"Our evolving landscape requires us to become more flexible, improve our time to market and bring innovation to our customers faster than ever," Chief Executive Maximo Ibarra said in a statement.
The company, which is holding a capital markets day later, said it aims to save around 350 million euros (310 million pounds)in operating expenses over the period, which it expects will help it grow its adjusted core profit (EBITDA).
It also plans to add 1 million new customers to its fibre-to-the-home (FttH) data network by the end of 2021.
"The FttH targets are way above consensus expectations and sooner than we thought possible," said Berenberg analyst Usman Ghazi. "The savings are much bigger than consensus, implying upside to EBITDA estimates."
The company also said it expects revenue to steady over the period, with adjusted core profit in its division serving businesses stabilising by mid-2020.
KPN stuck to its targets for 2018.
(Reporting by Alan Charlish in Gdynia; Editing by Rashmi Aich and Louise Heavens)