KPN selects Alcatel’s Ethernet solution to deliver business services

Contract is part of ambitious “All-IP” network transformation

Paris, August 28, 2006 - Alcatel (Paris: CGEP.PA and NYSE:ALA) today announced it has been selected by KPN, the incumbent operator in the Netherlands, to provide the network equipment to extend KPN’s nationwide Ethernet Virtual Private Network (VPN) services for business customers and Ethernet aggregation for residential services. The contract is part of a substantial IP network transformation project that will give KPN one of the largest MPLS-enabled networks in the world, which in turn forms part of its All IP program, whereby most of the current (legacy) platforms and services will be migrated to Next Generation Network platforms and Next Generation based Services.

The contract was awarded by KPN following a highly competitive tendering process and is the second phase of an ambitious IP/Ethernet network transformation. Phase one was awarded to Alcatel in October 2005 for the delivery of triple play services from 28 main points of presence (POPs) and 172 medium PoPs located in 14 different regions. The second phase extension is expected to be completed by 2008 and will result in a network with an additional 1300 smaller POP locations − enabling KPN to deliver highly competitive Ethernet VPN services to businesses and consumers across the Netherlands from a single Ethernet/MPLS platform.

“KPN required a premium IP/Ethernet solution for a variety of standard services for business and consumers; services which require extremely high quality of service (QoS) characteristics,” said Jan van Bekkum, Manager Marketing Broadband Services at KPN. “Alcatel was able to provide a solution that addressed the significant scaling requirements in addition to KPN’s need to offer differentiated services to help maintain our competitive edge.”

“This network extension by an innovative market leader creates an impressive nationwide MPLS- enabled network to deliver Ethernet services,” said Basil Alwan, president of Alcatel’s IP activities. “A transformation of this scale demonstrates the rapidly growing interest by businesses in deploying scalable, end-to-end Ethernet VPNs. KPN can now offer ’always on’ point-to-point and point-to-multipoint services characterized by high availability features which are critical for meeting the requirements of today’s enterprises.”

The foundation for the phase two extension is the industry leading Alcatel 7450 Ethernet Service Switch (ESS) and Alcatel 5620 Service Aware Manager (SAM), which gives KPN convenience, simplicity and flexible bandwidth across the wide area network, but with the quality of service and control critical for business networking applications. KPN joins a growing list of leading global carriers that have turned to the Alcatel 7450 ESS as the foundation for premium, revenue generating IP/MPLS-based VPN solutions.

About KPN
KPN provides telephone, internet and television services to customers through its fixed netwrok in the Netherlands. For business customers, KPN provides a range of services - from voice, internet and data services to fully-managed outsourced ICT solutions - in the Netherlands and internationally. For both personal and business customers, KPN offers mobile services in the Netherlands, Germany, Belgium and Western Europe. As of June 30, 2006, KPN served 6.4 million fixed-line subscribers and 2.3 million Internet customers in the Netherlands as well as 22.2 million mobile customers in Germany, the Netherlands and Belgium, while employing 28,536 individuals (26,033 FTEs). KPN was incorporated in 1989 and our shares are listed on the Amsterdam, New York, London and Frankfurt stock exchanges.

About Alcatel
Alcatel provides communications solutions to telecommunication carriers, Internet service providers and enterprises for delivery of voice, data and video applications to their customers or employees. Alcatel brings its leading position in fixed and mobile broadband networks, applications and services, to help its partners and customers build a user-centric broadband world. With sales of EURO 13.1 billion and 58,000 employees in 2005, Alcatel operates in more than 130 countries. For more information, visit Alcatel on the Internet: http://www.alcatel.com

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Régine Coqueran

Corporate Media Relations

Alcatel

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