SC TO-T/A

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE TO

TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)

OF THE SECURITIES EXCHANGE ACT OF 1934

(Amendment No. 5)

iBASIS, INC.

(Name of Subject Company (Issuer))

KPN B.V.

(Offeror)

KONINKLIJKE KPN N.V.

(Parent of Offeror)

CELTIC ICS INC.

(Wholly Owned Subsidiary of Offeror)

(Names of Filing Persons (identifying status as offeror, issuer or other person))

COMMON STOCK, $0.001 PAR VALUE

(Title of Class of Securities)

450732201

(CUSIP Number of Class of Securities)

Michel Hoekstra

Koninklijke KPN N.V.

Maanplein 55

2516 CK, The Hague, The Netherlands

+31 70 446 2093

(Name, address, and telephone numbers of person authorized to receive

notices and communications on behalf of filing persons)

Copies to:

Mark I. Greene, Esq.

Cravath, Swaine & Moore LLP

Worldwide Plaza

825 Eighth Avenue

New York, New York 10019

(212) 474-1000

CALCULATION OF FILING FEE

Transaction Valuation(1)	Amount of Filing Fee(2)
$69,991,322	$3,906

(1)           Estimated for purposes of calculating the filing fee only.  This amount is determined by multiplying 31,107,254 shares of common stock, par value $0.001 per share (the “Shares”), of iBasis, Inc. (the “Company”) by $2.25 per Share, which is the offer price.  Such number of Shares represents the 71,228,328 Shares issued and outstanding as of July 31, 2009, as reported in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2009, less the 40,121,074 Shares already owned by KPN B.V.

(2)           The filing fee was calculated in accordance with Rule 0-11 under the Securities Exchange Act of 1934 and Fee Rate Advisory #5 for fiscal year 2009, issued March 11, 2009, by multiplying the transaction value by .0000558.

ý Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

Amount Previously Paid: $2,690	Filing Party: Koninklijke KPN N.V., KPN B.V., Celtic ICS Inc.
Form or Registration No.: Schedule TO-T	Date Filed: July 28, 2009

¨ Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.

Check the appropriate boxes below to designate any transactions to which the statement relates:

ý third-party tender offer subject to Rule 14d-1.

¨ issuer tender offer subject to Rule 13e-4.

ý going-private transaction subject to Rule 13e-3.

¨ amendment to Schedule 13D under Rule 13d-2.

Check the following box if the filing is a final amendment reporting the results of the tender offer. ¨

If applicable, check the appropriate box(es) below to designate the appropriate rule provision(s) relied upon:

¨      Rule 13e-4(i) (Cross-Border Issuer Tender Offer)

¨      Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)

This Amendment No. 5 amends and supplements the Tender Offer Statement and Rule 13e-3 Transaction Statement filed under cover of Schedule TO with the Securities and Exchange Commission (the “SEC”) on July 28, 2009, as amended and supplemented from time to time (the “Schedule TO”), by (i) KPN B.V., a private limited liability company organized under the laws of The Netherlands (“Purchaser”) and a wholly owned subsidiary of Koninklijke KPN N.V., a public company incorporated under the laws of The Netherlands (“Parent”), (ii) Parent and (iii) Celtic ICS Inc., a Delaware corporation (“Merger Sub”) and a wholly owned subsidiary of Purchaser.  The Schedule TO relates to the offer (the “Offer”) by Purchaser to purchase all of the outstanding shares of common stock, par value $0.001 per share (the “Shares”), of iBasis, Inc., a Delaware corporation (the “Company”), that are not already owned by Purchaser at a purchase price of $1.55 per Share, net to the seller in cash, without interest and less any required withholding taxes, upon the terms and subject to the conditions set forth in the Offer to Purchase dated July 28, 2009 (together with any amendments and supplements thereto, the “Offer to Purchase”) and in the related Letter of Transmittal.  This Amendment No. 5 amends and supplements the Schedule TO and Offer to Purchase to, among other things, increase the Offer Price to $2.25 per Share.

Items 1 through  9, 11 and 13.

(1)       The Offer Price to be paid in the Offer, upon the terms and subject to the conditions set forth in the Offer to Purchase, is increased from $1.55 per Share to $2.25 per Share, net to the seller in cash, without interest and less any required withholding taxes.

(2)       The press release announcing the increase in the Offer Price is attached hereto as Exhibit (a)(1)(xii) and is incorporated herein by reference.

Item 1.             Summary Term Sheet.

(1)       The first sentence of the response to the question “How much are you offering to pay?  What is the form of payment?  Will I have to pay any fees or commissions?” in the “Summary Term Sheet” of the Offer to Purchase is hereby amended and restated as follows:

“We are offering to pay $2.25per Share net to you, in cash, without interest and less any required withholding taxes.”.

(2)       The first sentence of the response to the question “Do you have the financial resources to make payment?” in the “Summary Term Sheet” of the Offer to Purchase is hereby amended and restated as follows:

“We estimate that we will need approximately $74.3 million to purchase all of the currently outstanding Shares not already owned by us in the Offer and in a second-step merger with iBasis, which we intend to cause iBasis to consummate with Merger Sub following the successful completion of the Offer if we own at least 90% of the outstanding Shares at that time, and to pay related fees and expenses.”.

Item 4.             Terms of the Transaction

(1)       Clause (iv) of the first sentence of the third paragraph in the “Introduction” of the Offer to Purchase is hereby amended and restated as follows:

“(iv) the iBasis Delaware Action and the iBasis New York Action (in each case, as defined in “Special Factors—Section 1—Background of the Offer”), prior to the expiration of the Offer, each being dismissed with prejudice or settled pursuant to a settlement agreement that, in our reasonable judgment, does not impose obligations on us that restrict our ability to consummate the Offer or that, in our reasonable judgment, make it inadvisable to proceed with the consummation of the Offer or the proposed second-step merger (the “iBasis Action Condition”)”.

(2)       Clause (i) in the introductory portion of the first sentence in “The Tender Offer—Section 11—Certain Conditions of the Offer” of the Offer to Purchase is hereby amended and restated as follows:

“(i) prior to the expiration of the Offer, one or more of the Majority-of-the-Minority Condition, the 90% Condition, the Poison Pill Condition and the iBasis Action Condition has not been satisfied”.

(3)       Clause (a)(5) of the first sentence under “The Tender Offer—Section 11—Certain Conditions of the Offer” of the Offer to Purchase is hereby amended and restated in its entirety to read as follows:

“[intentionally omitted]”.

Item 5.             Past Contacts, Transactions, Negotiations and Agreements.

(1)       The seventh and eighth paragraphs under “Special Factors—Section 1—Background of the Offer” of the Offer to Purchase are hereby amended and restated as follows:

“In late March and April 2009, after the Company’s performance had continued to deteriorate in terms of certain key metrics, including total net revenues and Share price, the working group gave renewed consideration to Parent’s and Purchaser’s options with respect to the Company.  The working group collaborated to review the Company’s results for the first quarter of 2009 in detail and to perform an analysis of the Company’s business, key value drivers and prospects. As a part of this process, the working group consulted with employees of Parent with day-to-day responsibility for supporting Parent’s business relationship with the Company. At this time, Daniel Braat (Parent’s M&A department) joined the working group.  On April 16, 2009, Parent’s Board of Management and Mr. Hageman and Mr. Hoekstra discussed Parent’s and Purchaser’s options at a meeting of the Board of Management.  Parent’s Board of Management instructed such members of the working group to continue to give consideration to Parent’s and Purchaser’s options at that time.

As part of the process of exploring the financial, strategic and legal aspects of Parent’s and Purchaser’s options with respect to the Company,  Mr. Braat and Mr. Hoekstra, as members of the working group, met separately with Morgan Stanley & Co. Incorporated (“Morgan Stanley”) and Cravath in New York on April 22, 2009.  Following these meetings, Parent hired Cravath to provide advice on the options being explored by Parent on a going forward basis. The working group held regular conference calls with its advisors over the following weeks, including a call on April 28, 2009 among working group members Mr. Braat, Mr. Uematsu and Mr. Rodenburg, representatives of Morgan Stanley and representatives of Cravath, a call on April 29, 2009 among working group members Mr. van Halder and Mr. Braat, representatives of Morgan Stanley and representatives of Cravath, a call on May 1, 2009 among working group members Mr. Uematsu and Mr. Rodenburg and representatives of Morgan Stanley, a call on May 5, 2009 among working group members Mr. Braat, Mr. Uematsu, Mr. Rodenburg and Matthew House (Parent’s M&A department), who joined the working group in early May, and representatives of Morgan Stanley, a call on May 6, 2009 among working group members Mr. Braat and Mr. Rodenburg, representatives of Morgan Stanley and representatives of Cravath, and a call on May 8, 2009 among working group members, Mr. Braat, Mr. House and Mr. Rodenburg, Peter Olivier, a member of Parent’s tax department, representatives of Morgan Stanley and representatives of Cravath.  On these conference calls, the participants discussed various considerations applicable to the options being investigated by the working group, which options included maintaining Purchaser’s current ownership stake, selling Purchaser’s Shares and acquiring the outstanding Shares not already owned by Purchaser.  With respect to the status quo option, the participants discussed several options potentially available to the Company under the current ownership structure by which returns to all stockholders might be improved.  Among other things, the participants discussed ways in which the Company could return capital to stockholders and a strategy of pursuing acquisitions.  With respect to the possibility of selling Purchaser’s Shares, the participants discussed the typical process and timeline associated with a sale to a third party and, among other things, discussed the considerations that might be relevant to a hypothetical buyer in evaluating an acquisition of Purchaser’s Shares.  With respect to the going private option, the discussions included an overview of the differences in the typical process and timeline and the legal framework associated with available alternative approaches to a going private transaction.  The participants discussed the benefits and drawbacks of the various approaches, taking into account, among other things, trends in the multinational carrier market, recent transactions in the Company’s industry, the Company’s operating and stock price performance, research analyst views on the Company and the timing and tax considerations of the various approaches (see “Special Factors—Section 2—Purpose of and Reasons for the Offer; Consideration of Alternatives”).”.

(2)       The tenth and eleventh paragraphs under “Special Factors—Section 1—Background of the Offer” of the Offer to Purchase are hereby amended and restated as follows:

“In April 2009, Ofer Gneezy, the President, Chief Executive Officer and Chairman of the Board of the Company, informed Parent that he had been contacted by a leading private investment firm focused on technology industries (“Party A”).  Mr. Blok and Joost Farwerck, a director of the Company and an officer of Purchaser, decided not to participate in discussions with Party A to avoid any conflict of interest.  On May 4, 2009, Mr. Braat held a call with Mr. Gneezy to discuss the background of the contact by Party A.  On May 6, 2009, on a regularly scheduled conference call, working group members Mr. Braat and Mr. Rodenburg discussed with Morgan Stanley and Cravath the unsolicited contact received from Party A.  On May 11, 2009, Mr. Braat held a telephone call with representatives of Party A in which representatives of Party A expressed Party A’s interest in acquiring Shares.  On that telephone call, Mr. Braat told Party A’s representatives that the KPN Group was not interested in selling any portion of its interest in the Company at that time.

In early May 2009, Kenji Uematsu left the working group, and Mr. House joined the working group.

On May 13, 2009, Morgan Stanley presented discussion materials to working group members Mr. Hoekstra, Mr. van Halder, Mr. Braat, Mr. House and Mr. Rodenburg via teleconference.  See “Special Factors—Section 6—Summary of Morgan Stanley Presentations.”  These materials included a situation overview, preliminary Company valuation considerations and a review of Parent’s and Purchaser’s options with respect to the Company.  These options included acquiring the Shares not already owned by Purchaser, selling Purchaser’s stake in the Company and maintaining Purchaser’s current ownership position in the Company.  Morgan Stanley and Cravath presented analyses regarding alternative approaches and transaction structures for a going private transaction, as well as considerations regarding timing of such a transaction.  The working group continued to discuss these materials, along with additional analyses provided by Morgan Stanley on May 22, 2009 and June 2, 2009 (see “Special Factors—Section 6—Summary of Morgan Stanley Presentations”), as well as the strategic and procedural considerations relating to the various options, on calls with Morgan Stanley and Cravath on May 14, 2009, May 19, 2009, May 20, 2009, May 28, 2009 and May 29, 2009.”.

(3)       The thirteenth and fourteenth paragraphs under “Special Factors—Section 1—Background of the Offer” of the Offer to Purchase are hereby amended and restated as follows:

“On June 4, 2009, at a meeting of Parent’s Board of Management, members of the working group made a presentation regarding Parent’s and Purchaser’s options with respect to the Company and discussed preliminary valuation analyses and a description of a potential tender offer process.  Parent’s Board of Management authorized the working group to make preliminary preparations for a potential tender offer to acquire the Shares not already owned by Purchaser but did not authorize an offer at that time. The working group discussed these preliminary preparations and the Company’s business performance with its advisors over the following weeks, including on a call on June 4, 2009 among working group members Mr. Braat and Mr. Hoekstra, Morgan Stanley and Cravath, a call on June 5, 2009 among the working group, Morgan Stanley and Cravath, a call on June 8, 2009 among working group members Mr. Braat, Mr. House and Mr. Rodenburg, Morgan Stanley and Cravath, a call on June 11, 2009 among the working group, Morgan Stanley and Cravath, a call on June 12, 2009 between Mr. Braat and Morgan Stanley, a call on June 16, 2009 among the working group, Cravath and PricewaterhouseCoopers LLP (“PWC”), the Company’s independent auditor, calls on June 17, 2009 and June 22, 2009 among the working group, Morgan Stanley and Cravath, a call on June 23, 2009 among the working group, Cravath and PWC, a call on June 24, 2009 among the working group, Morgan Stanley and Cravath, a call on July 2, 2009 among working group members Mr. Braat and Mr. Rodenburg and Morgan Stanley, a call on July 6, 2009 among working group members Mr. Braat and Mr. Hoekstra, Morgan Stanley and Cravath, and a call on July 7, 2009 between the working group and Cravath.  Through these calls, the participants discussed the structural, timing, documentation, procedural, transactional cost and valuation considerations to be taken into account if Parent were to proceed with a tender offer.  During this period, the working group also held discussions on and began preparation of the documentation and other materials relating to a tender offer in case Parent subsequently would decide to pursue that option.  The working group also continued to assess the Company’s operating and stock price performance and to investigate Parent’s and Purchaser’s options with respect to the Company, including any opportunities to improve the Company’s performance.

On June 5, 2009, Parent received a letter from Party A in which Party A presented a non-binding, indicative proposal to acquire the outstanding Shares, including some or all of the Shares held by the KPN Group.  In the June 5 letter, Party A indicated that it would value the Company at $1.75 per Share based on information then available to it.  Party A indicated that, prior to signing any definitive agreement, it would require due diligence, internal approvals and the negotiation and execution of definitive transaction agreements.  On June 11, 2009, the working group discussed Party A’s indication of interest and Parent’s  potential response to Party A with Morgan Stanley and Cravath, and on June 16, 2009, Parent delivered a letter to Party A reiterating its position that the KPN Group was not interested in selling any portion of its interest in the Company at that time. The KPN Group has had no further contacts with Party A since that time.”.

(4)       The sixteenth paragraph under “Special Factors—Section 1—Background of the Offer” of the Offer to Purchase is hereby amended and restated as follows:

“At the request of the working group, on July 8, 2009, Morgan Stanley presented updated valuation analyses to Mr. Braat, Mr. House and Mr. Rodenburg via teleconference, which analyses are summarized in “Special Factors—Section 6—Summary of Morgan Stanley Presentations”.  On that call, such members of the working group and Morgan Stanley discussed hypothetical pricing scenarios in connection with a possible tender offer to acquire the Shares not already owned by Purchaser.”.

(5)       The eighteenth paragraph under “Special Factors—Section 1—Background of the Offer” of the Offer to Purchase is hereby amended and restated as follows:

“On July 10, 2009, following the close of the NASDAQ, the working group and Morgan Stanley held a conference call to discuss considerations pertinent to the determination of a price that might be offered in a tender offer for the minority Shares, including, among other factors, premia to trading prices offered in precedent minority buy-in transactions.  (See “Special Factors—Section 6—Summary of Morgan Stanley Presentations.”)  

 In its deliberations regarding an appropriate offer price, the working group also considered the range of per Share equity values implied by the discounted cash flow sensitivity analysis prepared by Morgan Stanley (see “Special Factors—Section 6—Summary of Morgan Stanley Presentations”) and by the working group’s own internal analyses.  Taking all of these considerations into account, the working group considered an offer price in the range of $1.55 to $1.60 per Share.  In deriving this range, the working group considered various metrics regarding precedent minority buy-in transactions contained in Morgan Stanley’s July 8 Presentation.  The working group applied the median premium of the initial price offered in such transactions to the trading price of the target’s stock on the day prior to announcement as observed in the July 8 Presentation (which was 21%) to the closing price of the Shares on July 10, 2009, the last full trading day prior to the initial public announcement of the intent to commence the Offer (which was $1.30).  This produced an illustrative price of $1.57, which the working group broadened into a five-cent range of $1.55 to $1.60.  The working group further considered that this derived range was also within the range of per Share equity values implied by Morgan Stanley’s discounted cash flow analysis.  The working group decided to recommend to Parent’s Board of Management an offer price of $1.55 per Share in the event that the Board of Management determined to proceed with a tender offer.  The working group did not discuss the reasons for rejecting the prices at the upper end of the derived range but considered that $1.55 per Share represented a premium to the recent trading price of the Shares in line with precedent transactions with similar characteristics, was in the top half of the range implied by the discounted cash flow analysis prepared by Morgan Stanley and otherwise represented a fair price for the minority Shares for the reasons set forth in “Special Factors—Section 5—Position of Parent, Purchaser and Merger Sub as to the Fairness of the Offer and Second-Step Merger.””.

(6)       The text “, and has not as of August 20, 2009, accepted” in the twenty-third and twenty-sixth paragraphs under “Special Factors—Section 1—Background of the Offer” of the Offer to Purchase is hereby replaced with the word “accept”.

(7)       The following is hereby added at the end of “Special Factors—Section 1—Background of the Offer” of the Offer to Purchase:

“On August 18, 2009, the Company filed its complaint in the iBasis New York Action with the SEC as an exhibit to Amendment No. 8 to the Company’s Schedule 14D-9.  Stockholders of the Company may obtain the complaint in the manner described in “The Tender Offer—Section 7—Certain Information Concerning the Company” of the Offer to Purchase under the heading “Available Information.”

On September 10, 2009, Parent’s Board of Management met with working group members Mr. Hageman, Mr. Hoekstra and Mr. House to discuss the status of the Offer, the iBasis Delaware Action and the iBasis New York Action and potential strategic next steps. Parent’s Supervisory Board met on September 16, 2009 to be updated on the status of the Offer, the iBasis Delaware Action and the iBasis New York Action and potential strategic next steps.  On October 1, 2009, Parent’s Board of Management met for a brief update on the status of the Offer, the iBasis Delaware Action and the iBasis New York Action.

On September 14, 2009, the Company filed with the SEC Amendment No. 10 to the Schedule 14D-9 stating that, since the commencement of the Offer, the Company has received an indication of interest from another third party with respect to a possible business combination transaction involving the Company, and that the special committee intended to approach Parent to determine whether to commence negotiations with Parent.  On September 15, 2009, representatives of Jefferies contacted representatives of Morgan Stanley to propose a meeting between such representatives.  On September 16, 2009, representatives of Jefferies and Morgan Stanley met in person in New York.  At this meeting, the Jefferies representatives reiterated that a third party had indicated interest in a business combination with the Company and again expressed the special committee’s view that the Offer Price was not acceptable, but did indicate that there would be a price at which the special committee would be willing to give a favorable recommendation of the Offer.

On October 2, 2009, in response to requests from representatives of Lampe, Conway & Co., LLC (“Lampe”), Millennium Management LLC, the general partner of Millennium Partners, L.P. (“Millennium”), and Karen Singer, Trustee of the Singer Children’s Management Trust (“Singer”), representatives from Morgan Stanley met with representatives of each of Singer and Lampe and Lloyd I. Miller III (who, having been contacted by Morgan Stanley on the grounds that he, together with Lampe, Millennium and Singer were the four largest stockholders of the Company other than Parent, participated in such meeting telephonically), and subsequently met telephonically with representatives of Millennium, to discuss those stockholders’ view of the Offer.  In these meetings, Morgan Stanley indicated Parent’s willingness to increase the offer price to $2.25.  No agreements were reached at the meeting, and no plans for further discussions were made.

On October 4, 2009, working group members Mr. Braat and Mr. Hoekstra met via teleconference to review the status of the Offer, the iBasis Delaware Action and the iBasis New York Action and to consider strategic options going forward.  Through this teleconference, the working group decided to increase the Offer Price from $1.55 per Share to $2.25 per Share in order to increase investor participation in the Offer. After the teleconference, Parent’s Board of Management and Supervisory Board were updated on the decision to increase the Offer Price.”.

Item 7.             Source and Amount of Funds or Other Consideration

(1)       The second sentence in the first paragraph under “The Tender Offer—Section 9—Source and Amount of Funds” of the Offer to Purchase is hereby amended and restated as follows:

“We estimate that the total amount of funds required to purchase all of the currently outstanding Shares pursuant to the Offer and a subsequent short-form merger, based on the Offer Price of $2.25 per Share, is approximately $74.3 million, including related transaction fees and expenses.”.

Item 11.                      Additional Information

(1)       The first bullet point under the subheading “June 2009 Scenarios” in “Special Factors—Section 7—Certain Projected Company Financial Information” of the Offer to Purchase is hereby amended and restated as follows:

“● The June 2009 Scenarios were not prepared for the purposes of a valuation analysis.  The employees of Parent with day-to-day responsibility for supporting Parent’s business relationship with the Company believed that significant changes in the way the Company managed its business would be necessary in order for the Company to achieve real improvement in its downward trends.  In particular, these employees of Parent understood that the Company was managing its business with a focus on more profitable minutes.  However, as demonstrated by the Company’s historical results, as gross margin increased, overall volumes and revenues—and overall profit—tended to decrease.  These employees of Parent believed the Company should consider shifting its strategy to focusing on a balance between minutes, revenues and gross margin and growing volumes and revenues overall, rather than focusing on more profitable minutes, and prepared the scenariosas a tool to stimulate an “outside the box” discussion between the Company and Parent about improving the Company’s future revenue performance and to motivate Company management to improve revenue performance. The June 2009 Scenarios were designed to illustrate the impact that a shift in strategy and a hypothetical increase in volumes and revenue would have on the Company’s overall results.  The scenarios were not projections for the business as currently managed under the Company’s existing strategy and therefore not intended for the purpose of valuing the Shares.”.

(2)       The second bullet point under the subheading “June 2009 Scenarios” in “Special Factors—Section 7—Certain Projected Company Financial Information” of the Offer to Purchase is hereby amended and restated as follows:

“● The nature of the June 2009 Scenarios and their underlying assumptions make them inappropriate to use as a basis for judging the valuation of the Company or its future prospects.   The June 2009 Scenarios were produced as illustrations of the impact that various growth assumptions would have on an incomplete set of the Company’s performance metrics (chiefly minutes and revenue).  The June 2009 Scenarios did not, however, focus on other of the Company’s performance metrics (such as EBITDA or free cash flow) and did not fully reflect the drivers of these performance metrics, such as the operating and other costs and capital expenditures necessary to achieve the various growth assumptions.

To create the June 2009 Scenarios, Parent’s employees began by generating four core scenarios, each of which illustrated a hypothetical shift in the Company’s focus away from more profitable minutes and towards increasing overall volumes and revenues.  The four core scenarios illustrated growth in the Company’s volumes and revenues that underperformed, met or overperformed certain rough expectations regarding such growth in the overall market.  Thegrowth rates applied in these illustrations were based on rough assumptions, rather than a study of the Company’s market, historical performance or plans, and because of the purpose of the scenarios these assumptions were not intended to represent realistic outcomes.  Each of these core scenarios assumed constant operating expenses and capital expenditures that were based on the Company’s actual expenses for the year to date, with no consideration given to whether increases in spending would be required in order to achieve the illustrated growth or to opportunities to reduce these expenditures in the future.  In all scenarios presented, EBITDA and free cash flow were arithmetically derived from the foregoing line items and were not independently modeled or examined.

In contrast, the Parent Projections that are included in this Offer to Purchase were prepared through careful study and modeling of the Company’s individual lines of business and specific assumptions relating to revenues, capital expenditures, operating expenses, balance sheet data and other items, all with a view to generating a reasonable estimate of the Company’s future performance.”.

(3)       The last sentence in the third bullet point under the subheading “June 2009 Scenarios” in “Special Factors—Section 7—Certain Projected Company Financial Information” of the Offer to Purchase is hereby amended and restated as follows:

“In contrast, the Parent Projections and their underlying assumptions were subjected to intensive review, both internally and with Parent’s financial advisors, and were used for the valuation that was presented to and discussed with Parent’s Board of Management.”.

(4)       The fourth bullet point under the subheading “June 2009 Scenarios” in “Special Factors—Section 7—Certain Projected Company Financial Information” of the Offer to Purchase is hereby amended and restated as follows:

“● KPN does not believe the June 2009 Scenarios represent reasonable projections of the Company’s future results, and the June 2009 Scenarios were not used or relied upon in any way by KPN in valuing the Company.  Due to the intended purpose of the June 2009 Scenarios and the significant limitations described above, including the fact that the June 2009 Scenarios were illustrations of the possible impact of a change in the Company’s strategy, rather than an evaluation of the Company’s prospects under its current strategy and circumstances, KPN views the June 2009 Scenarios as inherently unreliable and inappropriate to use as a tool for valuing the Shares.  As a result, KPN did not take the June 2009 Scenarios into account or rely on them in any way in considering the valuation of the Company, deliberating about the terms of the Offer or assessing the fairness of the Offer to the Company’s unaffiliated stockholders.  Similarly, because of the inherent unreliability of the June 2009 Scenarios as a valuation tool and the limitations described above, these scenarios were not provided to Morgan Stanley and therefore were not taken into account by Morgan Stanley in preparing its analyses.”.

Item 12.                      Exhibits.

(1)       The following exhibit is filed herewith:

(a)(1)(xii) Press release issued by Parent on October 5, 2009.

(2)       All references to the Offer Price set forth in the Letter of Transmittal, the Notice of Guaranteed Delivery, the Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees and the Letter to Clients for Use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees are hereby amended to reflect the Offer Price of $2.25 per Share, net to the seller in cash, without interest and less any required withholding taxes, upon the terms and subject to the conditions set forth in the Offer to Purchase.

Item 13.           Information Required by Schedule 13E-3.

Item 8.             Fairness of the Transaction.

(1)       The following paragraph is hereby added after the first paragraph under “Special Factors—Section 5—Position of Parent, Purchaser and Merger Sub as to the Fairness of the Offer and Second-Step Merger” of the Offer to Purchase:

“While we have increased the Offer Price from $1.55 per Share to $2.25 per Share, we continue to believe that the $1.55 initial offer price is fair to the stockholders that are unaffiliated with the Company based on the factors described below.  We decided to increase the Offer Price to $2.25 per Share  in order to increase investor participation in the Offer.  Since the date of this Offer to Purchase, we have not changed our belief in the reasonableness and appropriateness of the factors described below.  Since we continue to believe that the $1.55 per Share initial offer price was fair to the unaffiliated stockholders of the Company, we, for the same reasons described below, believe that the increased Offer Price of $2.25 per Share is also fair to the unaffiliated stockholders of the Company.”.

(2)       The first bullet point under the second paragraph under “Special Factors—Section 5—Position of Parent, Purchaser and Merger Sub as to the Fairness of the Offer and Second-Step Merger” of the Offer to Purchase is hereby amended and restated as follows:

“● The initial offer price represented a premium of approximately 19.2% over the closing price of the Shares on July 10, 2009, the last full trading day prior to the initial public announcement of our intent to commence the Offer (or 27.0% when iBasis’s significant net cash balance of $0.37 per Share as of March 31, 2009 is taken into account), and 33.6% over the average closing price during the three months preceding such date.  The Offer Price of $2.25 per Share represents a premium of approximately 73.1% over the closing price of the Shares on July 10, 2009, and 93.9% over the average closing price during the past three months preceding July 10, 2009.”.

(3)       The third bullet point under the second paragraph under “Special Factors—Section 5—Position of Parent, Purchaser and Merger Sub as to the Fairness of the Offer and Second-Step Merger” of the Offer to Purchase is hereby amended and restated as follows:

“● We considered the analyses contained in the presentation provided by Morgan Stanley to a working group composed of members of Parent’s management on July 8, 2009.  These analyses are summarized below.  Morgan Stanley was not asked to provide and did not provide any opinion as to the fairness of the Offer Price to Parent or Purchaser or to the unaffiliated stockholders of the Company, and Morgan Stanley’s analyses do not constitute a recommendation to Parent or Purchaser with respect to the Offer Price or to the unaffiliated stockholders of the Company as to whether such stockholders should tender their Shares in response to the Offer or as to how such stockholders should act in respect of any potential second-step merger.  See “Special Factors—Section 6—Summary of Morgan Stanley Presentations.”  Parent did not request that Morgan Stanley revise or update the Morgan Stanley Materials in connection with the increase in the Offer Price from $1.55 per Share to $2.25 per Share, and Morgan Stanley did not revise or update such materials.”.

(4)       The fourth bullet point under the second paragraph under “Special Factors—Section 5—Position of Parent, Purchaser and Merger Sub as to the Fairness of the Offer and Second-Step Merger” of the Offer to Purchase is hereby amended and restated as follows:

“● The premium represented by the initial offer price is comparable to premia offered in prior acquisitions of a minority interest by a majority stockholder.”.

(5)       The fifth paragraph under “Special Factors—Section 5—Position of Parent, Purchaser and Merger Sub as to the Fairness of the Offer and Second-Step Merger” of the Offer to Purchase is hereby amended and restated as follows:

“Our consideration of the factors described above with respect to the fairness of the Offer Price to unaffiliated stockholders of the Company is predicated on the assumption that the Company is a going concern.  As discussed above, we considered, among other factors, the analyses of Morgan Stanley in the July 8 Presentation in our assessment of the fairness of the Offer Price, which analyses, such as the discounted cash flow sensitivity analysis, could be considered to be relevant to the going concern value of the Company. We did not consider a quantifiable number for the going concern value of the Company.  See “Special Factors—Section 6—Summary of Morgan Stanley Presentations.” With respect to the discounted cash flow sensitivity analysis, we considered that it contained a range of implied Share prices between $0.82 per Share and $1.88 per Share.  Although the top end of this range exceeded the initial offer price of $1.55 per Share, we considered that the initial offer price exceeded the midpoint of this range by a significant margin.”  The Offer Price of $2.25 per Share exceeds the top end of this range of implied Shares prices.

Item 9.             Reports, Opinions, Appraisals and Negotiations.

(1)       The text prior to the subheading “The July 8 Presentation” in “Special Factors—Section 6—Summary of Morgan Stanley Presentations” of the Offer to Purchase is hereby amended and restated as follows:

“In connection with the consideration by Parent of the Offer, Parent engaged Morgan Stanley as its exclusive financial advisor, effective April 22, 2009.  Morgan Stanley had advised Parent in connection with the initial acquisition of Shares by Purchaser in the 2007 Transactions.  Parent selected Morgan Stanley in connection with Parent’s consideration of the Offer based on Morgan Stanley’s qualifications, experience, reputation and its knowledge of the business and affairs of Parent and the Company, resulting in part from Morgan Stanley’s involvement in the 2007 Transactions.  Parent had preliminary discussions with another potential financial advisor but decided to retain Morgan Stanley.

In connection with its engagement, on July 8, 2009, Morgan Stanley provided a written presentation to Parent’s working group, which included certain financial analyses (the “July 8 Presentation”).  The July 8 Presentation was preceded by preliminary financial analyses presented in writing by Morgan Stanley to Parent’s working group on June 3, 2009 (the “June 3 Preliminary Presentation”) and on May 13, 2009 (the “May 13 Preliminary Presentation” and, together with the July 8 Presentation and the June 3 Preliminary Presentation, the “Presentations”).  In addition, Morgan Stanley provided additional analyses to Parent’s working group on May 22, 2009 and June 2, 2009 (the “Additional Analyses”).  The Presentations and the Additional Analyses are together referred to as the “Morgan Stanley Materials”.

Each of the Presentations and the Additional Analyses was prepared for the purpose of assisting Parent in assessing the financial and strategic implications of a potential transaction involving the Company.  The Morgan Stanley Materials were not prepared for the purpose of recommending a fair or appropriate offer price for the Shares.  The analyses presented by Morgan Stanley do not purport to be appraisals or to reflect the prices at which Shares may actually trade.  Parent did not request, and Morgan Stanley did not provide to Parent, any opinion as to the fairness of the Offer Price to Purchaser, Parent, the Company or their stockholders.  Morgan Stanley did not determine or recommend the initial offer price of $1.55 per Share or the Offer Price of $2.25 per Share, which were determined by Purchaser and Parent, and did not determine that any potential offer price or consideration constituted appropriate consideration for the Offer.  The financial analyses performed by Morgan Stanley do not constitute, and should not be viewed as, a recommendation with respect to any matter pertaining to the Offer, including whether any stockholder of the Company should tender Shares into the Offer or take any other action in connection with the Offer or any second-step merger.

The full text of each of the Presentations and the Additional Analyses is attached as an exhibit to the Tender Offer Statement on Schedule TO filed with the SEC in connection with the Offer.  The description of each such document in the Offer to Purchase is qualified in its entirety by reference to such exhibits.  Each such document may be examined, and copies may be obtained from, the SEC in the manner described in “The Tender Offer—Section 8—Certain Information Concerning Parent, Purchaser, Merger Sub and Their Directors and Executive Officers—Available Information.”  Each such document is also available for inspection and copying at the principal executive offices of Parent, located at Maanplein 55, 2516 CK, The Hague, The Netherlands, during regular business hours by any interested stockholder of the Company or a representative of a stockholder of the Company who has been so designated in writing.Holders of Shares should read each such document in its entirety.

In preparing the Presentations, Morgan Stanley, among other things:

●   reviewed certain publicly available financial statements and other business and financial information concerning the Company, including certain equity research analyst reports relating to the Company from the only firm providing research coverage of the Company (and which terminated its coverage of the Company following its report on February 6, 2009);

●   reviewed certain projections for the Company prepared by members of Parent’s working group (the “Parent Projections”) (see “Special Factors—Section 7—Certain Projected Company Financial Information”) and certain other financial and operating data concerning the Company prepared by Parent and provided to Morgan Stanley;

●   reviewed the reported prices and trading activity for the Shares;

●   compared the financial performance of the Company and the prices and trading activity of the Shares with that of certain other publicly-traded alternative carrier companies and their securities;

●   reviewed the financial terms, to the extent publicly available, of certain precedent minority buy-in transactions;

●   participated in discussions with members of Parent’s working group regarding their assessment of the strategic rationale for the acquisition of the publicly held Shares;

●   participated in discussions with members of Parent’s working group regarding the Parent Projections and the past and current business operations, financial condition and prospects of the Company; and

●   considered such other factors and performed such other analyses as Morgan Stanley deemed appropriate.

In addition, in preparing the July 8 Presentation, Morgan Stanley also:

●   reviewed a letter prepared by the Company’s management, setting forth certain unaudited monthly financial and operating results of the Company for the period from January 2009 through May 2009 (the “May 2009 Management Letter”), a copy of which was provided to Morgan Stanley by Parent; and

●   reviewed a 2009 budget for the Company, dated December 12, 2008, prepared by the management of the Company for the board of directors of the Company (the “2009 Plan”), a copy of which was provided to Morgan Stanley by Parent.

In preparing the Additional Analyses, Morgan Stanley considered such factors as Morgan Stanley deemed appropriate for the purpose of each such analysis.

In preparing each of the Presentations and the Additional Analyses, Morgan Stanley assumed and relied upon, without independent verification, the accuracy and completeness of publicly available information and other information supplied to it by Parent.  No information was provided by the Company to Morgan Stanley in connection with the Presentations or the Additional Analyses.  With respect to the financial projections, Morgan Stanley assumed that they had been reasonably prepared on bases reflecting the best currently available estimates and judgments of the future financial performance of the Company.  Morgan Stanley is not a legal, tax or regulatory advisor.  Morgan Stanley is a financial advisor only and relied upon, without independent verification, the assessment of Parent and its legal, tax or regulatory advisors with respect to such matters.  Morgan Stanley did not make an independent valuation or appraisal of the assets or liabilities of the Company, nor was Morgan Stanley provided with any such valuation or appraisal.  Morgan Stanley did not review the tax or accounting treatment of any transaction and its analyses do not cover such tax or accounting treatment, nor did it assume any particular tax or accounting treatment.  Morgan Stanley’s analyses were necessarily based on financial, economic, market and other conditions prevailing as of, and the information made available to Morgan Stanley as of, July 7, 2009, in the case of the July 8 Presentation, May 29, 2009, in the case of the June 3 Preliminary Presentation, May 22, 2009, in the case of the Additional Analyses, and May 11, 2009, in the case of the May 13 Preliminary Presentation.

Morgan Stanley was not provided with, or otherwise in possession of, the June 2009 Scenarios (as defined in “Special Factors—Section 7—Certain Projected Financial Information”) prior to or at the time of any of the Presentations or the Additional Analyses.  Accordingly, none of the Presentations or the Additional Analyses contain an analysis of the June 2009 Scenarios, and the absence of such analysis from such presentations does not constitute an appraisal of the June 2009 Scenarios by Morgan Stanley.  Morgan Stanley was not provided with the June 2009 Scenarios prior to the Company’s filing of the June 2009 Scenarios together with the Amendment No. 2 to the Solicitation/Recommendation Statement on Schedule 14D-9 dated August 4, 2009.  Morgan Stanley has neither revised, nor been requested to revise, the Presentations or the Additional Analyses in light of the June 2009 Scenarios.

Morgan Stanley has neither revised, nor been requested to revise, the Presentations or the Additional Analyses in connection with the increase in the Offer Price from $1.55 per Share to $2.25 per Share.”.

(2)       The following disclosure is hereby added immediately prior to the subheading “Miscellaneous” in “Special Factors—Section 6—Summary of Morgan Stanley Presentations” of the Offer to Purchase:

“The May 13 Preliminary Presentation.  The May 13 Preliminary Presentation included:

●   an analysis of selected alternative carrier companies similar to that included in the July 8 Presentation and summarized in “Special Factors—Section 6—Summary of Morgan Stanley Presentations” under the heading “The July 8 Presentation—Analysis of Selected Alternative Carrier Companies,” focusing on Level 3 Communications, Inc., Global Crossing Limited, Vonage Holdings Corp. and IDT Corporation (Class B shares) and in which Morgan Stanley reviewed and analyzed valuation multiples and trading data available to Morgan Stanley as of May 11, 2009, including the multiple of equity value to the 2008 actual and 2009 estimated levered free cash flow (“LFCF” and, such multiple, the “EV/LFCF Multiple”); the following table sets forth the results of such analysis:

	AV/EBITDA Multiple(1)		EV/LFCF Multiple(1)
	2008A	2009E	2008A	2009E
Company	1.4x	1.6x	4.9x	6.2x
Selected Alternative Carriers (Ranked by Equity Value)
Level 3 Communications, Inc.(2)	7.2x	7.1x	NM	41.6x
Global Crossing Limited(2)	4.7x	3.8x	46.2x	10.5x
Vonage Holdings Corp.	5.8x	3.0x	NM	NM
IDT Corporation (Class B shares)	NM	NM	NM	NM

Source    Company Filings, Wall Street Research, Bloomberg

________________________

Notes:

1. Multiples labeled “not meaningful” (“NM”) when EBITDA or LFCF was zero or negative.

2. Aggregate value for Level 3 and Global Crossing calculated using market value of debt on or about May 11, 2009.

●   an implied share price analysis similar to that included in the July 8 Presentation and summarized in “Special Factors—Section 6—Summary of Morgan Stanley Presentations” under the heading “The July 8 Presentation—Implied Share Price Analysis,” focusing on the same historical trading data metrics, financial results and range of assumed financial results for the Company as identified under such section (other than substituting LFCF for revenue) and in which Morgan Stanley reviewed and analyzed valuation multiples available to Morgan Stanley as of May 11, 2009; the following table sets forth the results of the analysis:

Implied Share Prices

Company Multiple Reference Range	Actual Last 12 Mos. EBITDA		Assumed Next 12 Mos. EBITDA						Actual Last 12 Mos. LFCF(1)		Assumed Next 12 Mos. LFCF(1)
Statistic(2)	$	38.3	$	30.0	$	35.0	$	40.0	$	25.3	$	10.0	$	15.0	$	20.0
Current(3)	$	1.18	$	1.04	$	1.15	$	1.27	$	1.18	$	0.84	$	1.27	$	1.69
3 Month Avg.	$	0.77	$	0.72	$	0.77	$	0.83	$	1.11	$	0.59	$	0.88	$	1.17
6 Month Avg.	$	0.99	$	0.88	$	0.97	$	1.05		NA	$	0.58	$	0.88	$	1.17
Since 9/15/08(4)	$	1.26	$	1.03	$	1.14	$	1.25	$	NA	$	0.76	$	1.14	$	1.53
One Year Avg.	$	1.87	$	1.39	$	1.56	$	1.73	$	NA		NM		NM		NM

Current and Historical Multiples

Company Multiple Reference Range	EBITDA		LFCF(1)
Time Period	Actual Last 12 Mos.	Next 12 mos.	Actual Last 12 Mos.	Next 12 mos.
Current(3)	1.5x	1.6x	3.3x	6.0x
3 Month Avg.	0.7x	0.8x	3.1x	4.2x
6 Month Avg.	1.1x	1.2x	NA	4.2x
Since 9/15/08(4)	1.6x	1.6x	NA	5.4x
One Year Avg.	2.8x	2.4x	NA	NM

________________________

Notes:

1.        Multiples labeled “not available” (“NA”) when LFCF was unavailable for part of period and “not meaningful” (“NM”) when EBITDA or LFCF was zero or negative.

2.        Statistics in $ millions

3.        As of May 11, 2009

4.        Date of Lehman Brothers bankruptcy

●   a discounted cash flow sensitivity analysis similar to that included in the July 8 Presentation and summarized in “Special Factors—Section 6—Summary of Morgan Stanley Presentations” under the heading “The July 8 Presentation—Discounted Cash Flow Sensitivity Analysis,” informed by Morgan Stanley’s review of the same sources of information as identified under such section other than the May 2009 Management Letter and the 2009 Plan (which had not made available to Morgan Stanley as of such time).  The discounted cash flow sensitivity analysis used as a baseline the actual results for the year ended December 31, 2008.  Morgan Stanley assumed a range of terminal perpetuity growth rates from -2.0% to 2.0%, a range of 2008 through 2014 compound annual revenue growth rates of -4.0% to 2.0%, a range of 2009 to 2014 average EBITDA margins of 2.5% to 3.5% and a range of assumed weighted average costs of capital of 14.0% to 16.0%.  This sensitivity analysis resulted in an implied per Share equity value range as of June 30, 2009 of $1.08 to $2.55 for the Company; and

●   a precedent transaction analysis similar to that included in the July 8 Presentation and summarized in “Special Factors—Section 6—Summary of Morgan Stanley Presentations” under the heading “The July 8 Presentation—Precedent Transaction Analysis,” performed on the same twenty-six precedent transactions and in which Morgan Stanley calculated and analyzed the same per share premiums and discounts of the initial and final offer prices as identified under such section; the table below summarizes Morgan Stanley’s findings:

	% Premium to Aggregate Value			% Premium to Price(4)
Precedent Minority Buy-Ins	1 Day			1 Day			1 mo Avg.			3 Mo. Avg.			6 Mo. Avg.			Last 12 Mos. High			Last 12 Mos. Low
Initial
Median		13.2	%		21.5	%		25.8	%		17.4	%		12.7	%		(18.9	%)		62.2	%
Mean		32.3	%		29.0	%		29.9	%		23.7	%		18.1	%		(25.4	%)		157.2	%
High		468.5	%		97.5	%		125.6	%		100.3	%		121.8	%		87.1	%		1749.1	%
Low		(39.0	%)		(7.9	%)		(6.5	%)		(25.2	%)		(51.2	%)		(88.4	%)		20.8	%
Final
Median		17.9	%		32.8	%		37.6	%		30.1	%		25.6	%		(7.0	%)		83.5	%
Mean		45.1	%		40.7	%		41.3	%		40.1	%		36.3	%		(14.0	%)		189.2	%
High		641.1	%		140.0	%		96.5	%		111.4	%		121.8	%		87.1	%		1749.1	%
Low		(67.6	%)		6.7	%		(4.4	%)		(13.6	%)		(9.5	%)		(87.0	%)		20.8	%

Source     Company Filings, Public Filings, Press Releases, FactSet Research Systems

The Additional Analyses.  The Additional Analyses provided to Parent’s working group on May 22, 2009 and June 2, 2009 included precedent transaction analyses similar to the analysis included in the July 8 Presentation and summarized in “Special Factors—Section 6—Summary of Morgan Stanley Presentations” under the heading “The July 8 Presentation—Precedent Transaction Analysis,” performed on the same twenty-six precedent transactions as identified under such section, but in which Morgan Stanley (i) divided the precedent transactions into four quartiles based on where the target’s stock price in a precedent transaction was trading relative to its 52-week trading range (in the case of the analysis provided on May 22, 2009) or three-month trading range (in the case of the analysis provided on June 2, 2009) immediately prior to the announced tender offer and calculated the mean, median, high and low initial and final premiums offered in such quartiles of transactions; (ii) divided the precedent transactions into groups based on whether the target’s stock’s trading price was trading above or below its 52-week average price (in the case of the analysis provided on May 22, 2009) or three-month average price (in the case of the analysis provided on June 2, 2009) and calculated the mean, median, high and low initial and final premiums offered in such groups of transactions; and (iii) divided the precedent transactions into groups based on whether the target’s stock’s trading price was trading at a zero to 30% discount or a greater than 30% discount to its 52-week high trading price (in the case of the analysis provided on May 22, 2009) or three-month high trading price (in the case of the analysis provided on June 2, 2009) and calculated the mean, median, high and low initial and final premiums offered in such groups of transactions.  The Additional Analysesprovided to Parent’s working group on May 22, 2009 also included an analysis of the illustrative pro forma impact on Parent’s share price of a hypothetical sale of Parent’s interest in the Company, assuming an illustrative range of prices per Share from $1.00 to $2.00.”

Item 16.                      Exhibits

(1)       The following exhibits are filed herewith:

(c)(iii)               Presentation of Morgan Stanley dated May 13, 2009

(c)(iv)               Morgan Stanley Discussion Materials dated May 22, 2009

(c)(v)                Morgan Stanley Discussion Materials dated June 2, 2009

SIGNATURES

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

KPN BV
by KONINKLIJKE KPN N.V., its sole director
By:	/s/ Michel Hoekstra
	Name:    Michel Hoekstra
	Title:      Corporate Legal Officer & Attorney-in-Fact
	Date:     October 5, 2009

KONINKLIJKE KPN N.V.
By:	/s/ Michel Hoekstra
	Name:    Michel Hoekstra
	Title:      Corporate Legal Officer & Attorney-in-Fact
	Date:     October 5, 2009

CELTIC ICS INC.
By:	/s/ Michel Hoekstra
	Name:    Michel Hoekstra
	Title:      Secretary
	Date:     October 5, 2009

EXHIBIT INDEX

Exhibit No.                      Description

(a)(1)(i)	Offer to Purchase dated July 28, 2009*
(a)(1)(ii)	Letter of Transmittal*
(a)(1)(iii)	Notice of Guaranteed Delivery*
(a)(1)(iv)	Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees*
(a)(1)(v)	Letter to Clients for Use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees*
(a)(1)(vi)	Summary Advertisement published in the Wall Street Journal on July 28, 2009*
(a)(1)(vii)	Letter dated July 12, 2009 to the board of directors of iBasis, Inc. (incorporated by reference to Exhibit D to the Schedule 13D amendment filed by Purchaser, Parent and Merger Sub on July 13, 2009)*
(a)(1)(viii)	Press release issued by Parent on July 13, 2009 (incorporated by reference to Exhibit E to the Schedule 13D amendment filed by Purchaser, Parent and Merger Sub on July 13, 2009)*
(a)(1)(ix)	Press release issued by Parent on August 6, 2009*
(a)(1)(x)	Press release issued by Parent on August 13, 2009*
(a)(1)(xi)	Press release issued by Parent on August 21, 2009*
(a)(1)(xii)	Press release issued by Parent on October 5, 2009
(a)(5)(i)	Complaint filed by the Company on August 3, 2009 in action captioned as iBasis, Inc. v. Koninklijke KPN N.V., et al., Civil Action No. 4774-VCS, in the Court of Chancery of the State of Delaware (incorporated by reference to Exhibit (a)(9) to Amendment No. 2 to the Company’s Solicitation/Recommendation Statement on Schedule 14D-9 filed on August 4, 2009)*
(a)(5)(ii)	Answer and Counterclaims filed by Parent on August 13, 2009 in action captioned as iBasis, Inc. v. Koninklijke KPN N.V., et al., Civil Action No. 4774-VCS, in the Court of Chancery of the State of Delaware*
(a)(5)(iii)	Complaint filed by the Company on August 18, 2009 in action captioned as iBasis, Inc. v. Koninklijke KPN N.V., et al., No. 09 CV 7288, in the United States District Court for the Southern District of New York (incorporated by reference to Exhibit (a)(18) to Amendment No. 8 to the Company’s Solicitation/Recommendation Statement on Schedule 14D-9 filed on August 18, 2009)*
(b)	Euro 1,500,000,000 Syndicated Revolving Credit Agreement dated as of August 16, 2006 among Parent, ABN AMRO Bank N.V., as facility agent, an original lender, a mandated lead arranger, euro swingline agent and dollar swingline agent, and the other financial institutions party thereto (incorporated by reference to Exhibit C to the Schedule 13D amendment filed by Purchaser, Parent and Merger Sub on July 13, 2009)*
(c)(i)	Presentation of Morgan Stanley dated July 8, 2009*
(c)(ii)	Presentation of Morgan Stanley dated June 3, 2009*
(c)(iii)	Presentation of Morgan Stanley dated May 13, 2009
(c)(iv)	Morgan Stanley Discussion Materials dated May 22, 2009
(c)(v)	Morgan Stanley Discussion Materials dated June 2, 2009
(d)(i)	Share Purchase and Sale Agreement dated as of June 21, 2006 between the Company and Purchaser (incorporated by reference to Exhibit 2 to the Schedule 13D amendment filed by Purchaser and Parent on October 11, 2007)*
(d)(ii)	Amendment No. 1 dated as of December 18, 2006 to Share Purchase and Sale Agreement between the Company and Purchaser (incorporated by reference to Exhibit 3 to the Schedule 13D amendment filed by Purchaser and Parent on October 11, 2007)*
(d)(iii)	Amendment No. 2 dated as of April 26, 2007 to Share Purchase and Sale Agreement between the Company and Purchaser (incorporated by reference to Exhibit 4 to the Schedule 13D amendment filed by Purchaser and Parent on October 11, 2007)*
(d)(iv)	Amendment No. 3 dated as of August 1, 2007 to Share Purchase and Sale Agreement between the Company and Purchaser (incorporated by reference to Exhibit 5 to the Schedule 13D amendment filed by Purchaser and Parent on October 11, 2007)*
(d)(v)	Registration Rights Agreement dated as of October 1, 2007 between the Company and Purchaser (incorporated by reference to Exhibit 4.01 to the Current Report on Form 8-K filed by the Company on October 5, 2007)*
(d)(vi)	Second Amended and Restated By-laws of the Company (incorporated by reference to Exhibit 3.01 to the Current Report on Form 8-K filed by the Company on October 5, 2007)*
(d)(vii)	Amendment No. 1 to the Second Amended and Restated By-laws of the Company (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed by the Company on November 14, 2007)*
(f)	Section 262 of the General Corporation Law of the State of Delaware (included as Schedule II to the Offer to Purchase)*
(g)	None
(h)	None
(i)	Power of Attorney dated as of July 11, 2009*

* Previously filed

EX-99.(A)(1)(XII)

Exhibit (a)(1)(xii)

	Press Release
KPN Announces Increase in Tender Offer Price for iBasis to $2.25 Per Share	Date 5 October 2009
	Number 070pe

THE HAGUE, NETHERLANDS – October 5, 2009 - KPN B.V. (“KPN”) today announced an increase in the purchase price to be paid in its cash tender offer for all of the outstanding shares of common stock of iBasis, Inc. (“iBasis”) (Nasdaq: IBAS) not otherwise held by KPN to $2.25 per share. All other terms and conditions of the tender offer remain unchanged.

KPN believes that the increased purchase price is a full and fair price for the shares held by iBasis' public stockholders.  The new purchase price of $2.25 per share presents a premium of 45.2% over KPN’s previous offer of $1.55 per share, 73.1% over the closing price of the shares on July 10, 2009 (the last trading day prior to the announcement of the tender offer) and 93.9% over the average closing price during the three months prior to the announcement of the tender offer. KPN currently owns a stake of approximately 56% in iBasis. The minority stake of approximately 44% not owned by KPN would be valued at $70.0 million at the $2.25 per share offer price.

KPN continues to believe that this transaction represents a unique opportunity for iBasis shareholders to realize liquidity.  KPN also believes that private ownership will assist iBasis in reaching its operational and strategic objectives, given the current challenging economic and competitive environment facing iBasis.

KPN continues to pursue its counterclaims which seek to invalidate the “poison pill” purportedly adopted by iBasis. KPN believes that iBasis’ “poison pill” is a clear violation of iBasis’ own bylaws and the terms of the agreement pursuant to which KPN acquired its interest in the company. The Delaware Court of Chancery will hold a hearing on these claims on October 8 and October 9, 2009.

About KPN’s Tender Offer

On July 28, 2009, KPN commenced a cash tender offer for $1.55 per share for all of the outstanding shares of common stock of iBasis not already owned by KPN, subject to the terms and conditions set forth in the Offer to Purchase dated as of July 28, 2009, as amended and supplemented (the “Offer to Purchase”).  The current offer to the public minority shareholders of iBasis of $2.25 per share in cash is without interest and less any required withholding tax, subject to the terms and conditions set forth in the Offer to Purchase. The offer was previously extended on August 21, 2009, and is scheduled to expire at midnight, New York City time, on Friday, October 23, 2009, unless further extended in the manner set forth in the Offer to Purchase.

For further information:
Corporate Communicatie	Investor Relations
Mediavoorlichting
Tel: (070) 446 63 00	Tel: (070) 446 09 86
Fax: (070) 446 63 10	Fax: (070) 446 05 93
E-mail: press@kpn.com	E-mail: ir@kpn.com

	Accompanies press release
	dated 5 October 2009
	Number 070pe

IMPORTANT INFORMATION

This press release is for informational purposes only and does not constitute an offer to purchase or a solicitation of an offer to sell iBasis stock.  The tender offer is being made pursuant to a Tender Offer Statement and Rule 13e-3 Transaction Statement on Schedule TO (including the Offer to Purchase, a related letter of transmittal and other offer materials) filed by KPN with the SEC on July 28, 2009, as amended and supplemented (the “Schedule TO”).  Shareholders of iBasis are advised to carefully read the Schedule TO, the Offer to Purchase and any other documents relating to the tender offer that are filed with the SEC, as each may be amended and

supplemented, because they contain important information that iBasis shareholders should consider before any decision is made with respect to the Offer. Shareholders of iBasis can obtain copies of these documents for free at the SEC’s website at www.sec.gov or by calling Okapi Partners LLC, the Information Agent for the Offer, at
1-877-869-0171.

2 of 2

EX-99.(C)(III)

Exhibit (c)(iii)

CONFIDENTIAL WORKING DRAFT - FOR DISCUSSION PURPOSES ONLY Project Celtic Discussion Materials 13 May 2009 Morgan Stanley

PROJECT CELTIC CONFIDENTIAL WORKING DRAFT - FOR DISCUSSION PURPOSES ONLY Table of Contents Section 1  Situation Overview Section 2 Preliminary Valuation Perspectives Section 3 Review of Alternatives Tab A Preserve Existing Structure Tab B Buy In Public Minority

Tab C Exit / Sell Celtic Appendix A Supplemental Materials Appendix B Celtic Executive Compensation Review Morgan Stanley

PROJECT CELTIC CONFIDENTIAL WORKING DRAFT - FOR DISCUSSION PURPOSES ONLY Section 1 Situation Overview Morgan Stanley

PROJECT CELTIC CONFIDENTIAL WORKING DRAFT - FOR DISCUSSION PURPOSES ONLY Situation Overview Overview of Celtic Business Overview US based carrier of international voice traffic, founded in 1996 Acquired KPN Global Carrier Services in October 2007 and KPN became majority shareholder of combined company Network spans more than 100 countries and delivers - 2Bn minutes of international call termination every month Network operations centers on three continents Operations primarily consist of a wholesale trading business, which connects buyers and sellers of international telecommunications services, and calling cards Customers include KPN and subsidiaries, AT&T, Verizon, Vodafone, China Mobile, China Unicom, IDT, Qwest, Skype, Telecom Italia, Telefonica and Yahoo Source Celtic Filings, Celtic Website, Wall Street Research Corporate Timeline Founded in 1996, headquartered in Burlington, MA IPO priced November 10, 1999 at $16 per share Purchased PriceInteractive for approximately $100MM in 2001 Conducted private placement of $31.5MM in 2004 to increase working capital and reduce debt Announced transaction in June 2006 with KPN in which KPN acquired majority stake in Celtic and Celtic acquired KPN Global Carrier Services (closed October 2007) Acquisition of certain assets of TDC for approximately $11MM closed April 2008 Source Celtic Website, Capital IQ, Press Releases Historic Financials ($MM, except where noted) Pro Forma2007A2008A1Q 2009ARevenue$1,390.6$1,323.6$255.5% Growth (1)(4.8%)(21.4%)Gross Profit$142.3$136.3$31.0% Margin10.2%10.3%12.1%Adjusted EBITDA (2)(3)$49.7$39.8$9.1% Margin3.6%3.0%3.6%Net Income (2)$3.9($16.3)($1.7)% Margin0.3%(1.2%)(0.7%) Source Celtic Investor Presentation May 2009 (Publicly Available), Celtic Filings Business Mix 2008A (%) By Product By Geography Retail 7% Outsourcing 18% Trading 75% Europe 43%Latin America 28%Middle East & Africa 19% Asia Pacific 8% North America 2% Source Celtic 10K (12/31/08) Notes 1.1Q 2009A revenue growth is quarter-over-quarter (1Q 2009 vs. 1Q 2008) 2.Celtic Management exclude the following expenses in calculating Adjusted EBITDA: stock-based compensation, merger related expenses, acquisition activity related expenses, option analysis expense, retroactive regulatory fees & other, and purchase accounting adjustments; however, Adjusted EBITDA above includes stock-based compensation as an expense 3.Excludes goodwill impairments (tax expense has not been adjusted in 2008) Morgan Stanley

PROJECT CELTIC CONFIDENTIAL WORKING DRAFT - FOR DISCUSSION PURPOSES ONLY Review of Multinational Carrier Market 2007 Traffic Volume Traffic Volume Carried by Selected Multinational Carriers –Minutes (Bn) Verizon Celtic Tata DT Telecom Italia Orange IDT Belgacom BT Sprint C&W Telmex Other Source Celtic Investor Presentation May 2009 (Publicly Available) TeleGeography Morgan Stanley

PROJECT CELTIC CONFIDENTIAL WORKING DRAFT - FOR DISCUSSION PURPOSES ONLY Review of Celtic Operating Performance Key Performance Metrics Since 2007 (1) Minutes of Use (MM) 7,000 5,600 4,200 2,800 1,400 0 425 587 4,541 1Q 2007 467 640 4,749 2Q 2007 512 738 4,972 3Q 2007 500 622 4,888 4Q2007 510 523 4,776, 1Q 2008  4.6% 698 543 4,940 2Q 2008 5.5% 713 677 4,456 3Q 2008 (6.0%) 658 614 4,419 4Q 2008 (5.3%) 641 571 3,925 1Q 2009  (11.6%) Total YoY Growth: Average Revenue Per Minute (ARPM) ($) 12.00 10.00 8.00 6.00 4.00 2.00 0.00 1Q 2007 5.66 4.34 9.99 5.85 2Q 2007 5.69 4.35 10.64 5.94 3Q 2007 5.68 4.34 10.37 5.91 4Q 2007 5.59 4.05 10.39 5.83 1Q 2008 (4.4%) 5.32 3.93 9.85 5.59 2Q 2008 (1.7%) 5.51 3.84 9.72 5.84 3Q 2008 (2.2%) 5.34 4.35 9.89 5.78  4Q 2008 5.00 4.18 8.12 5.27 (9.6%) 1Q 2009 (11.1%) 4.67 4.24 7.48 4.97 YoY ARPM Growth: Revenue (MM) 375 300 225 150 75 0 1Q 2007 257 26 43 2Q 2007 270 28 50 3Q 2007 282 32 53 4Q 2007 274 25 52 1Q 2008 254 21 50 0.0% 2Q 2008 272 21 68 3.8% 3Q 2008 238 29 71 (8.0%) 4Q 2008 221 26 53 (14.5%) 1Q 2009 183 24 48 (21.4%) Trading Retail Outsourced Total Note 1 Celtic Investor Presentation May 2009 (Publicly Available) Key performance metrics have deteriorated during last several quarters driven by price and volume declines Growth Trend 2Q 2008 to 1Q 2009 % Growth Minutes of Use Trading (20.5%) Retail 5.2% Outsourced (8.2%) Total (16.9%) ARPM Trading (15.2%) Retail 10.4% Outsourced (23.0%) Total (14.9%) Revenue Trading (32.7%) Retail15.8% Outsourced (29.2%) Total (29.2%) First quarter that reflects TDC acquisition Morgan Stanley

PROJECT CELTIC CONFIDENTIAL WORKING DRAFT FOR DISCUSSION PURPOSES ONLY Review of Celtic Operating Performance (cont’d) Summary Financials Since 2007 Celtic Summary Financials (1) Pro Forma Pro Forma Pro Forma 1Q 2007 2Q 2007 3Q 2007 4Q 2007 1Q 2008 2Q 2008 3Q 2008 4Q 2008 1Q 2009 Revenue $324.8 $347.7 $367.5 $350.6 $324.9 $360.8 $338.0 $299.8 $255.5% Growth (YoY) 0.0% 3.8% (8.0%) (14.5%) (21.4%) Gross Profit 32.2 36.9 33.9 39.3 35.4 37.5 32.4 31.0 31.0% Revenue 9.9% 10.6% 9.2% 11.2% 10.9% 10.4% 9.6% 10.3% 12.1% % Growth (YoY) 9.9% 1.6% (4.4%) (21.1%) (12.4%) Adjusted EBITDA(2)(3) 12.2 14.0 9.6 13.9 10.6 12.0 9.7 7.5 9.1% Revenue 3.8% 4.0% 2.6% 4.0% 3.3% 3.3% 2.9% 2.5% 3.6% % Growth (YoY) (13.1%) (14.3%) 1.0% (46.0%) (14.2%) Operating Profit(3) 3.5 6.1 1.4 0.3 1.7 3.5 1.2 (0.3) 0.6% Revenue 1.1% 1.8% 0.4% 0.1% 0.5% 1.0% 0.4% (0.1%) 0.2% % Growth (YoY) (51.4%) (42.6%) (14.3%) NM (64.7%) Net Income(3) $1.5 $3.7 $0.7 ($2.0) ($2.1) $0.0 $3.3 ($17.5) ($1.7) % Revenue 0.5% 1.1% 0.2% (0.6%) (0.6%) 0.0% 1.0% (5.8%) (0.7%) % Growth (YoY) NM (100.0%) 371.4% NM NM Source Celtic Investor Presentation May 2009 (Publicly Available) Notes 1.1Q 2007 to 3Q 2007 reflect the pro forma combined results of Celtic and KGCS (as per May 2009 Celtic Investor Presentation) 2.Celtic Management exclude the following expenses in calculating Adjusted EBITDA: stock-based compensation, merger related expenses, acquisition activity related expenses, option analysis expense, retroactive regulatory fees & other, and purchase accounting adjustments; however, Adjusted EBITDA above includes stock-based compensation as an expense 3.Excludes goodwill impairments (tax expense has not been adjusted in 2008) Celtic completed its acquisition of TDC’s non-Nordic international wholesale voice business for ~$11MM in cash on 4/1/08 Management estimates the acquisition added ~$80MM of annual revenue Jefferies Research estimates an EBITDA margin of ~3.0% TDC results included from 2Q 2008 onwards Prior periods are not pro forma for the acquisition Morgan Stanley

CONFIDENTIAL WORKING DRAFT FOR DISCUSSION PURPOSES ONLY Project Celtic Declines in analyst estimates since early / mid 2008 have followed the trends in Celtic’s underlying business Situation Overview Evolution of Celtic Analyst Estimates Based on Jefferies Research (1) 2008 Revenue Estimates ($MM) 1,750, 1,500, 1250, 1,000 1,388 1,421  1,362 1,324 (4.7%) Date of Report 4/29/08 7/23/08 10/22/08 2/6/09 2009 Revenue Estimates ($MM) 1,750, 1,500, 1250, 1,000 1,535 1,578 1,400 1,257 (18.1%) Date of Report 4/29/08 7/23/08 10/22/08 2/6/09 2010 Revenue Estimates ($MM) 1,750, 1,500, 1250, 1,000 1,674 1,721 1,411 1,275  (23.8%) Date of Report 4/29/08 7/23/08 10/22/08 2/6/09 2008 EBITDA Estimates (2) ($MM) 0 25 50 75 52 50 42 40 (23.6%) Date of Report 4/29/08 7/23/08 10/22/08 2/6/09 2009 EBITDA Estimates (2) ($MM) 0 25 50 75 64 62 45 35 (45.3%) Date of Report 4/29/08 7/23/08 10/23/08 2/6/09 2010 EBITDA Estimates (2) ($MM) 0 25 50 75 70 68 46 38 (45.9%) Date of Report 4/29/08 7/23/08 10/22/08 2/6/09 Source Jefferies Research Notes 1.  Percentages represent change between 2/6/09 vs. 4/29/08 estimates 2.  EBITDA post stock-based compensation expense Morgan Stanley

CONFIDENTIAL WORKING DRAFT FOR DISCUSSION PURPOSES ONLY Project Celtic Comparable benchmarking challenging given the lack of public disclosure on the business segments relevant to Celtic 2008A -2011E CAGRs Revenue EBITDA Celtic (0.9%) (1.2%) IDT NA NA Vonage 0.4% 33.6% Level 3 (3.5%) 3.7% Global Crossing 2.4% 17.2% SITUATION OVERVIEW Benchmarking Analysis Revenue Growth 2007A –2011E (%) 40.0 20.0 0.0 (20.0) 7.2 (8.4) 36.3 (5.5) 7.5 (4.8) (5.3) 8.7 0.7 9.5 (5.0) (2.6) (1.4) (10.6) (1.3) 1.5 NA 0.8 (1.0) 4.2 1.1 NA 1.8 1.8 4.4 2007A 2008A 2009E 2010E 2011E EBITDA Margin(1) 2007A –2011E (%) 30.0 25.0 20.0 15.0 10.0 5.0 0.0 (5.0) (10.0) 3.6 (3.3) (6.5) 17.1 4.2 3.0 (3.3) 4.7 21.2 10.5 2.8 (1.2) 9.4 24.2 13.0 3.0 NA 9.5 25.4 14.6 3.0 NA 11.1 26.2 15.8 2007A 2008A 2009E 2010E 2011E LFCF Margin (2) 2007A 2011E (%) 10.0 5.0 0.0 (5.0) (10.0) (15.0) (20.0) NA (7.6) (14.0) (9.4) (10.6) 1.3 (5.8) (4.1) (0.8) 0.4 1.1 (1.7) 0.0 1.2 1.9 1.1 NA 0.1 2.3 1.3 0.7 NA 2.0 2.6 2.4 2007A 2008A 2009E 2010E 2011E Celtic(3) IDT Vonage Level 3 Global Crossing(4) Source Public Filings (2008A), Wall Street Research (2009E 2012E) Notes 1. EBITDA (includes stock-based compensation expense); Vonage stock-based compensation estimated holding 2008 expense as a percent of revenue constant 2. LFCF defined as Cash Flow from Operations – Capex; IDT LFCF defined as EBITDA (less non-cash compensation) less cash interest expense, capex, minority interests, and tax expense in the projected period 3. Celtic projected LFCF based on latest report published by Jefferies and assumes $22MM of debt each year at a floating rate of LIBOR + 275bps and an interest rate on cash balances of 1.0%. Pro Forma LFCF from 2007 not available 4. Revenue growth in 2008A based on pro forma 2007 revenue for the acquisition of Impsat as disclosed in Global Crossing’s 2008 10K Morgan Stanley

CONFIDENTIAL WORKING DRAFT FOR DISCUSSION PURPOSES ONLY Project Celtic Beat Consensus EPS Estimate Met Consensus EPS Estimate Missed Consensus EPS Estimate Current Valuation  ($MM, except where noted) Share Price (1)$1.18 % Disc. to LTM High(73.4%) % Prem. to LTM Low131.4% FDSO71.2 Equity Value$84.0 Plus: Debt22.0 Less: Cash (48.6) Aggregate Value $57.5 SITUATION OVERVIEW Celtic Share Price Evolution Since Announcement of KPN Transaction Celtic Closing Share Price Price ($) Volume (MM) $15 $12 $9 $6 $3 $0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Volume Price 21-Jun-06 Celtic announces KPN transaction 10-Nov-06 Celtic announces delay in 10Q filing 18-Dec-06 Celtic extends close date of KPN transaction from 31-Dec-06 to 30-Apr-07 23-Mar-07 Celtic announces delay in 2006 10K filing 27-Apr-07 Celtic extends close date of KPN transaction from 30-Apr-07 to 31-Oct-07 3-May-07 Celtic announces delay in 1Q 2007 10Q filing and only details selected results 1-Oct-07 Celtic completes KPN transaction 14-Jan-08 Celtic announces TDC transaction 1-Apr-08 Celtic completes TDC transaction Jun-06 Dec-06 May-07 Nov-07 May-08 Oct-08 May-09 Source FactSet Note1.As of 5/11/09 Morgan Stanley

CONFIDENTIAL WORKING DRAFT FOR DISCUSSION PURPOSES ONLY Project Celtic Price Performance Overview L2Y LTM L6M L3M Celtic (88.2%) (62.9%) (45.9%) 43.9% Level 3 (79.2%) (63.3%) 30.7% 35.3% Global Crossing (62.7%) (52.3%) (0.7%) 46.9% Vonage (86.1%) (74.1%) (44.8%) 23.1% IDT (1) (94.6%) (82.4%) (11.1%) 65.8% S&P 500 (39.6%) (35.2%) 1.1% 9.1% SITUATION OVERVIEW Relative Share Price Performance Since Announcement of KPN Transaction Indexed Share Price 0 25 50 75 100 125 150 175  21-Jun-06 13-Oct-06 6-Feb-07 31-May-07 24-Sep-07 16-Jan-08 9-May-08 2-Sep-08 25-Dec-08 11-May-09 IDT: (96%) VG: (95%) Celtic: (87%) LVLT: (72%) GLBC: (56%) S&P: (27%) Celtic Level 3 Global Crossing Vonage IDT(1) S&P 500 Source FactSet Note1. Denotes price performance for Class B shares Morgan Stanley

CONFIDENTIAL WORKING DRAFT FOR DISCUSSION PURPOSES ONLY Project Celtic SITUATION OVERVIEW Price / Volume Distribution Analysis Historical Price / Volume Distribution (1) $0.00 $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 $10.75 $8.67 $10.65 $4.90 $5.70 $3.54 $4.26 $3.05  $4.32 $3.06 $3.49 $1.20 $1.64 $0.54 $1.25 $0.70  Current Stock Price: $1.18 3Q 2007 4Q 2007 1Q 2008 2Q 2008 3Q 2008 4Q 2008 1Q 2009 2Q 2009TD Volume Traded (MMs):12.1 14.6 8.9 9.7 6.9 6.1 4.3 2.1  Source FactSet, Thomson Financial Group <25% 25%-50% 50%-75% 75%-100% Total Volume as % of Public Float: (2) 48% 58% 35% 39% 28% 24% 17% 8% Notes 1. As of 5/11/09 2. Public float per Thomson Financial Group of 25.5 million shares; excludes shares held by KPN and various insiders Morgan Stanley

CONFIDENTIAL WORKING DRAFT FOR DISCUSSION PURPOSES ONLY Project Celtic Top institutional shareholders of Celtic have been long-term holders and have strong value orientation SITUATION OVERVIEW Top 30 Current Active Institutional Investors (1) Institutional Investor Equity Assets ($Bn) Style City Value of Holdings ($MM)% TSO % TSO Excl. KPN Illustrative Cost Per Share Position In Shares (000s)4Q 2008 3Q 2008 2Q 2008 1Q 2008 4Q 2007 3Q 2007 2Q 2007 1Q 2007 KPN NV (Koninklijke) 0.2 Other The Hague 56.6 56.3 N/M N/A 40,121.1 40,121.1 40,121.1 40,121.1 40,121.1 Millennium Management, L.L.C. 6.5 Core Value New York 3.9 3.8 8.8 $6.17 2,737.0 2,493.9 2,996.2 2,943.7 2,391.8 1,772.7 1,522.3 1,319.5 Lampe, Conway & Co., LLC 0.1 Hedge Fund New York 3.0 3.0 6.8 $6.98 2,106.8 2,371.2 2,389.4 2,068.8 2,026.7 1,927.4 1,475.4 2,748.3 GMT Capital Corp.2.0 GARP Atlanta 2.3 2.3 5.2 $7.24 1,606.4 2,317.2 3,009.7 2,782.3 2,499.5 2,102.4 1,522.3 1,522.3 Paradigm Capital Management, Inc.1.2 Core Value Albany 1.8 1.8 4.0 $3.97 1,252.1 1,266.2 1,292.2 1,276.8 1,266.3 1,336.7 1,514.1 1,535.6 Dimensional Fund Advisors, LP 69.1 Deep Value Santa Monica 1.4 1.4 3.1 $5.54 979.2 943.8 784.8 809.5 786.1 715.7 713.8 664.9 Bruce & Company, Inc. 0.1 Deep Value Chicago 1.2 1.2 2.7 N/A 840.6 840.6 840.6 840.6 840.6 840.6 927.5 930.5 Renaissance Technologies Corp. 27.6 Hedge Fund New York 0.9 0.9 2.0 $10.00 628.3 672.5 749.9 849.4 934.3 942.9 773.6 409.0 New Generation Advisors, Inc. 0.1 Deep Value Boston 0.5 0.5 1.1 N/A 333.1 334.0 334.0 334.0 334.0 404.5 404.5 404.5 TIAA-CREF 111.2 GARP New York 0.3 0.3 0.7 $10.03 219.6 218.1 216.2 227.1 285.6 273.3 234.3 State Teachers Retirement System of Ohio 18.4Core Value Columbus 0.3 0.3 0.7 $3.49 209.2 43.7 43.8 14.3 14.7 32.5 Spark, L.P. 0.3 Growth New York 0.3 0.3 0.6 $6.16 181.6 155.9 138.0 42.6 117.3 19.9 181.0 111.5 LSV Asset Management 25.8 Deep Value Chicago 0.2 0.2 0.4 $3.65 127.4 171.0 Goldman Sachs Asset Management (US) 73.6 Core Growth New York 0.1 0.1 0.3 $2.81 97.4 - - 0.0 13.8 13.7 PNC Wealth Management 21.9 Core Growth Philadelphia 0.1 0.1 0.3 $2.56 95.5 25.5 25.5 25.5 Schroder Investment Management Ltd. (SIM) 48.7 Core Growth London 0.1 0.1 0.3 $3.58 85.2 85.2 74.6 Alliance Bernstein L.P. 192.5 Core Growth New York 0.1 0.1 0.3 $1.84 84.2 Ohio Public Employees Retirement System 19.2 GARP Columbus 0.1 0.1 0.2 $7.39 68.2 68.2 42.6 38.4 38.4 38.4 35.5 Northern Trust Global Investments 42.2 Core Growth Chicago0.1 0.1 0.2 $5.74 51.6 54.1 36.2 36.7 34.8 36.0 35.3 30.2 D. E. Shaw & Co., L.P. 18.0 Hedge Fund New York 0.1 0.1 0.1 $6.06 45.1 64.7 17.8 12.5 27.0 32.5 13.5 Bainco International Investors, LLC 0.2 Growth Wellesley0.1 0.1 0.1 $1.84 43.3 T. Rowe Price Associates, Inc.169.9 GARP Baltimore 0.1 0.1 0.1 N/A 40.0 40.0 103.3 103.3 103.3 103.3 103.3 103.3 BlackRock Investment Management, LLC 57.0 Deep Value Plainsboro 0.1 0.1 0.1 $9.92 35.9 35.9 35.9 48.3 46.2 43.6 43.4 0.2 JMG Capital Management, LLC0.3 Hedge Fund Los Angeles0.0 0.0 0.1 $1.84 31.8 General Motors Asset Management 2.8 Growth New York 0.0 0.0 0.1 $1.84 29.8 Numeric Investors LLC 7.0 Core Value Boston 0.0 0.0 0.1 $9.82 28.8 40.7 40.7 472.2 903.0 865.2 639.0 280.4 AIG Investments 13.4 GARP New York 0.0 0.0 0.1 $10.18 25.1 28.5 28.5 28.5 30.0 28.9 27.6 New York Life Investment Management, LLC 9.8 Core Growth New York 0.0 0.0 0.1 $3.42 24.6 - - 0.1 4.7 6.2 SGAM Alternative Investments S.A. 3.8 Hedge Fund Courbevoie 0.0 0.0 0.1 $6.73 22.7 22.7 22.7 22.7 22.7 MFC Global Investment Management 18.2 GARP Toronto 0.0 0.0 0.1 $7.74 21.7 17.9 17.9 15.1 14.0 14.4 14.2 Total 73.6 73.2 38.7 52,173.3 52,432.5 53,361.6 53,113.3 52,855.8 11,518.3 10,212.9 10,060.2 Volume Weighted Average Price by Quarter $1.84 $3.65 $3.57 $4.56 $6.73 $9.67 $10.37 $9.61 Source Thomson Ownership, FactSet Buyer in the Period Seller in the Period Notes 1.As of 4Q 2008, excludes index funds and broker-dealers 2.KPN ownership timing (4Q 2007) based on transaction close as of 10/1/07 Celtic Shareholder Analysis Morgan Stanle

CONFIDENTIAL WORKING DRAFT – FOR DISCUSSION PURPOSES ONLY Project Celtic Top Buyers and Sellers of Celtic Stock SITUATION OVERVIEW Top 10 Institutional Sellers (Last 4 Quarters) (1) Institutional Investor Equity Assets ($Bn) Style Current Position ($MM) % of TSO Change (000s Shares) Position Shares (000s) 4Q 2008 3Q 2008 2Q 2008 1Q 2008 4Q 2007 Millennium Management, L.L.C. 6.5 Core Value 3.9 3.8 345.2 2,737.0 2,493.9 2,996.2 2,943.7 2,391.8 State Teachers Retirement System of Ohio 18.4 Core Value 0.3 0.3 194.5 209.2 43.7 43.8 14.3 14.7 Dimensional Fund Advisors, LP 69.1 Deep Value 1.4 1.4 193.1 979.2 943.8 784.8 809.5 786.1 LSV Asset Management 25.8 Deep Value 0.2 0.2 127.4 127.4 171.0 PNC Wealth Management 21.9 Core Growth 0.1 0.1 95.5 95.5 25.5 25.5 25.5 – Schroder Investment Management Ltd. (SIM) 48.7 Core Growth 0.1 0.1 85.2 85.2 85.2 74.6 AllianceBernstein L.P. 192.5 Core Growth 0.1 0.1 84.2 84.2 - Goldman Sachs Asset Management (US) 73.6 Core Growth 0.1 0.1 83.6 97.4 0.0 13.8 Lampe, Conway & Co., LLC 0.1 Hedge Fund 3.0 3.0 80.0 2,106.8 2,371.2 2,389.4 2,068.8 2,026.7 Spark, L.P. 0.3 Growth 0.3 0.3 64.3181.6 155.9 138.0 42.6 117.3 Total 9.5 9.4 1,353.0 6,703.4 6,290.2 6,452.3 5,904.4 5,350.4 Volume Weighted Average Price by Quarter $1.84 $3.65 $3.57 $4.56 $6.73 Top 10 Institutional Sellers (Last 4 Quarters) (1) Institutional Investor Equity Assets ($Bn) Style Current Position ($MM) % of TSO Change (000s Shares) Position Shares (000s) 4Q 2008 3Q 2008 2Q 2008 1Q 2008 4Q 2007 GMT Capital Corp.2.0 GARP 2.3 2.3 (893.1) 1,606.4 2,317.2 3,009.7 2,782.3 2,499.5 Numeric Investors LLC 7.0 Core Value 0.0 0.0 (874.2) 28.8 40.7 40.7 472.2 903.0 Sterling Johnston Capital Management, L.P. 0.5 Aggres. Gr. 0.0 0.0 (500.3) 314.9 500.3 Citadel Investment Group, L.L.C. 4.4 Hedge Fund 0.0 0.0 (317.2) - 66.7 185.1 136.7 317.2 Renaissance Technologies Corp. 27.6 Hedge Fund 0.9 0.9 (306.0) 628.3 672.5 749.9 849.4 934.3 O'Shaughnessy Asset Management, LLC 4.4 GARP 0.0 0.0 (266.2) 0.2 0.1 0.7 19.4 266.4 Zebra Capital Management, L.L.C.0.2 Hedge Fund 0.0 0.0 (147.7) - 4.4 67.7 129.0 147.7 Highbridge Capital Management, LLC 4.0 Hedge Fund 0.0 0.0 (144.9) 88.0 144.9 Wellington Management Company, LLP 205.8 Core Value 0.0 0.0 (134.6) 15.9 134.6 AXA Rosenberg Investment Management LLC 25.3 Core Value 0.0 0.0 (114.6) - 28.8 37.9 131.2 114.6 Total 3.2 3.2 (3,698.9) 2,263.6 3,130.4 4,091.7 4,939.1 5,962.5 Volume Weighted Average Price by Quarter $1.84 $3.65 $3.57 $4.56 $6.73 Source Thomson Ownership, FactSet Seller in the Period Buyer in the Period Note 1. As of 4Q 2008, excludes index funds and broker-dealers Morgan Stanley

CONFIDENTIAL WORKING DRAFT – FOR DISCUSSION PURPOSES ONLY Project Celtic Section 2 Preliminary Valuation Perspectives Morgan Stanley

CONFIDENTIAL WORKING DRAFT FOR DISCUSSION PURPOSES ONLY Project Celtic Projected CAGRs Preliminary Alt. Scenario Jefferies Scenario (1) 2008A - 2014E Revenue (3.2%) 0.1% EBITDA (4.4%) (0.6%) LFCF (3.6%) (16.4%) 2009E - 2014E Revenue 1.4% 1.1% EBITDA (4.8%) 1.8% LFCF (10.5%) (15.5%)  LFCF Bridge ($MM, except where noted) Preliminary Alt. Scenario Jefferies Scenario (1) 2009E EBITDA (post comp) $39 $35 Less: Capex (15) (15) Less: Net Interest Expense (0) (1) Less: Cash Taxes (1) (6) Less: Change in WC (1) (3) Plus: Stock-Based Comp. 3 3 LFCF $24 $14 2014E EBITDA (post comp) $30 $38 Less: Capex (16) (28) Less: Net Interest Expense (0) (1) Less: Cash Taxes (3) (6) Less: Change in WC (1) (2) Plus: Stock-Based Comp. 4 4 LFCF $14 $6  PRELIMINARY VALUATION PERSPECTIVES Review of Illustrative Financial Scenarios 2009E –2014E Revenue ($MM) 0 300 600 900 1,200 1,500 1,016 1,257 1,023 1,275 1,037 1,289 1,054 1,304 1,071 1,316 1,089 1,329 2009E 2010E 2011E 2012E 2013E 2014E % Growth (23.3%) / (5.0%) 0.8% / 1.5% 1.4% / 1.1% 1.6% / 1.1% 1.6% / 1.0% 1.7% / 0.9% EBITDA (2)  ($MM) 0 10 20 30 40 50 39 35 35 38 34 38 32 38 30 38 30 38 2009E 2010E 2011E 2012E 2013E 2014E % Margin 3.8% / 2.8% 3.4% / 3.0% 3.3% / 3.0% 3.0% / 3.0% 2.8% / 2.9% 2.8% / 2.9% LFCF (3) ($MM) 0 5 10 15 20 25 24 14 21 15 19 10 17 10 14 6 14 6 2009E 2010E 2011E 2012E 2013E 2014E Preliminary Alternative Scenario Jefferies Scenario (1) % Margin 2.3% / 1.1% 2.0% / 1.1% 1.9% / 0.7% 1.6% / 0.8% 1.3% / 0.5% 1.3% / 0.4%  Notes 1. Based on projections published by Jefferies on 2/6/09, which was the last report published before analyst discontinued coverage 2. EBITDA post stock-based compensation expense 3. LFCF defined as Cash Flow from Operations – Capex; Both scenarios assume a constant $22MM of debt outstanding each year at a floating rate of LIBOR + 275bps and an interest rate on cash balances of 1.0% Morgan Stanley

CONFIDENTIAL WORKING DRAFT –FOR DISCUSSION PURPOSES ONLY Project Celtic Historical Celtic Multiples AV / EBITDA LTM NTM EV / LFCF (3) LTM NTM Current 1.5x 1.6x 3.3x 6.0x 3 Month Avg. 0.7x 0.8x 3.1x 4.2x 6 Month Avg. 1.1x 1.2x NA 4.2x Since 9/15/08 (4) 1.6x 1.6x NA 5.4x One Year Avg. 2.8x 2.4x NA NM Since 2/5/08 Avg. 3.3x 2.8x NA NM Max 7.6x 6.1x 4.0x 18.3x Min 0.2x 0.3x 2.3x 2.6x PRELIMINARY VALUATION PERSPECTIVES Historical Celtic Trading Multiples Since Q4 2007 Earnings Release, 2/4/08 AV / LTM & NTM EBITDA (1) ($MM, except where noted)(x) 0.0 2.0 4.0 6.0 8.0 2/4/08 2/28/08 3/25/08 4/18/08 5/14/08 6/9/08 7/3/08 7/29/08 8/22/08 9/17/08 10/13/08 11/6/08 12/2/08 12/26/08 1/21/09 2/16/09 3/12/09 4/7/09 5/11/09 AV / LTM EBITDA AV / NTM EBITDA  EV / LTM & NTM LFCF (1)(2) ($MM, except where noted)(x) 0.0 4.0 8.0 12.0 16.0 20.0 2/4/08 2/28/08 3/25/08 4/18/08 5/14/08 6/9/08 7/3/08 7/29/08 8/22/08 9/17/08 10/13/08 11/6/08 12/2/08 12/26/08 1/21/09 2/16/09 3/12/09 4/7/09 5/11/09 EV / LTM LFCF EV / NTM LFCF NTM LFCF Multiple Not Meaningful Source FactSet, Celtic Filings, Wall Street Research Notes 1. EBITDA post stock-based compensation 2. Historical LTM LFCF only available for LTM periods ending 12/31/08 and 3/31/09 3. Pro Forma 2007 LFCF not available 4. Date of Lehman Brothers bankruptcy

CONFIDENTIAL WORKING DRAFT –FOR DISCUSSION PURPOSES ONLY Project Celtic Capitalization Overview ($MM, except where noted) Price Eq. Value Adj. AV (1) Level 3 $1.15 $1,891 $6,585 Global Crossing 8.55 524 1,276 Vonage 0.48 75 245 IDT (Class B)1.84 43 21 Celtic 1.18 84 57 PRELIMINARY VALUATION PERSPECTIVES Current Relative Valuation Analysis As of 5/11/09 AV / 2008A EBITDA  (1)(2) (x) 0.0 2.0 4.0 6.0 8.0 10.0 7.2 5.8 4.7 1.4 NM  Level 3 Vonage Global Crossing Celtic IDT  AV / 2009E EBITDA (1)(2)(x) 7.1 3.8 3.0 1.6 NM 0.0 2.0 4.0 6.0 8.0 10.0 Level 3 Global Crossing Vonage Celtic IDT EV 2008A LFCF (2)(3) (x) 50.0 40.0 30.0 20.0 10.0 0.0 46.2 4.9 NM NM Global Crossing Celtic Level 3 Vonage IDT EV 2009E LFCF (2)(4) (x) 50.0 40.0 30.0 20.0 10.0 0.0 41.6 10.5 6.2 NM NM Level 3 Global Crossing Celtic Vonage IDT Source Public Filings, Wall Street Research, Bloomberg Notes 1. Level 3 and Global Crossing AV based on market value of debt, Vonage debt does not trade 2. IDT multiples not meaningful because of negative EBITDA and LFCF 3. 2008A LFCF negative for Level 3 and Vonage 4. Wall Street Research projects $0MM LFCF for Vonage in 2009E

CONFIDENTIAL WORKING DRAFT –FOR DISCUSSION PURPOSES ONLY Project Celtic Historical Multiples EBITDALFCFLTMNTMLTMNTM Current 1.5x 1.6x 3.3x 6.0x 3 Month Avg.0.7x 0.8x 3.1x 4.2x 6 Month Avg.1.1x 1.2x NA 4.2x Since 9/15/08 1.6x 1.6x NA 5.4x One Year Avg. 2.8x 2.4x NA NM  PRELIMINARY VALUATION PERSPECTIVES Illustrative Implied Share Price Analysis Based on Historical Celtic Trading Multiples Illustrative Implied Share Price Analysis ($MM, except where noted) Celtic Multiple Reference Range Actual LTM EBITDA Assumed NTM EBITDA (1) Actual LTM LFCF (2) Assumed NTM LFCF (1) Statistic $38.3 $30.0 $35.0 $40.0 $25.3 $10.0 $15.0 $20.0 Current $1.18 $1.04 $1.15 $1.27 $1.18 $0.84 $1.27 $1.69 3 Month Avg. $0.77 $0.72 $0.77 $0.83 $1.11 $0.59 $0.88 $1.17 6 Month Avg.$0.99$0.88$0.97$1.05NA$0.58$0.88$1.17 Since 9/15/08$1.26$1.03$1.14$1.25NA$0.76$1.14$1.53 One Year Avg.$1.87$1.39$1.56$1.73NANMNMNM Notes 1. Assumes 71.2MM shares outstanding, $22.0MM debt and $48.6MM cash as of 3/31/09 2. Historical LTM LFCF only available for LTM periods ending 12/31/08 and 3/31/09

CONFIDENTIAL WORKING DRAFT – FOR DISCUSSION PURPOSES ONLY Project Celtic PRELIMINARY VALUATION PERSPECTIVES Illustrative DCF Analysis  Analysis assumes the following: Stock based compensation treated as a cash expense D&A: ~2.5% of revenue (equal to capex for terminal value) Capex: ~1.5% of revenue Investment in working capital: ~0.2% of revenue Terminal value reflects normalized tax rate of 30.0%  2014E EBITDA ($MM, except where noted)  2009E - 2014E 2008A - 2014E Rev. CAGR EBITDA Margin (4.0%) (2.0%) 0.0% 2.0% 2.5% 25.9 29.3 33.1 37.3 3.0% 31.1 35.2 39.7 44.7 3.5% 36.3 41.0 46.3 52.2  Illustrative Sensitivity Analysis ($MM, except where noted)  Assumed Avg. Assumed 2009E - 2014E Perpetual Assumed 2008A - 2014E Revenue CAGR EBITDA Growth (4.0%)  (2.0%)  0.0%  2.0% Margin (1) Rate 14.0% 16.0% 14.0% 16.0% 14.0% 16.0% 14.0% 16.0% Assumed Discount Rate   (2.0%) $1.15 $1.08 $1.22 $1.14 $1.29 $1.20 $1.36 $1.27 Estimated Celtic Share Price 2.5% 0.0% $1.19 $1.11 $1.26 $1.17 $1.34 $1.24 $1.42 $1.31  2.0% $1.24 $1.15 $1.32 $1.21 $1.40 $1.28 $1.49 $1.36  (2.0%) $1.50 $1.41 $1.59 $1.49 $1.68 $1.57 $1.78 $1.66 3.0% 0.0% $1.55 $1.45 $1.64 $1.53 $1.74 $1.62 $1.85 $1.71  2.0% $1.61 $1.49 $1.72 $1.58 $1.83 $1.67 $1.95 $1.78  (2.0%) $1.90 $1.77 $2.02 $1.88 $2.16 $2.00 $2.30 $2.12 3.5% 0.0% $1.97 $1.83 $2.11 $1.94 $2.25 $2.07 $2.41 $2.20  2.0% $2.07 $1.89 $2.22 $2.02 $2.38 $2.15 $2.55 $2.30  Morgan Stanley  Note 1.  Net of stock-based compensation expense

CONFIDENTIAL WORKING DRAFT – FOR DISCUSSION PURPOSES ONLY Project Celtic Section 3 Review of Alternatives Morgan Stanley

CONFIDENTIAL WORKING DRAFT – FOR DISCUSSION PURPOSES ONLY Project Celtic REVIEW OF ALTERNATIVES Overview of KPN’s Alternatives For Celtic Stake Summary Considerations Preserve Existing Structure Buy-In Public Minority Exit / Sell Celtic Description Continue status as majority shareholder in public company Execute on current strategic plan Consider pursuing initiatives to enhance shareholder value Offer to acquire remaining shares of public shareholders Operate Celtic as a wholly-owned subsidiary  Sell ownership stake or entire company to a strategic buyer or financial sponsor Merits Retain economic interest in business Maintain strategic flexibility Potential to improve share price through selected initiatives (e.g., return capital to shareholders, acquisitions, etc.) Retain benefit of smaller, entrepreneurial company for employees Obtain complete control over business Maintain strategic flexibility No longer required to comply with reporting and other public company obligations Enable management to focus on long-term strategy Potential combination benefits Opportunity to realize premium to current trading price  Given absence of clear catalysts for the stock, may be best way to maximize short-term value if not interested in acquiring full control  Focus resources on other strategic priorities  Structured transaction could involve ongoing interest in combined company Risks & Considerations Celtic’s recent performance Importance of independent, public company structure to strategy and execution Financial markets and macroeconomic conditions may continue to deteriorate Limits on ability to control and influence execution Unclear catalysts for stock price Increases investment in wholesale carrier sector Celtic’s recent performance Ability to retain/attract employees under corporate structure Importance of independent, public company structure to strategy and execution Financing Ability to optimize value in current market environment  Unclear buyer appetite  Risk of failed process  Ability to retain ongoing commercial relationship with buyer Time to Completion N/A 3-7 months 4 months plus potentially lengthy regulatory process Morgan Stanley

CONFIDENTIAL WORKING DRAFT – FOR DISCUSSION PURPOSES ONLY Project Celtic Tab A Preserve Existing Structure Morgan Stanley

CONFIDENTIAL WORKING DRAFT – FOR DISCUSSION PURPOSES ONLY Project Celtic PRESERVE EXISTING STRUCTURE Review of Alternatives Preserve Existing Structure Status Quo Return Capital to Shareholders Make Acquisitions Description Continue to execute on current strategic plan No change to capital policies Consider acquisitions on an opportunistic basis Return capital to shareholders via implementation of a dividend policy or ongoing share buybacks Increase focus on making acquisitions and consolidating industry  Merits Preserve current cash balance and flexibility around strategic initiatives Could serve as a catalyst to increase stock price over current levels Mechanism for KPN to generate current cash/income from investment Enhance wholesale carrier leadership position Attempt to create value through combination synergies, etc.  Risks & Considerations Unclear catalysts for stock price Financial markets and macroeconomic conditions may continue to deteriorate Feasibility given capital markets constraints (e.g., liquidity, capitalization, etc.) Signaling effect to investors, particularly of implementing a dividend Potential constraints on executing current strategic plan or pursuing new initiatives Impact on KPN ownership in case of stock buybacks Execution risk Availability of actionable opportunities at reasonable prices Investor reaction Access to capital Morgan Stanley

CONFIDENTIAL WORKING DRAFT FOR DISCUSSION PURPOSES ONLY Project Celtic PRESERVE EXISTING STRUCTURE Illustrative Dividend Analysis Projections Based on Jefferies Scenario Micro-cap status may limit appeal to traditional yield investors Selected Telco Benchmarks (2) ($MM, except where noted)  2009E FCF Yield Payout Ratio CenturyTel 9.0% 54.7% Consolidated Comm. 13.7% NM Frontier 12.9% 72.7% Iowa Telecom 13.0% 87.6% Windstream 11.5% 75.1% Illustrative Impact of Potential Dividend ($MM, except where noted) Assumed Annual Implied Annual Implied FCF Payout Illustrative Trading Value Dividend Dividend Total 2009E - Net Leverage Cash Balance Assuming Yield of Per Share Yield (1) Dividend 2009E 2014E 2014E Avg. 2009E 2014E 2009E 2014E 12.0% 13.0% 14.0% $0.00 N/A N/A N/A N/A N/A (1.0x) (2.1x) $55.5 $102.0 N/A N/A N/A $0.10 8.5% $7.1 52.6% 131.0% 83.0% (0.7x) (0.9x) 48.3 57.9 $0.83 $0.77 $0.71 $0.11 9.3% 7.8 57.8% 145.2% 91.7% (0.7x) (0.8x) 47.6 53.5 0.92 0.85 0.79 $0.12 10.2% 8.5 63.1% 159.6% 100.4% (0.7x) (0.7x) 46.9 49.1 1.00 0.92 0.86 $0.13 11.0% 9.3 68.4% 174.2% 109.2% (0.7x) (0.6x) 46.2 44.7 1.08 1.00 0.93 $0.14 11.9% 10.0 73.7% 189.0% 118.1% (0.7x )(0.5x) 45.5 40.3 1.17 1.08 1.00 $0.15 12.7% 10.7 78.9% 204.1% 127.1% (0.6x) (0.4x) 44.8 35.9 1.25 1.15 1.07 $0.16 13.6% 11.4 84.2% 219.4% 136.1% (0.6x) (0.2x) 44.0 31.5 1.33 1.23 1.14 $0.17 14.4% 12.1 89.5% 234.9% 145.2% (0.6x) (0.1x) 43.3 27.1 1.42 1.31 1.21 Morgan Stanley Notes 1. Based on current share price of $1.18 per share as of 5/11/09 2. As of 5/11/09, payout ratio based on Wall Street Research estimates

CONFIDENTIAL WORKING DRAFT - FOR DISCUSSION PURPOSES ONLY Project Celtic PRESERVE EXISTING STRUCTURE Illustrative Share Repurchase Analysis Assumes Purchases Made Pursuant to Rule 10b-18 Lack of trading liquidity limits efficiency with which a meaningful buyback could be executed Illustrative Sizing Matrix ($MM, except where noted) Program Size ($MM) $5.0 $10.0 $15.0 $20.0 Program Size (% of Total Cash) 10.3% 20.6% 30.9% 41.2% Program Size (% of 2009E Jefferies Scenario LFCF) 36.8% 73.6% 110.4% 147.2% Program Size (Shares MM) (1) 4.2 8.5 12.7 16.9 % of Total Shares Outstanding 5.9% 11.9% 17.8% 23.8% % of Public Float 16.6% 33.1% 49.7% 66.3% Days Trading 53 107 160 213 Illustrative Execution Timeframe (in Trading Days) At 25.0% of ADTV (19,852 shares per day) 213 427 640 854 At 20.0% of ADTV (15,881 shares per day) 267 534 800 1,067 At 15.0% of ADTV (11,911 shares per day) 356 711 1,067 1,423 At 10.0% of ADTV (7,941 shares per day) 534 1,067 1,601 2,134 Note 1. Based on $1.18 share price, 71.2MM shares outstanding and 25.5MM shares of public float. Execution Timeframe based on Celtic’s ADTV estimated by its historical median daily trading volume of -79,000 shares / day (as per Bloomberg). Celtic’s current Rule 10b-18 daily volume limit is -20,000 shares / day, which equals 25% of its trailing 4-week reported average daily trading volume of 79,000 shares / day Morgan Stanley

CONFIDENTIAL WORKING DRAFT — FOR DISCUSSION PURPOSES ONLY Project Celtic Tab B Buy In Public Minority Morgan Stanley

CONFIDENTIAL WORKING DRAFT — FOR DISCUSSION PURPOSES ONLY Project Celtic BUY IN PUBLIC MINORITY Initial Approach Alternatives Buy In Public Minority Assessment of up-front due diligence requirements will influence approach tactic preference Unilateral Tender Offer Description Initiate process by launching tender offer for all shares not held by KPN File 13D amendment Tender offer is conditioned on: Majority of the minority tendering in the offer Achieving 90% of the ownership of Celtic stock (which is minimum necessary to permit KPN to effect second-step short- form merger) Special committee is formed to make a recommendation on the tender offer Special committee approval of tender offer not technically required Practically, however, must obtain special committee’s recommendation in favor of tender offer in order to reach 90% ownership In addition, special committee’s favorable recommendation avoids risk of more stringent legal standard Merits Less stringent legal standard Gives KPN greater control over timing and terms of offer Abbreviated negotiations with special committee Increases pressure on special committee to recommend agreement Risks & Considerations Must be confident of achieving 90% ownership in tender offer Favorable recommendation from special committee may help achieve 90% ownership May not receive favorable recommendation without negotiating with special committee to some extent Offer is made without access to due diligence Recent Examples Hearst Corp / Hearst Argyle (subject to board approval) Cox Enterprises / Cox Radio (not subject to board approval) Negotiate with Special Committee Initiate process by sending proposal to board Diligence may be requested prior to sending proposal to board, but this would likely lock KPN in to negotiating with special committee rather than proceeding by unilateral tender offer Public announcement of proposal (since proposal triggers 13D amendment) Special committee is formed to review proposal and negotiate on behalf of board Enter into acquisition agreement (which may provide either for a one-step merger or a two- step tender offer) Proceed with cooperation of board Access to due diligence More stringent legal standard (i.e., transaction price and process must be entirely fair to minority shareholders) Less control over timing and terms Longer and more expensive process PepsiCo / Pepsi Bottling Group Morgan Stanley

CONFIDENTIAL WORKING DRAFT — FOR DISCUSSION PURPOSES ONLY Project Celtic BUY IN PUBLIC MINORITY Acquisition Structuring Alternatives (1) Shareholder Analysis (MM Shares) KPN Shares 40.1 Minority Shares 31.1 Total Shares 71.2 50% of Minority Shares A 15.6 90% of Total Shares 64.1 Less: KPN Shares (40.1) Minority Shares Required to Obtain 90% B 24.0 B —A 8.4 Two-Step Tender Offer Highlights Two steps: tender offer followed by merger in which non-tendered shares are cashed out If KPN holds at least 90% of Celtic shares following tender offer, short-form merger can be effected quickly and unilaterally by KPN If KPN holds less than 90% of Celtic shares following tender offer, long-form merger (with special committee approval) required Tender offer must remain open for a minimum of 20 business days, but resolving SEC comments may require extension of offer period May be commenced unilaterally or pursuant to an agreement with Celtic special committee Increasingly common method of acquiring U.S. public companies Merits Can be completed more quickly than a one-step merger, provided that sufficient shares are tendered so that KPN holds at least 90% of shares following tender offer Greater flexibility to change terms of offer Expedited SEC review of tender offer materials Risks & Considerations If unable to reach 90% of shares in tender offer, would need to complete more lengthy long-form merger in second step Shareholder appraisal rights for non-tendering shareholders available only in second-step merger One-Step Merger KPN and Celtic special committee agree to merger Requires merger proxy statement to be distributed to shareholders followed by special meeting and shareholder vote Typically requires 3-4 months from signing to close One-step as opposed to a two-step transaction No shares are purchased before acquisition of 100% of Celtic is assured Longer time frame than for tender offer More stringent and time-consuming SEC review Binary outcome Shareholder appraisal rights apply Tender Offer versus Merger (2) (%) Merger 46% Tender Offer 54% Note 1. This slide presents purely structuring considerations in deciding between a two-step tender offer and a one-step merger. The preceding slide discusses other relevant considerations 2. Selected Deals Since 2001; All Cash; US Deals; Minority Buy-in Value $25 -$500MM; All deals represent completed transactions except for Hearst-Argyle and Cox Radio Morgan Stanley

CONFIDENTIAL WORKING DRAFT — FOR DISCUSSION PURPOSES ONLY Project Celtic BUY IN PUBLIC MINORITY Illustrative Acquisition Timeline Alternative Key Steps Illustrative Time Unilateral Two-Step Tender Offer Prepare formal proposal to present to KPN Board 2 weeks KPN board meeting to approve tender offer 1-2 weeks Publicly announce and commence tender offer (and file 13D amendment) Offer Period 8-9 weeks Negotiate with Celtic special committee Accept tendered shares 1 week Effect short-form merger (1) Total time under unilateral tender process 3-4 months Negotiated Two-Step Tender Offer Prepare formal proposal to present to KPN board 2 weeks KPN board meeting to approve proposal 1 week Send proposal to Celtic board and make public announcement (and file 13D amendment) Celtic forms special committee 2-4 weeks Due diligence Negotiate with special committee 2-4 weeks Execute acquisition agreement Offer period 8-9 weeks Accept tendered shares 1 week Effect short-form merger if tender results in >90% ownership Total time under negotiated tender process 4-5.5 months (2) One-Step Merger Prepare formal proposal to present to KPN board 2 weeks KPN board meeting to approve proposal 1 week Send proposal to Celtic board and make public announcement (and file 13D amendment) Celtic forms special committee 2-4 weeks Due diligence Negotiate with special committee 2-4 weeks Execute merger agreement File and disseminate proxy statement 3-4 months SEC review of proxy statement Shareholder vote Total time under one-step merger process 5-6.5 months Notes 1. Assumes tender achieves >90% ownership, with tender followed by short-form merger 2. Assumes tender achieves >90% ownership, with tender followed by short-form merger. If tender achieves <90% ownership, long-form merger would be required and would add an additional -2-3 months onto process Morgan Stanley

CONFIDENTIAL WORKING DRAFT — FOR DISCUSSION PURPOSES ONLY Project Celtic BUY IN PUBLIC MINORITY Precedent Transaction Observations Reviewed 26 minority buy-in deals between $25MM - $500MM since 2001 Universe limited to all-cash transactions involving U.S. targets where majority shareholder owned less than 90% Summary statistics Median deal size of $68MM Median affiliate ownership of ~73% 62% of deals involved a bump in price (1) Premium Paid Summary (%) Initial Price Final Price (1) Mean Median Mean Median 1 Day Prior Aggregate Value 32.3% 13.2% 45.1% 17.9% 1 Day Prior Price 29.0% 21.5% 40.7% 32.8% 1 Month Avg. Price 29.9% 25.8% 41.3% 37.6% 3 Month Avg. Price 23.7% 17.4% 40.1% 30.1% Source Celtic Filings, Public Filings, Press Releases, FactSet Note 1. Excludes Hearst-Argyle and Cox Radio transactions, which have not been completed Morgan Stanley

CONFIDENTIAL WORKING DRAFT - FOR DISCUSSION PURPOSES ONLY Project Celtic BUY IN PUBLIC MINORITY Pricing Considerations Illustrative Pricing Matrix ($MM, except where noted) Assumed Buy-in Offer Price Equity Value (1) Aggregate Value (2) Buy-in Amount (3) % Premium to Price (4) % Premium to AV 1 Day 1 Mo Avg. 3 Mo Avg. 6 Mo Avg. LTM High LTM Low 1 Day Statistic $1.18 $0.98 $0.81 $1.11 $4.44 $0.51 $57.5 $1.00 $71.2 $44.7 $40.1 (15.3%) 2.4% 23.3% (10.2%) (77.5%) 96.1% (22.3%) $1.10 78.4 51.8 44.1 (6.8%) 12.6% 35.6% (1.2%) (75.2%) 115.7% (9.9%) $1.20 85.5 58.9 48.1 1.7% 22.8% 48.0% 7.7% (73.0%) 135.3% 2.5% $1.30 92.6 66.0 52.2 10.2% 33.1% 60.3% 16.7% (70.7%) 154.9% 14.9% $1.40 99.7 73.2 56.2 18.6% 43.3% 72.6% 25.7% (68.5%) 174.5% 27.3% $1.50 106.9 80.3 60.2 27.1% 53.6% 85.0% 34.7% (66.2%) 194.1% 39.7% $1.60 114.0 87.5 64.2 35.6% 63.8% 97.3% 43.7% (64.0%) 213.7% 52.1% $1.70 121.2 94.6 68.2 44.1% 74.0% 109.6% 52.6% (61.7%) 233.3% 64.5% $1.80 128.3 101.8 72.3 52.5% 84.3% 122.0% 61.6% (59.5%) 252.9% 77.0% $1.90 135.5 108.9 76.3 61.0% 94.5% 134.3% 70.6% (57.2%) 272.5% 89.4% $2.00 142.6 116.1 80.3 69.5% 104.7% 146.6% 79.6% (55.0%) 292.2% 101.8% Precedent Minority Buy-Ins (5) Initial Mean 29.0% 29.9% 23.7% 18.1% (25.4%) 157.2% 32.3% Median 21.5% 25.8% 17.4% 12.7% (18.9%) 62.2% 13.2% High 97.5% 125.6% 100.3% 121.8% 87.1% 1749.1% 468.5% Low (7.9%) (6.5%) (25.2%) (51.2%) (88.4%) 20.8% (39.0%) Final Mean 40.7% 41.3% 40.1% 36.3% (14.0%) 189.2% 45.1% Median 32.8% 37.6% 30.1% 25.6% (7.0%) 83.5% 17.9% High 140.0% 96.5% 111.4% 121.8% 87.1% 1749.1% 641.1% Low 6.7% (4.4%) (13.6%) (9.5%) (87.0%) 20.8% (67.6%) Source Celtic Filings, Public Filings, Press Releases, FactSet Notes 1. Balance sheet as of 3/31/09, assumes 71.2MM basic shares outstanding and dilution from options as per 10K as of 12/31/08 2. Assumes total debt of $22.0MM and cash of $48.6MM as of 3/31/09 3. Based on KPN ownership of 56.3% of Celtic 4. Based on share price as of 5/11/09 5. Based on selected deals since 2001; all cash; US deals; minority buy-in value $25 - $500MM Morgan Stanley

CONFIDENTIAL WORKING DRAFT – FOR DISCUSSION PURPOSES ONLY Project Celtic BUY IN PUBLIC MINORITY Elements of a Proposal (Unilateral or Negotiated Tender Offer) Illustrative Terms Key Considerations Comments Transaction KPN to propose to buy 100% of the shares it does not currently own at a price of $[ ] / share Consideration Cash Structure KPN to launch tender offer for 100% of shares Subsequent short-form merger at same price Conditions Majority of minority (15.6MM shares) acceptance condition in tender offer Material adverse change No financing condition Others TBD Financing Available cash and existing KPN revolver capacity Other Employee arrangements TBD KPN not a seller Morgan Stanley

CONFIDENTIAL WORKING DRAFT – FOR DISCUSSION PURPOSES ONLY Project Celtic Tab C Exit / Sell Celtic Morgan Stanley

CONFIDENTIAL WORKING DRAFT – FOR DISCUSSION PURPOSES ONLY Project Celtic EXIT / SELL CELTIC Hypothetical Sale to Third Party Illustrative Transaction ROIC Analysis (1)

($MM, except where noted) Share Price Equity Value(2) Aggregate Value(3) No Synergies $0.0 $5.0 $10.0 $10MM of Annual Synergies $10.0 $15.0 $20.0 $20MM of Annual Synergies $20.0 $25.0 $30.0 Assumed Annual EBIT $1.25 $89.0 $62.5 NA 5.6% 11.2% 11.2% 16.8% 22.4% 22.4% 28.0% 33.6% $1.50 106.9 80.3 NA 4.4% 8.7% 8.7% 13.1% 17.4% 17.4% 21.8% 26.2% $1.75 124.7 98.2 NA 3.6% 7.1% 7.1% 10.7% 14.3% 14.3% 17.8% 21.4% $2.00 142.6 116.1 NA 3.0% 6.0% 6.0% 9.0% 12.1% 12.1% 15.1% 18.1% $2.25 160.6 134.0 NA 2.6% 5.2% 5.2% 7.8% 10.4% 10.4% 13.1% 15.7% $2.50 178.5 152.0 NA 2.3% 4.6% 4.6% 6.9% 9.2% 9.2% 11.5% 13.8% $2.75 196.5 170.0 NA 2.1% 4.1% 4.1% 6.2% 8.2% 8.2% 10.3% 12.4% $3.00 214.5 188.0 NA 1.9% 3.7% 3.7% 5.6% 7.4% 7.4% 9.3% 11.2% Notes 1. Analysis assumes tax rate of 30% 2. Balance sheet as of 3/31/09, assumes 71.2MM basic shares outstanding and dilution from options as per 10K as of 12/31/08 3. Assumes total debt of $22.0MM and cash of $48.6MM as of 3/31/09 Morgan Stanley

CONFIDENTIAL WORKING DRAFT – FOR DISCUSSION PURPOSES ONLY Project Celtic EXIT / SELL CELTIC Hypothetical Sale to Financial Sponsor Analysis assumes: Transaction closes on 6/30/09 and investor exits 12/31/13 Celtic’s debt repaid at par $25MM of Celtic balance sheet cash used to fund acquisition (balance funded with sponsor equity) 5% management promote Illustrative IRR Sensitivity Analysis Assumes 100% Equity Financed($MM, except where noted) Illustrative Entry Price Prem. / (Disc.) to Current Entry Equity Value Entry Aggregate Value Entry AV / LTM EBITDA Assumed Avg. 2009 - 2014E EBITDA Margin IRR to Sponsor Assuming 2014E Forward EBITDA Multiple of: 1.0x 2.5x 4.0x (4.0%) (2.0%) 0.0% 2.0% (4.0%) (2.0%) 0.0% 2.0% (4.0%) (2.0%) 0.0% 2.0% Assumed 2008A - 2014E Revenue CAGR 2.5% 5.9% 7.4% 8.9% 10.5% 13.9% 16.0% 18.1% 20.2% 20.3% 22.8% 25.2% 27.8% $1.00 (15.3% ) $71.2 $44.7 1.2x 3.0% 12.6% 14.2% 15.8% 17.5% 20.5% 22.6% 24.8% 27.0% 26.8% 29.3% 31.9% 34.6% 3.5% 17.2% 18.9% 20.7% 22.4% 25.2% 27.4% 29.7% 32.1% 31.7% 34.3% 37.0% 39.8% 2.5% 2.0% 3.4% 4.9% 6.4% 9.6% 11.6% 13.6% 15.7% 15.8% 18.1% 20.5% 22.9% $1.20 1.7% 85.5 58.9 1.5x 3.0% 8.4% 9.9% 11.5% 13.1% 15.9% 18.0% 20.1% 22.2% 22.0% 24.4% 26.9% 29.4% 3.5% 12.8% 14.4% 16.1% 17.8% 20.5% 22.6% 24.8% 27.1% 26.7% 29.2% 31.8% 34.4% 2.5% (1.2%) 0.1% 1.6% 3.0% 6.2% 8.0% 10.0% 12.0% 12.1% 14.3% 16.6% 19.0% $1.40 18.6% 99.7 73.2 1.9x 3.0% 5.0% 6.4% 7.9% 9.5% 12.2% 14.2% 16.2% 18.3% 18.1% 20.4% 22.8% 25.2% 3.5% 9.2% 10.8% 12.4% 14.0% 16.6% 18.7% 20.8% 23.0% 22.6% 25.0% 27.5% 30.1% 2.5% (3.9%) (2.6%) (1.2%) 0.2% 3.2% 5.1% 6.9% 8.9% 9.0% 11.1% 13.4% 15.6% $1.60 35.6% 114.0 87.5 2.3x 3.0% 2.1% 3.5% 4.9% 6.4% 9.1% 11.0% 12.9% 15.0% 14.8% 17.0% 19.3% 21.7% 3.5% 6.2% 7.7% 9.3% 10.9% 13.3% 15.3% 17.4% 19.5% 19.1% 21.5% 23.9% 26.4% 2.5% (6.2%) (4.9%) (3.6%) (2.2%) 0.7% 2.5% 4.3% 6.2% 6.3% 8.4% 10.6% 12.8% $1.80 52.5% 128.3 101.8 2.7x 3.0% (0.4%) 1.0% 2.4% 3.8% 6.4% 8.3% 10.2% 12.1% 11.9% 14.1% 16.4% 18.7% 3.5% 3.6% 5.1% 6.6% 8.1% 10.5% 12.5% 14.5% 16.5% 16.2% 18.5% 20.8% 23.2% 2.5% (8.2%) (6.9%) (5.7%) (4.3%) (1.5%) 0.3% 2.0% 3.9% 3.9% 6.0% 8.1% 10.3% $2.00 69.5% 142.6 116.1 3.0x 3.0% (2.5%) (1.2%) 0.2% 1.6% 4.1% 5.9% 7.7% 9.6% 9.5% 11.6% 13.8% 16.0% 3.5% 1.3% 2.8% 4.2% 5.7% 8.1% 10.0% 11.9% 13.9% 13.6% 15.8% 18.1% 20.5% Morgan Stanley

CONFIDENTIAL WORKING DRAFT – FOR DISCUSSION PURPOSES ONLY Project Celtic EXIT / SELL CELTIC Illustrative Timeline Sale of Company A sale of the company could take 4 months to announcement Closing could take significantly longer depending on required regulatory approval Launch Process (T + 0) Enter the Market (T + 4 Weeks) Indications of Interest (T + 8 Weeks) Final Bids (T + 14 Weeks) Signing of Transaction Agreement (T + 16 Weeks) (T + ?) Preparation Phase 4 weeks Phase 1 Marketing Phase ~4 weeks Phase 2 Due Diligence Phase ~6 weeks Final Negotiations 2 weeks Closing Morgan Stanley due diligence Prepare marketing materials Finalize list of potential buyers Prepare audited financials Draft confidentiality agreement Develop script for initial calls to buyers Draft bid procedures letter Contact potential buyers and send teaser Negotiate / sign CAs Meetings with buyers Prepare for Phase 2 – Data room – Merger agreement Receive preliminary non-binding indications of interest – Analysis of bids – Select short list of buyers for Phase 2 Due diligence meetings with buyers Data room review Distribute merger agreement Prepare disclosure schedules Draft final bid letter Receive final binding bids Negotiation of merger agreement Prepare internal / external communications Prepare regulatory filings Buyer’s financing HSR and other regulatory clearances Morgan Stanley

CONFIDENTIAL WORKING DRAFT – FOR DISCUSSION PURPOSES ONLY Project Celtic Appendix A Supplemental Materials Morgan Stanley

CONFIDENTIAL WORKING DRAFT – FOR DISCUSSION PURPOSES ONLY Project Celtic Supplemental Materials Evolution of Celtic Analyst Estimates Detailed Backup Based on Jefferies Research Research Benchmarking ($MM) Date of Report 4/29/2008 7/23/2008 10/22/2008 2/6/2009 Change 2/6/09 vs. 4/29/08 2008 Minutes of Use (MMs) 25,779 25,027 23,600 23,500 (8.8%) 2009 Minutes of Use (MMs) 30,716 29,331 24,383 24,082 (21.6%) 2010 Minutes of Use (MMs) 35,496 33,894 25,112 25,102 (29.3%) 2008 - 2010 CAGR 17.3% 16.4% 3.2% 3.4% 2008 Average Revenue per Minute $0.054 $0.057 $0.058 $0.056 3.7% 2009 Average Revenue per Minute 0.050 0.054 0.057 0.052 4.0% 2010 Average Revenue per Minute 0.047 0.051 0.056 0.051 8.5% 2008 - 2010 CAGR (6.7%) (5.4%) (1.7%) (4.6%) 2008 Total Revenue $1,388.3 $1,421.2 $1,361.8 $1,323.6 (4.7%) 2009 Total Revenue 1,534.8 1,577.7 1,399.7 1,257.1 (18.1%) 2010 Total Revenue 1,674.01, 720.8 1,411.0 1,275.4 (23.8%) 2008 - 2010 CAGR 9.8% 10.0% 1.8% (1.8%) 2008 EBITDA $52.1 $50.0 $42.0 $39.8 (23.6%) 2009 EBITDA 64.4 62.0 45.2 35.2 (45.3%) 2010 EBITDA 70.1 67.9 45.9 37.9 (45.9%) 2008 - 2010 CAGR 16.0% 16.5% 4.5% (2.4%) 2008 EBITDA Margin 3.8% 3.5% 3.1% 3.0% 2009 EBITDA Margin 4.2% 3.9% 3.2% 2.8% 2010 EBITDA Margin 4.2% 3.9% 3.3% 3.0% Source Jefferies Research Morgan Stanley

CONFIDENTIAL WORKING DRAFT – FOR DISCUSSION PURPOSES ONLY Project Celtic SUPPLEMENTAL MATERIALS Evolution of Celtic Analyst Estimates Detailed Backup Based on Jefferies Research Research Benchmarking ($MM) Date of Report 4/29/2008 7/23/2008 10/22/2008 2/6/2009 Change 2/6/09 vs. 4/29/08 ’08 Wholesale Revenue $1,067.6 $1,081.1 $1,002.5 $985.1 (7.7%) ’09 Wholesale Revenue 1,185.0 1,218.1 1,080.7 925.4 (21.9%) ’10 Wholesale Revenue 1,275.7 1,311.4 1,075.3 926.1 (27.4%) 2008 - 2010 CAGR 9.3% 10.1% 3.6% (3.0%) ’08 Revenue Outsourced from KPN $233.1 $252.9 $258.0 $241.9 3.8% ’09 Revenue Outsourced from KPN 252.4 279.8 281.4 218.2 (13.5%) ’10 Revenue Outsourced from KPN 270.3 300.1 279.5 217.6 (19.5%) 2008 - 2010 CAGR 7.7% 8.9% 4.1% (5.2%) ’08 Retail Revenue $87.6 $87.2 $101.3 $96.61 0.3% ’09 Retail Revenue 97.4 79.8 37.6 113.5 16.5% ’10 Retail Revenue 128.0 109.4 56.2 131.7 2.9% 2008 - 2010 CAGR 20.9% 12.0% (25.5%) 16.8% Source Jefferies Research Morgan Stanley

CONFIDENTIAL WORKING DRAFT – FOR DISCUSSION PURPOSES ONLY Project Celtic SUPPLEMENTAL MATERIALS Historical Celtic Forward Trading Multiples Since Q4 2007 Earnings Release, 2/4/08 AV / EBITDA (1) ($MM, except where noted) (x) 6.0 4.5 3.0 1.5 0.0 2/4/08 2/28/08 3/25/08 4/18/08 5/14/08 6/9/08 7/3/08 7/29/08 8/22/08 9/17/08 10/13/08 11/6/08 12/2/08 12/26/08 1/21/09 2/16/09 3/12/09 4/7/09 5/11/09 2008 EBITDA Est. $61.0 $52.1 $50.0 $42.0 $39.8  2009 EBITDA Est. 70.6 64.4 62.0 45.2 35.2 AV / 2008E EBITDA AV / 2009E EBITDA Jefferies Drops Coverage Historical Celtic Multiples AV / EBITDA EV / LFCF 2008E 2009E 2008E 2009E Current 1.4x 1.6x 4.9x 6.2x 3 Month Avg. 0.7x 0.8x 3.4x 4.2x 6 Month Avg. 1.2x 1.2x 4.1x 4.2x Since 9/15/08 (2) 1.7x 1.5x NM 5.1x One Year Avg. 2.7x 2.3x NM 9.3x Since 2/5/08 Avg. 3.0x 2.6x NM 9.7x Max 6.2x 5.4x 18.9x 21.4x Min 0.2x 0.3x 2.3x 2.6x Morgan Stanley EV / LFCF ($MM, except where noted) (x) 25.0 20.0 15.0 10.0 5.0 0.0 2008 LFCF Multiple Not Meaningful 2/4/08 2/28/08 3/25/08 4/18/08 5/14/08 6/9/08 7/3/08 7/29/08 8/22/08 9/17/08 10/13/08 11/6/08 12/2/08 12/26/08 1/21/09 2/16/09 3/12/09 4/7/09 5/11/09 2008 LFCF Est. $22.2 $0.8 $6.2 $21.5 $17.1 2009 LFCF Est. 30.0 12.9 21.9 25.2 13.6 Jefferies Drops Coverage EV / 2008E LFCF EV / 2009E LFCF Source FactSet, Celtic Filings, Wall Street Research Notes 1. EBITDA post stock-based compensation 2. Lehman bankruptcy Morgan Stanley

CONFIDENTIAL WORKING DRAFT – FOR DISCUSSION PURPOSES ONLY Project Celtic SUPPLEMENTAL MATERIALS WACC Analysis WACC Assumptions Component Input Commentary Risk-Free Rate 3.3% Based on 10-Year U.S. Treasury yield as of 5/11/09 Equity Market Risk Premium 4-6% Consistent with historical data, academic surveys and forward-looking market data Small-Cap Premium 3-6% Based on historical data from Morningstar for market caps less than $626MM Celtic Equity Beta 1.26 Current Celtic predicted equity beta per Barra Assumed Tax Rate 30.0% Estimated Normalized Rate Assumed D / (D+E) 20.8% Based on current capital structure (1) WACC Estimates by Analyst Jefferies Celtic 15.0% Cost of Equity Sensitivity Small Cap Market Risk Premium Premium 4.0% 5.0% 6.0% 3.0% 11.3% 12.6% 13.9% 4.5% 12.8% 14.1% 15.4% 6.0% 14.3% 15.6% 16.9% WACC Sensitivity Pre-Tax Cost of Equity Cost of Debt 12.5% 15.0% 17.5% 10.0% 11.4% 13.3% 15.3% 12.0% 11.6% 13.6% 15.6% 14.0% 11.9% 13.9% 15.9% Morgan Stanley Note 1. Assumes $22.0MM in total debt and $84.0MM in equity value as of 5/11/09

CONFIDENTIAL WORKING DRAFT – FOR DISCUSSION PURPOSES ONLY Project Celtic SUPPLEMENTAL MATERIALS Illustrative Two-Step Tender Offer Timetable Timeline Events/Activities Prepare documentation Prepare Schedule TO (“Offer to Purchase”) Prepare and file any necessary regulatory filings Execute Dealer Manager Agreement Commence tender offer (1) File Schedule TO with SEC and disseminate by mailing to stockholders Hand deliver Schedule TO to Target Tender offer period (2) SEC Review Target files 14D-9 stating position (3) Note: SEC comments on tender offer materials could delay close of Tender Offer, potentially pushing entire timetable back by as much as 4-5 weeks 90% shares tendered? Yes A No B 0 7 14 21 28 35 Calendar Days Notes 1. Tender Offer commences as soon as the bidder gives security holders the means to tender (i.e., letters of transmittal) 2. Under the Williams Act, the Offer must be outstanding for at least 20 business days. Offer must also remain open for 10 business days after any increase or decrease in the percentage of the class of securities being sought, the offered consideration, or the dealer’s soliciting fee or any other change to the terms of the Offer of comparable significance. Offer must remain open for 5 business days after any other material change 3. Target has 10 business days after commencement to file the 14D-9; in a negotiated tender offer, Target would typically file 14D-9 simultaneously with commencement Morgan Stanley

CONFIDENTIAL WORKING DRAFT – FOR DISCUSSION PURPOSES ONLY Project Celtic SUPPLEMENTAL MATERIALS Illustrative Two-Step Tender Offer Timetable (cont’d) Timeline Events/Activities Extend Tender Offer or commence subsequent offering period (3–20 business days) (1) Tender offer expires (2) Issue press release before opening of the market reporting acceptance of shares File final amendment to Schedule TO, if necessary Delivery of “acceptance letter” to the depository Pursue Short-Form merger; transaction closes File Certificate of Merger Withdraw Target’s common stock from trading File a Form 15 with the SEC delisting Target common stock Mail Notice of Merger Information Statement to non-tendering stockholders of Target advising them of their appraisal rights and sending them transmittal materials Appoint paying agent and circulate letter of transmittal materials to merged out stockholders Pursue Long-Form merger (only where the tender offer proceeded with the approval of the special committee) File Preliminary Information Statement or Proxy Statement Receive comments from SEC and file Definitive Information Statement or Proxy Statement (3) Print and Mail Information Statement or Proxy Statement to stockholders Stockholder approval Meeting of the stockholders of Target Merger approved by the stockholders of Target Stockholder approval is assured given KPN’s majority position Transaction closes File Certificate of Merger Withdraw Target common stock from trading File Form 15 with the SEC delisting Target common stock B 90% shares tendered? No A Yes 35 45 47 50 55 61 65 75 85 95 96 105 115 124 125 Calendar Days Notes 1. Disclose possibility of subsequent offering period in the initial offering materials or in subsequent amendments, within the time frame accepted by SEC. Security holders tendering in subsequent periods do not have withdrawal rights. Offer can be extended or closed and subsequent offering period commenced by press release as late as 9:00 a.m. on the day following a scheduled expiration date. If offering period extended, withdrawal rights remain for the entire period the Offer is extended; therefore, shares cannot be accepted for payment in ANY Offer until expiration. If Offer closed, purchase shares already tendered and announce results and commence subsequent offering period. Depository typically instructed to pay shareholders as soon as practicable after expiration of the Offer. If Offer is still open, withdrawal rights have never terminated 2. These actions may commence at the expiration of either the initial or extended Tender Offer period, so long as 90% of outstanding shares have been validly tendered and not withdrawn prior to the expiration of the period 3. SEC reviews may take anywhere from 4 to 6 weeks and typically involve 2 rounds of comments Morgan Stanley

CONFIDENTIAL WORKING DRAFT – FOR DISCUSSION PURPOSES ONLY Project Celtic SUPPLEMENTAL MATERIALS Illustrative One-Step Merger Timetable Timeline Events/Activities Signing of Definitive Agreement and Transaction Announcement Press Release issued File Proxy Statement with SEC; prepare and make all necessary regulatory filings SEC review period (1) Receive final clearance from SEC and mail Proxy Statement to Target stockholders Target stockholders vote and approve merger Close transaction Contact former stockholders to obtain old shares Replace with cash Withdraw Target’s shares from trading File a Form 15 with the SEC delisting Target company’s common stock 0 21 30 50 60 70 85 90 Calendar Days Notes 1. SEC review process typically may take anywhere from 4 to 6 weeks or even longer in the case of a going private transaction, and typically involves two rounds of comments. Overall timeline could be from 3 to 4 months Morgan Stanley

CONFIDENTIAL WORKING DRAFT – FOR DISCUSSION PURPOSES ONLY Project Celtic SUPPLEMENTAL MATERIALS Precedent Minority Buy-in Transactions Selected Deals Since 2001; All Cash; US Deals; Minority Buy-in Value $25 -$500MM (1) Precedent Minority Buy-ins Value % Initial Final Final Initial Price Premium to: Final Price Premium to: Premium to AV Announced Target Name Acquiror Name Structure ($MM)Sought Price Price Bump 1 Day 1 Mo Avg. 3 Mo Avg. 6 Mo Avg. LTM High LTM Low 1 Day 1 Mo Avg. 3 Mo Avg. 6 Mo Avg. LTM High LTM Low Initial Final 3/25/09 Hearst-Argyle Television Inc Hearst Corp Tender $67 18.0% $4.00 NA NA 91.4% 125.6% 11.8% (51.2%) (82.9%) 174.0% NA NA NA NA NA NA 18.3% NA 3/23/09 Cox Radio Inc Cox Enterprises Inc Tender 65 21.6% $3.80 NA NA 15.2% (6.5%) (25.2%) (35.4%) (70.9%) 26.2% NA NA NA NA NA NA 6.1% NA 10/22/07 Waste Industries USA Inc Investor Group Merger 272 49.0% 36.75 $38.00 3.4% 35.6% 31.8% 22.1% 18.3% 3.4% 48.3% 40.2% 36.3% 26.3% 22.3% 6.9% 53.3% 25.2% 28.5% 2/22/07 Great American Finl Res Inc American Financial Group Inc Merger 225 19.0% 23.50 24.50 4.3% 8.6% 7.7% 4.8% 5.5% (1.9%) 24.7% 13.2% 12.3% 9.3% 10.0% 2.3% 30.0% 6.5% 9.9% 10/09/06 NetRatings Inc VNU NV Merger 327 43.0% 16.00 21.00 31.3% 9.8% 9.9% 15.4% 16.4% 4.1% 39.5% 44.1% 44.2% 51.4% 52.8% 36.6% 83.1% 13.9% 62.4% 3/21/06 Erie Family Life Insurance Co Erie Indemnity Co Tender 75 24.9% 32.00 32.00 0.0% 6.7% 15.3% 14.9% 13.4% (0.6%) 20.8% 6.7% 15.3% 14.9% 13.4% (0.6%) 20.8% 5.8% 5.8% 9/13/05 CoolSavings Inc Landmark Communications Inc Merger 32 49.6% 0.80 0.80 0.0% 45.5% 40.6% 19.1% 16.2% (30.4%) 158.1% 45.5% 40.6% 19.1% 16.2% (30.4%) 158.1% 19.7% 19.7% 4/12/04 Edelbrock Corp Investor Group Merger 58 48.9% 14.80 16.75 13.2% 9.5% 9.2% 15.7% 19.6% 5.7% 54.2% 23.9% 23.6% 31.0% 35.3% 19.6% 74.5% 10.6% 26.9% 7/24/03 Digex Inc WorldCom Inc Tender 25 39.3% 0.70 1.00 42.9% (7.9%) 20.2% 48.0% 51.3% (22.2%) 536.4% 31.6% 71.7% 111.4% 116.2% 11.1% 809.1% (1.6%) 6.6% 6/02/03 Ribapharm Inc ICN Pharmaceuticals Inc Tender 187 19.9% 5.60 6.25 11.6% 10.2% 19.3% 23.7% 8.5% (45.4%) 80.6% 23.0% 33.2% 38.1% 21.0% (39.0%) 101.6% 6.6% 14.8% 2/18/03 Lexent Inc Investor Group Merger 32 49.5% 1.25 1.50 20.0% 37.4% 30.8% 25.3% 4.2% (76.2%) 64.5% 64.8% 56.9% 50.4% 25.1% (71.5%) 97.4% (39.0%) (67.6%) 1/13/03 Next Level Communications Inc Motorola Inc Tender 28 26.0% 1.04 1.18 13.5% 14.4% 22.5% 33.8% 19.0% (66.6%) 79.0% 29.8% 39.0% 51.8% 35.0% (62.1%) 103.1% 7.2% 14.9% 7/30/02 JCC Holding Co Harrah’s Entertainment Inc Merger 50 37.0% 10.54 10.54 0.0% 17.1% 31.0% 60.6% 121.8% 17.1% 1749.1% 17.1% 31.0% 60.6% 121.8% 17.1% 1749.1% 11.5% 11.5% 7/09/02 International Specialty Prods Samuel J Heyman Merger 138 19.0% 10.00 10.30 3.0% 25.8% 44.4% 20.2% 16.2% (10.0%) 78.6% 29.6% 48.7% 23.8% 19.7% (7.3%) 83.9% 12.5% 14.3% 3/18/02 Meemic Holdings Inc ProAssurance Corp Tender 35 18.8% 29.00 29.00 0.0% 11.5% 29.2% 28.1% 26.1% (9.3%) 40.1% 11.5% 29.2% 28.1% 26.1% (9.3%) 40.1% 11.5% 11.5% 3/14/02 Konover Property Trust Inc Investor Group Merger 38 47.9% 1.75 2.10 20.0% 0.0% (1.5%) 7.7% 10.6% (61.1%) 47.1% 20.0% 18.2% 29.2% 32.7% (53.3%) 76.5% 0.0% 3.9% 2/19/02 Travelocity.com Inc Sabre Holdings Corp Tender 491 30.0% 23.00 28.00 21.7% 19.8% 3.7% (3.1%) 10.8% (39.3%) 93.8% 45.8% 26.3% 17.9% 34.9% (26.1%) 135.9% 21.4% 49.5% 10/10/01 TD Waterhouse Group Inc Toronto-Dominion Bank Tender 386 12.0% 9.00 9.50 5.6% 45.2% 41.9% 9.9% (7.2%) (49.8%) 52.5% 53.2% 49.8% 16.1% (2.1%) (47.0%) 61.0% 16.2% 19.0% 10/01/01 NCH Corp Irvin Levy Tender 133 43.0% 47.50 52.50 10.5% 21.2% 14.9% 11.2% (1.2%) (15.6%) 43.9% 34.0% 27.0% 22.9% 9.2% (6.7%) 59.1% 33.6% 53.8% 8/22/01 Homeservices Com Inc MidAmerican Energy Holdings Co Tender 24 16.5% 17.00 17.00 0.0% 38.8% 41.7% 48.6% 45.7% 28.8% 70.0% 38.8% 41.7% 48.6% 45.7% 28.8% 70.0% 27.9% 27.9% 8/21/01 Spectra Physics Inc Thermo Electron Corp Tender 68 20.0% 20.00 17.50 (12.5%) 46.1% 9.2% (1.3%) 3.4% (72.3%) 50.9% 27.8% (4.4%) (13.6%) (9.5%) (75.8%) 32.1% 44.7% 27.0% 8/16/01 Leeds Federal Bankshares Inc Northwest Bancorp, Warren, PA Merger 40 27.3% 32.00 32.00 0.0% 97.5% 94.9% 100.3% 116.9% 87.1% 187.6% 97.5% 94.9% 100.3% 116.9% 87.1% 187.6% 97.0% 97.0% 5/30/01 Bacou USA Inc Bacou SA Merger 147 29.0% 28.50 28.50 0.0% 21.8% 14.6% 12.7% 11.9% 0.4% 58.3% 21.8% 14.6% 12.7% 11.9% 0.4% 58.3% 16.7% 16.7% 5/23/01 Unigraphics Solutions Inc Electronic Data Systems Corp Tender 205 14.0% 27.00 32.50 20.4% 27.1% 44.6% 41.9% 43.9% 9.9% 88.6% 52.9% 74.1% 70.7% 73.2% 32.3% 127.1% 21.8% 42.7% 5/14/01 Agency.com Ltd Seneca Investments LLC Merger 51 34.3% 3.00 3.35 11.7% 46.3% 51.7% 67.3% (5.9%) (88.4%) 159.5% 63.4% 69.4% 86.8% 5.0% (87.0%) 189.7% 468.5% 641.1% 3/26/01 CSFBdirect CSFB Tender 110 18.0% 4.00 6.00 50.0% 60.0% 31.0% 3.4% (7.7%) (74.3%) 60.0% 140.0% 96.5% 55.1% 38.4% (61.4%) 140.0% (23.7%) (55.4%) Mean: 11.3% 29.0% 29.9% 23.7% 18.1% (25.4%) 157.2% 40.7% 41.3% 40.1% 36.3% (14.0%) 189.2% 32.3% 45.1% Median: 8.0% 21.5% 25.8% 17.4% 12.7% (18.9%) 62.2% 32.8% 37.6% 30.1% 25.6% (7.0%) 83.5% 13.2% 17.9% High: 50.0% 97.5% 125.6% 100.3% 121.8% 87.1% 1749.1% 140.0% 96.5% 111.4% 121.8% 87.1% 1749.1% 468.5% 641.1% Low: (12.5%) (7.9%) (6.5%) (25.2%) (51.2%) (88.4%) 20.8% 6.7% (4.4%) (13.6%) (9.5%) (87.0%) 20.8% (39.0%) (67.6%)  Source Celtic Filings, Public Filings, Press Releases, FactSet Note 1. All deals represent completed transactions except for Hearst-Argyle and Cox Radio Morgan Stanley

CONFIDENTIAL WORKING DRAFT –FOR DISCUSSION PURPOSES ONLY Project Celtic SUPPLEMENTAL MATERIALS Illustrative Valuation Matrix Illustrative Valuation Matrix $MM, except where noted) AV / EBITDA EV / FCF Share Price Equity Value(1) Aggregate Value(1) Prem./Disc. to Current Share Price AV Actual 2008A Actual LTM Assumed NTM EBITDA Actual 2008A Actual LTM Assumed NTM Statistic$1.18$57.5$39.8$38.3$30.0$35.0$40.0$17.1$25.3$15.0$20.0$25.0 $1.00 $71.2 $44.7 (15.3%) (22.3%) 1.1x 1.2x 1.5x 1.3x 1.1x 4.2x 2.8x 4.7x 3.6x 2.8x $1.18 84.0 57.5 0.0% 0.0% 1.4x 1.5x 1.9x 1.6x 1.4x 4.9x 3.3x 5.6x 4.2x 3.4x $1.25 89.0 62.5 5.9% 8.7% 1.6x 1.6x 2.1x 1.8x 1.6x 5.2x 3.5x 5.9x 4.5x 3.6x $1.50 106.9 80.3 27.1% 39.7% 2.0x 2.1x 2.7x 2.3x 2.0x 6.3x 4.2x 7.1x 5.3x 4.3x $1.75 124.7 98.2 48.3 % 70.8% 2.5x 2.6x 3.3x 2.8x 2.5x 7.3x 4.9x 8.3x 6.2x 5.0x $2.00 142.6 116.1 69.5% 101.8% 2.9x 3.0x 3.9x 3.3x 2.9x 8.3x 5.6x 9.5x 7.1x 5.7x $2.25 160.6 134.0 90.7% 133.1% 3.4x 3.5x 4.5x 3.8x 3.4x 9.4x 6.3x 10.7x 8.0x 6.4x $2.50 178.5 152.0 111.9% 164.3% 3.8x 4.0x 5.1x 4.3x 3.8x 10.4x 7.1x 11.9x 8.9 x 7.1x $2.75 196.5 170.0 133.1% 195.6% 4.3x 4.4x 5.7x 4.9x 4.2x 11.5x 7.8x 13.1x 9.8x 7.9x $3.00 214.5 188.0 154.2% 226.9% 4.7x 4.9x 6.3x 5.4x 4.7x 12.6x 8.5x 14.3x1  Note 1. Assumes 71.2MM shares outstanding, $22.0MM debt and $48.6MM cash as of 3/31/09 Morgan Stanley

CONFIDENTIAL WORKING DRAFT –FOR DISCUSSION PURPOSES ONLY Project Celtic Appendix B Celtic Executive Compensation Review Morgan Stanley

CONFIDENTIAL WORKING DRAFT –FOR DISCUSSION PURPOSES ONLY Project Celtic CELTIC EXECUTIVE COMPENSATION REVIEW Celtic Executive Compensation Overview Celtic Compensation Summary Executive Compensation • Consists of the following:  − Base salary  − Annual performance-based cash bonus  − Stock options  − Severance / change of control arrangements  − Health and other benefits Change of Control  • Change of control triggers likely tripped in 2007 Stock Plan, requiring Celtic to either cash out in-the-money options or accelerate all options and require that they be exercised immediately Executive Bonus Plan (to be voted on 5/26/2009 shareholder meeting) • Permits the Compensation Committee to make cash awards to executives that qualify as "performance-based" compensation under Section 162(m) of the Code  • Total expected 2009 maximum target awards for executive officers is $1.8MM (6 executive officers) and other employees is $1.1MM (14 other employees, including officers who are not executive officers) Source Celtic 2009 Proxy dated 4/10/09 Note 1. Percentage of ownership based on 71,228,328 shares of common stock outstanding on 4/1/09 Summary of Beneficial Ownership Beneficial Owner No. of Shares Beneficially Owned % Owned (1) Directors and Executive Officers Directors and Executive Officers Ofer Gneezy 1,587,903 2.22% Gordon J. VanderBrug 709,352< 1%  Charles N. Corfield 616,509< 1% W. Frank King 162,355< 1% Robert H. Brumley 99,994< 1% Joost Farwerck 0< 1% Eelco Blok 0< 1% Richard G. Tennant 194,849< 1% Paul H. Floyd 239,124< 1% Edwin van Ierland 26,250< 1% Mark S. Flynn 55,161< 1% Total 3,691,497 5.09% Source Celtic 2009 Proxy dated 4/10/09 Morgan Stanley

CONFIDENTIAL WORKING DRAFT –FOR DISCUSSION PURPOSES ONLY Project Celtic CELTIC EXECUTIVE COMPENSATION REVIEW •Base salaries increased in 2008 between 20 –40% to raise executive compensation to the 25th percentile of the Primary Peer Group Composite –Peer Group as defined in the proxy comprises 10 publicly traded firms with similar products/services and revenues (5) •Annual incentive awards are made in cash and based on EBITDA and cash-flow targets •Long-term incentive awards historically have been issued in the form of stock options –Generally vest quarterly over a four-year period Executive Officer Summary Compensation Table Compensation includes salary, bonus, options, benefits and non-equity incentive compensation Summary Compensation Table ($ in 000's) Name and Principal Position Year Salary Cash Bonus(1) Option Awards(2) Non-equity Incentive Plan Compensation(3) Other Compensation Total Ofer Gneezy (President & CEO) 2008 $490 $73 $282 $7 $851  2007 350 97 111 135 5 698  2006 208 60 132 4 405 Gordon J. VanderBrug (EVP) 2008 $360 $61 $207 $7 $634  2007 300 83 111 106 5 605 2006 187 60 119 4 371  Paul H. Floyd (SVP, Global Products) 2008 $275 $87 $120 $7 $489  2007 225 66 39 100 5 435  2006 185 48 112 4 350 Richard G. Tennant (CFO) 2008 $313 $87 $131 $7 $538  2007 250 66 39 77 5 437  2006 185 48 112 4 350 Mark S. Flynn (Chief Legal Officer) (4) 2008 $288 $101 $94 $7 $489 2007 220 43 77 56 75 472 Source Celtic 2009 Proxy dated 4/10/09 Notes 1. Represents cash bonus amounts paid in respect of performance for the three quarters ended 9/30/07 2. Represents the proportionate amount of the total fair value of option awards recognized by us as an expense in 2008, 2007 or 2006 for financial accounting purposes including the period prior to the closing of the KPN Transaction. For Mr. Gneezy and Dr. VanderBrug, the amount related to option awards includes $79,017 each of stock-based compensation expense in 2007 for the accelerated vesting of options upon the closing of the KPN Transaction 3. In the case of 2007 amounts, reflects the actual amounts paid as cash bonuses during 2007 for the first three quarters of 2007, and during 2008 for the quarter ended 12/31/07 and the transaction synergy incentive bonuses tied to the achievement of synergies from the completion of the KPN transaction 4. Mr. Flynn commenced employment with us on 2/12/07; Other income includes $70,000 in relocation expenses.  5. Peer Group comprises Akamai Technologies, Earthlink, Global Crossing, IDT Corp., Paetec Holding Corp., RCN Corp., Savvis, Time Warner Telecom, Vonage Holdings Corp. and Windstream Corp Morgan Stanley

CONFIDENTIAL WORKING DRAFT –FOR DISCUSSION PURPOSES ONLY Project Celtic CELTIC EXECUTIVE COMPENSATION REVIEW Outstanding Equity Awards Grants of stock options outstanding (vested and unvested) as of 12/31/08 •No options to purchase shares of the Company’s common stock were exercised by the named executive officers during the fiscal year ended 12/31/08 except that on 2/25/08, Mr. Gneezy exercised an option to purchase 38,376 shares of Common Stock at an exercise price of $2.29 per share –The value realized by Mr. Gneezy upon the exercise of this stock option was $73,947 Outstanding Equity Awards Option Awards Name No. of Securities Underlying Unexercised Options (#) Exercisable Unexercisable Option Exercise Price($) Option Expiration Date Name Option Awards No. of Securities Underlying Unexercised Options (#) Exercisable Unexercisable Option Exercise Price($) Option Expiration Date  Ofer Gneezy 19,188 0 $30.96 05/25/10  23,984 0 1.50 11/15/11  15,518 0 1.83 08/11/13 42,045 0 2.21 08/11/13 1,198 0 4.42 09/14/14 17,990 0 4.90 09/14/14 38,376 0 4.54 03/29/16  22,500 97,500 4.51 02/26/18 Richard G. Tennant 53,966 0 $1.50 11/15/11 17,988 0 3.54 11/15/11 32,981 0 2.21 08/11/13 14,989 0 1.83 08/11/13 1,198 0 4.42 09/14/14 14,391 3,599 4.90 09/14/14 10,493 13,492 4.54 03/29/16 13,125 56,875 4.51 02/26/18 Gordon J. VanderBrug 28,782 0 $2.29 12/03/08 14,390 0 28.14 05/25/10 23,984 0 1.50 11/15/11 17,988 0 1.83 08/11/13 39,575 0 2.21 08/11/13 17,990 0 4.90 09/14/14 1,198 0 4.42 09/14/14 38,376 0 4.54 03/29/16 18,750 81,250 4.51 02/26/18 Mark S. Flynn 13,492 48,727 $6.78 02/15/17 4,688 20,312 4.51 02/26/18 Paul H. Floyd 28,782 0 $1.50 11/15/11 83,947 0 2.58 06/24/13 32,981 0 2.21 08/11/13 14,989 0 1.83 08/11/13 1,198 0 4.42 09/14/14 14,391 3,599 4.90 09/14/14 10,493 13,492 4.54 03/29/16 13,125 56,875 4.51 02/26/18 Source Celtic 2009 Proxy dated 4/10/09 Morgan Stanley

CONFIDENTIAL WORKING DRAFT –FOR DISCUSSION PURPOSES ONLY Project Celtic CELTIC EXECUTIVE COMPENSATION REVIEW Severance and Change of Control Arrangements •Definition of Acquisition or Change of Control for Employment Agreements and Offer Letters  –Acquisition defined as a transaction in which (i) more than 50% of the voting power of outstanding shares transferred to a person or persons who did not hold the shares beforehand or (ii) the sale, transfer or disposition of all or substantially all of the company’s assets to one or more persons in a single or series of related transactions –Change of control defined as (i) a person or group of persons acquires beneficial ownership of securities possessing more than 50% of combined vote as a part of a tender or exchange offer made directly to shareholders or (ii) over a period of 36 months or fewer, a majority of board of directors by one or more proxy contests (a) ceases to be composed of individuals who have been members of the board prior to the period or (b) have been elected or nominated for election as members of the board during such period by at least a majority of the board who were still in office at the time such election or nomination was approved by the board Severance and Change of Control Arrangements •Mr. Gneezy and Dr. VanderBrug: –In the event of termination by Celtic without cause or by the executive for good reason, the executive is entitled to 12 months base salary continuation (which is mitigated dollar for dollar in the event the executive begins new employment) and 12 months of health insurance continuation  –In the event of an acquisition or change in control, the executives' options and restricted shares, if any, automatically become fully vested immediately prior to the event, and each option remains exercisable until the expiration of the option or until it sooner terminates in accordance with its terms –“Good reason” is defined as “(i) failure of the Employer to continue to employ the Employee as [Job Title] of the Employer; or (ii) material diminution of the Employee's responsibilities, duties or authorities as President and Chief Executive Officer of the Employer, or assignment to the Employee of any responsibilities or duties inconsistent with such positions; or (iii) failure of the Employer to pay and provide to the Employee the compensation provided for herein; or (iv) requiring the Employee to be permanently based anywhere other than the principal executive offices of the Employer (excluding business-related travel to an extent reasonably consistent with past practice)”(3) –“Good reason” also includes (1) a material diminution in the employee’s base compensation (including base salary and target annual incentive opportunity); (2) a material diminution in the employee’s authority, duties or responsibilities; (3) a relocation of the Corporation’s principal office, or the employee’s office as assigned by the Corporation if at another location, to a location that is more than 50 miles from the current location of such office; or (4) any other action or inaction that constitutes a material breach of the terms of the applicable agreement.  •Messrs. Floyd, Tennant and Flynn  –If the executive is terminated without cause or resigns for good reason (as defined in the employment agreements set forth above)within 6 months of an acquisition or a change in control, the executive is entitled to 9 months of base salary continuation Summary Payments Assuming Termination ($ in 000’s) Severance Payable Upon a Termination Without Cause or For Good Reason Officer Cash Severance Health Insurance Benefits Total(1)(2) Ofer Gneezy $490 $18 $508 Gordon J. VanderBrug 360 18 378  Summary Payments Assuming Termination following a Change in Control Officer Severance Payable Upon a Termination Without Cause or For Good Reason Following a Change in Control Total (1)(2) Paul H. Floyd $206 $215  Richard G. Tennant 235 243 Mark S. Flynn 250 250 Notes  1. All information from Celtic 2009 Proxy dated 4/10/09; Assumes termination as of 12/31/08  2. The exercise price of all outstanding unvested stock options was greater than the price of the Company’s stock ($1.41 per share) on 12/31/08  3. Both Mr. Gneezy and Dr. VanderBrug have the same definition of “good reason” in their respective employment agreements, except for their title Morgan Stanley

CONFIDENTIAL WORKING DRAFT –FOR DISCUSSION PURPOSES ONLY Project Celtic CELTIC EXECUTIVE COMPENSATION REVIEW Severance and Change of Control Arrangements (cont’d) 2007 Stock Plan Change of Control  Definition  • Includes a going private transaction (i.e., any transaction in which Celtic ceases to be a public reporting company) Considerations  • In a going private transaction the company will likely have to either cash out the in-the-money options or immediately accelerate all options and require that they be exercised (if at all) prior to closing of the transaction  Source Celtic 8K Filing dated 10/3/07 (Exhibit 10.1) Morgan Stanley

CONFIDENTIAL WORKING DRAFT –FOR DISCUSSION PURPOSES ONLY Project Celtic CELTIC EXECUTIVE COMPENSATION REVIEW Severance and Change of Control Arrangements (cont’d) Executive Bonus Plan Change of Control Definition  • Change in Control is defined as a transaction in which any one person, entity or group acquires  − (i) stock in the Company that, together with the stock in the Company already held by such person, entity or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company or   − (ii) more than eighty percent of the assets of the Company; provided, however, if any one person, entity or group is considered to own more than 50% of the total fair market value or total voting power of the stock of the Company or more than 50% of the assets of the Company, the acquisition of additional stock or assets by the same person, entity or group shall not be deemed to be a Change in Control. The definition of Change in Control shall be interpreted, to the extent applicable, to comply with Section 409A(a)(2)(A)(v) of the Code.  • Awards may specify that they are payable upon a change in control at the target amount  • Plan to be approved at the 5/26/2009 shareholder meeting Morgan Stanley

EX-99.(C)(IV)

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EX-99.(C)(V)

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