing patients and medical equipment in real time In the field of e-health, the Jan Yperman hospital is a good example of the added value which Telindus can provide. This hospital, founded in 1998 by the merger of three hospitals, has about 550 hospital beds, 1,000 employees and 100 doctors. Per year, this translates into 15,000 hospitalizations and 18,000 one-day hospitalizations. The project, which is a first in a Belgian hospital, consists of localizing patients and medical equipment in real time.

To do so, Telindus, assisted by its partners, uses the local area network, the Wi-Fi network and RFID tags.

1,000 tags are used for the real-time localization of equipment, 400 tags are equipped with an alarm button for hospital staff, and 40 tags allow you to check the patient’s temperature.

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CBU Principal achievements in 2008 CBU - residential market The Consumer Business Unit of Belgacom, which serves our residential clients, operates on a market of more than 4.5 million households in Belgium, or some 10.6 million people. In 2008, the level of Belgacom’s penetration of the residential sector remained high, with close to 80% of households possessing one or several fixed-line or mobile products from Belgacom. Belgacom managed to retain its number one position for most product lines in the competitive Belgian market, and to carve out a comfortable share of the Belgian digital television market.

The market in 2008 Among the highlights of 2008 was the impact of multiplay offers by competing telecommunications operators, combining telecommunications and television: Telenet launched “Shakes” (digital tv plus fixed and mobile voice and internet), Tele 2 and Scarlet offered packages (voice and internet), Mobistar combined internet with fixed and mobile voice, while Base offered fixed and mobile internet.

On the mobile market, the penetration of the number of active cards exceeded the 100% threshold (September 08: 106%). This growth is explained by the increased number of users with a second SIM card and making use of specific offers that match their usage (unlimited voice, unlimited SMS, international calls, mobile data, multiplication of professional and private applications)…

The market for internet access continued to grow, reaching a penetration level of 49% of Belgian households, principally via high-speed connections. In parallel, operators also developed mobile internet offers.

The market for digital television has more than doubled in 2 years, to reach a level of penetration of 31% of households in September 2008, against 12% in

September 2006. Cable penetration in Belgium is historically high, this is why it is easier for cable providers to convert their customers to digital television. High definition (HD) made its entry with the Olympic Games and a growing offer of linear channels, televised series and specialised packages.

Belgium: 4,575,959 households – 10,666,866 individuals in 2008 Penetration in percentage of households (H2 2008) Fixed line(1) Mobile only(2) PC(3)

71 % 29 % 67 %

Percentage of penetration in number of cards/habitant (H2 2008) Mobile(4) 106 % Penetration as conn./households in % (Q4 2008) internet(5) Broadband(6) ADSL(7)

50 % 49 % 29 %

> Continuation of our “6-packs” strategy through segmented offers; > Simplification and improvement of offers of access to internet and Belgacom TV; > Renewal of TV rights for live retransmission of the Jupiler Pro League for three further seasons; > Optimisation of our positioning on the residential market via the purchase of Scarlet; > Acquisition of Tele2 Luxembourg, principally active under the Tango brand.

Our response Belgacom successfully continued its “6-packs” strategy by proposing new Packs (internet – telephone– TV via fixed line and mobile), but also convergent offers of fixed and mobile for voice (Together) and for internet.

Notably, Belgacom internet clients were allowed to surf free during weekend and holidays on the mobile network (free weekend mobile internet).

Belgacom showed once again that it is the only operator able to offer fixed and mobile solutions for voice and internet access and for digital television.

Our position as the main challenger in the field of digital television was confirmed through the renewal of the football broadcasting rights contract (Jupiler Pro League) and by our CEO being voted “IPTV Executive of the Year” at the European Media Leaders conference held in London on 17 November 2008.

(1) Of residential households, internal study.

(2) Households without a fixed line, but with at least one mobile access.

(3) Internal study.

(4) Total of the mobile market.

(5) ISPA client connections/household.

(6) ISPA broadband client connections/household.

(7) DSL retail + wholesale consumers/household.

More info : www.belgacom.com

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The Belgacom and Proximus brands still in the lead Belgacom and Proximus are the most outstanding brands on the Belgian telecom market. Proximus has the strongest image of all mobile operators, according to a study by the communications agency “Brandhome”.

Segmented offers In 2008, the Belgacom Group boosted its range of offers adapted to specific segments of the population. In addition to the existing partnerships (mobiSud, RSCA Mobile, Plug Mobile, Sanoma, TMF Mobile), new agreements were reached with La Poste and MTV Networks.

Thanks to the latter, Proximus reinforced its position in the youth segment with the launch of its “post-paid” tariff plan, Generation MTV.

By conducting a survey of 1,000 Belgians, Brandhome gauged the impact of various telecom brands based on criteria such as price, customer satisfaction and quality of service. Proximus came in first place.

Regional offers such as Oufti (in the province of Liège) were also developed, notably in Hainaut and Limbourg.

Playing the local card, these offers make use of words and expressions anchored in the culture of the region concerned.

With a score of 42%, this brand also has the largest market share.

Sales channels The Group also invested in the development of its sales channels. New Discovery Stores were opened, while many of the Belgacom Shop sales points were renovated. Belgacom also acquired the outlets of Pierre Poncin, a telecommunications services supplier with five boutiques in the region of Liège. In addition, convinced of the significant potential of sales and support on line, Belgacom and Proximus continued their policy of investments in their internet sites. Belgacom.be and proximus.be underwent a face-lift to improve the user’s experience, and to facilitate consultation and purchase of products and services. The specific “web deal” offers were increased to reinforce the interest in on-line purchases.

According to this study, “one-stop shopping” (fixed and mobile telephony, TV and Internet services from a single supplier) is a big advantage for the customer, and has a strong impact on brand loyalty and the implications thereof. Only two brands, one of which is Belgacom, really hold this trump card.

This means that they hold the best cards for the future.

The Belgacom Group proactively helps customers who have difficulties in communicating, whether because of disability or age, by putting technology at their service.

We launched a video telephone solution comprising a Maestro 9000 videophone and the Video Talk service.

Thanks to this solution, people with hearing difficulties and elderly people can enjoy not only a more convivial mode of communication, but also a series of health services.

More info : www.belgacom.com

our customers

80%

of households have one or more fixed or mobile products of Belgacom

CBU priorities for 2009

More for their money

The acquisition of Scarlet and Tango

Our clients want more for their money, and all the more so because they consider telecommunications as an absolute necessity. They are therefore increasingly interested in obtaining clear added value. It is no longer just the brand that they look for, but what the brand promises in terms of quality and service. In line with our tariff policy, which aims to put the accent on quality and comfort, our offers for internet access and for Belgacom TV subscriptions have been improved. For the internet, both the volume and the up and download speeds have been increased to meet the growing needs of users – for sharing photos, or for downloading music or films. Because Belgacom understands that for the customer, it is not the technology which counts, but the use he can make of it, the names for our offers were changed and clarified, e.g. replacing Belgacom ADSL by Belgacom internet.

The Belgacom Group continually looks for potential strategic acquisitions that offer a better response to customers’ expectations and create additional value for the Group. From this point of view, the purchase of Tango and Scarlet will allow us, during 2009, to offer a complementary approach to the Group’s existing brands.

Offers for internet access via the mobile 3G network have also seen a reduction in rates to make them more accessible. The launch of the convergent offer Mobile Free Weekend follows that trend.

Our response

In offers for telephony, Belgacom and Proximus joined forces to provide an even better response to the customers needs for fixed and mobile telephones, offering the Together tariff plan. This convergent offer allows up to 600 minutes of free calls during the week-ends and national holidays, on the fixed and mobile networks.

At the end of 2008, nearly one million customers had already opted for this simple and innovative solution.

The intention is to become the reference player in Europe, concentrating, beyond Belgium, on five key countries: the Netherlands, France, Luxembourg, Spain and the UK. EBU will nonetheless continue to offer a series of international solutions in some sixty countries around the world via partnerships, notably with our international “carrier” subsidiary, Belgacom ICS.

High Definition In the same order of ideas, Belgacom TV saw its catalogue of on-demand content boosted thanks to partnerships with cinema majors like Twentieth Century Fox – without forgetting the arrival of High Definition, which offers an exceptional quality of image and sound.

Football fans have also been well catered for, thanks to the renewal of the contract for broadcasting of the football rights (Jupiler Pro League), which allows them to see all the matches of the Belgian first division championship.

EBU - business market The Enterprise Business Unit of Belgacom meets the ICT needs of each category of professional clients, from freelancers to major groups, and including the small and medium-sized firms. Convergence is progressing rapidly on the business market, eroding the frontiers between the worlds of telecommunications and IT, fixed and mobile telephony, and voice and data. EBU positions itself appropriately to be able to offer end-toend solutions that meet all the needs of its customers.

To reinforce its position on the ICT market, EBU has refocused its field of activities both geographically and in terms of products and services.

In terms of products and services, the EBU offer is being developed around a global solution, “Explore”, including a series of managed services (Unified Communications, fixed voice, mobile voice and data). Explore is a platform offering in particular teleworking and mobility services, monitoring applications and advanced security services. In the future, Explore will also make it possible to take advantage of the full range of services linked to telephony via IP. Another example of the use of the platform is the PubliLink 2.0 solution, a powerful intranet allowing communication between different public administrations.

Our central objective in the residential market is to lead our clients to discover a world where communication, information and entertainment are limitless. The Group aims to merit the confidence of its clients by providing accessible solutions where, when and how they wish.

These are our strategic priorities for the years to come: Customer satisfaction: > Fix the basics; > Each interaction counts; > Retain the customer; > Focus on high value; Profitable growth: > Cross-sell through segmented multiplay; > Develop new internal and external revenue sources; Innovation & transformation: > Optimize service in all channels & segments; > Deliver solutions anywhere, any time, on any device; Operational excellence: > Do everything first time right; > Optimize cost allocation.

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> our assets

10,000

attendees to the 35th ICT Symposium

EBU principal achievements in 2008 > Refocus on 6 key countries; > New simplified organisation; > Opening of Bizz Corners; > Acquisition of Mobile-for in the context of our innovation strategy.

EBU priorities for 2009 EBU aims to be the principal ICT partner, concentrating on networks, offering professional customers managed end-to-end solutions. EBU’s ambition is to become a reference in its field in Europe in the years to come: Customer satisfaction: > Deliver superior service to keep low churn; Profitable growth: > Cross-sell telecom, mobile data and network IT; Innovation & transformation: > Shift to network-centric ICT; Operational excellence: > Ensure profitability & industrialize solutions.

More details on these certifications under “about our Group” on our website www.belgacom.com.

To allow small and large businesses to concentrate on their principal activity, the Group also offers made-tomeasure outsourcing solutions.

A new simplified organisation To put its strategy into action, EBU has completely revised its organisation under the direction of Michel De Coster, recently named Executive Vice President.

This simplified organisation should make it possible to respond more rapidly and more efficiently to customers’ needs, allowing them to profit fully from the potential of convergence.

Vice President SME Kris Vervaet

Vice President COR Kris Verheye

Vice President International William Mosseray

Vice President Product & Solutions Hendrik Van De Velde Vice President Operational Excellence Bart Watteeuw

Large companies and institutions Our approach to meet the needs of our clients is from now on based on two pillars, large companies and institutions (COR), and smaller firms and independent traders (SME). One of the highlights among the many initiatives launched in 2008 in the Corporate segment was the organisation of the 35th ICT Symposium, in collaboration with the Broadband World Forum Europe.

This event allowed more than 10,000 people to discover the most innovative ICT solutions and to exchange ideas with the biggest players in the market.

Independents and SMEs Independents and SMEs are not forgotten, as is demonstrated by the opening of Bizz Corners, the dedicated spaces for this audience. The launch of the tariff offer Business Voice Fusion, allowing calls between colleagues in the same firm at a flat rate on both the fixed and mobile networks, aims at permitting SMEs too to benefit from the advantages of convergence.

Another highlight was the “Ultimate Make Over” competition, organised jointly by Belgacom and its partners with the aim of promoting ICT usage in SMEs in Belgium and Luxembourg. The price was a full makeover worth EUR 200,000 for the winner.

ISO certification As proof of its professionalism and competence, the Belgacom Group complies in a uniform manner with the requirements of several international norms through an Integrated Management System (IMS).

IMS currently comprises the following systems: > Quality Management System ISO9001:2000 for corporate clients; > Environmental Management System ISO14001:2004 for the Haasrode site; > Information Security Management System ISO27001:2005 for hosting in our data centres.

Innovation, a reality The acquisition in July 2008 of Mobile-for, a company specialised in mobile payment, perfectly demonstrates the Belgacom Group’s determination to invest in inno-

our customers

BIZZ corner In a bid to continuously improve the service offered to its customers, Belgacom has installed Bizz Corners dedicated to SMEs and the selfemployed in 43 of its points of sale.

These dedicated areas are easy to find, thanks to a special logo, and allow customers to contact a Bizz Expert directly.

vative solutions. The first concrete application of this new method of payment is the possibility to pay for parking by SMS in a dozen cities in the north of the country.

Our international activities On the professional market, the Group’s international activities have been further developed via five main international subsidiaries of Telindus, but also via Belgacom ICS.

The Bizz Experts have received thorough training, which enables them to give personalized advice. Do you have a question about using the Internet?

Do you want to test all the functions of a BlackBerry? Or does your company need a full telecom check-up? These are the sorts of questions that prompt SME managers to contact our Bizz Experts.

We realize that they are people with a busy schedule, who attach great importance to a professional service. We now offer them the possibility to make an appointment with an expert via the site www.bizzcorner.be. This site allows them to quickly locate the nearest Bizz Corner and check its opening hours and the name and telephone number of its expert.

Belgacom ICS Belgacom ICS, a joint venture with Swisscom Fixnet, is one of the world top 10 carriers in terms of mobile data services. It offers its services to 200 operators around the world. Thanks to its world presence, Belgacom ICS plays an important role in the international deployment of the Explore platform.

Belgacom ICS exploits an evolving European network, 4 international switches, a share in 70 undersea cables with more than 90 points of presence (PoP) in 55 towns and 33 countries and 9 networks in metropolitan zones (Amsterdam, Brussels, Düsseldorf, Frankfurt, Geneva, London, New York, Paris and Zurich). Belgacom ICS has five offices around the world (Brussels, Berne, New York, Dubai and Singapore).

Telindus International As explained elsewhere, the Group’s international ICT activities have been re-thought and Telindus has now refocused its presence in five key countries in Europe.

More information: www.bizzcorner.be

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Our teams in 2008 A company in constant change

The “One Group” philosophy

The world of telecommunications is evolving rapidly and the Belgacom Group must provide itself with the means to adapt rapidly and to anticipate change.

This integration has enabled us to reinforce our efficiency by optimising some of our resources and our tools within the Group. For example:

This is why the human resources department aims to keep the Group right up amongst the most attractive companies on the job market. Here we already have an advantage because of the sector we work in. Innovation and development of new technologies linked to the world of telecommunications offer a range of very various functions with numerous career perspectives.

> We now have a more efficient recruitment system which is common to the entire Group.;

However, the Group does not concentrate only on that aspect. It aims also at operational excellence within the human resources department, coupled with the control of costs.

Operational excellence: added value for the company 2008 made it possible to move to a new stage in the transformation of the Belgacom Group. A further step towards convergence, which in particular saw the integration of the Staff & Support business unit on 1 October 2008. This project concerned essentially the staff working in Skynet,Telindus, Proximus and Belgacom s.a.

The integration of our teams is an element of the strategy announced by the Belgacom Group at the end of 2006. The aim is to bring our assets together so we are better able to adapt to the market and to future challenges. This integration gives the Group several advantages. It allows us to optimise our working methods, to share our knowledge and best practices more easily, and to create new synergies within the Group.

It also offers economies of scale within the Belgacom Group.

> Our “careers” site brings together all the Group’s job offers. This move has helped us consolidate our image in the outside world, and at the same time offer candidates a better overall view of the perspectives our company provides; > Since June 2008, a new shared platform allows us to manage our training offers through a single catalogue. This is an invaluable asset to an integrated training strategy covering our entire workforce. We can simultaneously manage both classic training and e-learning.

Controlling costs The costs of human resources are also the object of particular attention. To maintain its leading position in the telecom market, the Belgacom Group has continued to pursue the policy it has followed for several years, which consists of optimizing the allocation of resources in order to improve efficiency and control costs.

> Human capital remains our principal strength; > New company values have been put in place to support the Group’s strategy, to build a common identity and to stimulate internal cohesion and collaboration; > We target our recruitment policy on specific profiles and orientated our staff development; programmes towards the competences that will be required in the future; > We improved our operational excellence by integrating our Staff & Support division into a single legal entity.

The optimization of staff numbers is carried out in consultation with the social partners, in particular through the implementation of acceptable social programs.

As part of the optimisation of Group resources, a policy of external mobility has been negotiated with the trade unions, allowing statutory employees to pursue their career in federal public services. By the end of 2008, nearly 220 people had taken this opportunity.

More info: www.belgacom.com

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> our assets

“The new values enable us to give each employee an identity and a reference that he/she can relate to.”

Targeted recruitment will continue

Training

In a group that is going through a process of transformation, certain competences inevitably tend to become less required, but in parallel other key profiles have to be recruited.

In an ever-changing sector, training courses which enable employees to familiarize themselves with new technologies, products and services are indispensable.

More than ever, a cornerstone of our offer is customer orientation, whereby we aim not only to meet customers’ requests correctly and efficiently, but also strive to understand their needs so as to offer them an appropriate solution, thus ensuring their loyalty.

The Belgacom Group consequently follows a policy of targeted recruitment and continues to depend on the labour market and on new talent for many of the functions that are essential to the proper functioning and development of the company. In this context, the Group has focused on recruiting sales staff for its call centres and sales points, and on people with ICT skills.

In 2008 the Group hired 892 new external recruits, and the level of mobility within the Group was about the same. In total, therefore, the Belgacom Group saw more than 1,800 movements linked to various selection processes.

We are also actively committed to the recruitment of young high-flyers through our “Young Potential” programme. As a result, in 2008, 45 young potentials were recruited in different universities in Belgium.

In view of the success of this programme, we will renew the initiative in 2009. It is worth noting, in this respect, that some of the young people we have recruited over recent years already hold positions of responsibility in our hierarchy.

In addition to these offers, an extensive support program for the transformation of the teleshops (Shop Efficiency) was also launched in 2008. To meet today’s challenges and those of the future, the Group is aware that it is crucially important to consolidate skills linked to relational aspects (“soft skills”) and management.

Skills Measuring skill levels and needs was developed in 2008 through, in particular, the creation of “learning centers” (a key skills evaluation programme aimed at young talents) and through the implementation of a pilot project for modelling sales skills.

Perspectives for 2009 Technical training and training in products and services and customer focus will remain high on the list of priorities for 2009.

We are also seeking the best partnership formulas with specialized schools to develop links between future graduates, training, and the jobs on the ground that we can offer.

Training for experts will also be a priority in 2009. The revision of development programmes for staff at expert level started in 2008 with the creation of “Master Classes”.

Development of our staff

Modelling and measuring skills will also remain a priority and will concern all the sales forces of EBU.

Obviously the policy of the Group is not only limited to recruitment. On the contrary, Belgacom’s objective is to continue its efforts in training so that its staff remains motivated and competitive.

2009 will also see the setting up of a vast programme of training in leadership, via modules adapted in relation to the level of the employee (4 levels of leadership are

our teams

Our values

60

different nationalities in the Group

Three new values have been chosen by the Group as supports for our strategy: “Respect, Can do, Passion”. Born out of wide consultation conducted during 2008 with members of staff, these values have made it possible to highlight certain of our strengths and ambitions.

Proud of our respective pasts in each entity, we have started from the principle that the diversity of our experiences was an asset and that we had at our fingertips all the ingredients needed to maintain our position as a leader on the market.

Three strong concepts emerged, in which each member of staff should be able to find him or herself. This is the special quality of our new values. To bring everyone together, to give to each employee – whatever his or her origin and from whichever subsidiary – a direction, an identity and a context in which he or she can feel comfortable. In time, these values are destined to become an essential element in belonging to the Group.

The Belgacom Group has put in place a series of concrete actions which will be unfurled throughout 2009 through a communication campaign. The aim: to inspire us so that we can all live these values!

taken into account) and integrating the Group’s new values.

New values Following reflections initiated in 2008, a process which delivered a rich crop of insights, the Belgacom Group has just adopted three new key values, around which all personnel are invited to gather: “Respect”, “Can Do” and “Passion”. An awareness campaign will be run in 2009 to alert and invite staff to make these values their own and to act in accordance with them.

The concern for good communication The aspirations to a strong identity and a sense of belonging have to be backed by internal communications that allow each employee to perceive the importance of his or her place in the company, while at the same time providing the best information about the evolving company context.

To achieve this, many communication tools have been created (intranet, internal mailings, posters…), but the company magazine indisputably plays a major role right across the Group. Created in 2007 to appeal to all the Group’s staff, the audience for “You-nited” has continued to grow in 2008. It now has a supplementary version in English, which is particularly valuable for conveying information directly to Belgacom Group staff working in our international subsidiaries.

In addition to the traditional tools already mentioned, internal communication has also started to put in place the future communication tools of the Group. In 2008, the first milestones were erected on the road to greater interactivity, to socialisation à la carte, and to the use of media such as television.

More info : www.belgacom.com

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> our assets

Integration Staff & Support In completing the integration of the horizontal functions that support the activities of the Group, Belgacom has given itself the means to increase its efficiency and its response capacity, as well as improving its ability to meet the challenges of the future.

Workforce 2008 (in Full Time Equivalents)

Statutory: 44.4% Contractual: 55.6%

A company on the human scale The credo of diversity

This further move towards operational excellence is, for the Group’s employees, a first step towards convergence among its organisations. Thanks to this integration, improved support is available for our teams in marketing, sales, engineers or technicians.

Belgacom remains more than ever convinced that creating a diversified working environment helps stimulate creativity and innovation, makes leadership more effective and generates a richer professional experience for its staff.

This integration, which concerns the human resources, finance, legal affairs, strategy and communications departments, has been in effect since 1 October 2008. This breakthrough for the Group has been achieved, as is the custom, in close collaboration with the unions on the basis of transparent and constructive dialogue.

> The organisation of a special ”ICT = FUN” day, to familiarise employees’ children with the world of ICT, and to attract young women into trades that have traditionally been male-dominated;

In order to promote diversity at all levels, Belgacom has developed various initiatives throughout the year, notably:

> The organisation of focus groups bringing employees together in order to obtain their feedback on the diversity policy and on the related internal projects; > The establishment of a mentoring programme specially dedicated to a group of women.; > The development of an e-learning module on the theme of diversity within our teams, which was distributed to all Group employees; > The organisation of events related to the development of women’s networks, in collaboration with Winc; > Collaboration with Interface 3, aimed at people from groups with little formal schooling, and offering them a training, an internship, and even a job if the experience works out well.

The high point of 2008 was the presentation by Joëlle Milquet, Deputy Prime Minister, of the renewed “Equality–Diversity” label to Jean-Marc Verbist, Vice

our teams

Staff evolution (in Full Time Equivalents) 20,000 15,000 10,000 5,000 0 05

06

07

08

President Human Capital. The label rewards companies which have actively engaged in celebrating and introducing diversity and equality in their economic, social and commercial strategies. This label was awarded to Belgacom for the first time in 2007, by the Minister of employment and of equal opportunities. Although it applies to the period 2007-2010, the winners are audited each year by a committee which verifies the quality of the engagements made.

Enjoying leisure within the company It is now three years since the initiators of “The Pulse” proposed to all Group staff an impressive choice of courses and workshops accessible after working hours.

The initiative is particularly appreciated by our employees, and benefits from Belgacom support. 2008 saw remarkable achievements such as the first theatre shows in public, the recording of a CD, and several public performances by the “El Coro” choir.

Balance, development and diverse advantages Proud of its success in the area for several years now, the Belgacom Group continues to multiply the initiatives designed to promote a balance between the private and professional lives of its staff. The Work Life Unit organised several major events for the employees: the Belgacom Group Fun Day 2008 (which brought together 11,500 employees and their families), and the end-ofyear party for employees’ children (4,803 children from 0 to 12 years came in 2008).

Alongside these initiatives, many other actions demonstrate the Group’s concern for the health and wellbeing of its staff. For example:

> The launch of the multi-annual campaign, free of charge, to alert, prevent and screen staff for health risks was given an enthusiastic reception with more than 50% of the target public taking part in 2008 (2,225 inscriptions); > The Brussels 20 km race. Belgacom supports its staff and their families in this legendary sporting event.

The programme aims to help develop relations across the company, and to increase the sense of conviviality and of belonging to a working community; > Baby-sitting services at home for children who are sick; > Day care facilities for the children of employees during the 2008 summer holidays (7,038 days in a day centre for children for the entire Belgacom Group).

“To be able to take on future challenges, it is essential to consolidate relational and management skills.”

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> our assets 24

our network

can do innovation

&

Our achievements in 2008 From network to infrastructure Today, it makes more sense to speak of network infrastructures and IT. Nowadays, the telecoms infrastructure is an almost inextricable mix of cables, fibre, servers, routers and IT software to ensure they all run properly. The old distinction between network and IT is gradually disappearing as these domains become increasingly interdependent.

Following the convergence strategy The Belgacom Group continues to successfully carry forward its strategy of convergence, thanks to the superior quality of its fixed and mobile infrastructures. The investments by our Service Delivery Engine (SDE) entity in networks and IT allow the Group to stay abreast of innovation and to anticipate its clients’ growing needs for greater bandwidth.

In Belgium, ADSL coverage extends to 99.85 % of the population. This has been made possible through the use of a technology known as “Reach Extended ADSL”, which allows coverage across long distances on a classic copper connection. This exceptional figure is the result of an investment policy initiated in 1999 by the Belgacom Group, aimed at offering each citizen the possibility of access to a high quality broadband connection.

To offer its clients an even higher surfing speed, Belgacom started in 2004 to deploy VDSL technology as part of its Broadway project. By the end of December 2008, VDSL2 covered 66.2 % of the population. In four years, the Group laid 13,337 km of optic fibre and linked in 16,193 optic platforms.

The goal we have set is to cover 80% of households with VDSL2. With an actual speed reaching up to

20 Mbps, the VDSL2 network meets the need of customers for fast connections and for High Definition television.

Mobile Infrastructure Our infrastructures for mobile telephony have also been significantly improved, both in quality and capacity.

The 2G network (voice) today covers almost the whole of the Belgian population (99.8%). As for the 3G infrastructure for high-speed data transfer, the Group provides coverage of 90.2% of the population. Moving data faster is also a rapidly-evolving factor. The technology for data upload (HSUPA) reaches 2 Mb/s, and data download technology (HSDPA) makes reception speeds of up to 7.2 Mb/s possible. These increases have been made possible principally by the upgrading of our installations.

> We continued to develop and simplify our infrastructures to reach our objective of convergence; > Whether fixed or mobile, these infrastructures constitute the nerve centre of our activities and provide the connectivity which is indispensable to the products and services we offer to our customers; > We are continuing our efforts to obtain a stable and fair regulatory regime.

Our teams have also focused on high-speed access for customers on the move, whether via the 3G Broadband Vodafone Mobile Connect Card or a USB modem.

All these improvements, as well as the increased performance of our mobile network, should allow us in the coming months to witness a real boom in offers linked to data transfer and the use of mobile TV.

High Definition television At the end of December 2008, no less than 86.6 % of Belgian households had access to Belgacom TV. The continued deployment of VDSL2 technology considerably increases the capacity of our network and offers many of our clients the possibility of watching Belgacom TV on two television sets (“second stream”). The total base of Belgacom TV clients reached, at the end of December 2008, 506,000, of which 65,000 were second stream customers.

For more info, www.belgacom.com

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> our assets

86.6%

of households have access to Belgacom TV

EUR

470

million

investments in the Broadway project

Virtualisation and Green IT But one of the major advances in 2008 was the launch of High Definition (HD) television.

With this, Belgacom TV has since 14 April 2008 been offering its clients HD television, allowing them to benefit from a quality of image five times higher than currently available with digital television.

The HD offer, accessible to more than 64 % of the population at the end of December 2008, includes video on demand as well as television channels. In addition it allowed our clients to watch, for the first time, the Olympic Games in High Definition.

The Group continues to invest Until now, the whole of the Broadway project has required investments of around EUR 470 million, of which EUR 91 million was spent in 2008.

The Group also continues to reflect on the future development of its technical infrastructure. This future could see the emergence of fibre connections right into the homes of customers. Small-scale tests are currently being conducted in Belgium.

Belgacom was the first mobile operator in Belgium to invest in 3G/UMTS technology, and has continued the development of its infrastructure during 2008.

Investments in 3G rose to a total of EUR 446 million.

In 2008, the Service Delivery Engine (SDE) division also launched a transformation programme of its activities “Move to All IP” (MaIP), aims at a complete reorganisation of IT, networks and operational processes. This transformation will eventually allow the Group to continue to provide a higher quality of client experience, to offer more and more convergent products, and to respond to growing operational complexity. To achieve this, Belgacom put into effect in 2008: > An IMS (IP Multimedia Subsystem) platform designed to support voice services in the future. This IP platform will eventually replace our telephone exchanges, and will in the future be the heart of the convergence between fixed and mobile telephony;

Virtualisation is of the greatest importance for the Belgacom Group. It allows a single server to function simultaneously with several separate operating systems and applications. Concretely, a single server today fulfils the role previously allocated to several machines.

At the end of 2008, 35% of Belgacom Group’s Windows server park had already been virtualised. There are many advantages to this technique.

For a start, the total cost (TCO) of a virtual server is 70% lower than for a physical server. Virtualisation also makes considerable space savings possible, since one physical server can support an average of up to 25 virtual servers. In addition, electricity consumption is reduced. A virtual server is ten times less energy-hungry than a physical server. Virtualisation is one of the initiatives we have taken in the context of our Green IT programme.

It allows us to take another step towards responsible informatics and also significantly improves the Group’s ecological footprint.

our network

> A new computer application which will be gradually brought into service to support our various sales channels for fixed and mobile products. The first benefits should become visible in 2009; > A new tool to support our teams on the national and international ICT markets.

Providing customers with a highquality experience In our desire to improve our customers’ experience, the Belgacom Group developed during 2008 a technology known as “Zero Touch Configuration” for installing our broadband lines. Thanks to this technology, the modem is automatically configured as soon as it is connected and turned on, without any manual intervention. And thanks to a remote management platform, the home gateway immediately telecharges the software configuration required to support the services requested by the client (internet, TV, Voice over IP). In addition, the data needed for access to internet and Voice over IP services are automatically transmitted to the client’s modem through a secure link.

In parallel, other initiatives have been put in place to improve the client experience without losing sight of the basis of operational performance. To simplify life for our clients, more precise waiting times have been introduced, for instance, for visits by one of our technicians.

The SDE teams have also put in place a notification system by text message, to alert clients about the progress on their orders, or to check they are satisfied after a product has been installed.

Because employee satisfaction and competence are important drivers of client satisfaction, specific staff coaching programmes have been run, focusing on concepts such as “tone of voice”, “signing your work” and “first time right”. Operational performance is part of the overall client experience and service. Our teams managed to keep to deadlines and service levels in our call centres, even during promotions, with the consequent increased workload.

Evolution of the regulatory framework in 2008 Analysis of the regulatory framework at European level In 2008, the European Commission’s 2007 proposals for a reform of the current regulatory framework entered the co-decision procedure between the European Parliament and the European Union Council. The principal points of divergence between these three institutions relate notably to the creation and the statute of a new European telecommunications agency and to the Commission’s powers in respect of remedies imposed on operators holding a significant market power. The Commission expects this new framework to be agreed in 2009, so that it can come into effect in 2010-2011.

Impact on the fixed-line market Fixed line interconnection On 26 November 2008, the Belgian regulatory authority, the IBPT took a decision freezing Belgacom’s fixed termination rates until the end of 2010. The IBPT also decided not to continue with its plans to introduce a capacity-based tariff schedule for interconnection rates.

Other operators are authorised to charge prices 15% higher than Belgacom’s, with the exception of Telenet and Versatel, which were authorised to invoice a surcharge of 370% in 2007. This price supplement was reduced to 190% in 2008 and to 15% on 1 January 2009.

Local loop services (unbundling and bitstream access) On 22 October 2008, the IBPT took a decision on access tariffs for binary signal (charge for line rental and ATM transport) applicable from 5 November. The cost of the rental for an ADSL line rose from EUR 4.95 to EUR 5.02, but the IBPT refused to apply a price surcharge for ADSL2+. For ATM transport, the IBPT established a new tariff structure with significantly lower prices, particularly for higher bandwidths.

“Virtualisation offers many advantages for our customers, such as a considerable reduction in the delivery time for the installation of servers.”

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> our assets

“Our objective is to provide 80% of households with VDSL2 to enable them to benefit from highdefinition television.”

On 18 January 2008, Belgacom submitted a complete reference offer for an ADSL2+ bitstream access. This offer has been available for alternative operators since July 2008.

A reference offer for wholesale broadband VDSL2 was submitted to the IBPT in the fourth quarter of 2008. The IBPT decision on VDSL2 tarification is expected in the second quarter of 2009. This offer has been available for alternative operators since 7 November 2008. On 20 March 2008, Belgacom appealed the IBPT decision requiring the opening of its VDSL2 network.

The IBPT defined in November 2008 accompanying measures for the progressive suppression of Belgacom’s LEX, in the context of the deployment of its NGN/NGA network. These measures concern, among other things, transparency about modifications to the network, and the timetable for closing the access sites.

Wholesale leased lines On 3 September 2008, the IBPT took a decision on the tarification of the regulated wholesale leased lines, with the result that prices fell heavily in January 2009.

Retail tariffs On 25 July 2008, the IBPT fined Belgacom EUR 3.09 million for not having fully passed on rate reductions of mobile termination rates into retail calls from fixed to mobile. Belgacom has now passed on all the rate cuts of mobile termination, and its rates for calls from fixed to mobile are now up to 30% cheaper than those of the alternative operators. Belgacom has appealed the decision to impose a fine.

At the level of the mobile market Mobile termination In December 2007, the IBPT had taken a new decision on the future regulation of mobile termination rates.

This new decision, in line with the harsh comments of the European Commission and the national competition authority, was intended to reduce the proportional differences between termination rates applied by the three mobile operators. Following the suspension of this decision by the Brussels appeal court, the IBPT took a new decision on 29 April 2008, reinstating the rates initially fixed in August 2006 for 2008, thus reintroducing significant asymmetries (+ 25% with Mobistar and + 59% with Base).

In 2008, the IBPT started to revise the mobile termination rates. It envisages communicating the new price levels for 2010-2012 by the end of 2009. These will be influenced by a new European Commission recommendation expected at the start of 2009. The Commission encourages tariff symmetry, as well as lower rates.

Extension of the regulation on international roaming On 23 September 2008, the European Commission adopted a proposal to amend the June 2007 Regulation.

The Commission is proposing further reductions for the charges linked to voice roaming, at the wholesale and retail level, between 2009 and 2012, as well as the introduction of billing by the second. The regulation would also impose maximum rates for the charges linked to SMS roaming, also wholesale and retail, as from July 2009, as well as tariff transparency for data roaming, including the possibility for clients to fix in advance the maximum amount they want to spend on data roaming. Beyond this limit, their service will be interrupted. According to the Commission proposal, the wholesale level, the modified regulation would fix as from 1 July 2009 a “safeguard” ceiling of EUR 1 per megabyte of data transmitted for the average fee that the visited network could charge to the domestic network of the roaming service’s client. The modified regulation should be adopted before June 2009.

our network

2,550

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optic fibre deployed in 2008

2,883

ROP installed in 2008

Our priorities for 2009 Customer satisfaction: > Enable superior end-toend experience; Profitable growth: > Deliver timely and cost efficiently converged ICT solutions;

Renewal of 2G licences The GSM licences for Proximus and Mobistar were granted in 1995 for a period of 15 years. In line with the Royal Decree relating to GSM licences, a GSM licence is tacitly renewed, except when a contrary decision has been taken at least two years before the date of expiry of the licence.

On 25 November 2008, the IBPT decided to block the tacit renewal of the 2G licences of the three mobile operators. Belgacom appealed this decision. It is expected that the Belgian government will adopt the new conditions for GSM licences in 2009. These will include the renewal of the Belgacom Mobile and Mobistar licences up to the date that the BASE licence expires, in 2013, as well as the payment of supplementary charges.

High Definition television On 14 April 2008, the Belgacom Group took a new step by offering its clients the possibility of watching television in High Definition (HD). Thanks to this technological advance, the clients of Belgacom TV can enjoy an unprecedented quality of image and sound.

This operation was made possible through the work of the technical teams in the Service Delivery Engine department, who are key to the constant evolution of the Belgacom Group network. These teams deployed no less than 2,550 kilometers of optic fibre and installed 2,883 ROP cabinets during 2008. This substantial achievement already allows more than 64% of the Belgian population to benefit from the HD offer proposed by Belgacom TV.

Innovation & transformation: > Build all-IP network, IT- and service platforms and implement new customer model; Operational excellence: > Be the lean and efficient engine of change.

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> our performance

CBU - Consumer Business Unit

In 2008, Belgacom’s penetration level in the residential sector remained very strong with about 80% of households possessing one or more fixed or mobile Belgacom products.

195,000 new mobile customers for CBU

Strong mobile performance The Belgian mobile market remained fairly stable in 2008, with no change in the main mobile players and a mobile-only population of about 29% of households.

Unlike other mobile players, CBU managed to grow its customer base mainly under its own brand Proximus. In total, CBU gained 195,000 mobile customers in 2008, including 136,000 new postpaid customers and 70,000 via its MVNO Mobisud, while the prepaid customer base slightly decreased by 10,000 customers. The year 2008 started with a good first quarter with 65,000 new customers and ended with an even better quarter with 72,000 net adds. This led to a total mobile customer base of 3,777,000 by year-end.

Whereas the blended mobile data ARPU (mainly SMS) is kept fairly stable at EUR 6.3, the Mobile Voice ARPU remains under pressure, mainly due to regulation combined with a low elasticity, and because of customers switching to lower priced offers. The blended net Voice ARPU, including credits and discounts for 2008 was EUR 23.0, compared to EUR 25.2 for 2007, or a decrease of 9%.

Traditional voice Traditional fixed voice lines continued to be under pressure with a loss of 162,000 lines in 2008. However, the launch of successful flat rate plans in the past and the growing number of Voice over IP lines in 2008 have decelerated the net line loss over the last three quarters of 2008. In 2008, CBU sold 49,000 VoIP lines marketed under the name I-Talk.

Broadband The Broadband market is marked by strong competition, especially from cable. Nevertheless, CBU kept its national Broadband market share fairly stable.

Supported by a strong first and last quarter, CBU(1) managed to add a total of 85,000 fixed broadband customers in 2008, an increase compared to the 77,000 net adds in 2007. Year-over-year, the broadband ARPU slightly decreased by 1.7% to EUR 30.0.

(1) Excluding Scarlet.

(2) For Belgacom customers to all landlines and to all mobile customers.

For Proximus customers to all landlines and to Proximus numbers.

To maintain a high quality offering, Belgacom continuously seeks to improve its services. In July 2008, Belgacom enhanced its Broadband offer significantly by increasing its bandwidth to 12 Mbps for “Go” and “Plus” subscriptions and to 4 Mbps for ADSL Light. Volumes were increased to 25 gigabyte on ADSL Go and to 60 gigabyte on ADSL Plus.

Fixed-mobile convergence Belgacom operates both a mobile and fixed network, putting CBU in an excellent position to offer residential customers a wide range of telecom products.

In March 2008, to underline its convergence strategy, Belgacom and Proximus launched the “Together” pricing plan. Belgacom fixed or mobile customers signing up for the Together option enjoy 600 minutes of free(2) calls per month on weekends. By end 2008, Belgacom had about 1 million customers signed up for the Together plan.

Another example of a converged product offering is the launch of “Mobile internet Free Weekend”, in which fixed internet customers are offered free usage of Mobile internet during the weekend.

CBU’s objective is also to move customers from “singleplay” to “multi-play”. About 40% of its customers has more than one Belgacom product, a percentage that Belgacom wants to increase. This is supported by the launch of converged bundles, enabling customers to choose a combination of several products, including fixed and mobile solutions. In 2008, 149,000 packs were added, including 44,000 in the fourth quarter, bringing the total to 302,000 packs by end 2008. CBU intends to further increase the number of multi-play customers through enhanced, simplified and innovative converged bundles.

Belgacom TV Since its launch in June 2005, Belgacom TV has proved very successful, with a rapidly growing customer base.

In a period of three and a half years, Belgacom managed to increase its market share in the Digital TV domain to a strong 30% by end 2008. The population coverage

Consumer Business Unit

ARPU TV (in EUR)

Number of ADSL/VDSL access channels (in thousands) 1,000

20

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15

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also increased significantly over the years: at year-end 2008, over 86% of Belgian households could access Belgacom TV and more than 64% could watch in High Definition.

In 2008, Belgacom added 201,000 new TV users, a considerable rise compared to the 166,000 users in 2007. Customer growth peaked in the fourth quarter of 2008, with a total of 63,000 net adds, due to successful year-end promotions. By end 2008, Belgacom had a total of 506,000 Belgacom TV users, including the growing number of customers connecting a second TV set. Benefitting from the roll-out of VDSL2, Belgacom was able to further enhance its TV offer. The capacity was considerably raised, enabling an increasing number of customers to connect a second TV set. Over 2008, the take-up of second TV connections has therefore increased to 65,000 customers.

“Our multiplay strategy is paying off: 40% of our customers have more than one Belgacom product.”

Despite the year-end promotions which impacted the ARPU in the fourth quarter, the overall 2008 TV ARPU continued its positive evolution and grew 7% to EUR 17.2, compared to EUR 16.1 in 2007. An important driver of this continued improvement is the success of on-demand services.

The success of Belgacom TV is due to a continued search for improvement and innovation.

TV: Some realisations during 2008 > The agreement with 20th Century Fox in March 2008 to add Fox films to the Video-on-Demand offer of Belgacom; > The expansion of the TV offer to customers having a fixed voice line but no internet connection as of April 2008; > The launch of a High Definition offer for Belgacom TV and Video-on-Demand, also in April; > Belgacom acquired for the second time the national broadcasting rights for Belgian football; > Belgacom expanded its interactivity of Belgacom TV via the “Blue Button” of the remote control (music, games, weather, lottery).

For more info, www.belgacom.com

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Position strengthened through non-organic growth In 2008, Belgacom strengthened its position through non-organic growth. > In June 2008, Belgacom announced the acquisition of the second mobile market player in Luxembourg operating under the name Tango. Besides strengthening the residential mobile offer, it will enable Belgacom to strengthen its corporate market offering; > In November 2008 Belgacom acquired Scarlet s.a., a no-frills provider offering fixed and mobile services to residential and business customers. This allows Belgacom to penetrate a new market segment and to reinforce its multiplay offering in Belgium.

Our four strategic objectives In the coming years, Belgacom CBU will concentrate on four strategic priorities. Firstly, CBU will focus on customer satisfaction by delivering a superior end-toend customer experience. Secondly, CBU will pursue profitable growth by increasing the number of services per customer. The third priority will be innovation and transformation, with the aim of offering solutions anywhere, any time, on any device. Lastly, CBU will strive for operational excellence by getting everything right the first time round and optimizing cost allocation.

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EBU - Enterprise Business Unit

During the year 2008, EBU decided to adapt its structure to better meet the customers’ requirements, to offer even more integrated solutions and to have a simple and more agile operating model. Therefore EBU decided to focus on three goals: focus, simplify and become operationally more efficient.

25,000 enterprise-customer sites on the Explore platform

Focus Focus on serving the customers better and giving them the best possible experience. To do so our enterprise division has adapted its organization to better reflect the market reality and decided to change its approach of the domestic market. Instead of three segments, EBU now works with only two domestic segments: COR and SME.

Simplify To become more agile and better at reacting rapidly and efficiently, EBU decided to reduce the layers in its organization and bundled similar functions within its entities.

Operational efficiency In the current economic environment, EBU needs to keep the costs under control. Therefore, to make sure that our organization has the right people in the right spot supported by the right systems and tools, EBU has appointed someone in its organization that looks at Operational Excellence.

Slowdown due to economic downturn Since the second half of 2008, the weakening economy has started to have some effect on the enterprise business, with especially ICT showing some exposure to the slowdown. Towards the end of 2008, other business areas too showed some evidence of sales projects being cut back and impeded decision-making processes.

Although this did not have a material impact on the 2008 operations, EBU took the necessary precautions to strengthen its position, starting with a more simple and efficient internal organization.

International Telindus presence Fully in line with Telindus International’s strategy to boost the profitability of its operations outside Belgium, the scope and focus were pared down to core ICT products and services and its international presence reduced to five key countries: the Netherlands, France, Luxembourg, Spain and the United Kingdom. The other international branches were liquidated as they lacked

the necessary scale of Telindus activities to grow a profitable business: Hungary in the fourth quarter of 2007, Thailand in the first quarter of 2008, Germany in the third quarter of 2008, Hong Kong, China, Switzerland, Italy, Sweden and Portugal in the fourth quarter of 2008. With the focus on the key countries, EBU-Telindus has a lowered risk profile and improved its position to further grow a profitable business.

The Telindus divestment program impacted the 2008 revenue and involved losses on disposal for an amount of EUR 34 million, included in the non-recurring expense recorded in the fourth quarter of 2008.

Convergence through “Explore” platform EBU is committed to simplifying its ICT range by offering managed solutions with guaranteed end-to-end quality. These solutions are provided over “Explore”, an intelligent service platform that facilitates fixed to mobile convergence and that is easy to migrate to.

“Explore” indeed combines fixed and mobile networks into a single network infrastructure. All professional customers can smoothly move to this network and benefit from all the flexible, convergent, enterprisegrade services and applications it offers. By the end of 2008, the “Explore” platform already numbered some 25,000 enterprise-customer sites.

“Fusion”, the convergence offer for SME’s To address the convergence needs of smaller enterprises in an innovative way, EBU launched “Fusion” in March 2008. This successful convergence offer designed for SME’s covers calls made from both fixed and mobile phones, and introduced a flat calling fee for in-company calls made between colleagues from fixed and mobile numbers alike, as well as unlimited calling to any national fixed number. By the end of 2008, Belgacom had some 66,000 subscribers for the Fusion offers.

Advanced data revenue grew Mobile data services have been increasingly successful, supported by a high-quality 3G network covering 90% of the population and supported by a new range of

Enterprise Business Unit

Revenue from mobile data (in millions EUR) 200 150 100 50 0 07

08

mobile solutions launched in June 2008: Business Sharepoint, Belgacom Communication Tools and BlackBerry option.

Mobile data has also been a source of revenue growth, generating EUR 32 million additional revenue in 2008, which represents a 25% increase compared to the previous year. Advanced data products such as Mobile internet and the BlackBerry surged by 33% since 2007.

The year 2008 saw stabilization in the loss of fixedvoice lines, including VoIP lines. The number of voice lines declined by 33,000 in 2008, compared to a decrease of 35,000 in 2007. EBU closed the year 2008 with a total of 1,544,000 voice lines and a voice ARPU of EUR 31.7.

The mobile customer base rose by 101,000 new active customers in 2008 to a total of 1,139,000 mobile customers. The voice ARPU, which was already significantly impacted by regulation, underwent further pressure as customers moved to more advantageous rate plans in 2008, resulting in a total decrease of 16.1% to EUR 47.6.

Belgacom takes part in the growing mobile payment business EBU also takes part in the growing mobile payment business, such as the SMS ticketing system which it test-pioneered in cooperation with De Lijn (the Flemish public transport company). Allowing passengers to pay for their fare with their mobile phones, the SMS ticketing service has been available in Antwerp and Ghent for all Proximus customers since the end of 2007. No less than 226,000 SMS tickets were sold in 2008.

To further reinforce this line of business, in July 2008, Belgacom acquired Mobile-for, a company specialized in mobile payments for parking. Mobile-for introduced SMS parking in Antwerp, Hasselt, Tienen, Lokeren, Wetteren, Turnhout and Diest. In 2008 over 1.3 million parking transactions were recorded.

Several large contracts highlight EBU’s strong position In 2008, EBU won some large contract deals, underlining its important position in the enterprise market.

A few examples: > Belgacom-EPT Luxemburg is granted a multi-year contract by the European Institutions for national and international voice traffic (EUR 55 million over 7 years); > ICT contract for seven years between the Flemish government and the EDS-Telindus consortium for a total value of EUR 582 million;

“We will export our know-how by developing the Explore platform internationally.”

> Belgacom and Aeroscout integrated a revolutionary application for management of medical equipment, temperature monitoring and personnel protection at the Jan Yperman hospital in Ypres. Belgacom is responsible for the LAN network and a high-performance Wi-Fi-network; > A major retail chain integrating electronic payment services to ATOS Worldline in a fully secured way on top of its Explore network; > AS Adventure’s choice for Belgacom Explore International, including a Unified Communication solution, proves a successful cross-border offering for EBU.

EBU aims to become the preferred networkcentric ICT service provider Although competition on the professional market is expected to remain tough in all product areas in the coming years, EBU is uniquely positioned to become the preferred network-centric ICT service provider in Belgium and a reference on the European market.

For more info, www.belgacom.com

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> our performance

ICS - International Carrier Services

Over 2008, Belgacom ICS generated EUR 812 million revenues, which is EUR 66 million or 8.9% more than in 2007.

The EBITDA margin increased from 7.2% in 2007 to 7.9% for 2008.

Belgacom ICS was awarded the distinction of “Best Wholesale Carrier”.

Belgacom ICS scores high worldwide Since 1 July 2005, Belgacom ICS has been a Joint Venture held by Belgacom for 72% and by Swisscom for the remaining 28%.

Belgacom ICS is ranked in the top 10 of largest operators worldwide in terms of voice traffic volume and is world leader in mobile data services, serving 200 mobile operators. In November 2008, for the third time in five years, Belgacom ICS was awarded the distinction of “Best Wholesale Carrier” at the World Communication Awards in London.

To strengthen its business, Belgacom ICS has over the years signed several partnerships with other operators.

In May 2008 the partnership between Omantel and Belgacom ICS was taken one step further with the joint investment in the Europe India Gateway (EIG) sea cable, the first direct high-bandwidth optical fibre submarine cable system from the United Kingdom to India. This system also serves the Middle East and Africa. The joint investment in the EIG enables both companies to optimize their cost structure while securing enough capacity to serve their future needs. Furthermore, ICS has invested in the capacity upgrade of the submarine cables SAT-3/WASC/SAFE and SMW-3, which will help Belgacom ICS to provide top-class services to its African and Asian customers.

7.9% EBITDA margin

Growing volumes in a very competitive environment Belgacom ICS has posted positive results for voice in an extremely competitive environment, mainly driven by the continued growth in the mobile segment especially in Africa and Asia. Voice volume growth exceeded the market growth and compensated the declining margins.

The volume growth is the major driver behind the growth in revenue. Traffic from VoIP providers has grown exponentially in the last quarter of 2008, partly explained by the acquisition of a pre-paid billing platform.

The excellent performance continued in the mobile data area, where Belgacom ICS further strengthened its leadership position. This success explains the increase of the Belgacom ICS EBITDA margin, which has increased from less than 3% to almost 8% in the last three years.

In 2008, Belgacom ICS leveraged its sea-cable and terrestrial European network by increasing significantly its sales of capacity solutions to operators in Europe, Middle East and Asia.

Belgacom ICS has successfully completed the reorganisation of its Service Delivery and Engineering department in 2008. A new project has been launched to replace the current TDM switching platform by a NGN solution by the end of 2009. This new platform will allow new advanced technical features to be developed and improve Belgacom ICS’ operational efficiency while significantly reducing costs in terms of capital and operational expenditures.

shareholder information

shareholder information

Stock market Ticker ISIN National SVM code Bloomberg code Thomson code

First Market of Euronext Brussels BELG BE0003810273 3810.27 BELG BB BELG-BT

Investor Relations Belgacom Investor Relations (IR) aims at providing Belgacom’s current and potential shareholders with the best possible communication. Through a transparent and consistent dialog with investors and financial analysts, the Group strives for a fair share value.

The IR department ensures an open channel of communication between the Belgian and international investment community to the Belgacom Group’s senior management.

Twice a year, following the full-year and half-year results, Belgacom organizes a roadshow, covering the most important money centers of Europe and the United States. In between the roadshows in 2008, a wide variety of investors and analysts had the opportunity to talk to senior management in one-on-one meetings or conference calls. In addition, Belgacom participated in several major international investment conferences. In 2008, Belgacom visited 15 different money centers in Europe and the United States and had over 500 investor and analyst contacts.

On 16 April 2008, Belgacom organized its second Investor & Analyst day in Brussels. The main topic of the day was the transition of the traditional segment reporting to the new customer-oriented reporting that is applied as from the publication of the first quarter 2008 results.

Institutional as well as retail shareholders can count on the support of the Investor Relations team. A strict quiet period is observed four weeks before the issuing of a quarterly reporting and seven weeks before the communication of the annual results.

Changes in the share capital and number of shares The treasury shares held by Belgacom increased during 2008 from 5,953,359 shares to 17,690,874 shares, mainly as a result of share buyback programs during the year.

On 24 July 2008, the Belgacom Board of Directors approved a share buyback for a maximum amount of EUR 200 million, within the limitations decided at the General Meeting of 9 April 2008. Therefore, the share price could not be more than 5% above the highest and 10% below the lowest closing price in the thirty-day trading period preceding the transaction.

The buyback started on 4 Augustus 2008 and was completed on 26 November 2008. In total, 7,379,925 shares were bought back at an average price of EUR 27.10.

Belgacom kept the market informed on the progress of the share buyback program through interim press releases.

Announcement date 10 September 2008 7 November 2008 27 November 2008 Total

Million EUR 70 70 60 200

Number of shares 2,666,888 2,601,937 2,111,100 7,379,925

Average share price 26.57 26.59 28.41 27.10

At year-end 2008, Belgacom held 17,690,874 treasury shares, representing 5.2% of the total number of shares.

This was a result of the following actions: > In the course of 2008, 125,143 treasury shares were used in a Discount Share Purchase Plan for Belgacom management; > In addition, 280,920 options were exercised during 2008; > In 2008 Belgacom acquired a total of 12,143,578 shares through its share buyback programs: • Share buyback program launched on 13 November 2007: during the period from 1 January 2008 until 3 March 2008, Belgacom acquired 4,763,653 shares; • Share buyback program launched on 4 August 2008: Belgacom acquired 7,379,925 shares through the buyback program of 4 August 2008 until 26 November 2008.

www.belgacom.com is one of the communication channels to the investment world.

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> our performance

Ownership (on 31 December 2008)

Free float: 41.3% Belgian state: 53.5% Belgacom: 5.2%

“In 2008 the Belgacom share was perceived as a good defensive play given Belgacom’s low leverage, high dividend yield and disciplined M&A strategy.”

Treasury shares evolution Status 31 December 2007 Options exercised during 2008 Discount Purchase Plan employees Acquisition of treasury shares Status 31 December 2008

5,953,359 -280,920 -125,143 12,143,578 17,690,874

The voting rights of the treasury shares are suspended by law. The dividend rights of the treasury shares acquired in 2004 are also suspended, whereas the dividend rights for shares acquired in 2005, 2006, 2007 and 2008 are cancelled.

Under Belgian law, companies are prohibited from owning more than 20% of their outstanding share capital.

Belgacom ownership structure Ownership on 31 December 2008 Belgacom ownership Belgian State Belgacom Free-Float TOTAL

Shares

% of total shares

% Voting rights

180,887,569 17,690,874 139,446,692 338,025,135

53.5% 5.2% 41.3% 100.0%

56.5% 0.0% 43.5% 100.0%

% Dividend rights

Dividend rights

55.9% 180,887,569 1.0% 3,180,891 43.1% 139,446,692 100.0% 323,515,152

On 30 October 2008 Capital Research and Management notified that it had 18,876,300 Belgacom shares in its possession on 1 September 2008, a participation of 5.6% of the shares with voting rights emitted by Belgacom s.a.

Information on the Belgacom share (1 January - 31 December)

EUR

2.45

earnings per share in 2008

Closing prices (in EUR) Closing price last trading day of year Year high Year low Annual Trading volume (number of shares) Average trading volume per day (number of shares) Market Capitalization 31 Dec. (billion EUR) Key figures Earnings per share (in EUR) Ordinary dividend per share, gross (in EUR) Extra-ordinary dividend per share, gross (in EUR) Interim dividend per share, gross (in EUR) Price/Earnings ratio 31 December

2007

2008

33.74 35.82 27.82 291,898,716 1,144,701 11.20

27.33 33.31 24.58 281,419,643 1,099,295 8.75

2.87 1.68 0.50 11.76

2.45 1.68 0.50 11.15

shareholder information

Belgacom share compared to BEL20 index and Euro STOXX price (in EUR)

volume

5,000,000

35.0

4,000,000

30.0

32.5

27.5 3,000,000

25.0 22.5

2,000,000

20.0 17.5

1,000,000

15.0 0 03/01

23/02

19/04

09/06

The year 2008 was a dramatic year for the stock markets. The unprecedented turmoil in the financial markets reached its climax in the fall of 2008. The telecom sector showed more earnings resilience during the economic downturn than other sectors.

The Belgacom share was perceived as a safe haven by investors due to its:

Strong balance sheet During the Telecoms hype years, Belgacom did not overspend on licenses and acquisitions, resulting in a sound balance sheet with a net debt position of EUR 1.8 billion at the end of December 2008. The net debt/ EBITDA ratio stands at 0.9x, the lowest in the European telecom sector. The outstanding debt amounted to EUR 2.5 billion.

Low refinancing need Belgacom has almost no debt coming up for refinancing in the short term, besides the floating rate note of EUR 300 million which will mature in November 2009. The remainder of the outstanding debt matures in 2011 and 2016. In November 2008, Belgacom issued the following bonds in order to finance its acquisitions: > Belgacom successfully increased its outstanding EUR 600 million 4.125% bond due 2011 by EUR 175 million and its EUR 750 million 4.375% bond due 2016 by EUR 200 million; > Belgacom launched a public bond offering for an amount of EUR 125 million with a maturity of 5 years and a coupon of 6%.

Attractive shareholder return Over the years, Belgacom has generally returned most of its cash to its shareholders via a mix of dividends and share buybacks.

01/08

21/09

11/11

12.5 30/12

Share price evolution 2008 In 2008 the financial system collapsed, leading to the biggest crisis since 1929. The telecom sector showed to be more resilient than other sectors. The Belgacom share in particular was seen as a good defensive play given its low balance sheet leverage, high dividend yield and best-in-class credit worthiness. In 2008, the Belgacom share (-18%) clearly outperformed the DJ STOXX Telecommunication index (-36%) and the BEL20 index (-54%). > The Belgacom share price reached its year high on 8 January 2008, closing at EUR 33.31; > Beginning of February, the Belgacom share price took a hit due to market fears that Belgacom would announce weak 2007 results. When on 29 February 2008, Belgacom announced its 2007 full-year results in line with consensus expectations(1); the share price remained fairly flat; > In April the share price ran up for the expected dividend relating to the 2007 result. The Belgacom share went ex-dividend on 15 April 2008; > On 16 May 2008, Belgacom reported first quarter results.

The share price remained fairly stable; > On 25 July 2008, Belgacom reported its half-year results and slightly downgraded the revenue guidance. As a result the share price dropped more than 7%; > In the September-October timeframe, the crisis in the financial markets reached its climax. The Belgacom share price outperformed the market but nevertheless, on 26 October 2008, it reached its year low closing price at EUR 24.58; > On 7 November 2008, Belgacom reported Q3 results. The share price remained fairly stable; > Beginning of December the Belgacom share price rose again above EUR 30 as there was a rush for defensive shares. Mid-December an interim dividend of EUR 0.50/ share was announced. The share went ex-dividend on 16 December 2008. At 31 December 2008, Belgacom was the fifth largest company in the Bel20 index, counting for 7.6%.

(1) Consensus: estimates on Belgacom results published by analysts covering the Belgacom share.

Belgacom share price Stoxx Telco - restated Bel 20 - restated Belgacom share volume source: Thomson One

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> our performance

Dividend per share (in EUR) 2.5 2.0 1.5 1.0 0.5 0.0 04

1.68

EUR

ordinary dividend per share

05

06

07

08

Extra-ordinary dividend Normal dividend Interim dividend

Shareholder remuneration Return to shareholders A share buyback, approved by the Board of Directors on 24 July 2008 for a maximum amount of EUR 200 million, started on 4 August 2008 and was finalized on 26 November 2008.

The Board of Directors also approved on 11 December 2008 an interim dividend over the 2008 accounting year for a gross amount of EUR 0.50 per share (net amount of EUR 0.375 per share), corresponding to a total amount of EUR 162 million. The dividend was paid on 16 December 2008.

On 5 March 2009, the Board of Directors decided to propose an ordinary dividend of EUR 1.68 per share (total amount of EUR 544 million) to the Annual Shareholder Meeting of 8 April 2009.

Dividend policy There are no changes in the dividend policy whereby Belgacom intends to declare and distribute an annual dividend of 50% to 60% of its annual net income. This amount may be adjusted to reflect one-time gains or losses, and the amount of dividends declared may vary from year to year. In determining the amount of any annual dividends to propose to the shareholders, the Board of Directors will take into account the dividend payment practices of other European telecommunications operators.

The amount of any annual dividends and the determination of whether to pay dividends in any year may be affected by a number of factors, including the Group’s business prospects, cash requirements, financial performance, the condition of the market and the general economic climate, plus other factors, such as tax and other regulatory considerations.

Financial calendar 6 March 2009

Announcement of full year results 2008

8 April 2009

Annual General Shareholder meeting

15 May 2009

Announcement of first quarter results 2009

31 July 2009

Announcement of half-year results 2009

30 October 2009

Announcement of third quarter results 2009

corporate social responsibility

corporate social responsibility We formalized our commitment to Corporate Social Responsibility (CSR) two years ago, despite CSR had always been part of the philosophy of the Belgacom Group. As an ICT group, we believe we can make a positive difference to the communities we operate in by facilitating the access to telecommunications to everyone and by enabling a sustainable growth.

“Our CSR strategy, developed in 2007, aims to position the Belgacom Group as one of Belgium’s leading companies in terms of CSR.”

We consider CSR as a valuable management tool that must tune our performances more finely. The CSR report we release separately shows the challenges we have already identified and the actions we have undertaken to face them in 2008.

Strategy and governance Our CSR strategy, developed in 2007, aims to position the Belgacom Group as one of Belgium’s leading companies in terms of CSR. Our action is consequently based on the strictest ethical requirements in the conduct of our activities and on constructive dialogue with our stakeholders, to better understand and take account of their priorities.

To achieve our objectives, our strategy is based on two clear commitments: > Promote an inclusive e-society by providing access to communications to everyone in Belgium irrespective of age, ability or circumstances; > Enable a sustainable growth by managing our climate change impact more efficiently and by providing our customers with products and services that help them managing their environmental footprint more efficiently too.

A cornerstone of our approach is the development of an internal governance and reporting structure, based upon two entities – the CSR department and the CSR Operating Committee (CSR Opco). These committees headed by the Vice President Group CSR report directly to the CEO and the Belgacom Management Committee (BMC).

In 2008, we further established the governance for CSR inside the Group and succeeded in establishing CSR as part of the Belgacom Group core business strategy.

You can also follow our CSR commitments on www.belgacom.com.

Strategy in actions In 2008, we organized our actions according to the CSR strategy and the commitments that were approved by the BMC on 11th February, 2008. Please find here some examples of actions we conducted.

We continued to expand the reach of our networks enabling more customers to access our services irrespective of the technology they use. Bringing telecommunications closer to the local communities improves quality of life and enables participation in the growing e-society. We invested in projects to close the digital gap, training customers and non-customers, unemployed people to get used to the new technologies and possibly help them finding a new job in the ICT sector.

We developed tools to educate youngsters to the dangers and the possibilities of the new technologies.

We distributed number of PCs and laptops to schools and local associations all over the country to facilitate access to the internet.

In a response to the concerns people might have regarding the potential health effects of wireless technology, we decided to provide to our customers the maximum SAR(1) value of each mobile phone of the Proximus Collection on the packaging, in the point of sales and on the Internet.

While continuing to grow our business we believe we must minimize the adverse impact our activities could have on the climate. In 2008, we managed to reduce our CO2 emissions by 42% mainly through gradually expanding the purchase of renewable electricity. Since September, we buy 100% of Belgacom Group electricity from renewable sources. We started installing solar panels on some of our buildings and we performed a carbon footprint audit to identify further CO2 efficiency.

For a complete view of the Belgacom Group’s CSR activities in 2008, we invite you to consult our CSR report which is part of our annual report.

(1) SAR stands for Specific Absorption Rate and is the unit for measuring the quantity of electromagnetic energy that is absorbed by the human body when using a mobile phone. The maximum allowed SAR in Europe is 2 W/kg. Although the SAR is determined on the basis of the highest power level of the phone, the actual SAR in use may be considerably lower. The phone is indeed designed in order to not consume more power than needed to establish a connection with the network. In general, the closer you are to a base station, the less power the phone uses.

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> our responsibilities

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 to the best practices of Belgium’s Corporate Governance Code.

Belgacom governance model At Belgacom, the Articles of Association are strongly influenced by the specific legal status of the company. As a limited liability company under public law, Belgacom is in the first instance governed by the Law of 21 March 1991 on autonomous public sector enterprises (“the 1991 Law”). For matters not explicitly regulated otherwise by the 1991 Law, Belgacom is governed by Belgian corporate law. The key features of Belgacom’s governance model are: > A Board of Directors, which defines Belgacom’s general policy and strategy and supervises operational management; > The creation by the Board of Directors within its structure of an Audit and Compliance Committee, a Nomination and Remuneration Committee and a Strategic and Business Development Committee; > A President & Chief Executive Officer, who takes primary responsibility and ownership for operational management (including, but not limited to, day-to-day management); > A Management Committee, which assists the President & Chief Executive Officer in the exercise of his duties.

Board of Directors As provided for in the 1991 Law, the Board of Directors is composed of: > Directors appointed by the Belgian state in proportion to its shareholding > Directors appointed by a separate vote among the other shareholders, for the remaining seats. These Directors are independent according to the criteria of article 526ter of the Belgian Code of Companies and the criteria of the Belgian Corporate Governance Code. The Board of Directors is composed of 16 members, including the person appointed as President & Chief Executive Officer.

Functioning of the Board of Directors The Board of Directors meets whenever the interests of the company so require or at the request of at least two Directors. In principle, the Board of Directors meets every year in four regularly scheduled meetings. The Board of Directors must also evaluate the strategic longterm plan in an extra meeting each year.

In general, the Board’s decisions are made by simple majority of the Directors present or represented, although for certain issues a qualified majority is required.

The Board of Directors has adopted a Board Charter which, together with the charters of the Board Committees, reflects the principles by which the Board of Directors and its Committees operate.

The Board Charter provides, among other things, that important decisions should have broad support, understood as a qualitative concept indicating effective decision-making within the Board of Directors following a constructive dialogue between Directors. They should be prepared by standing or ad hoc Board Committees with significant

representation of non-executive, independent Directors within the meaning of Article 526ter of the Belgian Company Code.

All charters were updated on 5 March 2009. In its meeting of 23 October 2008, the Board of Directors has also adopted a Board policy on Discretion and Confidentiality.

Committees of the Board of Directors In accordance with the bylaws, Belgacom has an Audit and Compliance Committee, a Nomination and Remuneration Committee and a Strategic and Business Development Committee.

Audit and Compliance Committee The Audit and Compliance Committee (ACC) consists of five nonexecutive Directors, the majority of whom must be independent. In line with its charter, it is chaired by an independent Director. The Audit and Compliance Committee’s role is to assist and advise the Board of Directors in its oversight of: > The financial reporting process; > Efficiency of the systems for internal control and risk management of the company; > The Company’s internal audit function and its efficiency; > The quality, integrity and legal control of the statutory and the consolidated annual accounts and the financial statements of the Company, including the follow up of questions and recommendations made by the auditors; > The relationship with the Company’s auditors and the assessment and monitoring of the independence of the auditors; > The Company’s compliance with legal and regulatory requirements; and compliance within the Company with the Company’s Code of Conduct and the Dealing Code.

The Audit and Compliance Committee meets at least once every quarter. Mr. Philip Hampton (Chairman), Messrs. Pierre-Alain De Smedt, Michel Moll, Oren G. Shaffer and Paul Van de Perre are the members of the Audit and Compliance Committee.

Nomination and Remuneration Committee The Nomination and Remuneration Committee (NRC) consists of 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.

One member is chosen among the Directors appointed by the Belgian State. Two members must be appointed among the independent Directors.

The Nomination and Remuneration Committee’s role is to assist and advise the Board of Directors regarding: > The nomination of candidates for appointment to the Board of Directors and the Board Committees; > The appointment of the President & Chief Executive Officer and of the members of the Management Committee on proposal of the President & CEO;

corporate governance

> The appointment of the Secretary General; > The remuneration of the members of the Board of Directors and the Board Committees; > The remuneration of the President & Chief Executive Officer and members of the Management Committee; > The review on an annual basis of the remuneration philosophy and strategy for all personnel, and specifically the compensation packages of top senior management; > The oversight of the decisions of the President & Chief Executive Officer with respect to the appointment, the dismissal and the compensation of management; > Corporate governance issues.

The Nomination and Remuneration Committee meets at least four times a year.

The first meeting each year reviews the performance, budgets for payout of bonus and merits, and long-term and short-term incentive plans. At that meeting an annual review of the philosophy and strategy of the remuneration is also discussed. At the second meeting the Nomination and Remuneration Committee fixes the performance measurement targets of the President & Chief Executive Officer and the members of the Management Committee through Key Performance Indicators. In addition to these meetings, the Committee organizes a meeting on Human Resources and a meeting on Corporate Governance.

Mr. Theo Dilissen (Chairman), Ms. Martine Durez, Mr. Georges Jacobs and Ms. Lutgart Van den Berghe are the members of the Nomination and Remuneration Committee.

Strategic and Business Development Committee The Strategic and Business Development Committee (SBDC) consists of six Directors. In line with its charter, the President & Chief Executive Officer and the Chairman of the Board of Directors are ex-officio members, and the committee is chaired by the Chairman of the Board of Directors. One additional member is chosen among the Directors appointed by the Belgian State. Three members must be appointed among the independent Directors.

The Strategic and Business Development Committee’s role is to review envisaged acquisitions, mergers and divestments over EUR 100 million and to review large corporate restructuring programmes. If appropriate, the Board of Directors can decide on establishing a special ad hoc Committee, dealing with a specific subject, and composed of members with the appropriate experience.

Mr. Theo Dilissen (Chairman), Mr. Didier Bellens, and Messrs. Guido J.M. Demuynck, Robert Tollet and Oren G. Shaffer are currently the members of the Strategic and Business Development Committee.

Changes in the composition of the Board of Directors On 3 October 2008, Mr. Maurice Lippens resigned as member of the Board of Directors.

The mandate of Mr. Didier Bellens as President & Chief Executive Officer was renewed in December 2008 for a period of 6 years which will end on 28 February 2015.

The mandate of Mr. Theo Dilissen as Director was renewed in March 2009 for a renewable period of 6 years which will end on 28 February 2015. His mandate as Chairman was renewed for a renewable period of 3 years which will end on 29 February 2012.

Directors’ remuneration The remuneration and compensation of the Directors was decided by the General Meeting of 2004. The calculation of this compensation did not change in 2008: it foresees 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 of the Board of Directors, with the exception of the President & CEO. All members of the Board of Directors, with the exception of the President & CEO, have the right to an attendance fee of EUR 5,000 per attended meeting of the Board of Directors.

Attendance fees of EUR 2,500 have been foreseen for each member of an advisory committee to the Board of Directors, with the exception of the President & CEO. For the Chairman these attendance fees are doubled. The members also receive EUR 2,000 per year for communication costs. For the Chairman of the Board of Directors the communication costs are also doubled. The Directors do not receive performance-based remuneration such as bonuses or long-term share-related incentive programmes, nor do they receive benefits linked to pension plans.

Transactions between the company and its Board Members and executive managers A general policy on conflicts of interest applies within the company. It prohibits the possession of financial interests that may affect personal 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 to have a conflict of interest in connection with the Employee Incentive Plans of the agenda of the Board of Directors’ meeting of 28 February 2008. He is in fact a beneficiary of the Senior Management Short- & Long-term Incentive Plan 2008. He informed Belgacom’s auditor of this conflict of interest and decided not to participate in the deliberation or voting on this item.

In accordance with article 523 of the Belgian Companies Code, the President & CEO, Mr. Didier Bellens, declared to have a conflict of interest in connection with his contract, item of the Board of Directors’ meetings of 24 July 2008 and 27 November 2008. He informed Belgacom’s auditor of these conflicts of interest and decided not to participate in the deliberation or voting on these items.

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> our responsibilities

Members of the Board of Directors appointed by the Belgian State term Name Theo DILISSEN Didier BELLENS Martine DUREZ Mimi LAMOTE Michel MOLL Michèle SIOEN Robert TOLLET Paul VAN de PERRE

Age 55 53 58 44 60 44 62 56

Position Chairman of the Board(1) President & CEO Director Director Director Director Director Director

since 2004 2003 1994 2006 1994 2006 2003 1994

expire 2015 2015 2012 2012 2012 2012 2009 2012

Members of the Board of Directors appointed by the shareholders’ meeting and independent term Name Guido J.M. DEMUYNCK Pierre-Alain DE SMEDT Carine DOUTRELEPONT Philip HAMPTON Georges JACOBS Oren G. SHAFFER Lutgart VAN den BERGHE

Age 58 64 48 55 68 66 57

Position Director Director Director Director Director Director Director

since 2007 2004 2004 2004 2004 2004 2004

expire 2013 2010 2013 2010 2013 2013 2010

Activities Report and Attendance at Board and Committee meetings The Board of Directors in its meeting of July 24, 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 & Compliance Committee) and Mr. Pierre-Alain De Smedt in order to review the relationship between the Board and Management.

Name Theo DILISSEN Didier BELLENS Guido J.M. DEMUYNCK Pierre-Alain DE SMEDT Carine DOUTRELEPONT Martine DUREZ Philip HAMPTON Georges JACOBS Mimi LAMOTE Maurice LIPPENS (2) Michel MOLL Oren G. SHAFFER Michèle SIOEN Robert TOLLET Lutgart VAN den BERGHE Paul VAN de PERRE (1) As Chairman until 2012.

(2) Resignation on 3/10/2008.

Board

ACC

(total 6)

(total 5) (total 7) Ctee

6/6 6/6 6/6 6/6 6/6 6/6 6/6 5/6 6/6 2/3 6/6 6/6 5/6 4/6 6/6 6/6

NRC 7/7

3/5

Ad hoc SBDC 1/1

(total 2)

2/2 2/2 1/2

1/1 7/7

5/5 7/7

1/1 1/1 1/1 1/2

5/5 5/5

2/2 1/2 7/7

5/5

1/1

Total Remuneration

EUR 164,000 EUR 0 EUR 59,500 EUR 67,000 EUR 57,000 EUR 77,000 EUR 84,500 EUR 72,000 EUR 57,000 EUR 33,250 EUR 69,500 EUR 74,500 EUR 52,000 EUR 49,500 EUR 77,000 EUR 69,500

Members of the Board of Directors Theo Dilissen (1) Chairman of the Board of Directors of Belgacom since October 2004. Previously Mr. Dilissen was CEO, Managing Director and ViceChairman of Real Software and from 1989 to 2000 he was COO and member of the Board of ISS (a Danish publicly listed company). From September 2005 till the end of January 2008 he was President & CEO of Aviapartner. Since then he is Executive Chairman. He studied Sociology and holds a Master in Business Administration.

Didier Bellens (2) President & Chief Executive Officer and Director of Belgacom since March 2003. More info see p. 44, Members of the Belgacom Management Committee.

Guido J.M. Demuynck

(3) Mr. Demuynck held various positions within Philips from 1976 till 2002. Amongst others, he was Vice President Marketing Audio in the USA, CEO of Philips in South Korea, General Manager Line of Business Portable Audio in Hong Kong, CEO Group Audio in Hong Kong. In 2000, he became CEO Product Division Consumer Electronics in Amsterdam and member of the Group Management Committee of Philips. In 2003, Mr. Demuynck joined Royal KPN where he became member of the Board of Management and CEO of the Mobile Division (KPN Mobiel Netherlands, Base Belgium, E-Plus Germany). Until July 2008, he was the CEO of Kroymans Corporation BV in the Netherlands. Mr. Demuynck is also member of the Supervisory Board of Tom Tom since June 2005. He holds a degree in applied economics from the university of Antwerp (UFSIA) and a degree in marketing from the University of Gent (R.U.G).

Pierre-Alain De Smedt (4) Mr. De Smedt is Chairman of Febiac (Fédération belge de l’Automobile et du Cycle). From 1999 till end of 2004 he was Executive Vice President of Renault. He was chairman of Autolatina, VAG EUR and Ford’s joint venture subsidiary in Latin America. He served as Chairman of Volkswagen Brazil and Argentina before being appointed as Chairman of Seat.

Mr. De Smedt is Chairman of the Board of Deceuninck Plastics Group, member of the Board of the Compagnie Nationale à Portefeuille and of the Group Valeo. He is a graduate in engineering and economics from the University of Brussels (ULB).

Carine Doutrelepont (5) Ms. Doutrelepont is a lawyer at the Brussels’ Bar and member of the Bar of Paris. She is the founding partner of the Belgian law firm Doutrelepont & Partners, which is specializing in Information and Communication Technologies, Intellectual property, Media law, Competition matters and European law. She holds a PhD in law from the University of Brussels (ULB). She is a Professor of Media Law, Intellectual Property Law, and European Law at the ULB Faculty of law, at the Institute for European Studies, as well as in universities in other countries. She is also President of the Information and Communication Law Centre of the ULB. For years, she worked as an Expert for the European Commission (General Directorate Internal Market), at the Belgian Senate and at the Belgian Competition Authority. She is the author of several books and publications.

corporate governance

4

2

12

5

14

6

Martine Durez (6) Ms. Durez was the Chief Financial and Accounting Officer at La Poste till January 2006 when she became Chairman of the Board of La Poste.

Ms. Durez was also Professor of Financial Management and Analysis at the University of Mons-Hainaut till 2000. She has also served as a member of the High Council of Corporate Auditors and the Committee of Accounting Standard and as a special emissary at the Cabinet for Communication and State Companies. She serves as a regent of the National Bank of Belgium. Ms. Durez graduated as a Commercial Engineer and holds a PhD in Applied Economics from the University of Brussels (ULB).

Philip Hampton (7) Mr. Hampton spent the first ten years of his career at Lazard Brothers in London, New York and Paris. He then took up the positions of Finance Director for British Steel plc, British Gas plc and British Telecommunications Group plc and for Lloyds TSB Group plc. He became Chairman of J. Sainsbury plc., in 2004 and was appointed Chairman of The Royal Bank of Scotland on 3 February 2009. Mr. Hampton is a Chartered Accountant and holds an MBA from INSEAD, Fontainebleau and a M.A. from Oxford University.

Georges Jacobs (8) Count Jacobs is Chairman of the Board of Directors of Delhaize Group. He started as an economist at the International Monetary Fund (USA). Later, he joined the UCB Group and was appointed Director and CEO of UCB in 1987 until 1 January 2005, when he became Chairman of the Board.

Furthermore, Georges Jacobs is a member of the Board of Brussels Airlines. He holds a law degree and a degree in economics from UCL, as well as a Master of Arts in Economics from the University of California, Berkeley.

Mimi Lamote (9) Ms. Lamote started her career in retail: she occupied functions in buying, merchandising, store and district management. From 2001 until 2005 Ms. Mimi Lamote was General Manager of C & A Belgium-Luxembourg. From 2001 until 2004 she was member of the Board of Directors of the Federation of Enterprises in Belgium (FEB). In the same period, Mrs. Lamote was also member of the Board of Directors of Fedis (Federation of Distribution). From January 2005 until June 2006 she was CEO of SCF (Belgium-Lithuania) listed on the Belgian stock market. Since February 2007, Ms. Lamote is COO of ZNA (hospital network Antwerp). She is member of the board of Kinepolis Europe. 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.

Michel Moll (10) Mr. Moll serves as a non executive Director in industrial and financial companies such as Société Nationale de Construction Aérospatiale and the Belgian Corporation for International Investment (SBI). He is also a Censor of the National Bank of Belgium. Until April 2007 he was President & CEO of the limited company BATS (Belgian Advanced Technology Systems), specialized in Security Electronics, in Liège. Until December 2005, Mr. Moll was President of the venture company BRUFICOM and before that he was manager and Director of the National Investment Corporation (SNI) in Brussels. Mr Moll graduated as Engineer in applied economics from the business school of the University of Louvain (UCL).

8

3

13

1

15

10

7

9

11

Oren G. Shaffer (11) Mr. Shaffer is Chairman of Virgocap Inc. Formerly, Mr. Shaffer was Vice Chairman and Chief Financial Officer of Qwest Communications from 2002 to 2007 and President and Chief Operating Officer of Sorrento Networks. He was a member of the Board of Directors at Belgacom from 1996 to 2000. He is a member of the Board of Intermec and Terex Corporation. He holds a Bachelor of Science in business administration from The University of California at Berkeley and a Master of Science in management from The Massachusetts Institute of Technology.

Michèle Sioen (12) Since 2005 Michèle Sioen is CEO of the Sioen Industries group. She started her career in 1988 at an IT company. Two years later she was appointed Director of the Board of Directors of Sioen Industries and actively joined the Sioen Industries group. The group produces and processes technical textiles, designs and manufactures personal protective clothing and produces fine chemicals. Furthermore, Michèle Sioen is president of Fedustria (the Belgian association of textile-wood and furniture industries). She holds a degree in Economics and several postuniversity degrees.

Robert Tollet (13) Mr. Tollet is the Chairman of the Board of Directors of the Société Fédérale de Participations et d’Investissement, a public sector holding company. He is also the Chairman of the Central Council for the Economy.

Mr. Tollet holds a degree in Economics and a degree in Economic Analysis and Policy from the University of Brussels (ULB).

Paul Van de Perre (14) Mr. Van de Perre is the co-founder of GIMV (Venture Capital Firm) and was formerly a Director of Sidmar (Arcelor). He is currently Director of Grontmij NV and Greenbridge Incubator (University of Ghent).

Mr. Van de Perre is CEO of Five Financial Solutions, a division of Praxis in Management (corporate finance) and CEO of Caesar Real Estate Fund (real estate finance).

Mr. Van de Perre holds an MBA in Economics and is a certified accountant (IAB).

Lutgart Van den Berghe (15) Ms. Van den Berghe holds a PhD in economics from Gent University where she is an extraordinary professor. As executive Director, she heads the Competence Centre Entrepreneurship, Governance and Strategy at the Vlerick Leuven Gent Management School as well as GUBERNA. She lectures on Corporate Governance and serves as a non-executive Director in a number of listed and non-listed multinational companies such as Electrabel, CSM (The Netherlands), SHV Holding (The Netherlands).

43

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> our responsibilities

Members of the Belgacom Management Committee Didier Bellens

Michel Georgis

Mr. Bellens started his career at Deloitte Haskin & Sells. He held the post of financial Director of the Brussels Lambert Group until 1985, before taking on the position of Deputy Manager of the Pargesa Holding, where he was responsible for the management of holdings, mergers and acquisitions. Between 1992 and 2000 he was back at the Brussels Lambert Group, as Managing Director, taking charge of the group’s strategic participations in companies such as Royale Belge, the BBL and the CLT. He played an instrumental role in the merger between AXA and Royale Belge, the change in ownership of the BBL, and the merger between the CLT and the UFA.

Michel Georgis is since June 2007 the Executive Vice President of the Consumer Business Unit Belgacom and Chief Executive Officer of Proximus (Belgacom Mobile). He is also the Chairman of Skynet and Tango Luxembourg Boards.

Between 2000 and 2003, he served as CEO of the RTL Group, where he focused on the group’s international expansion. He concluded the merger with Pearson Television and launched the RTL Group on the stock market.

Mr. Bellens was appointed Belgacom’s President and Chief Executive Officer for the first time in March 2003. His mandate was then renewed in March 2009 for a sixyear term. Mr. Bellens is a member of the Board of Directors of Belgacom ICS, the Telindus Group, Proximus, Scarlet SA and Tango.

He is also a member of the Board of Directors of AXA Belgium, VOKA (the Flemish Chamber of Commerce and Industry) and is on the steering committee of the FEB (Federation of Enterprises in Belgium). In addition, Mr. Bellens serves as independent Chairman of the Appointments and Remuneration Committee, and as independent Director of the Board of Directors of the Compagnie Immobilière de Belgique. He is also advisor to CV Capital Partners and member of the International Advisory Council of the New York Stock Exchange.

He is also a member of the Board of Directors of the Erasmus Foundation and the ULB Foundation, and serves as Vice Chairman of the Solvay Business School’s Consultative Council.

Mr. Bellens holds a degree in management engineering from the Solvay Business School (ULB).

Scott Alcott Scott Alcott is the Executive Vice President of Belgacom’s Service Delivery Engine division. In that capacity, he oversees all technical infrastructure and operations for the group as well as wholesale activity. Previously Mr. Alcott has served as Belgacom’s Chief Operating Officer Fixed Line Services, Chief Strategy Officer, Chief Information and Technology Officer, General Manager of Marketing and Product Management, EVP (a.i.) Enterprise Business Unit and CEO (a.i.) of the Telindus Group. Prior to Belgacom, Mr. Alcott held various positions in marketing, product management and new business development for AT&T, AT&T Wireless, Ameritech and SBC. Mr. Alcott holds a B.S. in Economics from the Wharton School at the University of Pennsylvania.

Astrid De Lathauwer Astrid De Lathauwer is the Executive Vice President Human Resources. Ms. De Lathauwer joined Belgacom in 2000 and previously held the positions of Top Group Resources & Talent Director and HR Director of Belgacom. Prior to joining Belgacom, Ms. De Lathauwer worked in marketing and human resources with AT&T and Monsanto. Ms. De Lathauwer holds a degree in History of Art from the University of Ghent and a degree in International Politics and Diplomatic Sciences from the University of Leuven.

As of May 2005 Michel Georgis became the CEO of Proximus (Belgacom Mobile).

Prior to this position he was as of January 2004 the Chief Operations Officer at Proximus. He joined Proximus in January 2000 as Executive Vice President Sales, Marketing & Customer Operations.

Michel Georgis started his career in 1977 at Coca-Cola Belgium. In 1991 he joined Interbrew, where he filled different positions before becoming Sales & Marketing Director Central & Eastern Europe. Michel Georgis holds a Master’s degree in Applied Economics from the University of Leuven.

Grégoire Dallemagne Grégoire Dallemagne joined Belgacom in 2008 as Executive Vice President Strategy.

Mr Dallemagne started his career at Arthur Andersen in the audit division and then as consultant in the telecommunications team. A few years later, after a traineeship with Microsoft (USA) while completing his MBA, he embarked on his career in the Tele2 group in 2000. From assistant to the CEO of Tele2 AB, he became group financial controller and rapidly finance manager of Tele2 Luxembourg, before launching the Tele2 activities in Belgium from scratch in 2003, which he managed above expectations. In 2005, he led the acquisition of Versatel Belgium and took the position of Managing Director of Tele2 and Versatel Belgium. In 2007, KPN 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.

Michel De Coster Michel De Coster is the Executive Vice President Entreprise Business Unit.

Previously, Mr. De Coster worked in the Bosch Telecom Group as Sales Representative and rapidly evolved within the sales organization up to top management positions, finally becoming Division Manager Benelux. In 1998, he moved to Colt Telecom as Managing Director Belgium in order to set up the Belgian activities from scratch, which he managed with much success. In 2002, Mr De Coster became CEO of BT Benelux, a position he held until May 2008 when he joined the Belgacom Group. Mr. De Coster holds a Master Degree in Political and Administrative Sciences.

Ray Stewart Ray Stewart is Executive Vice President Finance & CFO. Prior to Belgacom, from 1994 until 1997 he was the Chief Financial Officer for Matav which is the incumbent Telephone Company for Hungary. From 1991 to 1994 he was the Chief Financial Officer for Ameritech International which was the International Business Development unit for Ameritech headquartered in Chicago. He has a Business Undergraduate degree in Accounting and a Masters of Business Administration in Finance. He is also a Certified Public Accountant.

Ray Stewart is also member of the Board of Directors of Nyrstar since September 2007.

corporate governance

45

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> our responsibilities

Application of the measures taken by the company in order to comply with legislation on insider trading and market manipulation (market abuse) In order to comply with legislation on insider dealing and market manipulation, Belgacom adopted a dealing code prior to the Initial Public Offering. This code aims to create awareness about possible improper conduct by employees, officers and Directors and the possible sanctions. This dealing code has been widely communicated and is available to all employees. A list of key persons is kept, and all Directors and key employees were requested to sign an affidavit that they had read, understood and agreed to comply with the dealing code. Closed periods (including prohibited periods) are defined, and any deal must be communicated to and cleared by the Head of Compliance Services before transaction (see “Compliance” section on p. 48).

Management President & Chief Executive Officer The President & Chief Executive Officer is appointed by the Belgian State by Royal Decree deliberated in the Council.

Appointments are for a renewable six-year term, and can be terminated only by Royal Decree deliberated after discussion in the Council of Ministers. In line with the 1991 Law and the Company’s Articles of Association, the President & Chief Executive Officer is a member of the Board of Directors. The President & Chief Executive Officer and the Chairman of the Board of Directors must come from different language groups.

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 President & 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. If the employer terminates the contract prematurely, except for serious misconduct, a severance pay of one year basic salary(1) will be due. In case of non renewal of the contract after six years, no indemnity is due except if the company does not give notice six months in advance. In that case an indemnity is due of half a year gross salary.

The President & Chief Executive Officer is bound by a non-competition clause of 12 months prohibition from working for a competitor of Belgacom in Belgium and in those countries where Belgacom generates at least 5% of its consolidated revenues and will receive an amount equal to one year’s salary as compensation.

Management Committee The members of the Management Committee are appointed and dismissed by the Board of Directors on proposal of the President & Chief Executive Officer after consultation of the Nomination and Remuneration Committee. The powers of the Management Committee are determined by the President & Chief Executive Officer. The Management Committee’s role is to assist the President & Chief Executive Officer in the exercise of his duties.

The Management Committee aims to decide by consensus, but in the event of disagreement, the view of the President & Chief Executive Officer will prevail.

The Management Committee generally meets on a weekly basis.

In 2008, the Belgacom Management Committee was composed of the following members, in addition to the President & Chief Executive Officer (see table below).

Name Scott ALCOTT Grégoire DALLEMAGNE Astrid DE LATHAUWER Michel DE COSTER

Age 42 36 45 46

Michel GEORGIS

55

Ray STEWART

59

Position Executive Vice President Service Delivery Engine Executive Vice President Strategy Executive Vice President Human Resources Executive Vice President Enterprise Business Unit & Chief Executive Officer of Telindus Group N.V. Executive Vice President Consumer Business Unit & Chief Executive Officer Proximus (Belgacom Mobile) Executive Vice President Finance

Mr. William Mosseray was member of the Belgacom Management Committee until 14 April 2008 after which date he became CEO of Telindus International.

The members of the Belgacom Management Committee have a contractual termination clause with a maximum indemnity of two years of remuneration after 12 years of service.

The members of the Belgacom Management Committee, who are bound by a non-competition clause of 12 months prohibition from working for any other mobile or fixed licensed operator active on the Belgian market, will receive an amount equal to six months salary as compensation.

(1) Basic annual salary + holiday pay + 13th month = EUR 910,278.60.

corporate governance

Executive Remuneration The Nomination & Remuneration Committee sets the remuneration policy and individual packages for the President & CEO and the members of the Management Committee.

Belgacom has developed an executive remuneration policy which rewards executives competitively, taking into account Group, Line of Business and Individual performance. The company wants to position executive pay towards the median in the market for base salaries, and towards the upper quartile for total remuneration in case of sustained excellent performance. This positioning is verified on a regular basis by the Nomination & Remuneration Committee, by benchmarking executive pay against a set of peer companies in the ICT sector, both in Belgium and in Europe. The remuneration philosophy strives to align management and shareholders’ interests.

Short term employee benefits

In option Scott ALCOTT Grégoire DALLEMAGNE Michel DE COSTER Astrid DE LATHAUWER Michel GEORGIS Ray STEWART Didier BELLENS

2008 30,336 55,000 55,000 21,457 30,151 39,955 82,967

Grants vest over a period of three years in equal instalments, and are exercisable during a period of seven years. 12,983 options were exercised during 2008 by the members of the Management Committee. On a cumulative basis, the President & CEO still holds 371,703 options, and current other members of the Management Committee 534,601 options.

Base salaries of the President & CEO and the Management Committee are reviewed annually by the Nomination & Remuneration Committee, based on an extensive review of performance and potential assessment provided by the President & CEO, as well as external benchmarking data.

Adapted remuneration package of the President & CEO as from 2009

The annual bonus scheme rewards performance against a set of predefined Key Performance Indicators, which are set by the Board of Directors upon advice of the Nomination & Remuneration Committee.

For 2008, these performance indicators included financial metrics as well as metrics related to customer satisfaction and employee commitment. The amount of remuneration and other benefits granted directly or indirectly to the members of the Belgacom Management Committee in 2008, by Belgacom or by any other undertaking belonging to the Belgacom Group is (benefit based on gross or net remuneration, depending on the type of benefit, employer social contribution not included):

As from this date, the annual base salary of the President & CEO will equal EUR 775,000 + holiday pay + 13th month = EUR 910,278.60 in total. This amount is indexed. The target bonus scheme foresees a target bonus percentage of 70% of the annual base salary (EUR 775,000).

(in EUR) Short-term employee benefits (2)

President & CEO 1,372,770

Other Members of the Management Committee 3,052,156

Long-term employee benefits Long-term employee benefits consist of post-employment benefits and equity benefits. The members of the Management Committee participate in a complementary pension scheme. In 2008, the company contributed an amount of EUR 566,606 for the President & CEO, and an amount of EUR 1,144,275 for the other members of the Management Committee in insurance premiums for post-employment benefits. On an annual basis the members may also receive a stock-option grant.

On an individual basis, the Belgacom Management Committee received the following options:

(2) Basic annual salary + variable remuneration.

The contract granting a new six-year mandate to the President and CEO as from 1 March 2009 adapted the remuneration package of the President & CEO.

With respect to the Long Term employee benefits, the contract granting a new mandate foresees a stock option grant which, on target, equals a value of 60% of the annual base salary. The characteristics of this stock option grant are the same as in previous years. Furthermore the President & CEO participates in a complementary pension scheme which foresees an annual indexed contribution of EUR 73,495.45.

Board of Auditors The Board of Auditors of the company is composed as follows: > ERNST & YOUNG Réviseurs d’Entreprises S.C.C.R.L./Bedrijfsrevisoren B.C.V.B.A., represented by Marnix Van Dooren, also Chairman of the Board of Auditors; > Romain LESAGE, Member of the Court of Auditors; > Pierre RION, Member of the Court of Auditors; > CALLENS, GUEVAR, VAN IMPE & Co S.C.C./B.C.V., represented by Herman VAN IMPE. Ernst & Young is responsible for the audit of the consolidated financial statements of Belgacom and its subsidiaries.

The other members of the Board of Auditors are, together with Ernst & Young, entrusted with the audit of the non-consolidated financial statements of the parent company.

Mr. Lesage’s mandate will expire on 30 June 2014, the mandates of Mr. Rion, Ernst & Young, and Callens, Guévar, Van Impe & Co. will expire at the annual General Shareholders Meeting in 2010.

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Additional fees paid to the statutory auditors In accordance with the provisions of Article 134 § 2 of the Belgian Companies Code, Belgacom declares the supplementary fees that it granted during the 2008 financial year to two auditors, members of the Joint Auditors: Ernst & Young Réviseurs d’entreprises S.C.C.R.L. and Callens, Guevar, Van Impe & Co. S.C.C. The Group expend during the year 2008 an amount of EUR 394,133 for non-mandate fees for Ernst & Young Réviseurs d’entreprises S.C.C.R.L., the Group’s auditors. This amount is detailed as follows: (in EUR) Other mandatory audit missions Tax advice Other missions Total

Auditor 46,950

Network of auditor 45,435

0 146,041 192,991

30,270 125,437 201,142

The Group also expended during the year 2008 an amount of EUR 2,750 for non-mandate fees paid to Callens, Guevar, Van Impe & Co. S.C.C. This amount is detailed as follows: (in EUR) Other mandatory audit missions Tax advice Other missions Total

Auditor 2,750 0 0 2,750

Government Commissioner The State has appointed Mr. Roger De Borger as Government Commissioner in order to supervise, in conformity with the 1991 Law, the management of Belgacom from an administrative point of view.

Departure from the Belgian Corporate Governance Code Belgacom complies with the principles and provisions of the Belgian Corporate Governance Code, except provisions 4.6, 5.3/1, 5.4/1 and 8.9. Although provision 4.6 stipulates that mandates of Directors should not exceed four years, the mandates of Belgacom Directors are for six years as prescribed by article 18 of the 1991 Law. Contrary to provisions 5.3/1 and 5.4/1, the Company has chosen to reflect also in the Nomination & Remuneration Committee the balance between the Directors appointed by the Belgian State and the independent Directors.

Given its current shareholder structure, contrary to provision 8.9, the Articles of Association do not provide for shareholders representing 5% of the capital to submit proposals to the Annual General Meeting.

Under the Articles of Association, shareholders must represent at least one-fifth of the company’s share capital to be entitled to do so.

Compliance Role of Compliance at Belgacom In an increasingly complex legal and regulatory context and a changing business environment, compliance plays an important role in the business world.

The Belgacom Group Compliance Office is responsible for coordinating compliance activities within the Belgacom Group, explaining the applicable rules, providing management with the required tools to encourage compliance, and ensuring a consistent approach to compliance within the Group. All 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”. This commitment will be renewed every year. 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.

Organization of compliance activities The Compliance Office is managed by the Head of Compliance Services, 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.

The Compliance Program Ten compliance domains form the pillars of the Belgacom Compliance Program: > Code of Conduct; > Corporate governance; > Regulatory compliance; > Accounting practices; > Risk management; > Competition law; > Chinese walls; > Privacy; > Environment; > Dealing Code.

These domains were determined on the basis of the company’s specific activities and operational environment, and are overseen by a “domain owner”. A specific compliance plan, with five components (policy drafting, communication, training, internal control and processes, and reporting), is drawn up for each domain.

However, given the organizational changes in the Belgacom Group, a new structure has been developed, striving for a compliance organization at group level based upon Key Group Policies. In 2008, the Head of Compliance Services reported twice to the Audit & Compliance Committee.

In addition to its coordination task, the Compliance Office is also responsible for ensuring Belgacom Group employees recognise the need to be fully aware of and to comply with internal and external regulations. Several awareness-raising campaigns promoting employee compliance activities within the company have been organized.

general information

key performance indicators

Financials Revenues (before non-recurring items) (in EUR million)

Workforce 2008 (in Full Time Equivalents)

Basic earnings per share (in EUR)

Year ended 31 December

3

2007

2008

6,065

5,978

0

8

Total revenue

6,065

5,986

EBITDA(1) before non-recurring items

2,077

1,990

EBITDA(1)

2,031

1,905

-774

-743

1,256

1,161

1

-109

1,258

1,053

-300

-254

958

800

Key figures (in EUR million) 2

Total revenue before non-recurring items CBU: 2,253 EBU: 2,696 SDE: 415 S&S: 34 ICS: 812

Net income (Group share) (in EUR million) 1,000

CBU: 5,979 EBU: 5,479 SDE: 3,421 S&S: 2,263 ICS: 229

800

Operating income (EBIT)

600

Net finance revenue / (costs)

400

Income before taxes

200

Tax expense

0 08

08

1,500

500

07

07

Depreciation and amortization

200 0

0

Investments (in EUR million)

1,000

400

Non-recurring revenue

Free Cash Flow (in EUR million)

800 600

1

07

08

0 07

08

Net income (Group share) (1) Earnings Before Interests, Taxes, Depreciation and Amortization.

“2008 proved to be a challenging year marked by competitive and regulatory pressure.

Nevertheless Belgacom met its 2008 full-year guidance on all key metrics and confirmed its solid operating and financial profile.”

Corporate name and legal form

Objects of the Company

The autonomous public-sector company Belgacom is a Société anonyme de droit public/Naamloze vennootschap van publiek recht (limited liability company under public law) as defined by the Law of 21 March 1991 on the reform of certain public-sector commercial undertakings and organized under the laws of Belgium.

As described in the Article 3 of the Articles of Association, the Company’s objects are:

The Company is subject to the statutory and regulatory provisions of commercial law applicable to companies limited by shares in all matters not expressly determined by (or by virtue of) the Law of 21 March 1991 or specific legislation of any kind.

Registered Office Belgacom SA under public law Bd. du Roi Albert II 27 B-1030 Brussels VAT BE 0202.239.951 Brussels Register of Legal Entities

Consultation of the issuer’s documents The public documents concerning the issuer can be consulted at the registered office.

Date of constitution The company was established as an autonomous public sector company, governed by the Law of 19 July 1930 setting up the Belgian National Telephone and Telegraph Company, the RTT (Régie des Téléphones et Télégraphes/ Regie van telegraaf en -telefoon). The transformation of Belgacom into a SA of public law was implemented by the Royal Decree of 16 December 1994, which was published in the Belgian Official Gazette on 22 December 1994, and went into effect on the same day.

1. to develop services within the field of telecommunications in Belgium or elsewhere; 2. to take all actions aimed at promoting, directly or indirectly, its activities or ensuring optimal use of its infrastructure; 3. to acquire participating interests in bodies, companies or associations – whether existing or to be created, Belgian, foreign or international, and public or private sector – that may contribute, directly or indirectly, to the achievement of its corporate objects; 4. to provide radio and television broadcasting services.

Disclaimer This communication contains forward-looking statements, including statements about the Company’s beliefs and expectations. These statements are based on the Company’s current plans, estimates and projections, as well as its expectations of external conditions and events. Forward-looking statements involve inherent risks and uncertainties and speak only as of the date they are made. The Company undertakes no duty to and will not necessarily update any of them in light of new information or future events, except to the extent required by Belgian law. The Company cautions investors that a number of important factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements.

Editor-in-chief: Ingvild Van Lysebetten Vice President Group Communication Bd du Roi Albert II/Koning Albert II-laan, 27 B - 1030 Brussels Conception and coordination: Frédéric Herzeele - Corporate Communication Manager Franck Vanbelle - Corporate Content & Publication Manager

Operationals

Design and prepress: Chris Communications www.chriscom.be Printing: Snel

2008 proved to be a successful year for Belgacom TV, with the customer growth exceeding previous year.

The Belgacom Group launched several initiatives to acquire new mobile customers in an increasingly competitive environment.

The launch of convergent bundled offers in the form of packs increased the success of multiplay.

Explore offers services and applications that allow professional customers to benefit from flexible, convergent solutions.

Pictures: Jean-Michel Byl, Reporters and Belgacom

Printed on certified

paper.

annual report

08

highlights > January 2008

• The EDS-Telindus consortium wins the new ICT contract of the Flemish administration. This outsourcing contract for seven years, worth an estimated EUR 582 million, is the most important contract ever awarded in Flanders.

> February 2008 • Belgacom announces the acquisition of Scarlet S.A. This deal required the approval of the competent competition authorities.

• The Belgian Post and Belgacom conclude an agreement whereby the former acquires 50% of Belgacom’s holdings in Certipost, to secure 100% ownership of the company’s shares.

• Belgacom announces the acquisition of Poncin Ltd, a telecom services reseller. Its aim is to strengthen the Group’s position in the Liège region.

> March 2008 • Belgacom and Proximus launch Together, a new calling package which allows customers to call free of charge on weekends.

• The Belgacom Group announces the appointment of Michel De Coster as Executive Vice President of the Enterprise Business unit.

• Belgacom ICS and Omantel reinforce their partnership by investing in the Europe India Gateway (EIG).

> June 2008

Visit Belgacom’s website: www.belgacom.com Belgacom’s Annual Report is also published in Dutch and in French.

• Belgacom breaks the silence and isolation by launching visiophone 9000 and the Video Talk service, both specially designed for the elderly and the deaf.

> October 2008 • Proximus improves internet browsing on mobile phones by offering the Google search engine on Vodafone live!

• Maurice Lippens retires from his post on the Belgacom Board of Directors.

> November 2008 • Belgacom celebrates 10 years of ADSL and highlights that it was one of the first operators in the world to launch this technology.

• Belgacom announces the issuance of a public bond in Belgium and the Grand Duchy of Luxembourg worth EUR 125 million.

• Belgacom International Carrier Services is elected Best Wholesale Carrier.

> December 2008

> May 2008

Ingvild Van Lysebetten Vice President Group Communication Bd du Roi Albert II/Koning Albert II-laan, 27 B - 1030 Brussels Tel: + 32 2 202 40 23 Fax: + 32 2 203 65 93 E-Mail: about@belgacom.be

• Belgacom renews the management of its subsidiary, Euremis SA, by appointing Ulrik Van Schepdael to the position of CEO.

> April 2008 • The Belgacom Group announces the appointment of Grégoire Dallemagne as Executive Vice President Strategy.

For further information, please contact

by offering its customers 14 channels and numerous movies in its video-on-demand catalog.

• Belgacom finalizes the acquisition of Scarlet.

channels in High Definition.

Nancy Goossens Vice President Investor Relations Bd du Roi Albert II/Koning Albert II-laan, 27 B - 1030 Brussels Tel: + 32 2 202 82 41 Fax: + 32 2 201 54 94 E-Mail: investor.relations@belgacom.be

• Belgacom enhances its high-definition television offer

• Belgacom concludes an agreement with Twentieth Century Fox to offer Fox movies in Belgacom TV’s on-demand catalog.

• Belgacom TV launches video on demand and TV

For financial information, please contact

> September 2008

• Belgacom acquires the broadcasting rights of the Jupiler League for the 2008-2011 seasons.

• Belgacom offers its customers more browsing convenience by increasing the speeds and monthly volumes of its ADSL subscriptions.

> July 2008 • Belgacom acquires Mobile-for, a company which specializes in pay-by-SMS parking.

> August 2008 • Belgacom strengthens its presence in Luxembourg and finalizes the acquisition of Tango, the second mobile operator in Luxembourg.

• Belgacom takes note of the IBPT’s decision to waive the tacit renewal of Proximus’s GSM (2G) license.

• Belgacom grants an interim dividend of EUR 0.50 per share.

> January 2009 • Scarlet announces its “strategic business plan” for 2009-2013, and the sale of its network.

> February 2009 • Belgacom launches Happy Time One, a calling package which combines fixed and mobile tele­phony and allows the customer to call free of charge in the evening and on weekends, from a fixed line or mobile phone, to all fixed and mobile numbers in Belgium.

> March 2009 • Belgacom presents its annual results and confirms the stability of its financial and operational profile.

• Belgacom acquires a 40% share in TUNZ, a company specialized in mobile payments.