Annual Report 2009 (EN)

For CSR information:

Concetta Fagard Vice President Group CSR, Sponsoring, PR and Events Bd du Roi Albert II/Koning Albert II-laan, 27 B - 1030 Brussels Tel: + 32 2 202 89 03 E-Mail: csr@belgacom.be

09

Florence Coppenolle Vice President Group Communication Bd du Roi Albert II/Koning Albert II-laan, 27 B - 1030 Brussels Tel: + 32 2 202 40 23 E-Mail: about@belgacom.be

annual report

For further information:

belgacom 09

The Belgacom Group Bolstered by its long-standing experience as Belgium’s incumbent operator and thanks to the multiple talents of its teams, the Belgacom Group is the country’s reference provider of integrated telecommunications services. By continuously investing in state-of-the-art technology, we are able to offer our customers high-speed solutions on all networks, both fixed and mobile.

For financial information:

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

Our mission

As a responsible company, Belgacom wants to be the preferred provider of intuitive end-to-end solutions combining fixed and mobile telecom, IT and media, thereby empowering its customers to master and enrich their professional and private lives in a sustainable way.

Our organisation

• Residential customers are taken care of by the Consumer Business Unit (CBU).

• Professional customers, meanwhile, benefit from the services of the Enterprise Business Unit (EBU).

• Service Delivery Engine and Wholesale (SDE&W) groups together the network and IT services. Its wholesale activity offers telecommunications services to other operators and suppliers on the Belgian market.

• Staff and Support (S&S) brings together all the horizontal functions that support the Group’s activities.

In addition to these four pillars, BICS, a joint venture of Belgacom, MTN and Swisscom, is in charge of international carrier services.

Our main brands

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

Making your life easier Respecting your Simpler and richer communications environment and the society thanks to convergence

A sustainable and safe world thanks to our CSR commitments

Imagining your future

Always further through open innovation

For CSR information:

Concetta Fagard Vice President Group CSR, Sponsoring, PR and Events Bd du Roi Albert II/Koning Albert II-laan, 27 B - 1030 Brussels Tel: + 32 2 202 89 03 E-Mail: csr@belgacom.be

09

Florence Coppenolle Vice President Group Communication Bd du Roi Albert II/Koning Albert II-laan, 27 B - 1030 Brussels Tel: + 32 2 202 40 23 E-Mail: about@belgacom.be

annual report

For further information:

belgacom 09

The Belgacom Group Bolstered by its long-standing experience as Belgium’s incumbent operator and thanks to the multiple talents of its teams, the Belgacom Group is the country’s reference provider of integrated telecommunications services. By continuously investing in state-of-the-art technology, we are able to offer our customers high-speed solutions on all networks, both fixed and mobile.

For financial information:

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

Our mission

As a responsible company, Belgacom wants to be the preferred provider of intuitive end-to-end solutions combining fixed and mobile telecom, IT and media, thereby empowering its customers to master and enrich their professional and private lives in a sustainable way.

Our organisation

• Residential customers are taken care of by the Consumer Business Unit (CBU).

• Professional customers, meanwhile, benefit from the services of the Enterprise Business Unit (EBU).

• Service Delivery Engine and Wholesale (SDE&W) groups together the network and IT services. Its wholesale activity offers telecommunications services to other operators and suppliers on the Belgian market.

• Staff and Support (S&S) brings together all the horizontal functions that support the Group’s activities.

In addition to these four pillars, BICS, a joint venture of Belgacom, MTN and Swisscom, is in charge of international carrier services.

Our main brands

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

Making your life easier Respecting your Simpler and richer communications environment and the society thanks to convergence

A sustainable and safe world thanks to our CSR commitments

Imagining your future

Always further through open innovation

General

Highlights

information

Digital television record sales

752,000

Corporate name and legal form

Belgacom TV clients

Key International Accounts Penetration of our digital tele­ vision increased at a rate never seen since its launch: 246,000 new clients, up nearly 50 % on 2008, and making a total of 752,000 clients. These record sales propelled Belgacom TV into the top three IPTV platforms worldwide for innovation and rapid growth.

Bizz Launch of Bizz, our new service concept for smaller firms. Bizz offers totally flexible converged solutions combining fixed lines, smartphones, mobile internet and even 3G-embedded laptops.

And it guarantees a superior level of service, on-line, by phone, and in the new Bizz Corners in our shops across Belgium.

Justine Henin

announces her return to competition with Belgacom.

Our new partnership with the tennis star enhances the synergies between our sponsorship and our corporate social responsibility.

Skynet

Skynet became the number one internet portal in Belgium, with visitors up 13% in a year.

It now receives an average of 3.3 million visitors a month, attracted by its comprehensive and varied contents - news updates, weather forecasts, classified advertisements and links to blogs.

Creation of Key International Accounts, which provide each major international business customers, with its own Key International Account manager.

This way we provide optimal service for cross-border business, and address the needs of our customers outside the six countries where we have a direct presence.

5 million mobile customers Proximus reaches 5 million mobile customers - a new record, and particularly striking in a country with population barely double that figure. The success is due to the quality of service, the range of additional benefits - such as an allowance of free text messages - and the flexibility of offers.

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.

-70% CO 2

emissions

PingPing Launch of PingPing, Belgacom’s micropayment system via mobile phones.

Building on the success of mobile parking services, it opens up the scope for micropayments in other fields. Partnerships and pilot projects are underway with Accor Services, Coca-Cola and Delhaize.

Reduction by 70% of the CO2 emissions of our Belgian operations over the period 2007-2020.

Promotion of green solutions for our customers, in order to enable a low-carbon society.

Innovations Award

‘Anne’, an exclusive digital television station

Belgacom wins the Innovations Award for Fixed Network Infrastructure for our Broadway Project, which includes the deployment of a high-speed broadband network for the delivery of advanced triple play services across Belgium.

Sales of packs reached 258,000 in the residential segment, taking the total to 560,000, an increase of 85% year-to-year and reflecting the genuine interest of our clients in convergent products.

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.

+85% increase in

packs sales

BICS and MTN BICS and MTN announce the closing of the transaction which results in a combination of their international carrier services. The deal pushes the new BICS into the top 4 operators worldwide. Not only is BICS now the largest international carrier in Africa; it has also become one of the leading actors in the consolidation of the sector.

Launch of ‘Anne’, an exclusive digital television station which is included in Belgacom’s standard TV offer. It broadcasts non-stop music clips, specials and concerts featuring Flemish artists. For this new Flemish channel, Belgacom is cooperating with the Vlaamse Media Maatschappij.

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

TOP 5 The group’s fibre optic network is recognised at the Broadband World Forum in Paris among the top five in the world, ranking alongside the leading operators in many much larger countries.

2010

Belgacom is awarded the Top Employer label. It is a recognition of the Group’s investment in its staff, in training, communication, and offering a supportive working environment that promotes and develops talent and assures a good work-life balance.

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.

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

The CO2 emissions related to the printing and distribution of this report have been totally offset with CO2Logic, by supporting a renewable energy project in India Our report is printed on Satimat Green coated paper, made out of 60% recycled fibers, 40% FSC virgin fibers and on Cocoon Offset extra-white, FSC-certified 100% recycled paper. Vegetable-based ink and non-solvent adhesives are used. The printing plates and ink recipients are recycled. The waste paper is collected and then compressed and recycled by authorized bodies. The printer is FSC and PEFC certified.

Disclaimer

This communication contains forwardlooking 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. Forwardlooking 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: Florence Coppenolle Vice President Group Communication Bd du Roi Albert II/ Koning Albert II-laan, 27 B - 1030 Brussels Conception and coordination: Franck Vanbelle - Corporate Communication Project Manager Design and prepress: Chris Communications www.chriscom.be Printing: Snel Pictures: Jean-Michel Byl, Pascal Broze, Reporters and Belgacom

General

Highlights

information

Digital television record sales

752,000

Corporate name and legal form

Belgacom TV clients

Key International Accounts Penetration of our digital tele­ vision increased at a rate never seen since its launch: 246,000 new clients, up nearly 50 % on 2008, and making a total of 752,000 clients. These record sales propelled Belgacom TV into the top three IPTV platforms worldwide for innovation and rapid growth.

Bizz Launch of Bizz, our new service concept for smaller firms. Bizz offers totally flexible converged solutions combining fixed lines, smartphones, mobile internet and even 3G-embedded laptops.

And it guarantees a superior level of service, on-line, by phone, and in the new Bizz Corners in our shops across Belgium.

Justine Henin

announces her return to competition with Belgacom.

Our new partnership with the tennis star enhances the synergies between our sponsorship and our corporate social responsibility.

Skynet

Skynet became the number one internet portal in Belgium, with visitors up 13% in a year.

It now receives an average of 3.3 million visitors a month, attracted by its comprehensive and varied contents - news updates, weather forecasts, classified advertisements and links to blogs.

Creation of Key International Accounts, which provide each major international business customers, with its own Key International Account manager.

This way we provide optimal service for cross-border business, and address the needs of our customers outside the six countries where we have a direct presence.

5 million mobile customers Proximus reaches 5 million mobile customers - a new record, and particularly striking in a country with population barely double that figure. The success is due to the quality of service, the range of additional benefits - such as an allowance of free text messages - and the flexibility of offers.

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.

-70% CO 2

emissions

PingPing Launch of PingPing, Belgacom’s micropayment system via mobile phones.

Building on the success of mobile parking services, it opens up the scope for micropayments in other fields. Partnerships and pilot projects are underway with Accor Services, Coca-Cola and Delhaize.

Reduction by 70% of the CO2 emissions of our Belgian operations over the period 2007-2020.

Promotion of green solutions for our customers, in order to enable a low-carbon society.

Innovations Award

‘Anne’, an exclusive digital television station

Belgacom wins the Innovations Award for Fixed Network Infrastructure for our Broadway Project, which includes the deployment of a high-speed broadband network for the delivery of advanced triple play services across Belgium.

Sales of packs reached 258,000 in the residential segment, taking the total to 560,000, an increase of 85% year-to-year and reflecting the genuine interest of our clients in convergent products.

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.

+85% increase in

packs sales

BICS and MTN BICS and MTN announce the closing of the transaction which results in a combination of their international carrier services. The deal pushes the new BICS into the top 4 operators worldwide. Not only is BICS now the largest international carrier in Africa; it has also become one of the leading actors in the consolidation of the sector.

Launch of ‘Anne’, an exclusive digital television station which is included in Belgacom’s standard TV offer. It broadcasts non-stop music clips, specials and concerts featuring Flemish artists. For this new Flemish channel, Belgacom is cooperating with the Vlaamse Media Maatschappij.

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

TOP 5 The group’s fibre optic network is recognised at the Broadband World Forum in Paris among the top five in the world, ranking alongside the leading operators in many much larger countries.

2010

Belgacom is awarded the Top Employer label. It is a recognition of the Group’s investment in its staff, in training, communication, and offering a supportive working environment that promotes and develops talent and assures a good work-life balance.

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.

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

The CO2 emissions related to the printing and distribution of this report have been totally offset with CO2Logic, by supporting a renewable energy project in India Our report is printed on Satimat Green coated paper, made out of 60% recycled fibers, 40% FSC virgin fibers and on Cocoon Offset extra-white, FSC-certified 100% recycled paper. Vegetable-based ink and non-solvent adhesives are used. The printing plates and ink recipients are recycled. The waste paper is collected and then compressed and recycled by authorized bodies. The printer is FSC and PEFC certified.

Disclaimer

This communication contains forwardlooking 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. Forwardlooking 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: Florence Coppenolle Vice President Group Communication Bd du Roi Albert II/ Koning Albert II-laan, 27 B - 1030 Brussels Conception and coordination: Franck Vanbelle - Corporate Communication Project Manager Design and prepress: Chris Communications www.chriscom.be Printing: Snel Pictures: Jean-Michel Byl, Pascal Broze, Reporters and Belgacom

Contents 02

Building cohesion

Interview with Theo Dilissen, Chairman of the Board

06

Forward for you

10

Performing in a challenging operating context

CSR Corporate Social Responsibility (CSR) is embedded in our strategy and operations.

This visual illustrates CSR initiatives in the chapters of our annual report. Our detailed CSR report is available on page 52.

24

Forward for our customers

• Suiting the individual • Empowering our business clients • Leading in international carrier service

44

86

Forward with our people

Forward with our shareholders

• Shareholder information

Forward on our strengths

• Moving forward to enrich people’s lives • Innovation and so much more • Investing in our systems

Forward with our responsibilities

• Enhancing access to communications • Enabling a low-carbon society • Communicating on electromagnetic fields and health • Promoting a positive working culture • Developing a responsible supply chain • Supporting our Communities

Interview with Didier Bellens, President and CEO

• Managing complex trends • Adapting to regulation

16

52

94

Forward with transparency

• Corporate Governance

107

Glossary

108

Financial Report

• Key figures • Management report • Consolidated financial statements • Non-consolidated financial statements

• Engaging our people

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

Belgacom Annual Report 2009 - 1

Every successful company is constantly evolving.

2

Interview

Building cohesion

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

What were the key developments in 2009 that shaped Belgacom for 2010?

Theo Dilissen : Every successful company is constantly evolving, but 2009 saw us make one of the biggest changes for many years. We integrated the different components of the Group. The process was formally completed only at the start of 2010, but it is a task that we worked on assiduously throughout 2009, so as to make it possible.

their services any place, any time, via fixed and mobile networks. And their expectations are legitimate.

Our new configuration is our response to their expectations. It is the concrete expression of our adaptation to what our customers want. Our different brands continue to exist, but the way we offer them will provide our customers with total solutions. The reorganisation will make their lives easier. And we will be in a better It is a step-change in the way the Group position not only to meet their expectaoperates. Now we are a coherent organi- tions, but to be ahead of them! sation that will allow us to live up to our motto of convergence more than ever be- What does it mean for employees? fore. Convergence is not just a buzzword. TD: The 17,000 employees in the “new” We have changed our way of working so Belgacom are all winners from the we can match promise with performance. change. They will gain in terms of caThe integration has given us a faster track reer advantages, because our coherence to the future. opens up more career paths. They will gain in terms of job mobility opportuniOf course the story goes back further than last year, to our takeover of Telindus and ties, across a large, solid Group. They will the acquisition of the whole of Proximus gain in confidence, because they can be in 2006. The integration is the logical sure of our continuous investment in the Group’s future. And they will gain in terms conclusion to this period of growth. of job satis­faction, as clearer management structures allow clearer definitions of roles What will the reorganisation mean for and clearer evaluations of performance. customers?

TD: In a word, ease. They will get total At the same time, we have ensured equitasolutions faster and more efficiently. ble treatment for all our staff, throughout the Customers’ expectations are constantly numerous administrative changes that the rising. As the boundaries between integration inevitably implies. As chairman different technologies become blurred, of the parity commission, I have seen at customers increasingly expect to access first hand how our social partners have

“We have chosen to put the accent on innovation, on responsiveness to our customers, on our responsibility to our workforce and the communities we work in.”

17,000

The employees in the “new” Belgacom are all winners from the change Belgacom Annual Report 2009 - 3

“We have already shown that we have been able to stabilise the share value in difficult times, and to give a better reward to our shareholders than many other companies in the sector.”

helped deliver the new structures in an atmosphere of social peace and cons­ tructive collaboration – and I recognize their contribution.

What does it mean for shareholders?

TD: A better guarantee than ever of the future health of the Group. The reorganisation allows the Group to focus with new precision on its markets, and to deploy its resources with greater efficiency. We have already shown that we have been able to stabilise the share value in difficult times, and to give a better reward to our shareholders than many other companies in the sector. Now, with streamlined processes and an optimised organisation, we are poised for continued success against the challenging competitive context we operate in.

What other major changes are you proud of?

TD: Our number one goal now is to give absolute priority to the customer – what we call “customer centricity”. This implies a quiet revolution in the way we work. Of course we have always been customer conscious. But this is something more.

It means that we, Belgacom, adapt what we do so that our customers do not have to. At board level as well as at management level, this is now at the top

4

of the agenda, and we have put in place mechanisms to make it happen throughout the Group.

We are checking ourselves out while we do it, too. To make sure the policy becomes routine practice, we are conducting constant surveys of satisfaction among every segment of our customer base, with a clear system of tracking from red to green, according to results.

Management is reporting this with regularity to the Board. And we are instituting policies on pay and bonuses that reinforce our ambition.

It is impossible to talk of the changes in 2009 without mentioning another of the breakthroughs of the year – the merger of BICS with MTN ICS. This has given us a seat at the top table of the world’s international carrier services. And above all, it has demonstrated the Group’s sound judgement in its growth strategy, and on deals that deliver real synergy.

You sound as if you envisage a total transformation of Belgacom?

TD: This is what is at stake. We know that we have to complete the transformation from being merely engineers providing networks to a coordinated Group offering a complex array of services and

Interview

solutions – and doing so in a way that is easy for our customers. Our networks remain vital, and we continue to develop them – but if we do not attract and retain customers, our networks will serve for nothing.

The world we operate in is in constant evolution – today we are leaders in offering quadruple play packages, in the extent of our networks, and in the quality of our IPTV. But we can see the advent of cloud computing and changes in the regulatory environment and the rise of new competitors and other seismic shifts in the way that IT services are developing. We must be able to evolve, too.

At Board level, it is our role to evaluate our top management team and make sure we are focusing on what counts, constantly assessing how we are performing against new challenges. I want to thank my fellow Board members for their invaluable assistance and guidance throughout the year.

We are also fortunate in the team we have, from top management to our staff at every level of the Group, and we are proud of the changes we have made.

I also have to thank formally management for its solid performance. Our

shareholders too are beneficiaries: we have been able to recommend a dividend for the year that will total EUR 2.08 per share. We have also instituted a new shareholder return policy that clearly reflects the company’s overall shareholder remuneration intentions, with a commitment to return, in principle, most of its annual free cash flow, to its shareholders.

From the financial result of the year 2010, we expect to return an annual dividend of EUR 2.18 per share.

We have chosen to put the accent on innovation, on responsiveness to our customers, on our responsibility to our workforce and the communities we work in, and on constant alertness to change.

I am certain that we are building from this the cohesion that will continue to benefit our shareholders too.

“Our number one goal now is to give absolute priority to the customer – what we call “customer centricity”. This implies a quiet revolution in the way we work. Of course we have always been customer conscious. But this is something more. It means that we, Belgacom, adapt what we do so that our customers do not have to.”

2.08

EUR dividend per share in 2009 Belgacom Annual Report 2009 - 5

2009 was a year of records for the Group.

6

Interview

Forward for you

Didier Bellens is confident about the future. Belgacom Group proved how strong it is in 2009, and it is now prepared to build on those strengths.

Even in a tough market and difficult economic times, the Group is in an unrivalled position to bring new satisfaction to its clients, shareholders and employees, and to act as a responsible company in the community it is a part of.

How did Belgacom cope in 2009?

Didier Bellens: 2009 was a year of records for the Group. Just look at what we achieved.

We had huge success with our packs. A record number of new customers opted for Belgacom TV. We now have more than 5 million mobile customers, and 1.5 million broadband customers. Our solutions for business clients are highly appreciated by professionals, making us the preferred ICT partner for this market. Our 3G network – outstanding for quality and for its 96.7% coverage – has enabled us to push mobile internet revenues by 12% in the consumer segment and 20% in the business segment. Our international carrier services grew by almost 10%.

Did you feel the effect of the crisis?

DB: We did well, despite the economic and financial downturn. Our consumer business was very resilient and showed no significant impact from the slow economy. On the contrary, we saw a surge in new customers for our products and services, and our existing customers remained loyal, despite the fierce competition. The impact on our enterprise business has been within expectations, with some weakness in IT and a slowdown in mobile usage.

We could see the crisis was coming. It did not change our strategy. We continued to invest in the future, but we were able to do so because one of our strengths has been to maintain a smart mix of investment, innovation and cost control over years. Our strategy paid off yet again, even in challenging times.

And our new products and services have

been additional drivers to keep us moving forward on our strengths.

So how did you keep moving forward?

DB: We kept on investing in innovative networks, in higher-speed delivery – with VDSL2, in more efficiency – with our Move-to-all-IP, and in new products and services – like TV or mobile payments. As a result, Belgacom is one of the three fastest-growing and most innovative IPTV services in the world, and we are among the top five worldwide for fibre deployment.

We have also reconfirmed this year that we want to enable sustainable growth and seize the opportunities offered by developments in e-health, e-government, and green initiatives such as smart management of domestic energy consumption. We are now increasingly offering technologies, products and services that respect the environment, and we want to help our customers to manage their own impact on climate change.

Where did growth come from?

DB: Nowadays, 78% of our revenues come from products and services that did not exist 15 years ago. Our strategy has developed alongside the evolution of the technology, and ahead of the market. Not only have we consistently been innovative in providing – and often in creating – stand-alone products and services, in everything from fast networks to smart phones. We have also been equally innovative over recent years in convergence – in providing combinations of our products and services in packs.

>5

million

mobile customers

Belgacom TV subscribers 752,000

506,000 305,000 140,000

2006

2007

2008

2009

Belgacom Annual Report 2009 - 7

“We have a clear vision and want to develop as a more innovative, more customer centric and more responsible company.”

BICS voice volumes (in billion of minutes)

19.3 16.2 12.2

2006

8

13.8

2007

2008

2009

Our results show how well our convergence strategy is paying off. Converged products are attractive in themselves to our customers.

And for us, they provide a perfect platform for cross-selling. This is how the strategy increasingly feeds our growth. We offer existing customers in one domain the full portfolio covering the other domains: fixedmobile, telecoms-IT, internet-TV.

What about the international dimension?

DB: In 2009 international activities represented some 25% of our total. We are pursuing an active international growth path.

We are present in several carefully-selected countries – for international ICT activities with Telindus International, and in our international carrier activities with BICS.

On the consumer side, we have done so well with our bundles that we have even broken some records. In the consumer market, our sales of bundles rose by 85% in 2009.

But the most powerful example of our international dimension is our deal with MTN ICS. This has consolidated our significant position in the global market for carrier traffic, making the enlarged BICS the world’s fourth biggest operator for international voice traffic. It carries 19 billion minutes. Year on year, this is a 20% increase.

In the business segment, we kept our leading position in fixed voice, data, and mobile voice, and the response to our offers by smaller firms proves we are providing something that they want. We remain the preferred supplier for ICT and we won some important new international accounts, on the grounds of quality as much as price.

This reflected our ability to offer products and services that are well-adapted to both our consumer and enterprise market. And we are also seeing real growth potential in mobile data and a network-centric approach.

But the star performer was Belgacom TV. Our constant innovation in services and marketing has made it one of our fastestgrowing products. It now has 752,000 subscribers – and this is in less than five years since its launch, and in a country where cable television was previously the sole provider. It is without question the best IPTV service in Europe, and the market has proved to be a secure area for growth.

How else has the strategy paid off?

DB: We have achieved good balance in our growth. We have done well investing in organic growth. But we also have ambitions to grow through attractive in-market deals. So we continue to monitor growth opportunities outside Belgium, with a judicious blend of alertness and discipline. We have demonstrated that the deals we make should fit Belgacom’s strategic rationale, create shareholder value, and answer strict financial criteria and synergy analysis.

We have also cut our costs – by about 5.6% over the preceding year. Altogether, we have achieved a performance that allows us to pay a dividend of EUR 2.08 for the year, way ahead of many companies in our sector. And this in a market where there is strong pressure on competition and on prices.

What are your priorities for 2010?

DB: The story is much more than the financial results.

We have a clear vision, and we want to develop as a more innovative, more customer-centric and more responsible company.

Innovating with the customer constantly in mind is central to the vision that I have consistently set out, of a telco company fully transformed into a servicing company.

We are now a platform that is able to provide an incomparable range of services that our customers increasingly want. Our aim therefore is to improve the quality of service for our residential and corporate customers.

Convergence means that service needs are evolving. The expectations of service among our customers are becoming convergent too.

To really enjoy the benefits of convergence, they need our constant attention and care. In 2010 more than ever, we want the customer to be king.

We want our teams to be better able to answer those evolving needs. This is one of the reasons we have integrated our subsidiaries into a single Belgacom Group.

Instead of working in the traditionally separate silos, our teams can now cooperate better, and together deliver better service. We have mobilized our many strengths, so that we can place the customer right at the centre of all our activities, and truly care for him, or for her.

What does this mean in terms of products and services?

DB: We are consistently developing the platform we have created, with an increasing shift to services. It means putting interactive television, fast internet, high-quality mobile, and many other innovations into our customers’ hands – and increasingly across different

Interview

devices. It can be seen already in our services in payment by sms or in e-health, where we are trend-setters. And we are already exploring how other innovations, such as further interactive TV services and entertainment, can be added to our range. We have captured the major technological trends and made them our own in advance of other operators in Europe.

Internet and television will morph into one indistinguishable product offering high growth opportunities for new services. The future will see fixed and mobile networks being used for new forms of entertainment and mobile television. Many professional applications will use intelligent communications networks in new ways for monitoring and managing their businesses, with machines talking to machines via fixed and mobile intelligent networks. We have already started to prepare that future.

We see the emergence of cloud computing services as an important opportunity for us. Services, applications, and even infrastructure that were once located locally on computers or servers in companies or at home are moving more and more towards remote servers in the network. Customers will be able to store content on the network and access it any time on any device – the computer, the TV or the mobile handset. We intend to play a key role in this new delivery model.

How far have you taken sustainability into account?

DB: My objective was to embed sustain­ ability even more firmly in our daily operations.

I wanted CSR to be integrated into each business unit. So we drew up a robust five-year CSR plan and governance model, endorsed by both the Belgacom Management Committee and the Board of Directors.

Our CSR strategy is focused on widening access to communications, on issues of health (and specifically in relation to electromagnetic fields), and on contributing to a greener society.

CSR helps us to anticipate societal trends and stakeholder expectations. It drives innovation and opens doors to promising new business areas.

Good examples of this are our initiatives in the e-health sector and in enabling higher energy and carbon efficiency via the use of ICT applications. Optimising our energy usage and waste lowers our costs. Raising awareness among youngsters of safe use of our technologies and of climate change helps

to ensure future generations to understand the world they live in. We constantly invest in and support the work of associations to improve the quality of life in the communities we operate amongst.

We succeed in being a profitable company.

I now want Belgacom to succeed in being a company that is also a leader in sustainability and responsibility.

What about the regulatory landscape?

DB: We consider that the playing field on which we compete is still uneven. Belgium is a good market in that there is wide consumer choice – and that means there is strong competition. But all operators should be subject to the same rules and obligations. The Group is still exposed to unfair treatment, as the current regulatory framework does not take into account the presence of cable, leaving that side of the industry totally unregulated.

our staff that can make progress happen for all our customers. What our teams have contributed in 2009 and what I know they can contribute in 2010 makes me confident that we are heading towards new levels of achievement.

Belgacom wants to be considered as a leader in customer satisfaction. We want to go forward with our customers and for our customers.

Regarding mobile, a recent draft decision of the BIPT foresees a lesser degree of asymmetry of the mobile termination rates than in the past years. We are going in the right direction. Nevertheless, Belgium is still the only country where there is asymmetry between the first and the second operator. Belgacom continues to insist that BIPT should abolish all the asymmetries in its final decision.

Concerning competition, we believe that it is better for consumers to have a limited number of mobile operators that really invest in new applications, rather than multiplying the number of operators with unclear investment commitments. This would coincide with the trend in Europe: fewer operators, but more competition, with real advanced services that have an added value for consumers.

A few words you want to add to conclude?

DB: Our strategy is the right one: Belgacom is a leader in IPTV, is a top employer, and has one of the best networks in the world. But we still have to improve the way we implement it. That is the reason why I have chosen to assign one top priority to the whole Group for 2010: end-to-end customer satisfaction.

I want the customer to be king at Belgacom.

I want us to follow our customers from the very first contact to the moment we install their equipment or they pay their first bill.

As we move into 2010, we are realising convergence in every sense: among our ser­ vices, our products, and – above all – our own ope­rations and operators. In line with the integration of our subsidiaries, we are creating a culture and an attitude among

top 5 worldwide for fibre network

“CSR helps us to anticipate societal trends and stakeholder expectations. It drives innovation and opens doors to promising new business areas.”

Belgacom Annual Report 2009 - 9

Performing in a challenging operating context Because Belgacom knows its markets and its clients, it can answer their expectations, and anticipate them.

That is how we maintain our leadership. And beyond the demands of our 足customers, we also answer - as a responsible company - to the expectations of other stakeholders, and respect our engagements in a complex regulatory environment.

10

Managing complex trends

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

BICS success With the extension of BICS cooperation with MTN, BICS has leapt into the top 4 carrier operators worldwide. It carried 19 billion minutes in 2009, and boosted revenues by 9.9 %. Not only is BICS now the largest international carrier in Africa, it has also become one of the leading actors in the consolidation of the sector.

T

his difficult year for the global economy hit the telecommunications market too. Consumers were more careful about how they spent their money, and businesses postponed major investments and reduced their roaming and mobile usage.

But even in difficult times, there is still plenty of growth in the telecommunications market. The mobile Internet market is booming for business and residential customers. Technology keeps opening up new possibilities for cross-platform services. And customers are receptive to offers that meet their needs or desires.

The smart companies are the ones that are able to maximise these opportunities – by innovation, by investment, and by creative response to customers. That is what Belgacom has done.

Belgacom not only proved resilient, but made real progress. It achieved a slight increase in revenues of 0.2%, and booked a net profit of EUR 904 million (EUR 104 million more than in 2008). It harvested the fruits of sensible management and excellent cost control. It continued to go forward in its markets.

A firm favourite According to a survey conducted by the Belgian ICT news service Data News at the end of 2009, Belgacom is the favour12

ite operator of Belgian companies, with strong and stable market shares in all domains.

At the international level, the Group consolidated its existing strengths with BICS, Telindus and Tango, and went one step further – jumping into the top four of international carriers worldwide in terms of international voice traffic.

Our strong assets – our network, our workforce, and our know-how, backed by healthy financials – helped us to keep our performance in the enterprise market in line with expectations. Belgacom’s convergent portfolio with innovative services, such as Explore, integrated fixed/mobile and telco/IT solutions, was a key success factor. The Group developed targeted and flexible offers for smaller firms, such as “Fusion” and “Bizz packs”.

Caring for the smart consumer The consumer telecom market remained buoyant. Although a traditional market like voice telephony is maturing, significant growth was realised in other markets such as digital television. Convergence played an important role in the consumer market.

Our customers are smart customers. They are not afraid to combine low-cost purchases with premium purchases. Belgacom has to give them the arguments to choose

Operating context

the premium brand, and to provide the best value for money.

Leadership beyond markets

Customers want to be always online, in touch with friends, family and fellow-thinkers.

They communicate through more devices, on different platforms, in search of distinct content. Increasingly, smart customers are very demanding and want maximal proximity, service, and solutions. They expect suppliers to be accessible, honest, caring and even stimulating.

Belgacom wants to become a leader in CSR, and a leader among sustainable companies. It has an ambitious five-year plan, and a clear strategy of combating climate change. Our engagement is embedded in business – the plan has been taken on in the strategic goals of each of our business units. There are three focuses: access to communications; health and clear information on electromagnetic fields; and climate change. We have made a strong commitment to cut our CO2 emissions by 70% by 2020.

Today’s customers want to relax while they are using technology. They demand simple, personalised solutions that work for them.

They don’t want to have to adapt to the technology. They welcome services such as Belgacom TV that help them maximise quality time through added applications such as VOD and PVR. Customers like to choose when it is convenient for them to watch TV. We have achieved unique success due to the popularity of our widened range of combined offers through our packs. Belgacom is the only operator in Belgium that can offer both fixed and mobile telephony alongside Internet and TV. And we continued to invest significantly in order to offer these best-of-breed solutions to our customers, despite strong regulatory pressure and a challenging economic environment.

We have a clear vision and want to develop as a more innovative, more customercentric and more responsible company.

Our convergence strategy is a success, and proves that Belgacom continued to make good strategic choices both for its clients and for its investors. It is following a judicious policy of organic growth and innovation, with a focus on its domestic market, complemented by a careful and disciplined monitoring of opportunities elsewhere, based on strict valuation criteria and a focus on shareholder value.

Responsibility, innovation and customer proximity are the keys to our long-term success. Our growth is linked to our ability to cross-sell, moving customers from single-play to multiplay offers that meet their needs ever more closely.

Today’s customers want to relax while they are using technology. They demand simple, personalised solutions that work for them. They don’t want to have to adapt to the technology.

Number of packs sold

560,000 302,000 153,000

2007

2008

2009

Belgacom Annual Report 2009 - 13

Adapting to regulation

14

Operating context

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

T

The regulatory framework in Belgium does, however, pose some exceptional chal­ lenges, which put Belgacom at a disadvantage to some of its main domestic competitors. As a consequence, we have to work even harder to achieve success. At the same time, we continue to make our case to the national regulator that changes would produce a more equitable working environment.

Level playing field Efficient and balanced regulation in the telecom sector is in the long term interest of Belgian consumers and companies.

For Belgacom, there are two key issues.

The market would work more efficiently if Belgacom and cable companies were treated on an equal footing, so that cable operators were subject to the same rules as telecoms operators. The market also still suffers from asymmetries in mobile regulation which put Belgacom at a disadvantage, because fees for traffic between mobile operators (termination rates) are not equal. The regulator is currently reviewing the regulation of the mobile termination rates with a view to fully align them by 2013 but Belgacom insists that this should happen sooner.

VDSL The Belgian regulatory authority, BIPT, continues to regulate Belgacom’s VDSL services, in line with its decision of January 2008. Belgacom developed a whole­sale VDSL service, which has been available since mid-2008, but the formal approval from BIPT is still pending.

Operators can, however, already use the service. Belgacom is seeking fair terms for opening up its VDSL2 network, so that its investment risks are taken into account.

Regulatory equivalence with cable Regulators don’t treat Belgacom’s network and the cable network in the same way. Belgacom has requested the regulatory authorities to remedy the current inequalities in competition. It wants equal regulatory treatment to cover all types of broadband access networks (both HFC cable and DSL). It also wants a solution to the monopoly that cable TV operators enjoy on analogue cable TV functionality, leaving alternative TV operators at a competitive disadvantage. A resale of analogue cable TV services would be one way of allowing alternative TV operators like Belgacom to compete with the dominant cable operators on an equal footing.

Mobile termination rates The mobile termination rate is the fee that mobile network operators charge to connect calls made from other fixed or mobile networks. Competition in Belgium is distorted – and consumers are impacted negatively – because Belgacom mobile sub­scribers have to pay high charges when they make calls to subscribers of other networks in Belgium. These charges are higher than subscribers of other networks have to pay for a call to Belgacom subscribers; this asymmetry amounts to unfairly requiring Belgacom – and its custo­ mers – to subsidise its competitors.

Renewal of 2g licenses Despite a Court decision of July 2009 that the Belgacom Mobile 2G license was already tacitly renewed until April 2015 under the 1995 conditions (i.e. without any additional fee for this extension), a law voted by the Parliament on 25 February 2010 imposes the payment of an additional fee for extension of its license until 2015, and another fee for extension until 2021.

Belgacom questions the legality of the imposition of these fees.

Universal service Since 1998 Belgacom has been the only operator subject to a broad universal service obligation. Belgacom has not received any compensation for the pro­ vision of social tariffs, despite a clear legal framework applicable since mid 2005.

Belgacom has asked BIPT to reduce the asymmetry between these termination rates.

The regulator’s proposal of 1st February 2010 foresees a lesser degree of asymmetry of mobile termination rates than in past years, but Belgacom continues to insist on abolition of the asymmetries in the regulator’s final decision.

Belgacom Annual Report 2009 - 15

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

16

Moving forward to enrich people’s lives

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

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hroughout these years of seismic change in the world we operate in, Belgacom’s deliberate choice has been to take a long-term view.

This has shown itself in our commitment to developing innovative business in our home market and our own high-quality network, in our alertness to seizing real opportunities abroad, and in our attachment to being a responsible company on every level: as an employer, in terms of acquisitions, and in our attitude to our environment. In all our decisions, we have always had one goal in mind: easing and enriching people’s lives, whoever and wherever they are, whatever they do.

Grégoire Dallemagne – Executive Vice President Strategy

“Our strategy has ensured we made the right choices, in infrastructure, in technology, in products, in services, and in our human resources. We prepare our future and the future of our customers with a continuous focus on innovation.”

18

To do so, we made smart choices, in infrastructure, in technology, in products, in services, and in our human resources.

And we implemented our choices optimally. Our convergence strategy was revolutionary when we introduced it, and it proved so fruitful that our competitors start to play in the same field. With an increasing focus on the customer, we have transformed Belgacom from an engineering into an entertainment and ICT leader, and from a Belgian telecommunications company into a services organisation with a worldwide reputation. Our attention to our employees has repeatedly won us loyalty from our staff and awards from the outside world.

It is innovation that has always been the fuel of our achievements. Our secret lies in our ability to reinvent ourselves, to reorganize ourselves so that our strategy can be implemented successfully, while at

the same time retaining the same values of can do, respect and passion It is this unique alliance of innovation in what we do and stability in who we are that has won us our image of a creative and reliable partner and employer.

Who we are defines what we do. And not reversely In a world of widely distributed knowledge, our group is rich in the diversity of activities and territories it covers - but it is also part of our character as a group to seek coherence and to start from who we are and the effect we want to have on our world. All our activities are uprooted in our identity, support our mission and are enabled by our internal culture.

One identity: We are a customer oriented, innovative and responsible company

One mission: As a responsible company, Belgacom wants to be the preferred provider of intuitive end-to-end solutions, combining fixed and mobile telecom, IT and media, thereby empowering its customers to master and enrich their professional and private lives in a sustainable way.

One culture: Everyone in the group shares our three fundamental values - “Can Do”, “Passion” and “Respect” - that are reflected in skills, work, and attitudes, and in our encouragement to responsibility, creativity, and talent development.

Strategy The Belgacom Group is now a single entity. A new start!

Launch of the VDSL2 network.

Telindus joins the Belgacom Group.

Belgacom becomes a listed company.

Belgacom Mobile launches the first GSM network in Belgium and four years later, SMS.

Belgacom launches ADSL.

2000

2004

2005

1994

1998 1992

2006

2008

2007

True Convergence

2010

Integrated solutions

2009 PingPing !

Belgacom and Proximus launch the first bundled offers: the packs.

Belgacom TV enters the market and Belgacom Mobile launches the 3G services.

Creation of Belgacom Skynet.

The RTT becomes Belgacom.

Who we want to become defines our future footprints The crucial innovation in 2010 will be to angle this focus to the ultimate goal of all our activities: Customer Satisfaction.

More than ever before, all our operations will be optimised to secure the best possible customer experience, because the customer is king. We will achieve this via our four priorities: • Customer Centricity: in every act and every decision, we will put customers’ interest first and offer them simple, efficient and accessible solutions.

•S ustainable Growth: we want to capture value through maximising our crossselling; we want to grow in a sustainable way, in line with our CSR commitments.

• I nnovation: we want to strengthen our leadership in innovation. So that we can capture growth from new fields, bringing additional value to our customers.

•O perational Excellence: we want to excel in efficiency, and implement lean models, so that we can keep our costs down.

It is in new fields of operation that Belgacom will increasingly excel, bringing new types and levels of service to customers and new models of business development. We see the next wave of growth coming from open forms of innovation.

Vast opportunities for further innovations are already opening up, and Belgacom will increasingly become an incubator for innovation. We are geared up to work with new ideas generated by our own employees, or in partnership with other companies, or responding to possibilities emerging from academia. Our innovations will play a bigger and bigger role in how we help build a better society, with more environment-friendly technology and processes, with our contributions to allowing everyone access to the opportunities of a digital society, and with our services that make healthcare more efficient.

More than ever before, all our operations will be optimised to secure the best possible customer experience, because the customer is king.

We will continue to innovate on all fronts and because our staff is central to our success, our innovations will continue to bring new benefits in terms of work-life balance, ever-wider opportunities, and a flexible and supportive working environment. But the greatest beneficiaries will be our customers.

Belgacom Annual Report 2009 - 19

Innovation

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

78%

of our revenues are generated by products and services that did not exist 15 years ago

Innovation Catalyst Belgacom created a dedicated innovation department in 2009.

It nominated its first Vice President Innovation, and created a team representing all aspects of business development within the Group. Its mission is to create value by fostering new ways of doing business through concrete projects, and to act as an incubator and catalyst for our Group’s products, processes and solutions, so we can be sure we are always alert to addressing unmet needs.

20

Innovation as a culture There can be no sustainable growth without innovation. This is why innovation is a state of mind for Belgacom, a keystone of our company culture. It is not confined to our research and development activities, but is integrated into the everyday tasks of each department. It is a conscious rejection of complacency, a determination to be open and to continuously re-invent, to experiment, and to be ready to learn from experience. Our ambition - and our strategy - is to turn innovation into a sustainable competitive advantage.

78% of our revenues are generated by products and services that did not exist 15 years ago. It was Belgacom that launched mobile phones in Belgium. It was Belgacom that followed up with hightech products and services such as ADSL – which celebrated its 10th anniversary in 2008 – and, more recently, Belgacom TV. Today, the richness and diversity of the range of our IPTV products place us among the pioneers of the sector. And our Explore platform, providing a new degree of unified connectivity for the professional market, is unique in Belgium. We continue

to develop new products and services based on convergence of contents and of technology, with offers that provide greater simplicity and global solutions.

Innovation as an adventure In a world of widely distributed know-ledge, Belgacom is determined and realistic.

We know we cannot depend solely on our own innovation and development capabilities. So our innovation team manages partnerships with key organisations (Alliance) such as Google, Microsoft and Vodafone, in order to enrich internal developments and share innovation roadmaps.

We have also created an open cooperation framework - Business Accelerator - for exploring new opportunities with dynamic business partners, so as to speed up the deployment of ideas into products. Combining our strategy of constantly monitoring new trends and emerging needs with an open-door approach allows us to work with new players in generating an environment favourable to innovation.

Innovation Awards Belgacom Group was nominated as finalist of the A.T. Kearny Best Innovator Award, recognizing its innovative vision. SMS-Parking was nominated “Product of the Year 2009” by Stichting Marketing and De Standaard.

Strategy

Innovating with our products SunSwitch

Zorg TV

An intelligent and green energy provider

technology at the service of health Zorg TV is a platform that puts technology at the service of health.

Health insurance organisations are piloting health information and advice transmitted by television to type 2 diabetes patients.

Softkinetic,

an intuitive interface that responds to gesture.

SunSwitch, a company based in Louvain-laNeuve, is the leader in sales and installation of photovoltaic solar panels in French speaking Belgium.

In collaboration with Belgacom, Sunswitch has developed a unique offer that monitors the management and production of green electricity.

This intelligent green electric meter is equipped with a GPRS card that offers different services such as alert, continuous technical control, performance comparison, error analysis or even green certificates management to the owners as well as the technicians.

Belgacom has become a partner of Softkinetic, a Belgian company specialising in human movement interfacing.

Its technology brings to television,to video games and to computers what the iPhone has brought to mobile phones – an intuitive interface that responds to gesture.

So users can switch channel without using the remotecontrol, play games without a joystick, react to marketing information just by using their hands but without touching the screen, and follow fitness programmes that analyse their movements in real time.

A new business model

HTC Magic Android

In 2009 One of the best examples of our innovative solutions is PingPing, a mobile platform for micropayments, which permits all mobile phone users in Belgium to buy products and services with their mobile phone, and offers options such as fidelity services or the collection and cancelling of electronic coupons.

It is operated by Mobile-For, a 100% subsidiary of Belgacom, and has already succeeded in webpayment solutions, smart vending machines, catering, SMS parking, the De Lijn bus company, and Ipark for you.

• 2.4 million mobile payment transactions • 2 million parking transactions in 12 cities by 300,000 unique users • 300,000 sms-tickets De Lijn at Antwerp & Gent, purchased by 60,000 unique users The introduction in June 2009 of the HTC Magic is a good example of our Alliance program. This is the first handset available in Belgium that runs on the innovative open source Android mobile software platform and will take advantage of Proximus’ stateof-the-art 3G network to deliver a highly intuitive, easy to use mobile web experience with adapted mobile internet tariffs.

The handset gives one-touch access to several embedded Google applications, such as Google Maps for Mobile, Gmail, YouTube, Google Calendar™ ,Google Talk and of course the Android Market.

Belgacom Annual Report 2009 - 21

Investing in our systems

From our earliest days as a telephone company through to the Belgacom of today, with its wide range of services, we have built upon our networks.

Our growth and development go hand in hand with the evolution of these systems, from copper wiring through to fibre. We aim at operational excellence through deployment of a high quality network.

O

ur investments have provided us – and Belgium – with one of the most advanced systems in the world. And in 2009, on the threshold of the dramatic new changes that technology will bring to the world of communications, we made a crucial step in network management, to ensure that we continue to move forward.

Revolutionising network convergence Convergence is our ambition not only among the products and services we offer to our customers, but also in the way that we manage our networks. Aggregating the elements in our networks and consolidating our traffic brings us economies of scale in handling fixed line voice, mobile voice, Internet and TV. It also allows us to give our business and residential customers a better service, and to be ready for the new possibilities – and increased traffic – that multiply every day.

As part of the continuous transformation of our activities, 2009 saw us take the first steps to move forward beyond the separate service platforms that have until now served different types of traffic. This is a historic and pioneering departure for Belgacom, and requires a complete adaptation of processes, IT systems and the networks.

It is a model of the convergence that will eventually become commonplace among integrated telecom operators every­where.

Gradually all platforms will shift to an IP-based multimedia system. Our ‘Move to All IP’ project is already able to deliver benefits in terms of the enhanced repair process and the implementation of a new Voice-over-IP platform on which the first professional customers are connected.

In technical terms, the switch also allows us more efficiency in our installations and equipment – the buildings and operational centres we require to run the network, the mechanisms for our thousands of customer interface installations, and our hundreds of service platforms and IT systems.

Don’t just say “SDE” – say “SDE & Wholesale”!

Scott Alcott – Executive Vice President Service Delivery Engine & Wholesale

“At Belgacom, technology is the heart and soul of our business, and we bring this to life through our state-of-the-art networks and datacenters.”

22

Wholesale is one of Belgacom’s big assets. Our SDE department not only provides infrastructure, network and IT services, but also offers “domestic wholesale” telecommunications services to other operators and suppliers on the Belgian market. So the SDE business unit is now known as “SDE and Wholesale”. The Carrier & Wholesale Solutions unit is now a central component of SDE, managing commercial arrangements between Belgacom and other operators and service suppliers. It is also responsible for managing roaming relations with foreign mobile operators. Providing wholesale services makes more use of our network, and the revenues from other operators help balance the investments we make in constant upgrading, which in turn allows us to increase the earnings that our shareholders expect. Wholesale clients are seen as partners in extending the penetration of Belgacom’s network. End-to end control is no longer required to achieve profitability.

Networks

In only a few years, convergence has moved from the first days of digitisation to integration of networks and IT, and the shift to IP. This in turn will permit fixed/mobile convergence, providing one number, and one email address, ubiquitously valid. The further step of convergence for the customer is also nearly upon us, with convergence among devices – pc, TV, handhelds and cameras – and among services, in both business and leisure.

Investing in transformation In response to these opportunities, Belgacom continued to invest almost EUR 600 milion of the Group’s revenues, so that our clients always have the products that meet their needs. The investments aim to support our organic growth and are the proof of our commitment to innovation, transformation and increased customer satisfaction. As a result, our fibre-to-the-curb coverage now reaches 73.1% of Belgium households, placing Belgacom among the top five worldwide – and winning us the Global Telecom Business ‘2009 Innovations Award’. By end 2009, Belgacom had increased its TV coverage to 87.2% of Belgian households, with 68.8% having access to High Definition TV. At the same time, to ensure that it can move forward at the forefront of new developments, Belgacom has been upgrading its mobile network for 3G and HSDPA, aware that the network revolution already underway is going to demand increasing mobile access – to voice, to data, and to host new services. It now offers an outdoor coverage of 96.7% – the best 3G coverage in Belgium, so its customers can play a full part in the emerging world of active as well as passive digital communication. We have made a visionary strategic choice. The network we have been deploying since 2004 has put us a long way ahead of our main competitors.

Embedding customer care in our operations Customer service at the centre of operations

converged offer which puts the customer at the centre of operations. As a result, customers have more influence in appointment handling, service ordering and configuration, trouble shooting, and recovery. We will be able to personalize still further our services, our communication, our products, and our contacts. Enhanced web access will put customers in the driving seat for placing orders and handling appointments with our staff. We will get to know our customers better, so that we can serve them better. Convergence – with network transformation and IT transformation – makes for shorter times to market, customer web-enablement (less manual support), activity automation and remote automation.

Going greener In the context of our 70% CO2 reduction target, we launched a major programme to replace all mobile equipment by minimum 25% more energy efficient equipment in the coming 2 years.

We also initiated major optimisation works in our datacentres in order to improve the efficiency of our cooling facilities and continued to virtualise our servers. Our networks and datacenters are powered with green electricity exclusively.  see more on page 64

Quality circles

‘Quality circles’ build on feedback from customers and from our staff who have direct contact with customers. We improve our ways of working, so as to enhance end-to-end customer experience, which is essential to our customer centric approach. Pilot programmes in the call centers in Mons and the technical helpdesk in Antwerp have demonstrated how a quality circle approach can improve client satisfaction and first-time-right. We are now developing a framework and a set of tools for use across call centers, technical helpdesks, shops, and technicians in the field. Quality monitoring and coaching with individuals ensures that employees are involved in the feedback loop. And we are resolving structural issues where more than one department is involved and there is a need for a coherent response at a cross-functional level.

Results of the pilot phase For Customer Satisfaction, the results were conclusive. There was 23% improvement at the technical helpdesk in Antwerp, 5% improvement at the commercial contact centre in Mons. For first-time-right, we achieved a 3% improvement at the technical helpdesk. For a set of piloted structural initiatives, we were able to demonstrate a substantial potential for reducing call inflow.

3G coverage (population)

84.4%

2007

90.2%

2008

96.7%

2009

Fibre-to-the-curb coverage

59%

66%

73%

These developments in hardware match the evolution in our approach to customer service. No longer will fixed line customers be treated separately from mobile telephony customers. We are developing a 2007

2008

2009

Belgacom Annual Report 2009 - 23

Forward for our customers Underlying our new approach to our business is an intensified focus on the customer - on all our customers, residential and business, in Belgium and abroad.

We are changing our methods of working so that our customers do not have to change theirs. Whether the customer with a fixed line wants an Internet connection or a mobile phone or access to our television services, whether it is for business or for pleasure, we increasingly offer a single point of access, a single contact through which any customer aspiration can be met.

The same applies to our customers seeking large-scale business services, often in several countries; we are now providing them with a single point of contact and a seamless service across platforms and frontiers.

24

Suiting

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

R

evenues were up 7.1% year on year, showing that residential clients continue to see our offers as real added value. This excellent performance comes from the contribution of Tango and Scarlet and the two main drivers of growth, Belgacom TV and mobile data.

Michel Georgis - Executive Vice President Consumer Business Unit

“We want as many people as possible to have access to new technologies – and we are there to help our customers make the best use of them.”

+85%

increase in pack sales yoy

The solutions that make the difference Convergence through packs

We say “convergence”, but what our customers see is greater freedom, simpler products, and better value for money.

Our convergent offers on packs in the residential segment saw 258,000 packs sold in 2009. The total is now 560,000, an increase of 85% year-on-year. This record level of sales reflects the genuine interest of our clients and the real value added that our products bring them. It is a further proof that the Group offers products and services that meet the criteria of flexibility, simplicity and value.

Internet One, bringing convergence of fixed and Mobile Internet, is boosting growth. The offer entitles customers to free Mobile Internet during the weekend, and the response shows that customers

are more than ready for this next step.

This development supports our growth in Mobile Internet, reinforces our credibility as a fixed Internet provider, and is in line with our strategy of complementarity between fixed and mobile services.

Our mobile triple play and quadruple play offers are increasingly valued by our clients – and appreciated by the media, too. All in One, which is one of our first possible formulas for quadruple play, provides voice, fixed and Mobile Internet, as well as television – all for one fixed payment a month. Customers get high-speed Internet and can make fixed and mobile calls free of charge to any number in Belgium in the evenings and during weekends, so they risk no unpleasant surprises on their bill.

Belgacom TV: the star player

Belgacom TV is a star player. External and impartial researchers have identified it as an industry-wide benchmark(1).

The most compelling demonstration that we have got our offer right is the unprecedented success that Belgacom TV enjoyed in a market still largely in the hands of cable operators. Just four years after its launch, Belgacom has become one of Europe’s leading IPTV companies.

(1) Source: Forrester Research

26

Customers

We increased the number of our clients at a rate never seen since the launch of digital television: 246,000 new clients, up nearly 50% on 2008, and making a total of 752,000 clients. These record sales propelled Belgacom TV into the top three IPTV platforms worldwide for innovation and rapid growth.

A unique offer: free digital TV In July Belgacom launched new packs with great success. The packs offer free TV when you subscribe to both a ‘voice’ (fix or mobile) and an ‘internet’ solution.

This very advantageous offer is valid for new and existing customers.

Thanks to the national launch of our FAIR and FAIR XL programmes, which offer tele­vision for free, we won over many new ­clients - demonstrating the relevance of our convergent strategy and the appeal of digital TV in the Belgian market. Market ­penetration was boosted thanks to the advantages of digital TV and services such as video on demand, high-definition TV and an ever increasing content offer, with for example the launch of our Flemish music channel: Anne. The Group also passed the

milestone of more than 5,000,000 mobile clients, a strong performance in a country where the competition is tough.

Mobile Internet, a growing market and a symbol for true convergence Belgacom introduced mobility in Belgium with the first mobile phones. Now it is doing it again with Mobile Internet. Our investments have created a quality 3G network and a level of service that gives our clients 96.7% outdoor coverage. Yet again, we have proved that we give the customers what they want. Mobile Internet revenues rose by 12% in 2009.

The Belgian market for Mobile Internet continues to grow. In the 15-45 age range particularly, it is becoming the norm to check e-mails, consult websites or carry on with social networking while on the move. In parallel, Proximus has been promoting Mobile Internet among customers who use a laptop. In September, it launched a prepaid Mobile Internet deal for laptops, aimed at customers who do not want to be tied to a subscription.

+30%

share of the Belgian digital TV market

Exclusivity on the first solar phone in Belgium As part of our corporate social responsibility, we continuously seek to help customers reduce their environmental footprint via eco-friendly products and solutions. We launched in exclusivity the Samsung Solar E1107, which combines a solar panel and an energy-efficient charger, along with minimised and recycled packaging. EUR 1 was donated to the Climate Education Programme for each sold handset, which raises awareness of Belgian students on climate change.

We experienced 300% higher sales than forecasted.

Belgacom Annual Report 2009 - 27

28

Valable sur les appels nationaux pour Pay&Go Flex et Pay&Go Generation.

Offre valable jusqu’au 31/01/10 inclus pour toute nouvelle carte Pay&Go. Les transferts d’un autre opérateur bénéficient automatiquement de l’avantage.

Les clients qui deviennent utilisateurs Pay&Go pour la première fois tapent avant le 31/01/10 le code #144# sur le clavier de leur GSM et appuyent ensuite sur YES/Téléphone/Envoi pour profiter de l’offre. Les transferts d’un plan tarifaire Proximus vers Pay&Go n’entrent pas en ligne de compte. Appelez jusqu’au 30/06/10 à – 50 % par rapport aux tarifs standard Pay&Go, vers des numéros en Belgique, à tout moment de la journée (hors numéros spéciaux). Pour Pay&Go

Customers

Delivering value as well as price Consumers care about costs, and we operate in a transparent market. So we make sure that our prices compare well with competitors, whether it is a mobile subscription, the fee for a television connection, or the charges for our ADSL service. For ADSL, for instance, Belgacom proposes the best value for money.

Domestic clients pay, on average, only EUR 28.7 a month – less than the EUR 30.0 average in 2008 (both figures excluding VAT). Tariffs have fallen by 33% over the last four years. Belgacom is committed to being clear about its prices, with no hidden costs, - so that our customers can see what they are paying for, as well as the value of they are getting.

Comparisons across offers from com­ peting suppliers are not always easy to draw. It is necessary to compare like with like: that means, for example, taking account of the number of free advantages we offer with a Proximus subscription – not always the case with our competitors.

Consumers also care about value. So they increasingly make assessments of the longer-term or recurrent advantages of the offers available in the marketplace. This is where our packs score so highly. We have

designed them so that they provide what the customer wants in terms of products and services, but also so that customers get more for their money – and can see the benefits clearly. Our Packs allow us to be more competitive than our principal rivals, the cable operators. One of the results is that, today, the majority of our broadband and TV sales are through packs.

We have designed our packs so that they provide what the customer wants in terms of products and services, but also so that customers get more for their money – and can see the benefits clearly.

-33% ADSL tarifs over the last 4 years

FAIR XL exemplifies the way our offers give our customers more than they can get anywhere else, and at an excellent price. Customers who already have internet, fixed and mobile subscriptions with us are offered television for free. This has won over many new clients – demonstrating to our principal competitors that we are way ahead of them in terms of innovative offerings.

The services our customers deserve More “Care and Ease” for everyone Success was not only derived from sales.

A major priority in 2009 has been improving customer experience – through our “Care & Ease” programme, which puts the customer right at the centre of all our activities. “Care” measures the ‘end-to-

Belgacom has taken an active role in the federal government’s «Start2surf@ home» campaign which aims to bring the advantages of home Internet to the widest public.  see more on page 61

Belgacom Annual Report 2009 - 29

Care & Ease initiatives

• more personalised communication: special efforts were made in the call centers and points of sale to capture the mobile phone number of each customer during the first contact, to allow better and more personal communication and follow-up • making it easier when customers move: a ‘Move Coordination Desk’ was set up – a virtual team to help customers when they change address; special priority is given to customers with installations that involve more than one service • quality circles: listening to customer experience to get feedback and give guidance to operators • answering the right questions: the FAQ section on our .be website has been analysed, reduced, simplified and enriched to give customers easier and quicker access

“Who took my badjas?” – A hugely successful Belgacom TV commercial acquired fame during the year.

30

end’ satisfaction of our clients, and “Ease” aims at simplifying the way customers access our services – with facilities like more precise appointment slot choices during the day, simplified interactive voice menus, and a focus on getting it right the first time.

A new approach to our customers in Belgium During the year we added a new dimension to our communication with our customers in Belgium. We made special efforts to get closer to our customers wherever they live, and to connect with them in their different backgrounds. So we conceived promotional campaigns with a strong regional or local flavour, to reflect what our customers are most familiar with. Among the successful examples are the new Flemish music channel added to our TV offer, and the notoriety acquired by one of our television commercials.

• “Anne”: the brand-new TV channel with “music from home” ‘Anne’ is a digital television channel which is exclusive to Belgacom TV since July, as part of the standard offer. Televiewers can enjoy non-stop music clips, concerts and special programmes featuring Flemish artists.

• “Who took my badjas?” – A hugely successful Belgacom TV commercial acquired fame during the year. “Who took my badjas (bathrobe)?” - intended to highlight our attractive video-ondemand offer - was a big hit in its own right on the web and in the media, especially in Flanders, with thousands of visits on YouTube and more than 170,000 fans on Facebook.

Proximus deals to suit the customer

In October, Proximus launched a new range of mobile rate plans with packs to match different user profiles, and with easy-to-see tariffs for contacting any fixed or mobile network in Belgium. Some of the rate plans are designed for customers who use their mobiles mainly for calling, and others are designed for customers who mainly send text messages. And each rate plan comes with a bonus of free minutes or text messages.

Rewards for customer loyalty

• Belgacom’s first Customer Day: The Bobbejaanland amusement park was where 14,000 Belgacom customers and their families enjoyed an exclusive day out of fun... courtesy of Belgacom’s first Customer Day. • Belgacom gifts: as a thank-you to loyal Belgacom customers, half a million gifts were offered on the www.Belgacomthanksyou. be site and at Belgacom points of sale.

Customers

The proximity our customers want Growth across all contact channels Because we have a comprehensive range of products and services, we also have a wide range of channels through which we connect with our customers. Across all these channels, 2009 has been a growth year.

Our e-channel experienced dramatic success. There was a +51% growth in the total number of sales transactions through it. Through our more traditional outlets, we had 4% more mobile sales transactions (post- and prepaid) in our own channels.

And via our partners – the shops which are not under our own management – we saw a 26% growth in fixed sales transactions (for voice, Internet and television).

This growth has not been generated only through our classic sales methods.

We introduced cutting-edge changes

to maximise our ability to connect with customers. Among the most important activities, we added five more shops to the network under our own management.

This means we now have 121 Belgacom Centres, of which 91 are shops with our own employees, and 30 are shops with outsourced personnel.

We also initiated a service differentiation in customer care in our front-office contacts. Since we have different customer segments, this provides each of them with a more appropriate and personalised service. Conscious of the vital importance of our frontline staff, we continued recruitment and training efforts to help them give every customer excellent service every time.

More focus on ‘e’ Customers move ahead with their use of technology too, and more of them are contacting Belgacom on-line, as well as making purchases via our websites.

+51% growth of sales via e-channels

The “One Partner programme” Another initiative in 2009 to keep us closer to our customers - this time through closer links with our agents - was the creation of the “One Partner programme”.

This created a single legal framework for all our agents, for fixed and mobile product lines, for CBU and EBU. It aligned the product commissioning for CBU and EBU, and provided coherent support that matches each partner’s business. Already by the end of 2009, we had brought 1,500 partners into convergence.

Belgacom Annual Report 2009 - 31

Offrez-vous un Pack avec

TV digitale gratuite

Décodeur gratuit inclus

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

Découvrez les Packs : 0800 33 909 • www.belgacom.be/pack • Points de vente Belgacom 32 Offre valable pour chaque nouvelle souscription de 12 mois à un des Packs Mobile + Internet + TV ou Telephony + Internet + TV. Frais d’activation : € 50. Cette offre n’est

Customers

In the residential market, Tango kept its leading position for prepaid through an aggressive commercial strategy and strong product innovation

In response, we decided in the spring to create an e-Business Unit, with end-to-end responsibility for every Group website.

Our strategy for the web is to leverage the audience of our different portals – proximus.be, belgacom.be, skynet.be, belgacomtv.be - by moving towards one converged and integrated media/telco portal. This will allow us to maximize online interactions with our customers.

A major step in this direction was taken in November, when we simplified and harmonised the structure and the look and feel of the Belgacom and Proximus websites.

Meanwhile, online sales are becoming increasingly significant. The total has already reached 4.6 % as the result of sharp growth, particularly for fixed products: the volume of e-sales of Internet and TV increased by a factor of four compared to the beginning of 2009.

The Scarlet way Scarlet Belgium

Scarlet performed in line with the postacquisition integration strategy during 2009, despite the exceptional economic circumstances and the fiercely competitive market. Consolidating its positioning as a “no frills” brand, it successfully launched its Scarlet One best-buy 4-play offer, which includes digital TV from Belgacom.

Migration of customers onto the Belgacom network reached 75% by Dec 31st, and is in line for completion in the first quarter of 2010. The projected operational and network synergies are being achieved in line with expectations.

Tango Complet

Vainqueur sur la vitesse et sur le prix !

Plus de

100 €/an d'économie !

Scarlet The Netherlands

Scarlet NL continued to deliver triple-play services offering good value for money, while improving its operational efficiency.

And it did so to the satisfaction of consu­ mers: it was elected “best customer service” by a leading client service consultancy.

It also signed a wholesale agreement with KPN to deliver DVBT services bundled with its triple-play offer as off Q2 2010.

Tango dances to success in Luxemburg Tango successfully consolidated its pre­ sence in the consumer market and captured the growth potential in the business sector.

Revenues grew, particularly through exploiting synergies, now that migration and full integration into Belgacom Group infrastructures is finalized. Solid financial performance was achieved alongside critical network investments.

In the residential market, Tango kept its leading position for prepaid through an aggressive commercial strategy and strong product innovation, and it increased its subscriber base in the post-paid market, including positive performance in the triple-play market, with the launch of 20Mbps ADSL speed as standard.

In the enterprise market, in line with Group priorities, it focused on customer needs and maximised synergies between Belgacom, Telindus and Vodafone: encouraging initial market reactions have been given tangible form by some recently closed deals.

The exclusive partnership concluded with Vodafone in March gave Tango an even broader international dimension, and the launch of the partnership with Apple in July allowed Tango to add one of the most popular devices in the market to its offer.

10 fois plus rapide : ADSL jusqu'à 20 Mbit/s et moins cher : 26 € 16,50 €/mois L’offre Tango Complet est conclue pour une durée d’engagement de 24 mois.

Prix de l’ADSL valable pour les clients éligibles au réseau fixe Tango (hors prix de l'abonnement de la ligne fixe).

Voir détails et conditions de l’offre dans l’un des points de vente Tango ou sur www.tango.lu

TANGOB_COMPLET_Annonce_Revue_235x297_prod.indd 1

9/09/09 11:33:25

The new shop concept • creates a coherent environment across all our shops and shop types (discovery stores, points of sales…), leading us towards upgrading and developing the network with the same atmosphere.

• brings harmony and balance within the Belgacom Group among the distinct brands of Belgacom and Proximus.

• allows focus on convergence and multiple play.

Safer Internet for everyone Preserving the security and privacy of our customers is key for us and we aim to raise awareness about a safe use of our technologies, in particular towards young people. For instance, we distributed 30,000 leaflets in our shops, with advice to adolescents about safe Internet usage

Healthy choices To help our customers make responsible choices, we provide information on the exposure level to electromagnetic fields for all our wireless devices

Belgacom Annual Report 2009 - 33

Empowering our business clients

34

Customers

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

Exploring new services Our Explore platform, an offer of convergent, integrated end-to-end mobile and fixed solutions, enjoyed continued success. It achieved 30,851 units at the end of 2009, confirming the confidence of our business clients.

Belgacom continued to develop targeted convergent offers to help SMEs to evolve.

“Fusion” proposes flat-rate tariffs to com­ panies for calls between colleagues from a fixed line or GSM. 127,000 SMEs and self-employed persons have already subscribed. It lived up to the promise Didier Bellens made in the 2008 annual report: “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.”

In mobile telephony too, Belgacom has helped the development of SMEs and self-employed workers. The Group made efforts to allow its clients to use the technology of its mobile data services by reducing the minimum level of business to access the technology. The result was a growth of 19.8% against 2008 in advanced mobile data.

Belgacom remains the preferred ICT supplier for firms. Despite longer buying cycles and the postponement of some orders, growth continued in datacenters, housing and hosting and in videocon­ ference services.

Thanks to the quality of our services and our teams, and the range of solutions we offer our clients, Belgacom also retained its leading position in fixed voice, data, and mobile voice and made progress in mobile data.

Our international presence was reinforced with the creation of Key International Account Managers, which allows firms with decision centers in different countries to have a single point of contact with us - strengthening our customer-centric approach and boosting the confidence of our clients.

Looking after tomorrow’s winners

Michel De Coster – Executive Vice President Enterprise Business Unit

“We are providing solutions that our most demanding customers want. And by doing so we help them to reach new successes.”

The future of the economy depends on the success of the numerous small and medium-sized enterprises. Together, these provide most of the employment in Europe, and some of them will be tomorrow’s leading companies. Belgacom provides services customised for the needs of this segment, both to promote the growth of SMEs, and to assure itself a healthy share of a growing market.

Building a strong SME identity

2009 saw the full launch of the “Bizz”, the new communication concept for SMEs. Bizz is the name for “Belgacom at the service of all SMEs”, and has provided Belgacom’s SME division with a real identity, both in the market and within the Group.

+19.8% growth in advanced mobile data

Belgacom Annual Report 2009 - 35

Boosting customer proximity During the year, all our Bizz corners – 57 in total, right across Belgium – were rolled out, and fully integrated into our new shop concept, allowing clients direct access to advice, with the possibility of booking an appointment in advance. We also launched our unique 0800 55 500 customer service number for all SME needs, for fixed and mobile.

Focusing on servicing our customers One of the new services offered to SME clients is the IT assistant, geared to fixing problems with computers. This is another 0800 number that all SMEs may call when they have an IT question. It is a ‘no-cure no-pay’ system: if the problem is solved, a fixed fee of EUR 35 is payable.

Linked with convergence, we launched the Bizz service pack, which is a package of additional services for our tripleplay (ie fixed/mobile/internet) customers, giving them priority at the fixed line repair desk and our customer service desk, and including the IT assistant. Self-employed workers benefited particularly from this pack, which support them with totally flexible converged solutions and a superior level of service.

Innovative Bizz deals Overall, our success can be measured by the fact that the SME churn rate on mobile voice and Internet was kept under control, and that we achieved a strong year in

terms of mobile acquisition, both mobile voice and mobile advanced data.

We launched a series of Bizz deals providing mobile advanced data. Clients can have a combination of a mobile smartphone or Blackberry plus a Mobile Internet tariff plan at a very attractive price, to boost Mobile Internet penetration among SMEs. Or they can have a complete mobility offer, combining a Mobile Internet offer and a 3G-embedded laptop, in partnership with vendors & IT sales channels.

This offer has then been expanded to all our direct sales channels. We reviewed our Internet on GSM and Mobile Internet on laptop portfolio, launching attractive new offers. These offers have continued to drive sales upwards, and are backed by improvements in customer experience, such as an sms notification both while roaming and in case of national mobile data usage, allowing the client to switch to a more favourable tariff.

For mobile voice, too, we introduced new offers. They included a new range of mobile voice tariff plans for SME (Bizz Happy & Bizz Flex), and the launch of specific packs for SMEs, in addition to the CBU packs which include free unlimited fixed-to-fixed calls.

Our offer on fixed voice has evolved constantly from the days when it was our principal service. In 2009 we introduced a combination of the I-Office VoIP solution with our high-end fixed voice tariff plans.

This enables us to successfully position

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

36

Customers

our VoIP solution on the Medium-sized Enterprise market – as has been confirmed by a continuous increase in penetration of the Forum IP PABX. The market for fixed data is fiercely competitive and highly saturated, but we performed well with ADSL, and saw continuous growth both in Explore connectivity and Explore Managed Services.

For start-up firms, we launched the “Start your Business” partnership, working with ING, Electrabel and Systemat. This is a specialised portal providing all the information needed for starting up a company, and listing events of interest to start-ups.

We are a partner in “je suis fantasTIC”, the campaign to promote ICT that the Walloon region led, and we concluded some attractive deals with Levis, Mercure, Eurobussing, Group Renault Motors and others. We also launched the first subsidised 3G embedded laptop with Hewlett Packard. In 2010, “Bizz goes ICT”. We will launch a new ICT agent sales channel, including selling ICT-related hardware, such as laptops and servers. We will also launch ICT Application Packs, which will combine all the basic ICT applications that SMEs need, and we will install them – thus overcoming what is often an entry barrier for these products.

Paving the way for 2010

We shall stay close to our customers, as part of our strategy of proximity, so that whenever they have a need in terms of service or equipment, we are there to supply it. We will make a step forward in servicing with a new dedicated call center for SMEs. For medium-sized firms, we will also offer account sharing solutions, providing more economical mobile tariffs that cover several employees. Our unique selling proposition is that we offer a full and convergent solution comprising fixed, mobile & Internet services. Moreover 13% of Belgacom TV’s customer base consists of SMEs.

Belgacom Annual Report 2009 - 37

Bizz rend l’internet mobile accessible à tous les indépendants et les PME.

Bizz Deal

€ 289 htva*

Bizz présente le Bizz Deal de la rentrée Smartphone Samsung C6625 • Smartphone 3G • Clavier complet • GPS •

6.1

€ 180,99 htva*

Option Mobile Internet 200MB Connectez-vous à l’internet et consultez vos e-mails où et quand vous voulez sur votre smartphone.

€ 108 htva* soit € 9 htva (au lieu de € 16,52 htva) facturés mensuellement pendant 12 mois.*

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

38

* Offre destinée aux clients professionnels et indépendants. Bizz Deal à € 289 htva (€ 349,69 tva comprise) : achetez un appareil Samsung C6625 d’une valeur de € 180,99 htva (€ 219 tva et cotisation Récupel comprises) et souscrivez du 20/08/2009 au 19/10/2009 simultanément à l’option Mobile Internet 200MB pour une durée de 12 mois. Vous payez alors seulement € 9/mois htva (€ 10,89 tva comprise) pendant 12 mois pour l’option Mobile Internet 200MB au lieu de € 16,52 htva (€ 19,99 tva comprise). Prix et conditions d’utilisation uniquement valables en Belgique pour un usage national. Cette offre est non cumulable avec d’autres

Customers

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

Supporting our corporate clients

Invest have made their decisions to work with us based on value rather than cost.

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

The 2009 strategy was to support our customers during the crisis and make sure that our budget targets and theirs could be met. And this strategy worked, as we were able to realise numerous strategic projects for our customers. The bases have been laid to enhance their ICT infrastructures for the coming years, as well as to continue working together to build the future of ICT in Belgium.

Changing inside for better impact outside

Meeting six expectations Our solutions have been rearranged to better meet the customers’ expectations in six categories: network, security, datacenter, unified communications, applications, and mobility. All six categories showed they could deliver the right solutions for our customers.

Our partnerships with market leaders have been strengthened, in a way that allows us to deliver solutions based on industry standards, while leaving room for further extensions as customers’ needs evolve.

We managed to win deals in all segments.

The result is that we still have a strong position in fixed voice and data, we maintained our position for mobile voice, and won new deals for mobile data. Our ICT solutions grew across all categories.

Thanks to our datacenter infrastructure, we were able to deliver solutions on-site, hosted or in managed services, giving our customers the power of choice, as well as the power to combine the best options for their actual and future needs. We also saw that our convergence approach worked: companies such as Dexia, KBC and Sea-

Internally, we set up projects to improve efficiency in bid management, and we plan to introduce SAP EPS early 2010. To better translate customer needs into practical converged solutions, the Belgacom Corporate University trained the sales teams with a focus on ICT knowledge. We further intensified customer interaction with many workshops, and successful events such as the STAR Conference that took place within the framework of the European Business Summit, and “The Night of ICT”.

The Belgacom website (ict.belgacom.be) was completely revamped with a fresh look and clear structure, based on our new value propositions, and we added an extra dimension of customer interactivity with the launch of the One magazine blog (www.onemagazine.be) linked to the wellknown printed customer magazine.

In order to guide our customers through a constantly changing environment, we developed the “uprooted enterprise” concept(1), and in this context, new value propositions that meet their needs and expectations. We encouraged companies to exploit the advantages that ICT brings, to make full use of the opportunities that the market offers, to see challenges and to embrace them. These are the companies that can evolve at the pace of the changing economic context. And their ability to adapt and stay flexible comes from their reliance on ICT. Belgacom positioned itself as their partner ensuring their ICT remains operational 24/7.

Datacenters and cloud computing At Belgacom, we stay ahead of the curve – and that means we are moving forward with new trends in the use of datacenters and

Explore Explore evolved from a connectivity solution to an enhanced ICT services platform. By integrating fixed and mobile services it provided new opportunities and possibilities for our customers, offering mobile backup for Explore sites, and a mobile data network for teleworking. It benefited from a new service reporting portal with an integrated reporting dashboard for connectivity and ICT services – demonstrating again our end-to-end approach with Explore as a basis.

(1) http://ict.belgacom.be/nl/aboutbelgacom/theuprootedentreprise.asp

Belgacom Annual Report 2009 - 39

We have focussed on building bridges between the countries, enhancing awareness of the Belgacom Group and expanding the potential of the international sales forces.

cloud computing. Our datacenters allow clients to keep their data safely on remote computers hosted by Belgacom. Cloud computing takes the trend still further, allowing clients to share computer resources via the internet, instead of using software or storage on their own computers.

In both these areas we obtained financial results beyond our expectations in 2009. Our performance exceeded our objectives, with significant growth in most domains. This success was all the more remarkable at a time when traditional IT spending patterns were disrupted and investments delayed. We devoted special attention to this segment, and we finished the year with results that more than justified our investment of time and effort.

Higher volumes compensated for price erosions. And we shifted to a hybrid approach for our customers, to which we provided cloud computing as an alternative to traditional on-site IT. There are major projects underway already for storage and server business. And increasingly business will increasingly to make greater use of managed services. The innovative work足place solutions we are offering to our clients indicate that we are also ready for the next wave of virtualisation: the virtualised desktop.

40

Our Business Innovation and Datacenter Services are now integrated into our Datacenter and Application Services.

This is more than a purely administrative rearrangement. It opens up prospects for interesting further developments, in which we reflect internally the potential for offering our clients transversal services such as streaming, digital signage, media screens, IPTV, and managed video surveillance.

Further commitments for 2010 In 2010, we will continue to work on cus足 tomer satisfaction, by further enhancing the skills of the sales teams and by delivering a superior end-to-end customer experience.

In addition, we will execute programmes to build a stronger partnership with our customers on a strategic level, to help them innovate in their business.

Belgacom will maintain its focus on an improved convergent offering, combining fixed, mobile and IP telephony with Unified Communications, and will continue to invest in datacenters and managed ser足 vices in order to further grow and fully capture the opportunity in cloud computing and on-demand services, as a proof point of implementation of Network Centric ICT, both domestically and internationally.

Customers

Exploring abroad Increasingly, Belgacom is a company with an international presence. Belgium remains its primary market, but through a careful programme of acquisitions and commercial links, we win business from beyond Belgium’s borders in carefully selected key markets. This focus has given additional value to our international operations.

Adaptation of our organisation The Enterprise Business Unit (EBU) has an established and strong position on the Belgian market for business services.

But 2009 saw a major development in our ability to provide solutions for a wider market. We created a new International Sales & Marketing organisation.

The objective was to respond to the needs of clients who want an ICT partner that can offer seamless cross-border solutions. This is something increasingly required by many of our Belgian cust­ omers with international activities. And it is equally a need among many customers in our international segment, which focuses on five countries in addition to Belgium: France, Luxembourg, Spain, the Netherlands & the United Kingdom. Customers are looking for strong regional players.

The objective has been met, and the results are clear even in the first year of this new configuration. We have focussed on building bridges between the countries, enhancing awareness of the Belgacom Group and expanding the potential of the international sales forces. As a result we have won new business among international companies and organisations.

The key to success

One of our crucial innovations was the creation of Key International Accounts.

These are a well-defined group of international customers that have decisionmaking centers spread throughout different countries. Each Key International Account benefits from the attention of its own Key International Account manager.

This means that our own organisation is designed to provide optimal service for cross-border business, and to address the needs of our customers outside the six countries where we have a direct pre­ sence.

Until now, major international clients fre­ quently concluded separate deals with our distinct operations in different territories, and we managed each of these deals separately. In the new organisation, a single Key International Account mana­ ger ensures that each of these clients receives comprehensive service across frontiers. This not only makes for greater efficiency. It also boosts the perception of the Belgacom Group among many of our international clients. This increased awareness and prestige translates into a more attractive platform for marketing our international services.

The International Sales & Marketing (ISM) organisation is responsible for managing our sales strategy for Key International Accounts and for coordinating the programmes of Key International Account Managers and Global Account Management. It also detects new international business potential, and supports the six EBU countries on complex international opportunities, in bid management, technical design & presales support.

As an integral part of the Belgacom Group, this new ISM organisation will become one of the major pillars of growth within EBU.

An increasing number of customers have been using the same kinds of ­services and applications on mobile phones and laptops as they already enjoy on their home or work computers. The launch of the HTC Magic is in direct response to this growing interest.

Helping our customers to reduce their CO2 emission Our products and services can contribute to ways of living and working that are more efficient in terms of CO2 emissions and energy consumption. Reports such as the GeSI/Climate Group Smart 2020 study demonstrate that through enabling other sectors to reduce their emissions, the ICT industry could reduce global emissions by as much as 15% by 2020 – a volume of CO2 five times its own footprint in 2020  www.smart2020.org.

We launched an online tool which helps our customers quantify the CO2 savings related to the use of our videoconferencing and teleworking solutions.  www.belgacom.be/ict

Belgacom Annual Report 2009 - 41

Leading

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

The MTN connection 2009 was an exceptional year for BICS, with continued growth of its organic business, and with the deal with the MTN Group.

Daniel Kurgan – CEO Belgacom International Carrier Services

“Our strong growth figures combined with a strategic M&A have boosted us into the Top 4 worldwide, a huge achievement for BICS.”

In June, BICS announced the extension of its strategic co-operation with the South African mobile telecommunications Group MTN, the biggest mobile operator Group in Africa. This marked a major step forward in the strategy of becoming a leader in the international carrier market. The transaction was completed in November, and will bring economies of scale, improve efficiencies and cost benefits.

BICS has leapt into the top four operators worldwide for international voice traffic – it carried 19 billion minutes in 2009, and boosted revenues by 9.9%. Not only is it now the largest international carrier in Africa; it has also become one of the leading actors in the consolidation of the sector.

Belgacom owns 57.6% of the new enlarged entity, while Swisscom holds 22.4% and MTN 20%. It is an interesting example of a Belgian company leading on the inter­national scene.

19 billion minutes carried in 2009 42

Overall, BICS won increased traffic both in minutes and in the volume of SMS and MMS messages carried. It won more than 100 new contracts for mobile data.

It is specialist work, and we win business because we provide transparency to customers on pricing and guarantees on service levels.

BICS has also expanded its organic business, exceeding EUR 100 million of EBITDA (100% consolidated) and reach­ ing 8.5% of EBITDA margin. Key factors were continued growth in voice business, despite an extremely competitive environ­ ment, mainly driven by the mobile seg­ ment especially in Africa and Asia. It also leveraged its worldwide submarine and European terrestrial network with significant sales of capacity services (high bandwidth leased lines) to operators in Europe, Middle East and Asia, and consolidated its market leadership in mobile data carrier services (signalling, messaging and GPRS roaming), with increased usage and market share. At the same time, operational expenses were tightly controlled to keep growth below the gross margin growth rate.

Up the value chain In line with its strategy of moving up the mobile value chain, BICS deployed new value added services for the wireless industry, including the launch of its Roaming Hub, making it the only provider with the Open Connectivity certificate of

Customers

+9.9% increase in revenues

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

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

by GSMA. In the course of 2009, BICS has started to progressively replace the current TDM switching infrastructure by a Next Generation Network solution. This new platform will permit the use of advanced technical features and improve BICS’ operational efficiency while significantly reducing future capital and operational expenditures.

International Network

ERMC

New York

In 2010, BICS will focus on the implemen­ tation of the transaction with MTN, the completion of the switching platform migration and the further deployment of its new mobile initiatives. It will also pursue its consolidation strategy, by triggering new outsourcing agreements. It continues to concentrate on the growth regions in Africa, Asia, and Middle East, while boosting its value chain by reinforcing its leading position in mobile data.

Amsterdam FFrankfurt Brussels ru l Pariss B Geneva Zurich EIG M il Milan

TAT14 FLAG Atlantic AC1 AC2/Yellow Apollo

London n

Tokyo

Ashburn SEA-ME-WE3 EIG Miami

SEA-ME-WE4

Hong Kong

Muscat

EIG

Taiwan Taipei

SEA-ME-WE4

SEA-ME-WE3

Singapore

SAT-3/WASC/SAFE

Europe

SEA-ME-WE3

Stockholm

Dublin London n Brusse Pa

SAT-3/WASC/SAFE

Warsaw

Amsterdam r ankfurt

bourg Bratislava ourg el Vienn Budapest Vaduz Ljubljana Geneva Zurich Zagreb an Lyon Marseille Roma

Lisbon

Madrid

Sydney

Kiev Prah

Cityrings C PoP's P Terrestrial cable

Bucharest Sofia

Athens

Optic Fiber SDH ERMC Submarine cables

Istanbul

Barcelona

SAT-3/WASC/SAFE SEA-ME-WE3 SEA-ME-WE4 EIG Atlantic seacables Seacables between America & Asia Pacific

Belgacom Annual Report 2009 - 43

Forward with our people Belgacom received the label of Top Employer during 2009 – and for good reason.

It invests in its staff, it trains its staff, it cares for its staff, and it communicates with its staff. In 2009 it provided a powerful demonstration of how well it works with its staff, by integrating its Belgian subsidiaries into the Group, and by initiating a shift in working patterns in line with its new customercentric approach.

44

Engaging our people

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

Astrid De Lathauwer – Executive Vice President Human Resources

“Together we will make a difference is a motto that is being put into practice throughout the Group, at all levels, making our HR actions coherent in the eyes of employees, as we bring our talents together to meet the needs of customers and generate innovations in a sustainable way.”

The key elements of our HR approach throughout the year were: • t he integration of all our resources within a single organisation, in a climate of mutual respect • t he convergence, deployment and development of our talents to enable us to meet the needs of customers and generate innovations • t he implementation of our strategy, allowing us to organise work in a more flexible way • the promotion of work-life actions resulting in increased interest and participation among our staff •d iversity as more than just a commitment

Integrating with respect Bringing all our resources within a single organisation was achieved in a climate of mutual respect. Belgacom’s 2009-2010 Collective Labour Agreement enabled us to offer the same treatment to all employees. Collective agreements were also signed with the Belgacom subsidiaries, providing guarantees on the transfer of benefits.

A social platform, bringing together all the social partners from all the subsidiaries and the Belgacom Group’s management committee, negotiated the different phases of the integration.

46

Creating a new culture A shared and supportive corporate culture is being constructed step by step, based on the experiences of teams working together, in order to support our convergence objectives and Group strategy.

Rather than coming from the top, our corporate campaigns and actions related to the Group’s values (Respect, Can Do, Passion) motivated employees to put them into practice on their own initiative.

The campaigns aimed to increase understanding about our strategy, so as to inspire rather than persuade employees.

In parallel, systematic skills development, training and performance evaluations provided employees with insights on how to apply these values in their daily work. Numerous initiatives were taken by the business units and by many teams, and individual employees also developed personal initiatives.

Developing our staff for more convergence Recruitment We increased internal mobility by 20%, corresponding to 1,100 job changes. External recruitment was down 25% on last year, but even so, 638 people were hired, and the Group maintained its high profile and strong position in the external labour market. Recruitment focused on ICT func-

People

Our initiatives

tions, sales functions for the call centers and sales outlets, and technicians.

We continued our highly selective “Young Potential” project, recruiting 36 young high-flyer graduates, who entered our intense coaching and career development programme. We also incorporated emerging social networks and media into our recruitment process, using LinkedIn, Face­book and blogging to tap the talent on the Net.

Training

In 2009, the Belgacom Corporate University has given about 430,000 hours of training to the Group. 86% of the collaborators has followed at least one class in 2009.

In 2009 we adapted our approach to training to support our growth objectives and our increasingly customer-centric structure. The emphasis was on customer focus and convergence, operational excel­ lence and new technologies, and leader­ ship. Pilot training programmes were created following an analysis of future needs in sales and front-line customer services. Various training options were developed, including our sales academies (where CBU provides product and service training to staff in our points-of-sale and COR pioneers forward planning in sales skills to ensure that we remain “best in

class”), and the Master class in Marketing that Belgacom Corporate University orga­ nised in cooperation with the Vlerick Management School in Ghent.

• The “Who shares our values?” campaign invited employees to talk about what the values mean for them, and who their role models are.

• Senior management and the business units developed a series of events to promote the values, including a seminar to make sales employees reflect on how the values can be applied in their job.

• Pilot programmes on ”quality circles” – a feedback process involving customers and employees who have direct contact with customers (see page 23) – gave employees a new level of influence and confidence in their contacts, while boosting customer centricity and employee job-satisfaction.

• The annual employee survey, Elix, monitored progress in putting the values into practice and in increasing employee commitment. This stimulated genuine dialogue throughout the workforce.

But this is only the beginning.

We have developed a multi-year programme that will continue in 2010 with a new action plan.

Improving work flexibility Our focus on improving customer service also implied changes in some of our working methods and practices, so we implemented the strategy by organising our work in a more flexible way. New agreements within our organisation were concluded with the social partners, which reconcile the new business demands with the social priorities of employees, and which have a direct impact on customer satisfaction. In the Care & Ease programme, for instance, we now make provision for installations in the evening for our residential customers. And we have also attained greater flexibility in handling peak workloads, introducing new shift arrangements and providing more coaching. An approach offering differentiation of services per customer category was also set up.

Favouring the environment A series of new facilities were made available to employees in 2009. These included a “cafeteria plan” with various commuting options, which encourages employees to go green and cut their travel costs, and an eco-check promoting ecological products at more reasonable prices.

Employees also took part in the Friday Bike Day organised by the Brussels-Capital Region (in which 113 cyclists covered 30,769 km), and we decided to extend the initiative in 2010 to the whole country, as well as launch a “Bike to work” operation in the spring.

Belgacom Annual Report 2009 - 47

2010

In 2009 we won the “Top Employer” award granted by the CRF Institute.

Managing work-life balance & well-being Belgacom is proud of its success in bringing a social dimension to the professional life of its staff as part of its contribution to achieving a work-life balance. 2009 saw numerous additional activities and initiatives in this regard.

Our Work-Life Unit organised major events for the staff, including the Belgacom Group Fun Day, attended by more than 12,528 employees and family members, and the end of year celebration for employees’ children, attracting 10,580 participants.

Vacances enfantines automne-hiver-printemps 2009-2010

8,600

children took part in the school holiday activities

48

In addition, the Group’s concern for the well-being of its employees led to the continuation of our health awareness campaign – including free screening for common pathologies in middle-aged employees (for which 2,315 people signed up). The Group also supported employees and their families who took part in the Brussels 20 km (providing an opportunity for promoting the sense of conviviality within the Group), as well as a programme for looking after sick children at home (on 6,207 hours), and school holiday activities for over 8,600 children.

Health and safety activities included blood donor sessions with the Red Cross of Belgium in the Belgacom head office, road safety campaigns for our drivers, participation in the Brussels “no smoking day” in

May and accident prevention campaigns.

In this regard, we pursued our efforts to build a safer working place. In 2009, we launched an awareness campaign to reduce fall & stumble accidents, with positive results.

Work-related stress is a growing concern in developed countries due to developments in the modern world; one of the most important causes of stress at work is the constantly changing nature of work.

At Belgacom, we always have to adapt to new technologies and market changes, which means that changes in our work are frequent. For this reason, we want to raise awareness at an early stage, so we developed a global policy to prevent problems at work, including all aspects of stress, bullying, sexual harassment and acts of violence. Advice, contact persons and specific tools are available within the Group. In 2009, we launched a stress self-assessment tool called ISAT, which allows employees to measure their stress level and determine the factors of stress, to help them solve their problem together with their manager. Extensive information on the Belgacom policies regarding a responsible work environment is available on our intranet.

Belgacom also hosts the activities of The Pulse, an initiative started by a group of enthusiastic employees, which offers courses and workshops outside working

People

hours on subjects ranging from photography and video-making to painting, drama and even disco dancing.

Promoting inclusiveness Belgacom attaches great importance to inclusiveness in the work place. More than just a commitment, diversity is an integral part of our HR approach. The label granted to us by the Federal Equal Opportunities Minister and the Federal Employment and e-Government Minister was renewed this year, and demonstrates that our own concerns are in line with those of society in general. We act in favor of the integration of people with disabilities, the promotion of women, more focused management of employees over 45 years of age and integrated management of people from diverse ethnic backgrounds who are present in ever-increasing numbers in the workforce.

Disability

We are committed to the integration of people with disabilities into the employment market, and took new measures in 2009 which are leading to projects which will benefit current and future employees.

These included checking systematically how well Belgacom makes provisions for the integration of people with disabilities.

We set up a partnership with the charity Wheel-it, which gives our recruitment staff special access to its database of CVs of job candidates and allows us to post our vacancies on its website. We conducted a review of all our buildings in Belgium, to check their accessibility on a broad range of criteria, including not only the obvious question of lifts, passage ways and lavatories, but also proximity to public transport and the provision of reserved parking places.

Age

We are concerned about age-related issues. In line with current progressive views, we pay attention to the related possibilities and challenges: do employees who are 50 have the same needs as those who are 20? What are the expectations and needs of older workers? And what is the best way of assuring knowledge transfer between the generations?

We asked Randstad Diversity to conduct an assessment, which involved Group discussions in which some 50 employees of more than 45 years of age gave their views

on a range of subjects relating to age (e.g. added value, salary differentials, the future of the Belgacom Group, motivation factors, differing needs and different roles for human resources). Based on this, Randstad was commissioned to produce an in-depth analysis and to propose lines of action in our management of age-related issues.

Belgacom Fun Day 24/05/2009

Gender

Equality of men and women is one of our highest priorities. There should be more women in the top/senior positions. Within our network of women, Winc., measures were taken to make it easier for women to maintain professional contacts and to access promotion paths. We initiated a mentoring programme for women. Women in middle-management are now offered the opportunity to receive coaching from colleagues in senior management. This has created links that allow contacts and exchanges outside the hierarchical relationship, with regard to career development and experiences as well as the work-life balance.

Belpark ©

12,528

employees and family members attended the Belgacom Group Fun Day

Our positive HR approach makes a positive impact Internal recognition

Our policy and positive approach paid off in 2009, and were reflected in the Group’s results. The Group delivered, and it grew.

The findings of the Elix survey (Employee Loyalty Index Survey) clearly show that staff commitment grew, partly due to an increased sense of job security. Our employees embraced change, and were confident in the future of the Group.

External recognition

We received two awards during 2009. We featured on the “Most Wanted Companies” list of Vlerick-References & Vacature, and won the “Top Employer” award granted by the CRF Institute. These awards confirm that Belgacom’s HR policies and practices are maintaining the Group as a leader among attractive firms, and that we are well-known for our investments in our staff, as well as our extensive training programme.

People Objectives for Belgacom Group 2010 • Continue the development

of complementary skills towards jobs of the future by strengthening our competencies with respect to customer service and centricity.

• Continue to invest in the culture change & change management to improve customer satisfaction.

• Adapt our organisation to become more customercentric.

Belgacom Annual Report 2009 - 49

Forward with our responsibilities

52 • Our CSR strategy 54 • Highlights 56 • How we manage CSR 60 • Enhancing access to communications 64 • Enabling a low-carbon society 70 • Communicating on electromagnetic fields and health 72 • Promoting a positive working culture 74 • Developing a responsible supply chain 76 • Supporting our Communities 78 • Achievements & commitments 80 • Key figures 82 • About our CSR reporting 83 • Independent Assurance Report 84 • GRI content table 50

In 2009, Belgacom made Corporate Social Responsibility a central feature of its Group strategy and operations, making a reality of our claim that we are a company that takes seriously its responsibilities to the wider community and to the wider world. And to mirror this, we are for the first time incorporating our CSR report into our annual report, demonstrating that CSR is now completely integrated into our business.

Our

CSR strategy

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

Didier Bellens - CEO

“We succeed in being a profitable company. I now want Belgacom to succeed in being a sustainable one. I believe we are good on track to become one of the leading responsible Companies by 2012.”  See also our CEO’s interview in the activities report

52

At Belgacom, we recognise the need for a responsible and sustainable approach to doing business. We consider CSR as a strategic management tool and as a key component of our corporate mission and strategy. CSR helps us to anticipate on societal trends and stakeholder expectations. It drives innovation and opens doors to promising new business areas, as illustrated by our initiatives in the e-health sector and in enabling higher energy and carbon efficiency via the use of ICT applications. Supporting ICT training programs and donating PC’s to schools and NGOs reduces the digital divide. Optimising our energy usage and our waste lowers our costs. Raising awareness of youngsters on a safe use of our technologies and on climate change better prepares future generations. Informing consumers on electromagnetic fields and health encourages customers to make responsible choices. Developing a fair, safe and diverse working culture enables us to retain and attract talents. Ensuring a responsible supply chain helps us manage reputational risks and increase our operational excellence. By donating money and time to good causes, we seek to improve the quality of life in the communities we operate in.

Our ambition is to be recognized as a leading responsible company in Belgium by 2012 and we believe we are on the right way.

Our CSR strategy sets priorities to promote an inclusive e-society and enable a sustainable growth, based on six commitments.

Strategy presentation

CSR

Mission_ As a responsible company, Belgacom wants 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 andcompany, private lives in a sustainable Mission – As a responsible Belgacom wants to beway. the preferred provider

Strategy presentation

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 CSR priorities private livesan in ainclusive sustainable way.

Promote e-society Enable a sustainable growth

CSR priorities • Promote an inclusive e-society • Enable a sustainable growth

CSR strategy P

c In ubli

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K ey

Commitments

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ele ctr om ag ne tic

fe l

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Commun icatin g on

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Bu

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

ities

nica mu om

- Network compliance - Transparent communication on exposure levels - Monitor scientific research

mun Com

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- Raise CSR standards of our suppliers - Include CSR as sourcing and selection criteria - Train our buyers

Su Un

Dev

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ts n e m Commit

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rs li e pp u S

Belgacom Annual Report 2009 - 53

NGO s

om mu

nitie

s

- Donate money and time to good causes - Responsible sponsoring

ap

es oye

g otin Prom

Empl

- Social dialogue - Diversity and Non-Discrimination - Safety and Health - Career Management and Trainings

r na Gove

CSR commitments Cu

ers

En

ng

Shar eho ld

low-carbon soc iety

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

lth ea dh n a ds

Cli en ts

2009 highlights Supporting our communities We invested EUR 1.5 million to support the communities we operate in.  see more page 76

How we manage CSR To further embed CSR in our daily operations, we elaborated a robust five-year CSR action plan and governance model, endorsed by both the Belgacom Management Committee and the Board of Directors.  see more page 56

We started to align our international activities with our Group CSR strategy

© Dieter Bernaers

A reduction of 70% of our CO2 emissions.

We now commit to achieve this.

-70% CO2 54

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

CSR

Developing a responsible supply chain We conducted a detailed assessment of the CSR performance of 23 strategic suppliers.  see more page 74

Promoting a positive working culture We elaborated a new Code of Conduct to better incorporate our Mission, Values and CSR principles and will implement it in 2010.

2010

challenges

 see more page 72 •C ontinuing the integra-

Enhancing access to communications We continued to help reduce the digital divide by promoting simple convergent offers, providing tailored offers for elderly and disadvantaged people, by donating 775 PC’s to schools and NGO’s and by providing ICT trainings to 7,000 persons.  see more page 60

tion of our international subsidiaries into our Group CSR strategy and action plans.

• Helping our business units to successfully deliver the Group CSR action plan.

• Improving our stakeholder engagement approach.

 See our performances and commitments table on page 78

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

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

Belgacom Annual Report 2009 - 55

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

Engaging with stakeholders to understand their expectations

Stakeholder expectation

Monitoring Progress Reporting to stakeholders

CSR

Materiality assessment

CSR programs and targets per business unit

Our diverse range of stakeholders includes employees, investors, suppliers, customers, NGOs, governments and regulators, and the communities where we operate.

We interact with our stakeholders through this CSR report, by completing questionnaires from analysts, investors, suppliers, customers and CSR organisations, by meeting stakeholders, and by replying to enquiries made to csr@belgacom.be. This year, we took new measures to better understand our stakeholders’ perceptions and expectations, and we will continue to improve our stakeholder engagement strategy in 2010.

We commissioned the Université Catholique de Louvain to conduct independent interviews with a broad range of external stakeholders: unions, consumer associations, NGOs, industry associations, suppliers, public authorities, and CSR associations.

31 stakeholders were asked how they perceived and what they expected from our CSR activities. Survey results confirm that our CSR strategy choices meet the concerns of stakeholders.

We surveyed our employees on their perception and expectations of CSR, which confirmed that our employees find CSR important and are willing to participate in CSR projects. General awareness on our CSR actions was still low.

90%

of the employees thinks that Belgacom is involved in CSR

17%

wants to participate outside office hours

46%

wants to actively participate

92%

finds it important to be informed about CSR activities Base: 1,208 employees

56

We included CSR topics in our presentations to investors and analysts and disclosed our environmental performance to investors via the Carbon Disclosure Project.

We very much value feedback of rating agencies on our CSR performance as it helps us improve the quality of our reporting.

We also carried out extensive market research in consumer (trends), and were reassured to observe that several of these societal trends were already being tackled by our CSR actions. For instance: Green and Health: Green and Health are increasingly important to people, but they will not make green or healthy choices if it has an impact on their lifestyle. Companies should take on the responsibility, and the associated costs. We address this trend by providing information on the potential health impacts of our wireless products and by providing greener alternatives at same price levels, such as the E1107 solar phone we sold at EUR 49.

Smart and connected consumer: With the internet fully embedded in our society, consumers are increasingly aware and informed in their choices. Honest and transparent communication will be key to retaining customer trust and loyalty. This gives us a responsibility to help people to get online, educate them, provide simple and objective information and to prevent the growth of the digital divide.

CSR

Responding to stakeholders’ expectations In response to our stakeholders’ expectations, we improved our CSR governance model, including a new Code of Conduct that will be implemented in 2010. We sharpened our CSR strategy and embedded it in our business unit priorities, and increased communication on our CSR activities. This new CSR plan and governance model was endorsed by the Belgacom Management Committee and the Board of Directors. We also delivered on the commitments we had taken.  See our achievements and commitments table on page 78.

CSR Governance

Board of Directors

Our mission, our corporate values (Respect, can Do, Passion) and our Corporate Governance Charter underpin our approach to business and to corporate social responsibility. These are the foundations to create and sustain a culture of vigilance, promote implementation and adhere to sustainable management and compliance processes and procedures.

Belgacom Management Committee

To further embed CSR in our organisation, we created a new Code of Conduct, called “The way we do responsible business”. It will be implemented in 2010. It translates, into a reference document, our mission, strategy, corporate values and CSR objective.

Wherever they are, all Belgacom employees will share a common way of working, the expression of the new corporate culture.

A cornerstone of our approach is the development of an internal governance and reporting structure, centred around two entities: the Group CSR department and the CSR Steering Committee, including Vice-Presidents from each business unit. These entities, headed by the Vice-President Group CSR, report directly to the CEO and the Belgacom Management Committee.

We appointed CSR representatives in each business unit, who work closely with the Group CSR team to implement the CSR actions. Our key CSR priorities are managed as “corporate strategic programs”, with monthly progress reports to our Belgacom Management Committee.

CSR steering committee VP CSR + VP’s from each business unit

CSR team

Coordination

3 Strategic Programs

– Low-Carbon/Green ­– EMF & Health – Access to Communications Divisional execution

3 Workgroups – Responsible

supply Chain – Positive working culture – Community Support

Belgacom Annual Report 2009 - 57

We included the key CSR actions in the strategic plans of our business units and defined clear targets to monitor progress.

Materiality assessment and embedding CSR in our business units Based on the results of our stakeholder surveys, our analysis of societal trends, benchmarking of our peers, and interviews with employees, we assessed whether we were still addressing the CSR issues that are the most significant for our stakeholders and for our business. It was reassuring to discover that the six CSR issues we had been working on for three years were still the most relevant, according to their financial and reputational impact on our business, and the level of stakeholder concern. Our CSR reporting focuses on these most relevant CSR issues (see table below).

Medium Low

Maturity level

High

We organised workshops involving 50 employees to prioritise the CSR actions needed to address our CSR issues over the next five years. CSR priorities were defined based on their importance (for stakeholders and for Belgacom) and our current maturity level.

We included the key CSR actions in the strategic plans of our business units and defined clear targets to monitor progress.

Priority 1 Priority 2 Monitor Low priority

58

Local community investment

Employee volunteering Biodiversity Water Low

Foundation/charity Reward & recognition Health, safety, wellbeing Social dialogue

Learning & development Responsible network deployment

Energy efficiency Clear pricing Employee involvement Waste Management Scientific research on EMF Ensure ICT education Sustainable sourcing Responsible marketing Promote product reuse

Communicatie on EMF & health Privacy & safe use of products Equal opportunities & diversity Digital Divide reduction CO2 footprint reduction Green customer solutions Customer service

Medium

Key issues for Belgacom and its stakeholders

High

CSR

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

CSR and our international operations So far, our CSR activities have been focused on Belgium. We recognize the need to expand the scope of CSR to our international activities, and we started working on this.

We assessed the importance and maturity level of CSR in our international subsidiaries, based on a self-assessment questionnaire and follow-up meetings. We will work further on the incorporation of our international activities in 2010 in order to include them in our Group CSR strategy. Meanwhile, we decided to provide an overview table of their activities and main CSR achievements so far, and highlighted some of their CSR initiatives throughout this report.

Activity description

FTE 2009

Belgacom Ownership

Material CSR issues

166

100%

ISO 14001, ISO 9001, ISO 27000, IPP certification, supplier assessment system

Telindus Netherlands

222

100%

ISO9001, SCC/ VCA, ISO27001 (in preparation)

327

64.69%

Telindus France

636

100%

UN Global Compact, ISO9001, ISO 14001, ISO 27001 planned

Telindus Spain

218

100%

ISO 14001,

Climate Change, Positive work environment, Responsible Supply Chain

each Business Unit. With my team, my role is now to monitor, challenge and support all departments of the Company to make sure that CSR objectives are not only embedded in roadmaps, but are alive and part of  our day to day operations.

Main achievements

Telindus Great Britain

(ISIT included) Network-centric ICT services and solutions Telindus Luxembourg (installation, maintenance, consulting and services)

We have succeeded in fully embedding CSR in

ISO 9001, Founding partner of Luxembourg Safer Internet awareness center (www.Lusi.lu)

Tango

Provides fixed, mobile and internet services in Luxembourg

87

100%

Access to Communications, EMF and Health, Positive work environment

Best Buy offers, Safe usage campaigns

Scarlet Netherlands

Reseller of internet, fixed and mobile telephony services in Holland

55

100%

Access to Communications

Winner Customer Service award

We will work further on the incorporation of our international activities in 2010 in order to include them in our Group CSR strategy.

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

Belgacom Annual Report 2009 - 59

access

Enhancing to communications

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

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CSR

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

We have Simplified our offers and lowered our prices Our new services deliver the benefits of convergence to our clients: greater freedom and simplicity for a better deal on price and quality. With the new All-In-One pack, the client benefits from free fixed and mobile calls to all Belgian numbers after 17.00 and at weekends, as well as surfing at home and on a portable computer anywhere free at the weekends. Digital television is included with no extra charge.

Our roaming tariffs have come down sharply (-67% for SMS for example), in line with the decisions of the European Commission.

Belgacom has taken an active role in the federal government’s “Start2surf@home” campaign, which aims to bring the advantages of home internet to the widest public, and to bridge the digital divide between those who currently have access to the 3 million active internet connections in the country, and those who do not. The Start2Surf kit from Belgacom comprises a new computer with all necessary softwares, including antivirus and antispam software, and 12 months free access to Belgacom Internet Budget. Each purchaser also has the right to one day’s training in using computers and the internet, a free after-sales help line, and a tax credit for 21% of the purchase price (ex-VAT).  www.belgacom.be/s2s We cooperated with the national regulatory authority to make it easier for the public to compare operators’ tariffs. Belgacom welcomes the tariff comparison simulator created by the national regulatory, IBPT, because it introduces an objective measure of service, taking account of quality as well as price. It shows clearly that Belgacom has an attractive deal for every client – not only in quality, but also with keen prices.  http://www.meilleurtarif.be and  http://www.bestetarief.be In May, the Belgian competition council fined Belgacom Mobile EUR 66 million, ruling that it abused a dominant position on the business market in 2004 and 2005, by under-charging for communications on its own network, and consequently harming its rivals. At the same time, the council threw out four other complaints against Belgacom Mobile – neatly demonstrating the uncertainties surrounding competition law. Belgacom Mobile has appealed against the ruling, and the case is still under review. Belgacom Group devotes the greatest attention to ensuring compliance with regulations in force. But some of these regulations are less than clear, and court rulings are often required to provide definitive guidance on their precise significance.

Focused on improving our customer experience and servicing A priority for 2009 has been our Care & Ease program. “Care” measures the ‘end-toend’ satisfaction of our clients. “Ease” aims at simplifying the way customers access our services. The introduction of new and more precise appointment slot choices during the day, the merging of different support call center access numbers into one number for residential customers and one for professional customers, the simplification of interactive voice menus and the improvement of first time right both for remote and field support have contributed to the easyness to do business with the customer operations. The proactive identification of non optimally executed Do It Yourself installations and other individual quality improvement opportunities offering support to the related customers have enforced our care approach. In 2010 customer operations will continue on this track improving further overall customer experience.

We work hard to look after our customers in all situations, and are particularly keen

on promptly reacting to incidents. Ensuring the security of our customers and keeping them informed in case of problems is an integral part of our customer-centric approach. We had to deploy our crisis management plan this year to cope with two network breakdowns and one security attack.

Our mobile network and broadband network each suffered a major breakdown this year. Technicians and equipment suppliers soon identified the cause of the problems, and the networks were restored to full functionality rapidly. We devoted great attention to keeping our customers informed during these breakdowns, via specific communication towards traditional press, via alternative channels like Twitter and blogs, and via an efficient internal communication to all our employees. Commercial gestures were made as well. Once the service has been restored, Belgacom attached a special attention to transparently communicate on the causes of the failure and apologized to its impacted customers by sending them a dedicated sms or e-mail.

Late in the year, an internet pirate published – on two occasions – connection codes for several of our clients. Our technicians checked the loophole that had allowed access to the pirate, and immediately provided all the affected clients with a new password. This too fits in our customer-centric and security policy.

Further action was taken to avoid any repetition of such incidents in the future.

Belgacom Annual Report 2009 - 61

Continued to protect customer privacy and promote a safe use of our technologies Privacy and data protection are increasingly important issues for customers of all kinds. Our comprehensive privacy policy is available on our intranet and our management system for information security is certified ISO27001.

All our products include security features that provide our customers with the highest possible level of protection and privacy. On Belgacom TV, adult content is protected by default at the highest security level of the parental control function. For internet, parental control is available on request in our Norton Security solution, which can be downloaded for free on our web site. Filtering systems have also been made available to block adult content delivered by third party services on mobile phones. On the Vodafone live multimedia portal, a warning precedes the opening of adults sites.

Child safety online is particularly important for Belgacom and we partner with two NGOs to raise awareness of children on a secure use of our technologies. We support Action Innocence, which visited 3,198 schoolchildren this year to raise awareness about the dangers of the internet. We also hosted two Action Innocence conferences for Belgacom Group staff. We continued to support Child Focus, the European Centre for Missing and Sexually Exploited Children, by providing office space for its members in Belgacom buildings, and by supporting its preventive campaigns on safer Internet usage. We distributed 30,000 leaflets in our shops, with advice to adolescents about safe Internet usage. Through this work, we are also members of the committee of the Belgian Integrated Network for Safer Internet, a project financed by the European Commission.

As signatories of the European Framework for Safer Mobile Use by Younger Teenagers and Children, we also took part in the drafting of the Belgian code of conduct for safer mobile use by younger teens and children, which has been signed by all the members of the GSM operators’ forum (GOF), and lays down rules they agree to respect.  www.gofguidelines.be/ The European Telecommunications Network Operators Association, to which we belong, has identified protection of children on-line as a priority, and Belgacom participates in this workgroup aiming to exchange and disseminate good practice in this field.

Launched new products tailored to the needs of elderly and disadvantaged people For the elderly, Belgacom offers specifically-designed mobile phones. Simple and user-friendly, they provide basic services, with a bright and easy-to-read screen, large keys, and a powerful loudspeaker.

Child safety online is particularly important for Belgacom and we partner with two NGO’s to raise awareness of children on a secure use of our technologies.

Telindus Luxembourg has developed its www.lusi.lu website, as part of the European Commission’s Safer Internet Program, providing advice, games, and news for children, adolescents and adults that aim to raise awareness on a safe use of the internet.

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For children with chronic disease or a long illness, Bednet ( www.bednet.be) and Take Off ( www.asbl-takeoff-vzw.be) create a virtual network allowing them to stay in contact with their teacher and classmates, and to carry on with their studies through distance-learning, to cut the risk of them falling behind or out of touch. Belgacom supplies equipment, software and internet links between classrooms and homes or hospitals. In 2009, some 75 children benefited from Bednet and 40 from Take Off. Belgacom has provided a video-conferencing facility in the Maria Middelares University Hospital in Ghent, which involves general practitioners more closely in multidisciplinary consultations on cancer cases. This assures the patient of the best possible coordination among treating doctors, both inside the hospital and outside, and also saves time for the general practitioner. This pioneering project is supported by the national health insurance organisation, INAMI. An innovative SMS-based telemonitoring project linking general practitioners and cardiac patients discharged after hospital treatment is helping to reduce the number of patients who need to be readmitted (40% of heart failure patients have to be readmitted to hospital within six months of discharge). More information about Belgacom’s role on  www.belgium-hf.be.

CSR

In collaboration with the mutual health insurance funds in Belgium, Belgacom has launched Zorg TV, which provides information and coaching to 25 patients suffering from type 2 diabetes, via Belgacom’s video telephony and digital TV platforms.

Further supported the development of ICT skills via our ICT training programs We donated 775 computers to 60 schools and to 52 organisations providing ICT trainings to disadvantaged people across the country.

For the elderly, Belgacom offers specifically-designed mobile phones.

Via our partnerships with several social organizations providing ICT skills, we indirectly trained about 7,000 people in 2009.

Techno.bel, is an ICT training centre issued from a partnership between Belgacom and the FOREM in Wallonia. In 2009, 70% of job seekers managed to find a job after the training. Compared to 2008, Techno.bel reached 34% more job-seekers in 2009, and 115% more students completing technical training. Techno.bel also aims to raise awareness about ICT, and has conducted a series of studies on the development of technologies and their impact on our economic and social environment, which have been presented to a wide public. At the end of 2009 it launched TIDI, a 3D virtual universe designed to stimulate e-learning.  www.technobel.be We continued to support The Network for Training Entrepreneurship (NFTE), which aims to encourage disadvantaged young people to develop their social and professional skills, and Formation Insertion Jeunes (FIJ), a Brussels based centre for unskilled jobseekers in the ICT.We also supported three Flemish organisations to develop the ‘Digidak’ concept – digital facilities open to the public, to help widen access to new technologies and to basic internet training. Belgacom supplies the internet connections.

2008

2009

2008

Total trainees FIJ Techno.bel Digidak NFTE Total

NA 997 1,080 329 1,326

416 2,814 3,500 475 7,205

2009 Total hours

NA 101,189 9,994 1,980 113,163

5,989 114,372 35,300 2,520 158,181

Continued to digitise our cultural heritage, preserving it and making it more accessible New technologies allow cultural heritage not only to be preserved, but also made widely available. This is why Belgacom launched its Digita project. In 2009, it continued to work with the Royal Library and began a project with the Royal Film Library, two major exercises that safeguard and facilitate the use of a part of these institutions’ collections. The RFP for the digitisation of the federal museum foreseen in 2009 has been postponed in 2010, Belgacom will be candidate.

We will • Simplify and harmonize our offers • Improve the overall customer experience and servicing • Further promote a safe use of our technologies, via a dedicated website • Continue to develop targeted offers for disadvantaged people • Continue to promote and support programs aimed at reducing the digital divide

The HomeSend service of Belgacom International Carrier Services is the first mobile centric global hubbing service for international remittance, airtime exchange and roaming recharge, endorsed by the GSM Association. International remittances are a significant part of mobile payments, allowing mobile subscribers to easily and quickly transfer money internationally.

Access to facilities to receive transfers of money is often limited, particularly for people on low incomes and in rural areas, where the banking sector is often under-represented and cash plays a larger part in the economy.

Mobile technology can lower the cost of remittances as it removes the need for physical points of presence and ensures a rapid and secure transaction.  www.homesend.com

Belgacom Annual Report 2009 - 63

Enabling a

low-carbon society

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

64

CSR

Key priorities • Reduce our CO2 emissions by 70% (2007-2020) • Help our customers lower their environmental impact • Raise awareness of stakeholders Our climate change strategy has three elements, supported by our environmental policy: 1. Reduce carbon emissions of our Belgian operations by 70% over 2007-2020; 2. P rovide customers with products and services that help them manage their own environmental footprint more efficiently; 3. I nvolve our stakeholders (employees, suppliers, etc.) and raise awareness on climate change In order to ensure the delivery of our climate strategy, we included it in our list of key corporate strategic programs. As a consequence, our climate targets are monitored and reported to the Belgacom Management Committee on a monthly basis, and a cross-functional team is responsible for the implementation of action plans.

We have set an ambitious CO2 reduction target for all our operations in Belgium: a reduction of 70% over the period 2007-2020

1. Reducing our own impact on the environment

We have Committed to reducing the CO2 emissions of our Belgian operations by 70% over 2007-2020 With the support of a leading carbon consultancy, Ecofys, we have set an ambitious CO2 reduction target for our operations in Belgium: a reduction of 70% over the period 2007-2020.

This target applies to all our operations in Belgium: office buildings, fixed and mobile networks, data-centres, fleet vehicles, air/train business travel, employee commuting, and outsourced transport. In the framework of the Greenhouse Gas Protocol, our target covers our scope1, scope 2, and a significant share of our scope 3 emissions.  www.ghgprotocol.org/calculation-tools/faq This new definition of our scope explains the differences in CO2 reporting compared to our previous CSR reports.

To reach this ambitious reduction target, we will focus on optimizing the consumption of energy throughout our operations, and on using renewable electricity only.

Reduced our CO2 emissions by 55% vs 2007 (and 24% vs 2008) In 2009, we managed to reduce our carbon emissions by 55% compared to 2007 and 24% compared to 2008. This is due to the full-year impact of our renewable electricity in 2009 (100% since September 2008) and the various initiatives taken to reduce our energy consumption. Compared to last year, we reduced our heating needs by 8%, our fleet consumption by 3%, and managed to keep our electricity consumption constant, despite increased traffic on our networks.

Became the biggest buyer of certified renewable electricity in Belgium All our electricity comes from certified renewable sources, and we are the biggest buyer of green electricity in Belgium, with an amount of green electricity equivalent to the yearly consumption of 140,000 households. Electricity comes from our own production through solar panels, and via purchasing agreements for hydroelectric generation.

Implemented major energy-saving initiatives in our data-centres and networks, delivering EUR 1.4 million yearly savings The main initiatives we took this year delivered total electricity savings of 14.4 GWh, equivalent to EUR 1.4 million yearly cost savings.

Clear targets have been defined in all key areas • 100% Renewable electricity: all our electricity is to come from certified renewable sources by 2009, via own-production and purchasing agreements • Mobile network: increase the energy efficiency by 25% by replacing all our equipment with state-of-the-art technology by 2012 • Fixed network: increase the energy efficiency by 25% by shifting to an all-IP network by 2018 • Data-centres: Increase the efficiency of our data-centres in order to reach an average Power Usage Effectiveness (PUE) of 1.75 by 2012 • Office buildings: further consolidate our real estate and continuously monitor and improve the energy efficiency of our buildings • Transport: further encourage the use of low-carbon transport, reach an average of 120 gr/ km for CO2 emissions in new company-car orders by 2012, and launch a major eco-driving training program

Belgacom Annual Report 2009 - 65

These key energy-saving measures were monitored on a monthly basis and progress is reported to the Belgacom Management Committee.

Yearly energy savings from key 2009 actions Server virtualization Shut-down plan Free Air Cooling Total

Target 2009

Realised 2009

Variance

1 GWh 5.8 GWh 6.6 GWh 13.4 GWh

1.3 GWh 6.1 GWh 7.0 GWh 14.4 GWh

+30% +5% +6% +7%

We significantly reduced energy consumed in our data-centres by virtualising 1,000 servers and buying energy-efficient servers. A virtualised server typically consumes 90% less electricity than a physical server. We also initiated major optimization works in our data-centres in order to improve the efficiency of our cooling facilities, which should deliver significant energy savings as of 2010.

All our electricity comes from certified renewable sources, and we are the biggest buyer of green electricity in Belgium.

Reduced by 11% the energy consumed in our offices and performed energy audits in key buildings We have consumed 11% less energy in our office buildings by vacating 4,700 m2, and by optimization measures such as adapting the temperature settings and implementing presence-based lighting. We asked external specialists to audit the energy consumption of our key office buildings and to assess the opportunities for further improvement.

-55%

Lowered CO2 emissions from our transport by 2% Measures that we took to reduce the environmental impact of our transport (fleet vehicles, employee home-work commuting, outsourced transport, and business travels), include:

CO2 emissions vs 2007

– 3% reduction of total fleet consumption compared to 2008 – A new mobility policy encourages our employees to use public transport: 100% reimbursement of public transport, or options to combine public transport and a company car;

CO2 emissions (in Thousand tons)

200

180

150

108

100

82

50 0

2007

Transpor Heating gas

2008

2009

Heating oil Electricity

Energy Consumption (In Terajoules)

3,000 2,500 2,000 1,500 1,000 500 0

– All our truck drivers (logistics) followed an eco-driving training. The positive results have encouraged us to launch a major ecodriving program in 2010, for all company car drivers.

– Systematic tyre-pressure checks were introduced, but had to be put on hold due to resource limitations.

– The number of satellite workers increased by 29% vs. last year, as we expanded the number of sites and desks.

– Our logistics distribution routing was optimised, resulting in 165,025 km saved.

– The CO2 emissions related to business travel (train and plane) decreased by 17%.

Reduced waste by 25% against 2008 Our waste management approach follows the principles “reduce, re-use, recycle”, and includes office waste and waste related to our operations (paper, wood, metal, cables, batteries, electronic scrap, etc.).

We have decreased our overall waste by 25% against 2008, thanks to less network deployment works, consolidation of buildings, and more efficient waste management.

2007

Vehicle fuel Heating gas

66

We continued to replace air-conditioning by fresh-air cooling in our fixed and mobile networks, which reduced our need for cooling by up to 90%. We launched a major program to turn off unused network equipment, and achieved spectacular energy savings.

2008

2009

Heating fuel Electricity

We have recycled/reused 66% of our waste, which is less than last year. This is due to the stronger decrease of recycled waste volumes compared to the decrease in residual waste therefore does not denote to a weaker performance than last year.

Our “investment recovery” department has obtained value from 801 tons of surplus equipment from our operations (such as cables, switching and transmission equip-

CSR

-25%

waste production vs 2008 Waste (In tons)

16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0

2007

2008

2009

Operations waste Office waste

ments, mobile devices); we implemented a recycling optimisation process in collaboration with a sheltered workshop and thereby recycled 204 tons of electronic waste.

We managed to collect and recycle 25,877 mobile phones in our point of sales this year and supported initiatives encouraging customers to return used handsets. 97% of the collected mobile phones have been reused, and the remaining 3% have been recycled.

2. Help our customers reduce their carbon footprint Our products and services can contribute to ways of living and working that are more efficient in terms of CO2 emissions and energy consumption. Reports such as the GeSI/Climate Group Smart 2020 study demonstrate that through enabling other sectors to reduce their emissions, the ICT industry could reduce global emissions by as much as 15% by 2020 – a volume of CO2 five times its own footprint in 2020.  www.smart2020.org

We have Promoted further some dematerialization solutions Many physical products and services can be replaced by their virtual equivalents, enabling energy and carbon savings on raw materials, production processes, logistic flows, and end-of-life disposal processes.

Examples of such applications include e-billing (602,367 residential customers end 2009), mobile payments via PingPing (replaces paper tickets and paper vouchers), video on demand via Belgacom TV, and digitization of medical files and cultural heritage.

Through enabling other sectors to reduce their emissions, the ICT industry could reduce global emissions by as much as 15% by 2020 – a volume of CO2 five times its own footprint in 2020.

Belgacom Annual Report 2009 - 67

Launched new transport optimization solutions Significant reductions in transport can be achieved today via our teleworking, video­ conferencing, and mobile intranet/internet services. All these solutions lead to lower CO2 emissions, increased work productivity, and better work-life balance. Future ICT applications in fields such as “intelligent cars” (telematics) or road charging will accelerate this low-carbon transformation.

Our Euremis subsidiary launched a field force automation solution, which optimises the planning and routing of mobile technicians. This contributes to less mileage and paperless order management.

We launched an online tool which helps our customers quantify the CO2 savings related to the use of videoconferencing and teleworking. www.belgacom.be/ict 68

We also launched an online tool which helps our customers quantify the CO2 savings related to the use of videoconferencing and teleworking.  www.belgacom.be/ict Continued our efforts to enable monitoring and metering of energy consumption and production via our mobile technologies Residential and office buildings can benefit from ICT-enabled energy efficiency solutions. For instance, we have trialled a smart-metering solution with the NGO Bond Beter Leefmilieu to test customer reactions and technical capabilities of this solution.

This real-time collection of energy consumption enables customers to visualize their energy consumption (via web interface, sms) and consequently change their behaviour, resulting typically in 2%-10% energy and CO2 savings. The energy supplier can use the same data to optimize production or adapt tariffs better to consumers’ needs.

These solutions are now in operation with companies like Sunswitch who, thanks to our mobile technologies, let their customers monitor the production of their solar panels in real time  www.sunswitch.be.

CSR

Successfully launched the first solar phone in Belgium and reduced our product packaging We started promoting green devices, for-instance the Samsung Solar E1107, which combines a solar panel and an energy-efficient charger, along with minimised and recycled packaging. EUR 1 was donated to the Climate Education Program for each sold handset. We experienced 300% higher sales than forecasted.

We continued our efforts to minimize the impact of our product packaging, reducing by 30% the packaging of our TV products for-example and shifting to FSC-certified and recycled materials.

3. We continued to involve our stakeholders and raise public awareness on climate change We believe it is vital to involve our employees and suppliers in our CO2 reduction efforts, and we aim to raise public awareness on climate change.

Involving our employees We organized several events and internal communication campaigns to raise employeeawareness on climate change and our 70% CO2 reduction plan. We also started offering eco-cheques to our employees, which can be used for environment-friendly purchases. 46 employees took advantage of our discounted offer for the installation of photovoltaic panels, which results in 49 tonnes of CO2 savings.

We launched the first solar phone in Belgium, the Samsung Solar E1107, which combines a solar panel, an energy-efficient charger and recycled packaging.

Influencing our suppliers We believe we can also influence our suppliers, and we therefore increasingly include energy-efficiency and “green” requirements in our tenders and discussions with our suppliers. The strict energy consumption norms defined in the EU Code of Conduct serve as reference when we buy new broadband and digital TV equipment.

Participating in sector initiatives, such as the Global e-Sustainability Initiative To engage further with our industry peers and to share best practices, we joined GeSI (Global e-Sustainability Initiative), which promotes collaboration between telecom operators and vendors on climate change issues. We continued to participate actively in initiatives such as the ETNO sustainability and energy workgroups.

Disclosing our performance via the Carbon Disclosure Project We disclosed our environmental performance to investors via the Carbon Disclosure Project for the first time, and will continue doing so on a yearly basis.  www.cdproject.net Raising awareness in Belgian schools via the Climate Education Program We decided to support the Climate Education Program, which raises awareness of climate change in Belgian schools  www.climate-education.be

We will • Continue to reduce the CO2 emissions of our Belgian operations by 70% over the period 2007-2020 In 2010: • Review our list of company cars and avoid cars with CO2 levels above 170 gr/km • Launch a large-scale ecodriving training program • Launch a mobile phone recycling campaign • Provide customers with products and services that help them manage their environmental footprint more efficiently • Sign the European Code of Conducts on energy efficient digital TV and datacenters.

We support the Climate Education Program, to help raise awareness of future generations on climate change.

Belgacom Annual Report 2009 - 69

Communicating on electromagnetic fields and

health

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

Key priorities • Network compliance • Transparent communication on exposure levels • Monitoring scientific research

In order to manage the strategic risks and opportunities related to EMF and to ensure the delivery of our EMF and health priorities, we included this in our list of key corporate strategic programs. As a consequence, our EMF realisations are monitored and reported to the Belgacom Management Committee on a monthly basis and a crossfunctional team is responsible for the implementation of action plans.

Latest developments in the legal framework Our 2G and 3G mobile networks meet the Belgian norm adopted at federal level in 2001, which is four times stricter than international standards. According to a January 2009 Belgian Constitutional Court ruling, protection against electromagnetic emissions is a matter of regional competence, and earlier regimes have been abandoned.

In the Brussels region, the authorities have imposed a norm of 3 V/m for a 900 MHz frequency reference, which is 50 times stricter than the federal norm, and 200 times stricter than the international recommendation, and antennae are now subject to environmental planning permission. The retrofit of existing base stations will start 6 months after the validation of a simulation tool by the Brussels authorities. In order to comply with a stricter norm, the emission power of some base stations will need to be lowered. The coverage will be consequently reduced. Each environmental permit may nevertheless foresee a delay to comply with the norm in order to allow the operators to have time to build the base stations needed to compensate for the coverage loss. The customers shouldn’t then notice any change.

In Wallonia, the authorities have adopted a different norm (3 V/m per antenna), and different monitoring procedures. The retrofit of the existing base stations will be completed by end September 2010.

The same norm is applicable to our Tango network in Luxembourg.

In Flanders, no decision has yet been taken on which norms will be required. We are following developments in this region and will put the necessary actions in place in order to comply with the new regulation.

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CSR

We have Increased communication towards our stakeholders We were the first supplier in Belgium to provide information on exposure to mobile phones (SAR, Specific Absorption Rate), and in 2009 we extended this initiative beyond our Proximus Collection to our Twist cordless phones (using DECT technology) and our broadband equipment (using WiFi technology). The information appears on packaging and on our internet sites. In addition, as from 2009, most mobiles in the Proximus Collection are equipped with an earpiece, which makes it possible to reduce exposure to emissions when in use.

We have kept our staff up to date on the subject through dedicated information sessions, and have taken part in similar events with local and national government bodies - including the Belgacom Telecom Days and ten sessions with people living near planned new base stations. A specific presentation on the use of wireless telecommunication technologies in the hospital environment was given at the Health Innovation Forum organised by our business division for healthcare professionals.

Our 2G and 3G mobile networks meet the Belgian norm adopted at federal level in 2001, which was four times stricter than international recommendations.

Through our commercial link with Vodafone, we took part in their study “EMF Key Stakeholder feedback”, which revealed high awareness of our stakeholders of Belgacom’s initiatives.

Key findings of latest scientific reviews The European Commis- association between RF some evidence that RF fields sion’s Scientific Committee exposure and single symp- can influence EEG patterns on Emerging and Newly toms was indicated in some and sleep in humans. HowIdentified Health Risks of the new studies, taken together, ever, the health relevance is European Commission con- there is a lack of consistency uncertain and mechanistic cluded, in respect of cancer: in the findings. Therefore, explanation is lacking. Fur“It is concluded from three the conclusion that scien- ther investigation of these efindependent lines of evi- tific studies have failed to fects is needed. Other studdence (epidemiological, ani- provide support for an effect ies on functions/aspects of mal and in vitro studies) that of RF fields on self-reported the nervous system, such as exposure to radiofrequency symptoms still holds. Scien- cognitive functions, sensory (RF) fields is unlikely to lead tific studies have indicated functions, structural stability, to an increase in cancer in that a nocebo effect (an and cellular responses show humans. However, as the adverse non-specific effect no or no consistent effects.” widespread duration of ex- that is caused by expectaIn ondes respect Exposition aux radioof children; it Blootstelling radiogolven posure of aan humans to RF tion or belief that something concluded: “From the risk is harmful) may play a role in fields from mobile phones Votre téléphone sans fil se compose du/de combiné(s) Uw draadloze telefoon bestaat uit een of meer handsets assessment perspective it is d’une en basisstation.

De handset zendt enkel tijdens formation. etAs symptom in station de base. Le combiné n’émet un signal is een shorter than the induction que pendantimportant les communications tandis que la station gesprekken een signaal uit, terwijl het basisstation to recognise that the previous opinion, there is time of some cancers, furde base émetinformation en permanence. permanent signalen uitzendt. on possible efther studies are required to no evidence supporting that combinéfects caused by RF fields in De handset identify whether considera- individuals, including Lethose L’indice DASchildren (débit d’absorption spécifique) De SAR-index (Specific Absorption Rate of specifiek is limited.” attributing symptoms est tol’unité RF de mesure de la quantité d’énergie bly longer-termis de (well beyond voor absorptietempo) meeteenheid de hoeveelheid absorbée par le corps lors de elektromagnetische energie waaraan het lichaam wordt exposure, are able to électromagnétique detect  www.belgacom.com ten years) human exposure l’utilisation d’un téléphone. Le combiné est considéré blootgesteld bij gebruik van een telefoontoestel.

RF fields.” to such phones might pose comme un appareil électronique de faible puissance.

De handset wordt beschouwd als een elektronisch toestel some risk.” De SAR-index voor handsets L’indice DAS des combinés varie entre 0,01 W/kg met eencancer gering vermogen.

In Derespect electroet 0,1 W/kg, le DAS maximum autorisé en Europe schommelt tussen 0,01 W/kg en 0,1 W/kg. maximaal of étant de 2 W/kg. toegelaten SAR-waarde in Europa bedraagt 2 W/kg. encephalogram (EEG) patIn respect of self-reported terns and sleep “There is de base symptoms, La station Het basisstation “Although an L’exposition est caractérisée par l’intensité du champ De blootstelling wordt gekarakteriseerd door de sterkte électrique à une certaine distance de la station de base van het elektrisch veld op een zekere afstand van het émettant à puissance maximale et est comparée aux basisstation bij maximaal vermogen en wordt getoetst recommandations internationales en matière de santé. aan de internationale aanbevelingen op het vlak van Ces recommandations ont été établies par l’ICNIRP gezondheid. Deze aanbevelingen werden vastgelegd door (International Commission on Non-Ionizing Radiation de ICNIRP (International Commission on Non-Ionizing et fixent une valeur limite de 60 V/m pour Radiation Protection) en schrijven een maximumwaarde • C60 ontinue electromagnetic Protection) fields viade our les stations base points DECT. of sale van V/m voorcommunication de DECT-basisstationson voor.

We will

• Launch an e-learning tool on electromagnetic fields for internal and external

Alle toestellen van Belgacom zijn conform stakeholders de Europese richtlijnen.

Tous les appareils Belgacom sont conformes aux directives européennes.

• Initiate the retrofit of our mobile network to comply with the new legal obligations

We inform customers on their exposure to De blootstelling vermindert naarmate u zich verder electromagnetic van het basisstation verwijdert: L’exposition diminue fur et à mesure que vous fields fromauour vous éloignez de la station de base : wireless devices.

50 cm

1m

In gesprek En conversation

1,1 V/m

0,55 V/m

0,033%

0,008%

Stand-by En veille

0,55 V/m

0,27 V/m

0,008%

0,002%

Meer info op www.belgacom.com Belgacom provides information on exposure to mobile phones (SAR, spePlus Absorbtion d’infos sur www.belgacom.com cific Rase), cordless phones and broadband equipment. The information appears on packaging and websites. (example of the base station of a Twist mono cordless phone)

Belgacom Annual Report 2009 - 71

Promoting a positive

working culture We aim to promote a fair, diverse and safe work environment and culture.

The success of the Belgacom Group is founded on competencies, involvement, and on the adaptability of the staff to all changes we are confronted with. We believe in the professional development of our employees, we work towards equal opportunities and we promote balance in life through many initiatives. Through all our policies and initiatives, we respect the Belgian law on human rights (16 March 1971, law on labour) and we define all priorities through a continuous social dialogue, guaranteed by the law from 1991 on public enterprises.

Key priorities • Social dialogue • Diversity and nonDiscrimination • Safety and health • Career management and trainings

We have Integrated all our human resources within a single organisation in collaboration with social partners Social dialogue enabled us to integrate our Proximus and Telindus subsidiaries in a constructive atmosphere. We have negotiated an agreement with the social partners that is the only one of its kind in Belgium, allowing representation of staff from the subsidiaries within the Belgacom formal consultation arrangements. As agreements were reached, the 2009-2010 collective labour agreement at Belgacom opened the way for aligning the various remuneration practices within the Group in order to offer standard treatment to all employees. Collective agreements have been signed with the Belgacom subsidiaries, providing guarantees about transfer of benefits. This offers the Belgacom Group a stable working environment enabling it to implement its strategic objectives and provide its services to customers, while optimising the work-life opportunities designed for its workforce.

Created a new corporate culture, based on our new values and open to diversity Throughout the year, we communicate the new corporate values we had defined in 2008 (Respect, Can Do and Passion). Many initiatives were taken, such as the launch of a new intranet dedicated to our values and the definition of 5 key competencies linked to our new values.

We incorporated our mission, strategy, and the corporate values into a new Code of Conduct, structured around the three ‘P’s (people, planet, profit) of corporate social responsibility.

This new code is an expression of the new corporate culture through which all Belgacom employees can share a common approach to working.

The new Code of Conduct also reflects the positive approach to diversity adopted by Belgacom. The label granted to us by the Federal Equal Opportunities Minister and the Federal Employment and Computerization Minister has been renewed this year, and reflect the fact that our own concerns match those of society in general. It will be communicated in 2010.

We asked Randstad Diversity to conduct an assessment, which involved group discussions (called Sounding Boards) in which some 50 employees of more than 45 years of age gave their views on a range of subjects relating to age.

We initiated a mentoring program for women in middle-management, who can now benefit from coaching by colleagues in senior management.

72

CSR

We are committed to the integration of people with disabilities. We set up a partnership with Wheel-it, a charity in the field, which gives our recruitment staff special access to its bank of CVs of job candidates, and allows us to post our vacancies on its website. And we conducted a review of all our buildings in Belgium, to check their accessibility on a broad range of criteria.

A special focus will be given to communication as our employee survey revealed a lack of awareness from employees on all these initiatives.

Preserved the safety and health of our collaborators Work-related stress is an issue of growing concern in developing countries due to important developments in the modern world. At Belgacom we want to raise awareness at an early stage, and we have developed a global policy to prevent psychosocial problems at work including all aspects of stress, bullying, sexual harassment and acts of violence at work. Advices and contact names to support employees who suffer from stress are available on the Group intranet. In 2009, we also launched a stress self assessment tool, named ISAT, for Belgacom SA employees. The purpose of the tool is to enable them to measure their stress level and determine the factors that cause and maintain stress, and thus help them, with their managers, to solve the issue. Roll out of the tool to all affiliates is foreseen in 2010.

Our work related accident rate decreased from 9.65 in 2008 to 9.58 this year for all Belgian affiliates. A positive result, due to high awareness in health and safety matters. In 2009, we launched an awareness campaign to reduce fall & stumble accidents, a flu vaccination campaign and, in collaboration with Red Cross of Belgium, four blood donor sessions have been organised in our headquarters. Belgacom also participated at the “no smoking day in Brussels”, distributed flyers and published information on the intranet. We continued training our employees on first aid and fire fighting. In 2009, we trained 46 new first aid workers; 167 followed the refresh course and 287 followed a fire fighting course.

In 2008, Belgacom signed the European Road Safety Charter, committing on actions to increase the safety of all Belgacom’s drivers. In 2009 we focused on increasing the safety level of Belgacom Group vehicle: importance of safety aspects (ESP, ABS, airbags, extra load fixing features) played a role in the selection of the vehicles, inspections in Belgacom car parks to ensure correct tyre pressure on all vehicles (1,000 vehicles tested). The correct tyre pressure is also mentioned now on stickers attached to all new vehicles. We also launched awareness campaigns (polite driving, safety on holidays) for safety on the road.

Promoted career management and training We increased internal mobility by 20%, corresponding to 1,100 voluntary moves.

External recruitments was down 25% compared to last year, but even so, 638 people were recruited, and the Group maintained its high profile and strong position in the external labour market.

Pilot training programs have been created in light of an analysis of future needs in sales and front line customer services. Among the training options developed are our sales academies and the Master class in Marketing that Belgacom Corporate University has been running with the Vlerick Management School in Ghent. 86% of employees followed at least one training, and 29 hours of training were given on average to each employee, which is slightly less than last year.

We will • Continue building our new customer-segmented organization with a deeper integration of all subsidiaries • Communicate on our new Code of Conduct throughout the organization • Develop practical tools for 45+ career management and publish a handbook to facilitate recruitment of disabled people • Continue implementing commitments included in the “Road safety” charter and in our Safety and Health prevention plan • Develop new trainings aiming at improving our customer service and centricity, and start promoting employee volunteering

We increased internal mobility by 20%, corresponding to 1,100 voluntary moves.

Average number of Training hours per year per employee

35

34 31

30

29

25 20

2007

2008

2009

Learning Penetration (% of employees who followed at least 1 training)

100 90

89

89 86

80 70 60

2007

2008

2009

Belgacom Annual Report 2009 - 73

Developing a responsible

supply chain

Our approach is to raise social and environmental standards throughout our supply chain by working with our direct suppliers to improve their CSR performance and their own supply chain management while improving our own efficiency.

Embedding our CSR standards in our procurement practices helps us to protect our reputation and make a real difference to the communities where our suppliers operate.

Key priorities • Raise CSR standards of our suppliers • Include CSR as sourcing and selection criteria • Train our buyers

87%

The priorities and action plans are defined and implemented by our Supply Chain experts, in close collaboration with our CSR team. To reinforce our approach, we recently appointed a full-time CSR manager in our Supply Chain team.

We have

CSR performance evaluation of 23 suppliers

Evaluated the CSR performance of 23 suppliers Using a tool developed by the company Ecovadis, we assessed 23 suppliers in depth on their CSR performance in relation to the environment, labour practices, fair business practices, and supply chain.

35% % suppliers assessed

30% 25% 20%

Two suppliers were identified as “below benchmark”, and we are currently defining improvement plans with them.

15% 10%

We will extend this approach in 2010 to our strategic suppliers, representing at least 30% of our total procurement spend.

5% Low score

Average

High score

2 supppliers Action Plan within 6 months We assessed 23 suppliers in depth on their CSR performance in relation to the environment, labour practices, fair business practices, and supply chain.

74

Our Group procurement policy includes our Corporate Social Responsibility approach and our Code of Ethical Purchasing (CEP).

Our Code of Ethical Purchasing sets out our expectations towards suppliers and is a mandatory component of our procurement contracts.  http://www.belgacom.be/sup.

local suppliers

0%

The Belgacom Group dispatches products towards shops, dealers, clients, technicians and subcontractors throughout Belgium, but owns no manufacturing facilities. To build and operate our network, we buy the equipment and services we need from thousands of suppliers worldwide, with whom we spend roughly EUR 1.5 billion a year. Some of Belgacom Group’s suppliers are large multinationals, but 87% of them are local providers that operate their own assembly factories, and/or source from independent manufacturers.

Incorporated ethical purchasing more widely into our purchasing and sourcing processes Compliance with our CEP has been a mandatory provision in all our new contracts since last year. However, it came to our attention that certain contracts were still sent out without the proper reference to our CEP and we are currently taking the appropriate actions to prevent further deviations. This year, we added a CEP compliance clause to all our purchase orders, in order to require compliance by our existing suppliers.

We thus now require all Belgacom Group suppliers to comply with labour, ethics and

CSR

100%

of buyers trained on CSR

environmental standards. Moreover, each new supplier accessing our Sap e-Sourcing tool needs to sign our CEP. Included CSR as a criterion in sourcing and selection projects We started to include CSR as a selection criterion in new sourcing projects. For instance, in the selection of our gadgets and gifts, CSR has been given a 10% weight, next to price, quality and delivery. We also drafted a sustainability charter for our suppliers of catering services, in order to raise their CSR standards.

We are currently finalizing our approach and will further include CSR as a selection criterion in our 2010 sourcing process.

Trained all our buyers on CSR We organised several training sessions in order to raise awareness of our buyers about the importance of a responsible supply chain, and completed CSR training for all of them.

Increased sourcing of sustainable products Although we have no formal sustainable-product policy, we ask buyers to give maximum attention to sustainable alternatives and to promote a lifecyle analysis approach.

For instance, we use almost exclusively FSC-labelled and/or recycled paper and cardboard in our product packaging, print communication and office paper; and all our electricity is now sourced from certified renewable sources. We refer to the strict energy-efficiency norms of the European Code of Conducts when we buy new customer equipment (broadband and digital TV).

Promoted e-supply In line with our efforts to reduce our environmental footprint, we have continued to promote e-supply and to reduce usage of paper and faxes. 88.1% of Belgacom group purchase orders were sent out electronically (83% in 2008) Increased collaboration with sheltered workshops We decided to increase our collaboration with sheltered workshops in order to provide employment opportunities for people from disadvantaged backgrounds. 126 people with disabilities are performing reconfiguration, assemblage, packaging and recycling activities for us.

We will • Evaluate the CSR performance of our strategic suppliers, representing at least 30% of our total procurement spend • Follow-up all our suppliers with insufficient CSR performance, within 6 months • Finalize our approach to include CSR as a criterion in sourcing and selection projects • Include a CSR topic in our strategic reviews with key suppliers

we use almost exclusively FSClabelled and/or recycled paper and cardboard in our product packaging, print communication and office paper

88.1% of Belgacom group purchase orders were sent out electronically

Belgacom Annual Report 2009 - 75

Supporting our

Communities

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

Key priorities • Donate money and time to good causes • Responsible sponsoring

We have Provided cash donations of EUR 1.5 million as well as time and equipment to charitable organisations We continued to encourage social engagement by our staff through Le Petit Coup de Pouce/De Helpende Hand initiative. This provided up to EUR 5,000 by special project where our staff works as volunteers with people who are disadvantaged, handicapped or sick. 69 projects were selected in 2009. Belgacom also continued donating furniture no longer needed in its offices.

More info on  www.lepetitcoupdepouce.be  www.dehelpendehand.be The Proximus Foundation supported 36 local charities working with young people in Belgium who are disadvantaged by poverty, social exclusion, or handicap.  www.proximusfoundation.be Seeing the success of both above-mentioned initiatives, we did not feel the need to create a Belgacom Group Foundation yet. Now that our subsidiaries are integrated, we will assess our Group-wide charity approach in 2010.

We became a partner of UNICEF Belgium to support wide public information campaigns. For instance, we supported the WaSH action, an initiative to provide drinking water in developing countries, in which EUR 2 were donated to UNICEF for every text message sent to a dedicated number. We also set up an internal campaign, enabling our employees to buy discounted ethical and fair trade products, and granting 10% of the purchase price of each item to UNICEF. We helped raise environmental awareness among schoolchildren by supporting the Climate Education Programme.  www.climate-education.be

Street Basket aims at giving children in disavantaged areas an initiation into the game.

76

We continued to support the independent Trans-Mission charity, which involves young people in social projects. As a partner of Responsible Young Drivers, we yet again donated the revenues from the first million text messages sent by our mobile clients on New Year’s Eve. We also continued to support Child Focus and Action Innocence.

In addition, we hosted numerous charity sales and recruitment campaigns in our headquarters building during the year, including for United Fund for Belgium, Amnesty International, la Fondation Damien, la Ligue Nationale Belge de la Sclérose en Plaques, Child Focus, Les Enfants du Viêtnam, and SOS Villages d’Enfants.

CSR

Centre de Compétence

© UNICEF Belgique

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

We made place for disabled athletes during the Belgacom Memorial Van Damme.

Two 100 m wheelers races were organised during this event. The first one dedicated to the youth, in collaboration with To Walk Again. The second one, with promising Paralympic top athletes selected by the Belgian Paralympic Committee.

Street Basket, is an initiative of Belgacom Liège Basket, aimed at giving children living in and around Liège in disadvantaged areas an initiation into the game. By learning sports values, they get a mean of social integration.

As part of the Music for Life campaign to combat malaria, collaboration between Studio Brussel and the Red Cross, we sponsored the delivery of 6,000 mosquito nets, through actions in which donors had their photograph taken in a celebrity location, and individuals handed in unwanted mobile phones at our sales outlets.

Thanks to our new partnership with Justine Henin (one of the UNICEF ambassadors), we also enhance synergies between Sponsoring and CSR.

We will • Further integrate CSR in our sponsoring activities and events • Assess our Group-wide charity/Foundation strategy • Launch an initiative to sponsor the equipment and web site of local sport clubs.

© Belga

“The partnership with the Belgacom Group allows us to create the favorable conditions for athletes to take part in the Paralympic Games and win medals.”

Anne d’Ieteren, President Belgian Paralympic Committee

Belgacom Annual Report 2009 - 77

Achievements & commitments We said

How we manage CSR Enhancing access to communications

We would continue to simplify our offers We would commercialize more convergence offers We would improve the customers experience while using our products & services We would continue to develop targeted offers for disabled people We would further promote and finance programs aiming at closing the digital gap We would investigate new initiatives in the eHealth domain We would be candidate to the RFP for digitalisation of federal museum

Enabling a low-carbon society

We would further lower our CO2 emissions and define an overall CO2 reduction target for our Belgian activities

We would implement a new mobility policy, promote ecodriving trainings, and increase the number of internal teleworkers

We would increase % of waste recycled/reused We would take further action to help our customers lower their carbon footprint

We would further engage with external stakeholders, by joining GeSI (Global eSustainability initiative) for-instance We would launch an internal employee involvement campaign

Communicating on electro-magnetic fields and health Promoting a positive work culture

We would continue to closely monitor the scientific research on electromagnetic fields We would further increase communication on EMF towards our stakeholders

We would Complete the 2nd Staff & support integration phase We would develop communication campaign and actions plans to implement new corporate values We would continue to promote diversity We would implement commitments included in the "Road safety" charter

78

Developing a responsible supply chain

We would finalize the training of our buyers on CSR and ethical procurement We would assess the CSR performance of our high risk suppliers

Supporting our communities

We would further study the feasibility of a Belgacom Group Foundation

We would include CSR performance as criteria in sourcing & selection projects

We would finalize our Community Investment policy

CSR

We have

We will

Enhanced our CSR 5-year plan, with clear priorities and accountabilities in all our business units

Continue the integration of our international subsidiaries in our Group CSR strategy and action plans Improve our stakeholder engagement approach Help our business units to successfully deliver the Group CSR action plan Simplify and harmonize our offers

Simplifed our offers, lowered our prices, and helped ease tariff comparison Launched new convergent packs such as our All-in-One Pack with free TV Taken new initiatives to improve our customer experience and service via our Care&Ease program Launched a mobile phone for elderlies and continued to support children with long-term sickness Donated 775 computers, and increased the development of ICT skills via our ICT training programs Launched new healthcare applications, such as ZorgTV for diabetics and videoconferencing in hospitals Continued to digitise our cultural heritage, preserving it and making it more accessible.

The RFP for the digital museum was postponed to 2010 Raised awareness on a safe use of our technologies in schools and in our shops Committed to reducing the CO2 emissions of our Belgian operations by 70% over 2007-2020

Further promote a safe use of our technologies, via a dedicated website Continue to reduce the CO2 emissions of our Belgian operations by 70% over the period 2007-2020

Decreased our CO2 emissions by 55% vs 2007 Became the biggest buyer of certified renewable electricity in Belgium Implemented major energy-saving initiatives in our datacenters and networks, delivering EUR 1.4 million yearly savings Reduced by 11% the energy consumed in our offices and performed energy audits in key buildings Launched a new mobility policy focused on stimulating the use of public transport

Review our list of company cars and avoid cars with CO2 levels above 170 gr/km

Trained all our truck drivers (logistics) on ecodriving Increased the number of satellite workers by 29% Recycled 66% of our waste, which is less than last year. We did achieve a reduction in residual waste volumes, but reduced the volume of recycled waste even more Launched the first solar phone in Belgium and reduced our TV product packaging by 30% Developed an online CO2 savings calculator for videoconferencing and teleworking Launched new dematerialization and transport optimization solutions Joined the Global e-Sustainability Initiative (GeSI) and reported to the Carbon Disclosure Project

Improve the overall customer experience and servicing Continue to develop targeted offers for disadvantaged people Continue to promote and support programs aimed at reducing the digital divide

Launch a large-scale ecodriving training program

Provide customers with products and services that help them manage their environmental footprint more efficiently Launch a mobile phone recycling campaign

Supported a climate education program in Belgian schools Organised various awareness sessions for our employees, and started offering eco-cheques for environment-friendly purchases Created a web page on scientific research on EMF Extended the EMF exposure labelling of our wireless products to DECT and WiFi Formalised our approach of EMF and health in a Corporate Strategic Program

Integrated all our ressources within a single organization in a climate of mutual respect Created a new corporate culture, including campaigns to put values in practice and the redaction of a new code of conduct Launched several new initiatives within our diversity program and Federal government confirmed our Diversity label for the third time Focused on the increase of our vehicles' safety level, and raised awareness of our drivers Increased internal mobility by 20% and recruited 638 new employees Continued to develop our training offers: 86% of the collaborators followed a training, resulting in 29 hours of training per employee Trained all our buyers on responsible procurement Assessed the CSR performance of 23 high risk suppliers Tested CSR as a selection criteria in several sourcing projects Added a CSR compliance clause in all our purchase orders, in order to require compliance of our existing suppliers Decided to go on with existing initiatives and donated EUR 1.5 million to charities and good causes through the Proximus Foundation, De Helpende Hand/Le Petit Coup de Pouce Initiated synergies between CSR and Sponsoring Launched a new partnership with UNICEF

Sign the European Union’s Code of Conducts on energy efficient digital TV and datacenters.

Launch an e-learning tool on EMF for internal & external stakeholders Continue communication on EMF via our points of sale Initiate the retrofit of our mobile network to comply with new legal obligations

Continue building our new customer segmented organisation with a deeper integration of all affiliates Communicate on our new code of conduct throughout the organisation Develop practical tools for 45+ career management and edit a handbook to facilitate recruitment of disabled people Continue implementing commitments included in the "Road safety" charter and in our Safety and Health prevention plan Develop new trainings aiming at improving our customer service and centricity, and start promoting employee volunteering Evaluate the CSR performance of our strategic suppliers, representing at least 30% of our procurement spend, and follow-up all our suppliers with insufficient CSR performance, within 6 months Finalize our approach to include CSR as a criterion in sourcing and selection projects Include a CSR topic in our strategic reviews with key suppliers Assess our Group-wide charity/Foundation strategy Increase integration of CSR in our sponsoring activities and events Launch an initiative to sponsor the equipment and web site of local sport clubs

Belgacom Annual Report 2009 - 79

Key figures 2007

2008

2009

6,065 958 17,833 (1)

5,978 800 17,371

5,990 904 16,804

99.80% 84.40% 3,946 83.75% 99.70% 80.00% n/a

99.98% 90.2% 4,097 90.14% 99.7% 86.60% n/a

99.98% 96.70% 4,243 84.20% 99.70% 87.20% 158,181

1,604 7% 149 141 509 n/a 179,618 15,061(3) n/a n/a n/a

1,667 76% 170 101 517 n/a 108,019 13,709 71% 26,742 n/a

1,670 100% 151 97 502 52 81,638 10,251 66% 25,877 223,874

n/a

n/a

100%

70.5 89% 34 30.3% 31.3% 19.1% 16.2% 100% n/a n/a n/a n/a 2717 n/a 100% 100%

70 89% 31 29.7% 31.3% 18.9% 15.5% 100% 9.65 6.50% 43.6 17.6 3463 2.37% 100% 100%

74.5 86% 29 29.4% 32.0% 20.7% 16.8% 100% 9.58 6.60% 44.3 18.5 4124 2.01% 100% 100%

n/a n/a n/a 80%

n/a n/a 43% 83%

87% 12.5% 100% 88%

0.2% 112

0.3% 99

0.2% 105

General Information Total revenue (Mio EUR) Net income (Mio EUR) Total number of employees (Full Time Equivalent)

Enhancing Access to communications mobile network coverage - 2G mobile network coverage - 3G Number of Base stations Mobile network Mobile network: Landlord relationships (average TRIM) Fast Internet coverage Digital TV coverage hours of ICT training provided via our partners

Enabling a low-carbon society (2) Electricity (Terajoules) (2) % renewable electricity (Terajoules) (2) Heating gas (Terajoules) (2) Heating fuel (Terajoules) (2) Vehicle (fleet) fuel (Terajoules) Yearly electricity savings (Terajoules) CO2 emissions (Tons) (2) Waste (Tons) % waste reused/recycled Mobile phones collected in our shops for reuse and recycling Water ('000L)

Communicating on health & EMF % of wireless devices with labeling of exposure levels

Promoting a positive working culture Employee satisfaction (index) % of employees having followed at least 1 training Average number of training hours per employee % of woman in total workforce (1) % of woman in middle management (1) % of woman in senior management (1) % of woman in top management (1) % of employees receiving regular performance and career development reviews Occupational accidents rate (index) Ilness rate (including long-term illness) average age of employees (years) (1) average career length (years) (1) Number of employees working part-time (1) Voluntary attrition rate (1) Workforce represented in health and safety committees % of employees covered by collective bargaining agreements

Developing a responsible Supply Chain % of suppliers based in Belgium CSR supplier assessments, in % of total procurement spend % of buyers trained % of e-orders

Supporting our communities Funding amount in % of pretax profit # of local non-profit organisations supported (1) In 2007, we reported on the total number of employees. As from 2008, we report on total FTEs. Reporting does not include Scarlet (2) 2007 and 2008 energy and CO2 data restated according to new scope of our CO2 emmisions reduction target (3) restated due to error in 2007

80

CSR

158,181

-55%

hours of ICT training provided

100%

CO2 vs 2007

renewable electricity

100%

of wireless devices with labeling of exposure levels

Evolution of Employee Satisfaction index

Belgacom employees age distribution

80 74.5 70.5

70

2007

87%

2008

of suppliers based in Belgium

< 25Y 25Y-29Y 30Y-34Y 35Y-39Y 40Y-44Y 45Y-49Y 50Y-54Y > 55Y

nationalities among Belgacom employees

70

60

60

2009

100% of buyers trained on CSR procurement

105

local non-profit organisations supported

Belgacom Annual Report 2009 - 81

About our CSR reporting This is Belgacom Group’s fourth Corporate Social Responsibility (CSR) Report.

It covers the year ended 31st December 2009. In this report, we aim to provide a balanced account of our performance on the socioeconomic, ethical and environmental issues which are the most relevant to Belgacom Group and its stakeholders.

• Further information on our business and financial performance, corporate governance, regulatory issues and directors’ remuneration is provided in our Annual Report.

• A glossary of the technical terms used in this report is available on pg 107 • We welcome your feedback on our CSR engagement and your views on this report. Please contact: Mrs Concetta Fagard Mr. Loïc van Cutsem E-mail: csr@belgacom.be

Scope and data The scope of this Report includes CSR data and activities from all Belgian operating companies managed by Belgacom in 2009, unless otherwise stated. We are currently working with our international subsidiaries in order to include them in future CSR reporting. Meanwhile, we have highlighted some CSR initiatives from international subsidiaries throughout the report.

The indicators have been collected, calculated and consolidated using dedicated computerized reporting tools. The data presented cover all Belgian operating companies managed by Belgacom in 2009, unless otherwise stated.

Compliance with Global Reporting Initiative guidelines We base our approach to CSR management and reporting on the principles of the Global Reporting Initiative third Generation (GRI:G3), here under some principles; others can be found in the glossary.

Completeness: We identify our stakeholders by assessing who is impacted significantly by the company and who could have an impact on the company. Stakeholder engagement helps us understand the issues of concern to our stakeholders.

Materiality: There is no natural basis for comparing the significance of one issue with another. Nevertheless it is important to be able to prioritise effort and resources. To make these judgements we assess the extensive list of issues for significance in three areas: the level of concern and interest among stakeholders most affected by our operations, our impact on society and the environment, the financial and reputation impacts on our business.

Disclaimer This report has been drawn up for the purpose of informing our stakeholders on the Belgacom Group’s performance and commitment with respect to CSR. Nothing in this document is intended to extend or amend the Belgacom Group’s existing obligations to its customers, employees, suppliers, shareholders and investors or other stakeholders. The Belgacom Group is not responsible for the reasonableness, accuracy or completeness of the information available on these Web sites, nor does their mention in this report constitute tacit approval or endorsement by the Belgacom Group of such sites or the products or the services offered therein. The Belgacom Group accepts no liability with regard to any such information that has been or will be provided by external parties via their Web sites.

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Stakeholder Inclusiveness: The selection of content for this report draws upon the out­ comes of stakeholder engagement processes. We use the knowledge gained from stakeholder engagement to explore possible actions and solutions. Where possible,we make an appropriate commitment and publish it in this report. On occasion we will not agree with a criticism or not be able to respond with a solution. In this situation we explain our view clearly and publicly.

Sustainability Context: The report presents the organization’s performance in the wider context of sustainability. This context is defined by a benchmark analysis and a press review.

We have included a GRI cross-reference table on p84 to help readers find GRI-related content and data.

Independent Assurance Our progress against targets and other aspects of our CSR performance is subject to independent external assurance by Ernst&Young in accordance with the International Standard for Assurance Engagements 3000 (ISAE 3000). Ernst & Young’s assurance statement does not provide assurance on quantitative data, neither on the references to external web links in this report.

CSR

Assurance report of the Independent Auditor To the management of BELGACOM Group SA de droit public

Engagement

We have been engaged by BELGACOM Group SA de droit public (“BELGACOM”) to obtain limited assurance on BELGACOM’s Corporate Social Responsibility (“CSR”) specific sections (pages 52 to 85) included in the 2009 Annual Report (“the Report” hereafter) of Belgacom Group for the year ended 31 December 2009.

The scope of the Report, including any inherent limitations that could affect the reliability of the information contained therein, is set out in the section “About our CSR reporting” (page 82) of the CSR sections of the Report. The CSR sections of the Report cover BELGACOM’s Belgian activities (inclu­ding Belgacom SA de droit public, Belgacom Mobile SA, Belgacom Skynet SA and Skynet I-Motion Activities SA, Telindus SA and Connectimmo NV). The CSR sections of the Report are the responsibility of the management of BELGACOM. Our responsibility as independent auditor is to provide limited assurance on whether the topics discussed in the CSR sections of the Report address the key CSR issues affecting BELGACOM, whether the reporting procedures and principles used are appropriate and consistently applied and whether the description of the policy and management systems provides a reasonable reflection of the efforts made by BELGACOM with respect to CSR during 2009. A limited assurance engagement provides less assurance than an audit.

Limitations in our review

Our engagement did not include verification or review of any of the quantitative information contained in the CSR sections of the Report nor did it include a verification of the internet links in the CSR sections of the Report and their related information disclosed on the BELGACOM internet site. In the section “About our CSR reporting” (page 82) of the Report, an explanation for the reasons of these limitations is provided.

Criteria and reporting principles

There are currently no generally accepted criteria for reporting sustainability performance in Belgium. The CSR sections of the Report have been prepared in accordance with the Sustainability Reporting Guidelines of the Global Reporting Initiative (“GRI”) detailed in the section “About our CSR Reporting” (pages 82) of the Report.

Management’s responsibility

Management is responsible for the preparation of the CSR sections of the Report and the information therein in accordance with the criteria mentioned above. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation of the CSR content in the 2009 Annual Report that is free of material misstatements, selecting and applying appropriate reporting policies and using measurement methods and estimates that are reasonable in the circumstances. The choices made by management, the scope of this report and the reporting policy, including any inherent limitations that could affect the reliability of information, are set out in the CSR sections of the Report.

The auditor’s responsibility and scope of the work performed

Our responsibility is to express a conclusion with regard to the CSR specific sections included in the 2009 Annual Report of BELGACOM based on the limited assurance engagement described above. We conducted our procedures in accordance with the International Standard for Assurance Engagements 3000 (“ISAE 3000”): “Assurance Engagements other than Audits or Reviews of Historical Financial Information” and the Code of Ethics, issued by the International Federation of Accountants (“IFAC”).

Procedures

We have performed all the procedures deemed necessary to obtain the evidence that is sufficient and appropriate to provide a basis for our conclusions.

Our main procedures were: •O btaining an understanding of the telecommunication sector and its relevant CSR issues; •A ssessing the acceptability of the reporting principles used, the choices of the stakeholder groups, and the topics on which BELGACOM reports; •R eviewing, through press review and internal documentation review, the key CSR expectations regarding BELGACOM ; •E valuating the procedures at BELGACOM Corporate level and at operational level to identify CSR issues relevant for internal and external stakeholders; •E valuating the existing procedures to define report content and to ensure that key stakeholders’ expectations are being addressed in the CSR sections of the Report; •E valuating the procedures at the BELGACOM Corporate level to obtain, process and report data and assess internal control measures; •E xamining, on a limited test basis, evidence supporting the descriptive data provided, and studying relevant company documents; •A ssessing the adequacy of the documentation and “audit trail” from the information in the report to the basic data; •E valuating the procedures for compliance with relevant laws, regulations and internal policies relevant to CSR including the monitoring of this compliance; •C onducting interviews with responsible company officers, mainly for the purpose of assessing the consistency of the descriptive data in the CSR sections of the Report; •E valuating the overall view of the CSR content of the Annual Report, amongst others by testing its content against the guidelines issued by the Global Reporting Initiative, (i) GRI content principles (materiality, stakeholder inclusiveness, sustainability context, completeness) and (ii) GRI quality principles (balance, clarity, accuracy, timeliness, comparability, reliability).

Conclusions

Based on our procedures performed to obtain limited assurance, nothing came to our attention that causes us to believe that: • The topics discussed in the CSR sections of the 2009 Annual Report do not address the key Corporate Social Responsibility issues affecting BELGACOM Group SA de droit public; • The reporting procedures and principles used, are not appropriate and consistently applied; • The description of the policy and management systems of BELGACOM does not provide a reasonable reflection of the efforts made by BELGACOM in respect of Corporate Social Responsibility in 2009.

Brussels, 20 March 2010 Ernst & Young Reviseurs d’Entreprises SCCRL Represented by

Harry Everaerts Partner

Belgacom Annual Report 2009 - 83

GRI Content Table

in accordance with GRI G3 and the Telecommunications Sector Supplement (TSS)

Content as per GRI G3 and Sector Supplement 1. Strategy and analysis

Compliance

Reference to Content and Comments

1.1 1.2

Yes Yes

CSR strategy / Annual Report CSR Strategy, How we manage and in each chapter

Yes

About our reporting, How we manage CSR / Annual Report

Yes Yes Yes

About our reporting, How we manage, KPI table

4.1-4.10 Governance structures, committees, policies, etc.

4.11-4.13 Commitments to external initiatives.

Yes Yes

4.14-4.17 List of stakeholders, approach, key expectations.

Yes

How we manage / Annual report / www.belgacom.com (about the group) How we manage, signatories of ETNO Sustainability Charter, Code of Ethical Purchasing based on ILO principles, European Road Safety Charter, Safer Internet Framework How we manage

Yes Yes

KPI table / annual report Enabling a low-carbon society

Yes Yes

How we manage, Developing a responsible supply chain, KPI table KPI table, enhancing access to communications / annual report

Direct and indirect energy consumption by primary energy source.

Energy saved due to conservation and efficiency improvements.

Initiatives to provide energy-efficient or renewable energy based products and services.

Initiatives to reduce indirect energy consumption and reductions achieved.

Total water withdrawal by source.

Total direct and indirect greenhouse gas emissions by weight.

Other relevant indirect greenhouse gas emissions by weight.

Yes Yes Yes

KPI table, enabling a low-carbon society KPI table, enabling a low-carbon society Enabling a low-carbon society

Yes Yes Yes Yes

Initiatives to reduce greenhouse gas emissions and reductions achieved.

Total weight of waste by type and disposal method.

Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation.

Percentage of products sold and their packaging materials that are reclaimed by category.

Yes Partial Partial

KPI table, enabling a low-carbon society Not material - KPI table KPI table, enabling a low-carbon society Enabling a low-carbon society (business travel, outsourced transport, Employee commuting) Enabling a low-carbon society KPI table, enabling a low-carbon society Enabling a low-carbon society

Significant environmental impacts of transporting products and other goods and materials used for the organizationâ&#x20AC;&#x2122;s operations.

Yes

KPI table, enabling a low-carbon society. All packaging material circulating in Belgium is subject to FostPlus and Val-i-Pac national collection systems.

KPI table (included in total transport figures)

Yes Yes

Promoting a positive working culture KPI table / Annual Report

Yes Yes

KPI table KPI table

Yes

KPI table

Yes

Promoting a positive working culture

Yes Yes

KPI table, Promoting a positive working culture Promoting a positive working culture / Annual Report

Yes

KPI table

Statement from the most senior decision-maker.

Description of the key impacts, risks and opportunities.

2. Organizational Profile 2.1-2.10

Comprehensive description of organization, products, brands, etc.

3. Report parameters 3.1-3.11 3.12 3.13

Scope of report, contact details, data and measurement methods.

Table identifying the location of the Standard Disclosures in the report.

Policy and current practice with regard to seeking external assurance for the report.

About our reporting, External Assurance Statement

4. Governance, Commitments and Engagements

Economic Performance indicators EC1 EC2 EC6 EC8

Direct economic value generated and distributed.

Financial implications and other risks and opportunities due to climate change.

Business policy, business practices, and % of locally-based suppliers.

Development/impact of infrastructure investments and services for public benefit.

Environmental Performance indicators EN3-4 EN5 EN6 EN7 EN8 EN16 EN17 EN18 EN22 EN26 EN27 EN29

Yes

Social Performance indicators Labor practices and decent work performance indicators LA1 Total workforce by employment type, employment contract, and region.

LA2 Total number and rate of employee turnover by age group, gender, and region.

LA4 Percentage of employees covered by collective bargaining agreements.

LA6 Percentage of total workforce represented in formal joint managementâ&#x20AC;&#x201C; worker health and safety committees.

LA7 Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities by region.

LA8 Training, prevention, and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseases.

LA10 Average hours of training per year per employee by employee category.

LA11 Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings.

LA12 Percentage of employees receiving regular performance and career development reviews.

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CSR

LA13

Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership, and other indicators of diversity.

Human rights HR2 Percentage of significant suppliers and contractors that have undergone screening on human rights and actions taken.

HR3 Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained.

HR6 Operations identified as having significant risk for incidents of child labor, and measures taken.

HR7 Operations identified as having significant risk for incidents of forced or compulsory labor, and measures taken.

Society performance indicators SO1 Nature, scope, and effectiveness of any programs and practices that assess and manage the impacts of operations on communities, including entering, operating, and exiting.

Product responsibility performance indicators PR3 Type of product and service information required by procedures, and percentage of significant products and services subject to such information requirements.

PR6 Programs for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship.

Yes

KPI table / Annual report (HR)

Yes

Developing a responsible supply chain

Yes

Developing a responsible supply chain

Yes

Developing a responsible supply chain

Yes

Developing a responsible supply chain

Yes

We measure landlord relationship satisfaction (KPI table), dialogue with communities close to base stations, network compliance with EMF norms

Partial

KPI table (labeling of EMF Exposure level)

Partial

Enhancing Access to communications / included in our Code of Conduct and Belgacom complies with competition laws

No

Annual report

Yes

Communicating on electromagnetic fields and health (labeling of exposure levels)

Yes

Communicating on electromagnetic fields and health (regional norms on exposure to EMF)

Yes

Communicating on electromagnetic fields and health (labeling of SAR)

Yes

We measure landlord relationship satisfaction (KPI table), dialogue with communities close to base stations, network compliance with EMF norms

Yes

Enhancing access to communications

Partial

Enhancing access to communications

Yes

KPI table

Yes

Enhancing access to communications

Yes Yes Yes

Communicating on electromagnetic fields and health (information of population, exposure level labeling) Enhancing access to communications Enhancing access to communications, enabling a low-carbon society

Yes

Enabling a low-carbon society

Partial

Enabling a low-carbon society

Telecommunications sector specific guidelines Category: internal operations IO1 Capital investment in telecommunication network infrastructure broken down by country/region.

IO4 Compliance with ICNIRP (International Commission on Non-Ionising Radiation Protection) standards on exposure to radiofrequency (RF) emissions from handsets.

IO5 Compliance with ICNIRP (International Commission on Non-Ionising Radiation Protection) guidelines on exposure to radiofrequency (RF) emissions from base stations.

IO6 Policies and practices with respect to Specific Absorption Rate (SAR) of handsets.

IO7 Policies and practices on the siting of masts and transmission sites including stakeholder consultation, site sharing, and initiatives to reduce visual impacts.

Describe approach to evaluate consultations and quantify where possible.

Category: providing access Access to telecommunications products and services: bridging the divide 1 PA2 Policies and practices to overcome barriers for access and use of telecommunication products and services.

PA3 Policies and practices to ensure availability and reliability of telecommunications products and services and quantify, where possible, for specified time periods and locations of down time.

PA4 Quantify the level of availability of telecommunications products and services in areas where the organisation operates.

PA7 Policies and practices to manage human rights issues relating to access and use of telecommunications products and services.

PA8 Policies and practices to publicly communicate on EMF related issues.

Include information provides at points of sales material.

PA10 Initiatives to ensure clarity of charges and tariffs.

PA11 Initiatives to inform customers about product features and applications that will promote responsible, efficient, cost effective, and environmentally preferable use.

Category: Technology applications TA2 Provide examples of telecommunication products, services and applications that have the potential to replace physical objects (e.g. a telephone book by a database on the web or travel by videoconferencing).

TA3 Disclose any measures of transport and/or resource changes of customer use of the telecommunication products and services listed above.

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