The penultimate hop router (second-to-last router in the LSP) performs PHP (Penultimate Hop Popping) by removing the MPLS label before forwarding the packet to the egress router. This reduces processing load on the egress router since it doesn't need to perform a label lookup - it receives a plain IP packet. Option B is incorrect because the penultimate router pops, not pushes. Option C describes a swap operation with explicit null (label 3), not the normal PHP case. Option D is what the egress router does after PHP, not the penultimate router's job.