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Den Haag, 21-9-06

KPN subsidiary E-Plus is to restructure its organisation to further strengthen its position as challenger on the German mobile market. The market leader in terms of growth in the first half of 2006, E-Plus aims to secure price and cost leadership and increase its customer focus by creating a leaner, less hierarchical organisation and expanding its retail network. E-Plus is also evaluating the outsourcing of selected non-customer-facing business areas.

E-Plus will accelerate the expansion of its sales and retail activities, recruiting more than 350 additional employees and increasing the rate at which new shops are opened. At the same time, E-Plus is investigating whether selected business areas can be managed more flexibly, more effectively and – due to increased scale – more cost efficiently by outsourcing partners. Such efforts will likely center on those non-core parts of network operations which primarily focus on building and running rather than planning and monitoring the network.

Other business areas will also be restructured according to efficiency criteria, including the realignment of management structures. A complete management layer will be eliminated, meaning that management positions will be cut by almost 40%. The aim is to increase management efficiency by 25%, increasing customer focus and improving time to market. These measures are anticipated to result in a headcount reduction of up to 300 employees.

Based on all the actions planned, the share of customer facing employees will increase from some 40% now to approximately 70% by the end of 2007.

E-Plus CEO Michael Krammer: “This new organisational structure, combined with our smart-follower strategy for new technologies, will bring us closer to our customers and deliver substantial cost advantages that we will leverage to lower prices for customers, further optimize our network, and to achieve continued profitable growth. This is an important step for E-Plus’ future as a successful challenger on the German market.”

E-Plus will immediately begin negotiations with employee representatives as well as potential partners for outsourcing of network operations.