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United Group

Annual Report to Noteholders for Financial Year 2019

29 April 2020

FY 2019 HIGH YIELD REPORT

CONTENTS Page

2019 Summary ...... 3 Business ...... 6 Key Operating Measures ...... 54 Results of Operations ...... 57 Liquidity and Capital Resources ...... 65 Subsequent (Material Recent) Events ...... 70 Mergers & Acquisitions ...... 73 Group Background ...... 74 Appendices ...... 76 Appendix 1 - Financial statements ...... 77 Appendix 2 - Key Factors Affecting Our Business and Results of Operations ...... 81 Appendix 3 - Definitions of Key Operating Measures ...... 91 Appendix 4 - Description of Key Line Items ...... 93 Appendix 5 - Quantitative and Qualitative Disclosures about Market Risk ...... 95 Appendix 6 – Critical Accounting Policies ...... 96 Appendix 7 – Adria BV Group Consolidated Financial Statements ...... 97 Appendix 8 – Related parties transactions ...... 98 Appendix 9 – Risk factors ...... 100 Appendix 10 – Material Debt Instruments (Other than the Notes) ...... 134

FY 2019 HIGH YIELD REPORT

Disclaimer

THIS REPORT (THIS “REPORT”) IS NOT AN OFFER OR SOLICITATION OF AN OFFER TO BUY OR SELL SECURITIES. IT IS SOLELY FOR INFORMATION PURPOSES. BY READING THIS REPORT, ATTENDING A PRESENTATION OF THIS REPORT (THE “PRESENTATION”) AND/OR READING THE SLIDES USED FOR THE PRESENTATION (THE “PRESENTATION SLIDES”) YOU AGREE TO BE BOUND AS FOLLOWS:

This Report, the Presentation and/or the Presentation slides, contains forward-looking statements, which include all statements other than statements of historical facts, including, without limitation, any statements preceded by, followed by or including the words “targets”, “believes”, “expects”, “aims”, “intends”, “may”, “anticipates”, “estimates”, “would”, “will”, “could”, “should” or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond our control that could cause our actual performance or achievements to be materially different from future performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding our present and future strategies and the environment in which we will operate in the future. These forward-looking statements speak only as at the date of this presentation. We expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any of such statements are based.

This Report contains summary audited financial information for Adria Midco B.V. and its for the twelve months ended December 31, 2019, unless another source, such as management accounts, is specifically mentioned.

Certain financial measures and ratios related thereto in this presentation, including EBITDA, Adjusted EBITDA, Adjusted EBITDA minus capital expenditure, RGUs and ARPU (collectively, the ‘‘Non-IFRS Measures’’) are not specifically defined under IFRS or any other generally accepted accounting principles. These measures are presented here because we believe that they and similar measures are widely used in our industry as a means of evaluating a company’s operating performance and financing structure. Our management believes this information, along with comparable IFRS measures, is useful to investors because it provides a basis for measuring the operating performance in the periods presented. These measures are used in the internal management of our business, along with the most directly comparable IFRS financial measures, in evaluating the operating performance. These measures may not be comparable to other similarly titled measures of other companies and are not measurements under IFRS or other generally accepted accounting principles, and you should not consider such items as alternatives to income (loss), operating income or any other performance measures derived in accordance with IFRS, and they may be different from similarly titled measures used by other companies.

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2019 Summary

29 April 2019 – , the leading cable and media player in South Eastern , today reports its financial results for 2019.

Operational Highlights  Homes passed grew by 1% to 1,852 thousand compared to FY 2018, primarily as a result of organic growth  Number of unique cable subscribers increased to 1,168 thousand (FY 2018: 1,166 thousand), primarily as a result of organic growth  Revenue Generating Units (“RGUs”)1 up by 3% year-on-year to 3,917 thousand, driven by organic growth  Blended Cable Average Revenue Per User (“ARPU”) for FY 2019 up by 4% year-on- year to €22.8 (FY 2018: €22.0), driven by migration from lower-priced to higher-priced service packages, subscriber growth for the Group’s multi-play offering, and price increases in , and

Financial Highlights  Consolidated Group revenue for FY 2019 up 17% year-on-year to €741.8 million (FY 2018: €635.6 million)  Consolidated Group adjusted EBITDA up by 13%2 in FY 2019 to €295.4 million (FY 2018: €260.6 million)  Net cash inflow of €206.6 million versus an inflow of €10.9 million in FY 2018  As at December 31, 2019, net leverage for United Group alone (ratio of Group Net Debt to Annualized Last Two Quarters Adjusted Pro Forma EBITDA3) and including (ratio of Group Net Debt to Annualized Last Two Quarters Adjusted Pro Forma EBITDA4) decreased to 4.84x and 4.86x, respectively (December 31, 2018: 4.88x)

1 2018 restated – Following a change in RGU classification methodology at the start of 2019, we have restated 2018 figures to facilitate like-for-like comparison. As a result of this new approach, OTT users on our network are classified as Cable and Cable services users on other networks, which are in turn reported under Other Services. Besides RGU and subscriber figures, this change also had an immaterial effect on ARPU. All 2018 operational figures presented herein have been restated in line with this new approach.

2 Year-on-year comparison affected by positive effect of acquisitions realized during 2018 and 2019, as well as changes in FX rates.

3 Annualized Adjusted Pro Forma EBITDA is calculated as two times Q3 2019 + Q4 2019 Adjusted EBITDA plus €4.2 million of expected synergies with and €12.4 million of expected synergies with DM & plus annualized Q3 2019 + Q4 2019 Adjusted EBITDA (€53.5 million).

4 Annualized Adjusted Pro Forma EBITDA is calculated as two times Q3 2019 + Q4 2019 Adjusted EBITDA plus €4.2 million of expected synergies with Nova Croatia and €12.4 million of expected synergies with DM & PINK plus Tele2 annualized Q3 2019 + Q4 2019 Adjusted EBITDA (€53.5 million) plus Vivacom annualized Q3 2019 + Q4 2019 Adjusted EBITDA (€202.1 million).

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The following summary describes the operations in each of the Group’s reportable segments or subgroups:  SBB Serbia includes the results of cable services in Serbia and direct-to-home (“DTH” or Satellite) operations in Serbia and . Absolut Solutions results are also included in the SBB Serbia segment, however their results are not reflected in the statutory consolidated results of the SBB Serbia Group.

Slovenia includes the results of the Group’s cable, mobile and DTH services in Slovenia.

 Telemach BH includes the results of the Group’s cable and DTH services in Bosnia and Herzegovina.

 Telemach includes the results of the Group’s cable and DTH services in Montenegro.

 United Media Group includes the results of the Group’s media and content business in the former Yugoslav region including the results of N1, , , Orlando Kids, IDJ and entities acquired during 2018 (Nova TV and Direct Media Group).

 Other Businesses includes the results of the Group’s other operating businesses (such as NetTV) and its Holding companies.

United Group generated consolidated revenues of €741.8 million during FY 2019. The 17% increase in revenue resulted from organic growth of the subscriber base, migration of subscribers to multi-play packages and the impact of acquisitions in 2018 and 2019. Adjusted EBITDA in FY 2019 was up 13% to €295.4 million.

Summary financials table in € m FY 2018 FY 2019 Change

Revenue 635.6 741.8 17% Adjusted EBITDA 260.6 295.4 13% Result from operating activities 20.7 51.6 149% Profit/(loss) before tax (43.0) (52.6) (23%)

In FY 2019:  SBB generated 30% of consolidated revenues and 40% of consolidated Adjusted EBITDA  Telemach Slovenia generated 31% of consolidated revenues and 25% of consolidated Adjusted EBITDA  Telemach BiH generated 10% of consolidated revenues and 9% of consolidated Adjusted EBITDA  Telemach MNE generated 2% of consolidated revenues and 1% of consolidated Adjusted EBITDA  United Media Group generated 25% of consolidated revenue and 27% of consolidated Adjusted EBITDA  Other Businesses generated 3% of consolidated revenue and -2% of consolidated Adjusted EBITDA

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Adj. 2019 in € m Revenue, net % of total % of total EBITDA

SBB Serbia Segment 220.0 30% 116.9 40% Telemach Slo Segment 229.6 31% 74.1 25% Telemach BH Segment 72.7 10% 26.4 9% Telemach MNE Segment 14.3 2% 3.2 1% United Media Segment 185.1 25% 80.1 27% Other Businesses 20.2 3% (5.4) (2%) Total 741.8 100% 295.4 100%

As at December 31, 2019, United Group had 3.92 million RGUs, up 3% year-on-year (FY 2018: 3.79 million) and an increase of 46 thousand quarter-on-quarter (Q3 2019: 3.87 million). This positive trend was driven by organic growth of cable pay-TV, telephony, mobile, and other services, as well as a growing proportion of multi-play subscribers. Blended cable average revenue per user (“ARPU”) for the period was €22.83, compared to €21.98 for FY 2018, with the 4% year-on-year increase primarily driven by migration of existing subscribers from lower-priced to higher-priced service packages, growth in subscribers for the multi-play offering, and price increases in Serbia, Slovenia and Bosnia and Herzegovina. Subscriber migration to multi-play packages is expected to continue as the cable market develops further. Capital expenditure (including capitalized inventory) amounted to €188.0 million in FY 2019, compared to €184.8 million in FY 2018. The majority of investments during in FY 2019 related to network expansion, customer premise equipment, the purchase of new programming rights and IP equipment and investment in mobile infrastructure.

United Group’s twelve-month financial statements have been prepared in accordance with International Financial Reporting Standard (“IFRS”) accounting policies.

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Business

Our Business at a glance United Group is the leading cable and media player in South Eastern Europe, providing services to more than 1.8 million homes as at December 31, 2019. United Group is the leading distributor of pay-TV in its core markets of Slovenia, Serbia, Bosnia and Herzegovina as well as in Montenegro. In all these markets, United Group also provides broadband internet and fixed-line telephony services via its cable infrastructure. As at December 31, 2019, United Group provided services to approximately 3.9 million RGUs and analog and digital cable pay- TV services to approximately 1.2 million unique subscribers. United Group is also the leading distributor of satellite (“DTH”) pay-TV across South Eastern Europe, with product and service offerings in each of Slovenia, Serbia, Bosnia and Herzegovina, North Macedonia and Montenegro, where it uses its Total TV platform to serve subscribers both inside and outside of its cable footprint to deliver content across the entire region, including rural areas. In addition to its cable-based and satellite-based services, United Group offers services in Slovenia, where it has acted as a mobile network operator (“MNO”). United Group’s core business is also complemented by its two over-the-top (“OTT”) distribution platforms which customers can access through internet-based streaming. This includes United Group’s regional OTT platform that enables customers connected to United Group’s competitors’ broadband internet connections (outside of United Group’s cable footprint) to access United Group’s attractive portfolio of pay-TV channels. Meanwhile, United Group’s international OTT platform, NetTV Plus, delivers ethnic and local language content to the Yugoslav diaspora around the world. Through its in-house content business, United Group produces distinctive and attractive pay-TV channels across multiple key genres that have historically driven pay-TV subscriptions. These channels include the region’s most popular family of branded pay-TV sports channels, as well as popular movie channels, children’s channels, a 24/7 news channel, music channels and other specialized channels, which United Group continues to expand both organically and through acquisitions. Together with other own productions, United Group currently produces over 40% of the total content in its national (terrestrial) and cable operations. United Group’s programs typically receive ratings of between 30% to 60% in the markets in which they are available. United Group believes its leading content portfolio differentiates United Group from its competitors, has enabled strong growth in its business and provides United Group with predictable third-party carriage fees. United Group’s media business also produces several pay-TV channels across key genres and sells them to third-party pay-TV distribution platforms in the region. United Group produces various TV formats, which are then sold to -to-air TV channels in the region. As part of its media business, United Group also provides services and digital production and distribution. Following the Nova Croatia Acquisition, and Direct Media/Pink Acquisition, United Group significantly developed its media business by adding leading full- format TV stations in Croatia, Bosnia and Herzegovina and Montenegro. Nova Croatia has strong local content production and profitability, with an share of 31% and market

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share by advertising revenue of 54%. Nova BH and have appealing content, such as popular national team football events licensed until 2022 (including the Eurocup qualifiers, Eurocup, World Cup qualifiers and League of Nations). In March 2019, United Group launched in Serbia. Nova S is a channel offering high-quality local production series, sports, talk shows with well-known national presenters and high-quality international productions, fully exclusive to SBB, Total TV and EON. In addition to its own content, as a result of United Group’s pan regional presence and well established distribution network, United Group is a distribution partner of choice for premium regional and international content owners, such as Discovery/, , AXN, CNN, HBO, Fox and Universal, and sports rights owners, such as the English , Spanish Football League LaLiga, 2020 UEFA European Championship qualifiers, 2020 UEFA European Championship, 2022 FIFA World Cup qualifiers, UEFA League of Nations, ATP, Formula 1, , and Moto GP. United Group believes this allows it to consistently obtain high-quality content and attractive payment terms. The Group believes these providers partner with United Group because of its well-known brands, large network and its focus on South Eastern Europe. United Group operates most of its business across the following six countries in South Eastern Europe: Slovenia, Serbia, Bosnia and Herzegovina, Croatia, North Macedonia and Montenegro. These countries have a combined population of approximately 20 million, distributed across approximately 6.8 million households, and represent the second largest Central and Eastern European (“CEE”) market after . Despite economic differences, many of these countries share a joint history and form a single market in which small local differences are overshadowed by the influence of similarities in cultural preferences and language across the region and are characterized by growing pay-TV and broadband markets that are currently underpenetrated relative to some other CEE and European markets. United Group is the leading multi-play provider in its existing markets, where it combines its services into packages, or bundles, which offer subscribers the convenience of being able to purchase television, broadband internet and telephony services from a single provider, and provides United Group with significant opportunities to cross sell United Group products. United Group believes that it has been able to establish its business as one of the leading distribution platforms in the region due to its attractive content portfolio, which it has established through ownership of certain key pay-TV channels, leading national TV stations in Croatia, Bosnia and Herzegovina and Montenegro, as well as long term partnerships with third party channel owners. Furthermore, United Group’s well invested network provides, among other things, one of the highest internet download speeds in each of its markets; and United Group delivers high quality customer service, which has led to relatively low churn rates which the Group believes demonstrates customer loyalty. United Group believes it is well positioned to maintain its market leading position in the pay-TV and cable broadband internet markets in Slovenia, Serbia, Bosnia and Herzegovina, and Montenegro, and is well positioned to further increase its market share in

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the fixed-line telephony market, as it differentiates its product offerings through access to desirable media content, a well invested network and high quality service. In addition, United Group believes that relatively low overall service penetration rates in Serbia, Bosnia and Herzegovina, and Montenegro, coupled with attractive product offerings, provide the Group with the opportunity to add additional customers and to cross and up-sell its products to existing customers. United Group’s platform allows for further market penetration through the ability to offer quad play bundles (a service package which includes cable pay-TV, broadband internet, and fixed-line and mobile telephony services) in Slovenia. The table below shows key operating and financial data of the Group as at and for the year ended December 31, 2019.

Source: Company information.

(1) Revenue split shown as percentage of gross revenue (incl. intercompany revenue)

(2) Market positioning is based on total number of subscribers as at December 31, 2019 for Slovenia and Serbia and as at December 31, 2018 for Bosnia and Herzegovina (last official data).

(3) United Group is the leading high- cable broadband internet provider in each of Serbia, Slovenia and Bosnia and Herzegovina within its footprint, and has the second largest broadband and telephony market share in each of these countries, behind the respective incumbents with national footprints.

(4) Cable RGUs in the Group’s markets consist of pay-TV, broadband internet and fixed-line telephony RGUs.

Our History United Group’s Group Executive Chairman, Dragan Šolak, founded the company as a Serbian cable-TV operator in 2000. Between 2001 and 2005, United Group grew its business by constructing an advanced cable network throughout Serbia. United Group also consolidated several sub-scale family-owned cable operators and successfully integrated them into its business. United Group launched its DTH services, Total TV, in Serbia in 2006 and in Slovenia, Bosnia and Herzegovina and Montenegro in 2007 and expanded Total TV into Croatia in 2008 (divested in 2018) and North Macedonia (formerly Macedonia) in 2009. In 2007, United Group

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entered into a strategic alliance with Sport Klub, and it acquired a controlling stake in the Ultra family of pay-TV channels in 2009. As a result of its strategic alliances, as well as the acquisition of local language television channels, United Group was among the first pay-TV providers in South Eastern Europe region to provide localized regional and international content.

In 2009, United Group acquired Telemach Slovenia, a leading triple-play provider in Slovenia, adding 160 thousand subscribers to its operations. During 2010, United Group’s consolidation of three cable pay-TV operators in , including KT Global Net, BH Cabel Net and ELOB, led to the formation of Telemach BH. In addition, over recent years United Group has amassed a comprehensive portfolio of owned pay-TV channels covering sports, movies, news, music, general and children’s programming, through its United Media business, which it has grown through focused and consistent investment. Telemach Slovenia, SBB Serbia, Telemach BH, Telemach MNE and United Media form the core operating companies of United Group’s business. United Group continues to leverage its position as the sole credible consolidator in the fragmented regional markets and has successfully acquired and integrated a number of businesses since 2010, including Maxtel in 2016, a local B2B internet provider in Slovenia, and Ikom in 2017, a cable operator in Serbia. In addition, following the acquisition of M-kabl in 2016, a cable operator in Montenegro, United Group has further expanded its subscriber base in Montenegro.

Following the liberalization of the fixed-line telephone markets in Bosnia and Herzegovina and Serbia in 2011 and 2012, respectively, United Group launched fixed-line telephony services in these two markets and, leveraging its existing cable pay-TV and broadband internet subscriber base, became the second-largest Serbian fixed-line telephone services provider in June 2013. United Group also launched its MVNO services in Slovenia in late 2012 and became an MNO upon its acquisition of Tušmobil in 2015, allowing it to provide quad-play bundles (cable pay-TV, broadband internet, and fixed-line telephony and mobile telephony services) to its subscribers in Slovenia, in addition to stand-alone mobile telephony services.

In July 2018, United Group acquired Nova TV d.d. from CME B.V.. United Group believes this acquisition, which includes several popular television channels in Croatia, helps it to create a strong platform which further differentiates its distribution platform, promotes its pay-TV channel portfolio, drives continued growth and creates a strong platform for additional bolt-on, accretive acquisitions. United Group is operating in a rapidly evolving environment where ownership of content and direct control of production capabilities are key to maintain its market position. The Nova Croatia Acquisition represented a continuation of its strategy of investment in content as a key long-term differentiator. The addition of general entertainment channels with wide appeal in Croatia combined with local content production capabilities enhances access for United Group’s subscribers to content that is popular, current and relevant for the region. United Group expects this complementary business to provide further cross-promotion opportunities as well as cost synergies. In September 2018, United Group acquired Direct Media, a leading media buying agency in

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Serbia, which included Direct Media’s operations in Serbia, Montenegro, North Macedonia (formerly Macedonia) and Albania, as well as United Group’s terrestrial TV stations Pink BiH and Pink Montenegro, which have been rebranded to Nova BH and Nova M.

Our Distribution Product Offerings United Group offers its subscribers a broad range of cable and satellite pay-TV, broadband internet and fixed-line and mobile telephony services in the following categories:

 Cable pay-TV. United Group’s analog and digital cable pay-TV services provide its subscribers with access to an attractive portfolio of standard definition (“SD”) and high definition (“HD”) pay-TV channels that offer popular local and regional content. As an additional service, United Group offers its pay-TV subscribers access to its proprietary pay-TV content “on the ” through its TV everywhere applications for computer, tablet and mobile devices. United Group offers cable pay-TV to approximately 1,168 thousand subscribers across its core markets of Slovenia, Serbia, Bosnia and Herzegovina and Montenegro as at December 31, 2019.

 DTH pay-TV. United Group’s DTH pay-TV service, known as Total TV, is targeted at households outside its cable footprint and provides access to an attractive portfolio of channels to approximately 446 thousand subscribers across South Eastern Europe as at December 31, 2019.

 Regional OTT. United Group’s regional OTT platform, which operates under the EON brand of products and services, allows it to reach customers of its broadband internet competitors and allows these customers access its full digital pay-TV channel offering. As a result, customers can access all of United Group’s digital pay-TV channels on their TVs, computers, tablets, mobile devices or other internet-enabled platforms. United Group’s regional OTT platform enables it to serve residents in Serbia and Slovenia who are currently outside of its cable footprint but have access to broadband internet connection with United Group’s pay-TV products.

 International OTT. NetTV Plus is an OTT content provider that delivers extensive local and regional content to members of the entire former Yugoslav diaspora worldwide. NetTV Plus had 111 thousand subscribers as at December 31, 2019, indicating further future growth potential, supported by the global proliferation of internet, which makes OTT one of the most viable platforms to access ethnic content.

 Broadband internet. United Group believes it operates the largest broadband internet network in the region and delivers among the fastest broadband connections in its markets with speeds of up to 1.0 Gbps. United Group’s network has been fully upgraded to EuroDOCSIS 3.0, which supports speeds of up to 1,200 Mbps. United Group offers broadband internet to approximately 856 thousand subscribers across its core markets of Slovenia, Serbia, Bosnia and Herzegovina and Montenegro as at December 31, 2019.

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 Fixed-Line Telephony. United Group offers telephony services using voice-over internet protocol technology (“VoIP”), which allows its subscribers to make traditional fixed-line telephone calls using a standard telephone handset. United Group offers fixed-line telephony to approximately 695 thousand subscribers across its core markets of Slovenia, Serbia, Bosnia and Herzegovina and Montenegro as at December 31, 2019.

 Mobile Telephony. Currently, United Group offers mobile telephony services in Slovenia, where it operates as an MNO. As an MNO, United Group is able to provide a broad array of subscription options, comprehensive data packages and enhanced coverage through its own mobile network. United Group offers mobile telephony services to approximately 550 thousand subscribers in Slovenia as at December 31, 2019.

• United Media: United Group’s media business produces several pay-TV channels across key genres and sells them to third-party pay-TV distribution platforms in the region. United Group also produces various TV formats which are then sold to free-to- air TV channels in the region. In addition, United Group’s media business provides advertising services and digital production and distribution. Since 2012, United Group has produced pay-TV channels across all genres including entertainment, sports, news, eSports, kids, TV series and movies. United Group also partners with regional and international content owners who seek to provide their content to South Eastern Europe and have long-term contractual relationships with several of them. In addition, United Group offers attractive advertising services with desirable advertising slots that it sells to both local advertisers and clients from around the world. United Group has also recently established a digital music production and content distribution business, and in 2018, it bolstered its media business with the Nova Croatia Acquisition. The Nova Croatia Acquisition strengthened United Group’s production capabilities, added to its portfolio of specialized pay-TV channels and helped it to create a strong platform for additional bolt-on acquisitions that it believes will be accretive to its media business.

Pay-TV United Group currently provides analog and digital cable pay-TV throughout its network in Slovenia, Serbia, Bosnia and Herzegovina and Montenegro. As at December 31, 2019, United Group provided its cable pay-TV services to 197 thousand subscribers in Slovenia through Telemach Slovenia (58% of homes passed), 733 thousand subscribers in Serbia through SBB Serbia (67% of homes passed), 208 thousand subscribers in Bosnia and Herzegovina through Telemach BH (62% of homes passed) and 30 thousand subscribers in Montenegro through Telemach MNE (33% of homes passed). In line with United Group’s business strategy, it leverages its extensive cable network and distinctive cable pay-TV content to encourage its subscribers to purchase one of its bundles which offer the convenience of being able to receive television, broadband internet and telephony services from a single provider. As at December 31, 2019, approximately 80% of United Group’s cable pay-TV

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subscribers had purchased one of its bundles. For the year ended December 31, 2019, United Group’s analog and digital cable pay-TV business segment generated revenues of €173.9 million at an average ARPU of €12.0.

United Group offers high-quality analog pay-TV throughout its network. All of United Group’s pay-TV customers receive its analog pay-TV service (“Basic TV”). United Group’s basic TV package has been standardized across its network and offers its customers access to over 57 analog TV channels in Serbia, over 15 in Slovenia, and over 54 in Bosnia and Herzegovina. In addition to Basic TV, United Group provides its customers with the option to subscribe to its digital cable pay-TV services (previously offered under the D3 brand and now offered as one of the EON brand of products and services), and it focuses on migrating analog subscribers to digital services and on continuing to take advantage of the cross- and up-selling opportunities provided by an influx of potential new customers switching from analog to digital cable pay-TV. United Group’s digital cable pay-TV service provides its customers with access to between 123 and 294 digital channels depending on the particular market, including up to approximately 86 HD channels and 112 radio stations. United Group’s digital cable pay-TV service offers its subscribers the option to build a multi-channel TV bundle to suit their preferences by allowing them to choose from a tiered digital pay-TV offering. United Group believes each of its digital pay-TV bundles is competitively priced and provides its subscribers with access to high-quality content.

In addition to its bundles, United Group also offers its subscribers digital add-on TV packages, each containing premium SD and HD television channels such as HBO, as well as bundled VoD options for subscribers that have leased one of its digital receivers. To upgrade to its digital pay-TV content (including digital cable, DTH pay-TV, HD content and interactive TV services), United Group offers subscribers the necessary equipment for free as part of a long-term services contract and recoup a portion of its cost of providing the equipment over the duration of the contract. The digital receiver remains United Group’s permanent property and the subscriber undertakes to return the receiver upon the termination of their contract. United Group’s digital cable pay-TV service also includes CatchUp TV and VoD services. CatchUp TV provides subscribers with the ability to view a wide variety of television programs from a group of popular channels at any time within seven days after the programs originally aired. VoD provides subscribers with access to a library of over 23,000 movies and other programming titles, either on a transactional basis or a monthly subscription contract.

United Group believes that its TV bundles offer a favourable channel line-up across a variety of popular genres, such as sports, children’s entertainment and movies, with a number of sports channels included in the Starter Package. Popular sports channels (Sports Klub) are also available in HD as part of United Group’s Extended Package at no additional cost. Many of United Group’s competitors, on the other hand, only include sports channels in their higher value packages and provide less overall premium content at equal or higher prices. United Group believes its high-quality and broad channel and content offering allows it to take a distinctive position in the market in relation to its competitors.

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In 2012, United Group launched its “TV everywhere” applications (previously offered under the D3 Go brand name and now offered as one of the EON brand of products and services) for computer, tablet and mobile devices. Through these applications, United Group provides its existing cable pay-TV subscribers with access to digital pay-TV content “on the go.” Subscribers can register up to three devices per household and the applications support access to all channels simultaneously. The application is fully HD-compatible. Subscribers require an active broadband internet connection in order to access United Group’s TV everywhere content and can download the applications from the internet for free. United Group’s TV everywhere content is also available to its mobile subscribers in Slovenia over its mobile network.

Telemach Slovenia

As at December 31, 2019, United Group’s pay TV penetration in Slovenia decreased to 58% from 61% at December 31, 2016. United Group’s cable pay TV subscribers in Slovenia increased from 186 thousand at December 31, 2016 to 197 thousand as at December 31, 2019. According to Solon, the total pay TV market (which includes cable, IPTV and DTH subscribers) in Slovenia was estimated at 642 thousand in 2017 compared to 245 thousand for Telemach Slovenia (including cable, IPTV and DTH subscribers). United Group believes this represents significant growth potential in the pay TV market in Slovenia. Furthermore, the total pay TV market in Slovenia is expected to grow at a CAGR of 2.3% from 642 thousand in 2017 to 753 thousand in 2025. As at December 31, 2019, 93% of United Group’s cable pay TV customers had subscribed to digital TV.

For the year ended December 31, 2019, Telemach Slovenia’s cable pay-TV services generated revenues of €46.5 million at an average ARPU of €19.0.

SBB Serbia

United Group’s pay TV penetration in Serbia increased from 63% at December 31, 2016 to 67% as at December 31, 2019. Furthermore, United Group’s cable pay TV subscribers in Serbia increased from 568 thousand at December 31, 2016 to 733 thousand as at December 31, 2019. According to Solon, the total pay TV market (which includes cable, IPTV and DTH subscribers) in Serbia was estimated at 1.7 million in 2017 compared to 978 thousand for SBB Serbia (including cable, IPTV and DTH subscribers), which United Group believes represents significant growth potential in the pay TV market in Serbia. Furthermore, the total pay TV market in Serbia is expected to grow at a CAGR of 2% from 1.7 million in 2017 to 1.9 million in 2025.

In Serbia, United Group expects to benefit further from its experience in Slovenia, where it has successfully increased the number of multi-play subscribers following the switchover from analog to in 2010, by taking advantage of the cross- and up-selling opportunities provided by an influx of potential new customers switching from analog to digital cable pay-TV.

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For the year ended December 31, 2019, SBB Serbia’s cable pay-TV services generated revenues of €95.9 million at an average ARPU of €10.5.

Telemach BH

United Group’s pay TV penetration in Bosnia and Herzegovina decreased from 67% at December 31, 2016 to 62% as at December 31, 2019. United Group’s cable pay TV subscribers in Bosnia and Herzegovina increased from 209 thousand at December 31, 2016 to 208 thousand as at December 31, 2019. According to Solon, the total pay TV market (which includes cable, IPTV and DTH subscribers) in Bosnia and Herzegovina was estimated at 784 thousand in 2017 compared to 345 thousand for Telemach BH (including cable, IPTV and DTH subscribers), which United Group believes represents significant growth potential in the pay TV market in Bosnia and Herzegovina. Furthermore, the total pay TV market in Bosnia and Herzegovina is expected to grow at a CAGR of 1.5% from 784 thousand in 2017 to 882 thousand in 2025.

For the year ended December 31, 2019, Telemach BH’s cable pay-TV services generated revenues of €27.5 million at an average ARPU of €10.6.

Telemach MNE

United Group offers analog pay-TV throughout its network in Montenegro and its cable package has been standardized across its network.

For the year ended December 31, 2019, Telemach MNE’s cable pay-TV services generated revenues of €4.0 million at an average ARPU of €11.4.

Direct to Home Pay-TV

United Group’s DTH, or satellite, pay-TV service known as Total TV, is targeted at households outside its cable footprint across the South Eastern European region (with the exception of Croatia, since January 2018, due to the divestiture of its Total TV operations in Croatia in connection with the Nova Croatia Acquisition). Total TV provides subscribers with access to up to 122 channels in Serbia, 43 of which are also available in HD format, 124 channels in Slovenia, 40 of which are also available in HD format, and 127 channels in Bosnia and Herzegovina, 43 of which are also available in HD format. In order to access Total TV content, users must be equipped with a digital receiver, a satellite card for the receiver and a satellite dish. As United Group only actively markets its DTH offering in those areas that are outside its cable footprint, there is limited to no overlap with analog and digital cable pay-TV offering. Additionally, there is a low risk of cable pay-TV cannibalization, due to the fact that, for a similar price as basic DTH pay-TV services, United Group’s basic cable pay-TV services offer a better value, including the option to watch TV programs on up to three TV sets, the possibility to combine cable pay-TV services with cable internet and digital telephony and the most popular TV channels. United Group offers reception boxes equipped to receive MPEG-4

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transmissions in every country in which it offers DTH services, allowing it to offer HD channels to all its DTH subscribers.

As with United Group’s analog and digital cable pay-TV offering, customers can choose from a range of DTH packages across different price points. Additionally, United Group has entered into partnership agreements with Telekom Slovenije in Slovenia and in Serbia pursuant through which it offers DTH pay-TV content and re-sells their respective ADSL internet services to customers outside of its cable footprint.

As at December 31, 2019, United Group’s provided its Total TV services to approximately 446 thousand subscribers throughout Slovenia, Serbia, Bosnia and Herzegovina, North Macedonia and Montenegro. For the year ended December 31, 2019, United Group’s DTH pay-TV business segment generated revenues of €59.6 million at an average ARPU of €11.2.

OTT Television

United Group’s two OTT content platforms, its regional OTT platform (previously D3i; now operating under the EON brand) and its international OTT platform (NetTV Plus), have allowed it to further expand its reach:

 Regional OTT. United Group’s regional OTT platform enables customers of its broadband internet competitors within Serbia and Slovenia (but outside of its cable footprint) to access its distinctive digital content via the internet. Unlike United Group’s DTH pay-TV platform, which aims to deliver content to subscribers in rural areas without cable infrastructure, the regional OTT platform delivers pay-TV services to customers in metropolitan areas. By expanding United Group’s reach beyond the traditional cable footprint using a regional OTT platform, United Group is able to increase the number of subscribers to its pay-TV content.

 International OTT. United Group’s NetTV Plus platform, which it launched in 2013, provides over 200 local-language channels showing ethnic content, including all national free-to-air channels, to the entire Yugoslav diaspora (estimated at over 4 million people) around the world through the internet. As at December 31, 2019, United Group had 111 thousand NetTV Plus subscribers. Subscribers can access its NetTV Plus content through their TVs using a set-top box connected to the internet, “Smart TVs” that have built-in internet functionality or by streaming content via internet-enabled tablets, mobile devices and personal computers. By expanding United Group’s geographic reach outside its region to customers in affluent countries in Western Europe and North America, United Group is positioned to charge prices that are higher than the prices it is able to charge for its pay-TV services in its three core markets, thereby further increasing its earnings.

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Programming Content Through focused and consistent investment over the last few years, including investment in developing own pay-TV content and investment in strategic partnerships with regional and international third-party content owners, United Group has built a comprehensive content offering, covering sports, movies, news and children’s content.

Owned Content Business

Through United Group’s owned-content business it directly owns many of the region’s popular pay-TV channels. In 2006, United Group acquired Sport Klub, the most popular sports channels in the region, and in 2012, it added Cinemania, a popular movie channel, to its content portfolio. United Group strives to continually improve these offerings. For example, in collaboration with notable studios in the United States, United Group has improved Cinemania’s movie content helping to establish Cinemania as a leading movie channel in the region. United Group has also continued to improve the content it offers through its leading Sport Klub channel by adding popular sporting events to its content portfolio. United Group has introduced localized feeds for Sport Klub channels, in both HD and SD. Furthermore, United Group organizes and produces eSports events, which it broadcasts via Fortuna eSports. In April 2017, United Group acquired , a Croatian channel with premium content focused on Ultimate Fighting Championship, and IDJ Digital Holding Limited, a digital distributor of music and online video content in Malta.

In 2014, United Group launched N1, an independent 24/7 regional news channel affiliated with CNN, with studios in , and Sarajevo and a large network of reporters and journalists reporting on regional events, and which is now available to subscribers in all of United Group’s geographic markets. In addition, United Group has sold distribution rights for this channel to all major operators in the region. Since the beginning of 2015, United Group has utilized its majority stake in Grand Production, a leading Serbian music and TV production house with a long history of popular shows in Serbia, Bosnia and Herzegovina and North Macedonia (formerly Macedonia) to introduce a 24/7 local music and entertainment channel called Grand. In 2016, United Group launched the Grand 2 channel, expanding its music channels portfolio with new content offered to its subscribers.

United Group has also been successful in broadening the distribution reach of its other pay-TV channels. For example, during 2015, United Group sold distribution rights of N1 and certain Grand Production channels to other major cable operators in the region. United Group has extended the distribution scope for Orlando Kids and Bambino (which have been rebranded as Pikaboo and Vavoom, respectively), popular channels geared towards children that complement its Ultra family of pay-TV channels, to include Bosnia and Herzegovina, North Macedonia, Montenegro and Serbia, as well as Croatia and Slovenia, where those offerings were already present. United Group has also increased revenues from its Sport Klub channels by successfully extending its existing contracts with third-party pay-TV distributors while maintaining access to premium content. United Group has also extended the production of the most popular entertainment shows for national TV stations in Serbia, Bosnia and

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Herzegovina, and North Macedonia, becoming one of the most watched shows in their respective markets. In addition, United Group has significantly increased advertising revenues in most of its channels.

In July 2018, United Group acquired Nova Croatia that features several popular television channels in Croatia. United Group believes this acquisition will help it to create a strong mainstream media platform that will further differentiate its distribution platform, promote its pay-TV channel portfolio, drive continued growth and create a strong platform for additional bolt-on, accretive acquisitions.

In September 2018, United Group acquired Direct Media, a leading media-buying agency in Serbia. The transaction included Direct Media’s operations in Serbia, Montenegro, North Macedonia (formerly Macedonia) and Albania, as well as the company’s terrestrial TV stations Pink BiH and Pink Montenegro. In October 2018, United Group rebranded these channels as Nova BH and Nova M, respectively, to facilitate synergies with the existing brand equity of Nova in Croatia. United Group believes this acquisition will allow it to deliver more targeted solutions to advertisers - for both television and digital - and lead to increased advertising revenue from United Media productions, including through product placements and sponsorships.

United Group believes that the attractiveness of its content platform across key pay- TV genres supports the sustainable leadership position of its distribution platform. While a significant part of United Group’s content business’s revenue consists of carriage fees charged to its own distribution platforms (Telemach Slovenia, SBB Serbia, Telemach BH and Total TV), United Group also generates revenues through carriage fees paid by third-party distribution platforms, such as Telekom Slovenije, , T2 and A1 (formerly Si.Mobil), sales of advertising and the sublicensing of some of the sports rights it acquires to regional free-to- air broadcasters or to TV operators in , where the Group does not have any operations. United Group’s Sport Klub sports TV channels are by far the most in-demand channels of its content business, followed by the Grand channels.

CAS Media, which is a of United Media, assists with the sale of advertising mainly in Serbia and Slovenia, with some presence in Montenegro, North Macedonia, Bosnia and Herzegovina and Croatia. CAS Media is United Group’s exclusive representative of domestic and foreign cable channels, and it offers innovative advertising in United Group’s markets across a diverse range of channels that target all audiences. CAS Media also assists with the sale of advertising space on N1, Grand, IDJ TV and Sport Klub and on N1’s web portal, attracting clients from across the world.

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The following table sets forth the main broadcasting rights United Group held through its Sport Klub sports TV channels as at December 31, 2019. United Group has historically been successful in renewing these contracts on comparable terms.

North Sport Period Slovenia Serbia BH Croatia Montenegro Macedonia Portuguese League 2009–2020       Moto GP 2010–2023 —      USA PGA Tour 2011–2020       European PGA Tour 2011–2022       Champions League . 2012–2021  — — —  — English Premier League 2016–2022       Spanish League 2012–2022       Formula 1 2011–2020 —   —  — Euroleague 2006–2022       ATP 2007–2023       WTA 2007–2023       FA Cup 2012–2024       Europa League 2012–2021  — — —  — European Qualifiers to UEFA Euro 2020/ World Cup 2014–2022       2022 + Euro 2020 EuroCup 2016–2022       2012–2022       International Basketball Federation (“FIBA”) World and European 2017–2021 —      Championships Turkish 2017–2022       Turkish Super Lig .. 2017–2022       FIBA 3x3 2018–2023       2018–2021       International Federation 2019–2021       UFC 2017–2021       UEFA Youth-Women 2018–2022       Competitions Wimbledon 2020–2023       CEV Volleyball Champions 2014–2020       League

United Group secured regional rights for certain other major football and basketball competitions, including qualifiers for the FIFA World Cup and the EuroCup, for the next five years.

The variety that United Group offers in its content business allows it to tailor its approach for each individual country and market in which it operates. United Group plans to continue to review its content offering and will continue to develop its own distinctive content.

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United Group continues to view content differentiation as the cornerstone of its strategy and to drive the attractiveness of its content offerings relative to those of its competitors.

To further its own content development and protect the general market for content development, United Group and 33 other organizations and institutions signed the “ Declaration” in November 2018 to help increase international cooperation in the fight against online piracy. The group includes representatives of broadcasters, content developers and distributors, such as the BBC, Discovery, NBCUniversal and others, as well as the representatives of organizations and associations from individual non-European and European markets and public administration, Europol, law enforcement agencies, businesses and the media. The Warsaw Declaration, among other things, acknowledges the growing need for effective international cooperation in combating online piracy through understanding and mutual cooperation among the various international stakeholders.

Third-Party Programming Content

In addition to its owned-content offerings, United Group’s pay-TV distribution platforms typically license the rights for the distribution of its own as well as third-party owned channels, typically for a period of three to five years.

As the prominent pan-regional operator, United Group has been able to negotiate contracts with third-party providers that it believes are beneficial. For example, United Group has been able to lock in flat-rate contracts for content that provide for terms spanning multiple years, which benefits its profit margins as its number of subscribers increases because it is able to retain the benefits of increases in its subscriber base, and thereby increase its margins. United Group also pays royalties based on its subscribers’ usage of its VoD content. United Group generally pays such license fees on a “per subscriber” basis. For on-demand content purchased by subscribers (transactional VoD), United Group generally pays a revenue share of the retail price. For packaged on-demand content, United Group pays on a “per-subscriber” basis (subscription VoD), often subject to fixed minimum guarantees. If necessary, United Group also licenses third-party copyrights through various collective rights associations. United Group generally seeks to negotiate fixed-fee contracts and attempts to move away from per- subscriber agreements. United Group expects that its content costs (above the minimum amounts) will generally increase in line with increased revenues from digital pay-TV and on- demand content and continued investment in high-quality content to differentiate its platform from its competitors. United Group negotiates its contracts for content and other third-party rights on a Group-wide basis, so that it is able to maximize the benefits of its scale and best practices across the Group, and United Group has historically been successful at renewing these contracts on comparable terms. United Group plans to acquire additional broadcasting rights in the future to further enhance its content offering.

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Summary of Overall Programming Content

The following table provides an overview of United Group’s content offering:

______Source: Company data

Broadband Internet In 2009, United Group upgraded its network to EuroDOCSIS 3.0, and its current network is fully EuroDOCSIS 3.0 enabled. United Group’s EuroDocsis network offers its customers up to 1.0 Gbps download speeds, with an option to upgrade to speeds of up to 1.2 Gbps. United Group believes EuroDOCSIS 3.0 is superior to DSL and on par with the FttH services offered by its competitors. United Group currently provides internet download speeds that it believes compare favorably to the national average with its average recorded speeds being faster than that of the respective local incumbent by a factor of 1.6x in Slovenia, 1.4x in Serbia and 5.0x in Bosnia and Herzegovina (as at December 31, 2019). As United Group’s broadband internet operations provide it with very attractive margins due to little additional cost, United Group leverages its attractive pay-TV offering to sell broadband internet services to existing pay-TV customers. As a result, United Group does not sell its broadband internet services on a stand-alone basis and customers wishing to receive its broadband internet services must at a minimum subscribe to its analog Basic TV package. As at December 31, 2019, United Group provided its broadband internet service to approximately 856 thousand subscribers across Telemach Slovenia, SBB Serbia, Telemach BH and Telemach MNE (46% of homes passed). For the year ended December 31, 2019, United Group’s broadband internet business generated revenues of €137.1 million at an average ARPU of €12.0.

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Telemach Slovenia

Within Slovenia, in a large portion of its cable footprint, United Group competes with DSL offered by competitors and not fiber, enabling it to provide the fastest broadband speed available within those areas. United Group’s EuroDOCSIS 3.0 enabled network allows it to compete effectively in the remainder of its cable footprint which is covered by its competitors’ FttH network as it can match speeds offered by FttH operators in these overbuilt areas. United Group only offers broadband in Slovenia as part of a double-, triple-, or quad-play package with its cable pay-TV subscriptions. United Group offers its subscribers several broadband internet service options, varying in price according to download capacity and speed, ranging from a minimum download speed of 50 Mbps to a maximum speed of up to 1,000 Mbps. As at December 31, 2019, United Group provided broadband internet to approximately 163 thousand subscribers. For the year ended December 31, 2019, Telemach Slovenia’s broadband internet business generated revenues of €38.7 million at an average ARPU of €18.3. According to Solon, the total broadband market (which includes cable, FttH, DSL and other subscribers) in Slovenia was estimated at 603 thousand in 2017 compared to 169 thousand for Telemach Slovenia (including ADSL subscribers), which United Group believes represents significant growth potential in the broadband market in Slovenia. Furthermore, the total broadband market in Slovenia is expected to grow at a CAGR of 2.3% from 607 thousand in 2017 to 730 thousand in 2025. In 2017, cable-based broadband accounted for 30% of the broadband services in Slovenia based on number of households, while FttH, DSL and others (which primarily includes wireless, Ethernet, LAD and fixed-wireless access) accounted for 70%. As at December 31, 2019, United Group’s total broadband market share in Slovenia was 28%. United Group’s fixed broadband penetration in Slovenia increased from 78% at December 31, 2016 to 83% as at December 31, 2019. As at December 31, 2019, 86% of United Group’s customers in Slovenia received broadband speeds greater than 40 Mbps. According to Solon, the percentage of customers in Slovenia receiving high-speed broadband greater than or equal to 30 Mbps is expected to grow at a CAGR of 29.8% from 2017 to 2020.

SBB Serbia

United Group is the leading cable broadband internet provider in Serbia with its network passing approximately 1,087 thousand households across the country as at December 31, 2019. Within Serbia, United Group’s subscribers benefit from its extensive fully two-way enabled and EuroDOCSIS 3.0 upgraded network, with its current maximum commercial offering speed of 1,024 Mbps. As at December 31, 2019, the minimum broadband delivery speed United Group offers to new customers is 50 Mbps. United Group believes this compares favorably to the minimum broadband internet delivery speed offered by its competitors in Serbia.

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United Group offers broadband in Serbia to its existing TV customers and increasingly as part of a multi-play package with its cable pay-TV. United Group offers customers several options of broadband internet services varying in download capacity and speed at various price points. As at December 31, 2019, United Group provided broadband internet to approximately 513 thousand subscribers. For the year ended December 31, 2019, SBB Serbia’s broadband internet business generated revenues of €74.6 million at an average ARPU of €10.7. According to Solon, the total broadband market (which includes cable, FttH, DSL and other subscribers) in Serbia was estimated at 1.5 million in 2017 compared to 457 thousand for SBB Serbia (including ADSL subscribers), which United Group believes represents significant growth potential in the broadband market in Serbia. Furthermore, the total broadband market in Serbia is expected to grow at a CAGR of 3.8% from 1.5 million in 2017 to 2.0 million in 2025. In 2017, cable-based broadband accounted for 39% of the broadband services in Serbia based on number of households, while FttH, DSL and others (which primarily includes wireless, Ethernet, LAD and fixed wireless access) accounted for 61%. As at December 31, 2019, United Group’s total broadband market share in Serbia was 32%. United Group’s fixed broadband penetration in Serbia increased from 62% at December 31, 2016 to 70% as at December 31, 2019. As at December 31, 2019, 92% of United Group’s customers in Serbia received broadband speeds greater than 40 Mbps. According to Solon, the percentage of customers in Serbia receiving high speed broadband greater than or equal to 30 Mbps is expected to grow at a CAGR of 10.0% from 2017 to 2020.

Telemach BH

Within Bosnia and Herzegovina, United Group’s subscribers benefit from its fully two- way enabled and EuroDOCSIS 3.0 upgraded network which extends approximately 1,737 kilometers across the country and allows network broadband internet speeds of up to 300 Mbps. United Group offers broadband in Bosnia and Herzegovina to its existing TV customers primarily as part of a multi play package bundled with its digital cable pay-TV. Alternatively, United Group offers customers several tiers of broadband internet services with its analog TV service. These internet services are available with various download capacities and speeds and at varying price points. Higher broadband internet speeds are available when United Group’s internet services are purchased as part of a bundle with its digital pay-TV as compared to the internet services offered as a bundle with its analog pay-TV. As at December 31, 2019, United Group provided broadband internet to approximately 159 thousand subscribers. For the year ended December 31, 2019, Telemach BH’s broadband internet business generated revenues of €21.5 million at an average ARPU of €9.9. According to Solon, the total broadband market (which includes cable, FttH, DSL and other subscribers) in Bosnia and Herzegovina was estimated at 700 thousand in 2017

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compared to 149 thousand for Telemach BH, which United Group believes represents significant growth potential in the broadband market in Bosnia and Herzegovina. Furthermore, the total broadband market in Bosnia and Herzegovina is expected to grow at a CAGR of 2.7% from 700 thousand in 2017 to 864 thousand in 2025. In 2017, cable-based broadband accounted for 33% of the broadband services in Bosnia and Herzegovina based on number of households, while FttH, DSL and others (which primarily includes wireless, Ethernet, LAD and fixed wireless access) accounted for 67%. As at December 31, 2019, United Group’s total broadband market share in Bosnia and Herzegovina was 22%5. United Group’s fixed broadband penetration in Bosnia and Herzegovina increased from 66% at December 31, 2016 to 76% as at December 31, 2019. As at December 31, 2019, 90%5 of United Group’s customers in Bosnia and Herzegovina received broadband speeds higher than 50 Mbps. While Bosnia and Herzegovina is generally not yet making use of high-speed broadband higher than or equal to 30 Mbps, United Group believes Bosnia and Herzegovina displays clear trends of acceleration.

Telemach MNE

Within Montenegro, United Group’s subscribers benefit from a fully two way enabled and EuroDOCSIS 3.0 upgraded network. United Group offers cable broadband internet in Montenegro to its existing TV customers primarily as part of a multi play package with its digital cable pay-TV. For the year ended December 31, 2019, Telemach MNE’s broadband internet business generated revenues of €2.0 million at an average ARPU of €8.2.

Fixed-Line Telephony United Group offers fixed-line telephony services in Serbia, Slovenia, Bosnia and Herzegovina and Montenegro using VoIP which allows its subscribers to make traditional fixed- line telephone calls using a standard telephone handset. In April 2014, the Serbian fixed-line telephony market was fully liberalized with the introduction of fixed number portability, which allows customers to use their existing telephone number when switching to United Group’s product. As a result of United Group’s leading position in the cable pay-TV and broadband markets, it has been able to take significant market share from the incumbent in each of its three core markets. This liberalization has resulted in rapid growth in the number of its fixed-line telephony subscribers in Serbia. In line with its strategy, United Group intends to leverage on its existing customer base and its extensive network and high-quality pay-TV content to cross sell telephony products and bundled products to new and existing customers. As a result, United Group’s fixed-line telephony services are only available to its existing cable pay-TV customers.

5 Last official data as at December 31, 2018.

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According to Solon, the total fixed-line telephony market in 2017 was estimated at 688 thousand subscribers in Slovenia, 2,490 thousand subscribers in Serbia and 760 thousand subscribers in Bosnia and Herzegovina. As as December 31, 2019, United Group had 172 thousand subscribers for Telemach Slovenia, 403 thousand subscribers for SBB Serbia, and 105 thousand subscribers for Telemach BH, and so it believes there is significant growth potential in such broadband markets, despite an expected negative CAGR from 2017 to 2025 for the total market in each country. United Group’s “Basic Package” in all markets offers free calls within the Group network and only an analog touchtone phone is required to use its service. In addition to its Basic Package, United Group offers its subscribers various other packages which include free calls to customers of other regional fixed-line telephony providers. Despite the relatively recent launch of its fixed-line telephony operations in Serbia, United Group believes it is the second largest provider of fixed-line telephony services in Serbia behind the incumbent Telekom Srbija.

As at December 31, 2019, United Group provided its fixed-line telephony services to 695 thousand subscribers, or approximately 59% of United Group’s total cable pay-tv subscriber base.

For the year ended December 31, 2019, United Group’s telephony services generated revenues of €32.5 million at an average ARPU of €4.0.

Mobile Telephony In 2012, United Group launched an MVNO based mobile offering in Slovenia in collaboration with Tušmobil, which was only available to customers who had also subscribed to its pay-TV services. In April 2015, United Group acquired Tušmobil, the third largest MNO in Slovenia, which it has now fully integrated with its Telemach Slovenia segment. United Group has been able to realize annualized cost synergies resulting from its acquisition of Tušmobil (approximately three times larger than its initial estimates) while simultaneously improving the quality and coverage of the network, its market share and brand perception, and its prepaid/postpaid subscriber mix. Prior to United Group’s acquisition of Tušmobil, Tušmobil had weak network quality perception and brand perception. Tušmobil was primarily associated with low prices, which was the main factor differentiating it from competitors. United Group’s acquisition of Tušmobil and its subsequent rebranding of it as Telemach, combined with its investment in an advanced network and additional and creation of innovative data driven offers has re-positioned Telemach Slovenia as a strong player in the Slovenian mobile market. According to the Ipsos Brand Tracking Report 2017, United Group’s “top of mind” recognition as a mobile provider in Slovenia had increased to 21% by the end of 2017, from 12% in 2015. Similarly, after the integration of Tušmobil, a higher percentage of customers choose Telemach Slovenia as their first choice for mobile products in Slovenia, while United Group’s primary competitors have experienced decreases in this metric during the same period from 2015 to 2017. The following chart shows the evolution of customers’ first choice of brand:

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______Source: Ipsos Brand Tracking Report 2017. For 2015, Tušmobil is the basis.

United Group has developed an attractive suite of fixed mobile convergence services in Slovenia. Accordingly, United Group now provides mobile voice, messaging and data to consumers and small home businesses on a contract and prepaid basis through a sales and distribution network. United Group aims to create a fully convergent cable, internet and fixed- line and mobile telephony operator in Slovenia on a greater scale and with a broader product offering than the incumbent operator Telekom Slovenia and to develop an attractive suite of fixed mobile convergence services, particularly data anywhere services, which it believes will result in sustained increases in overall RGUs in Slovenia.

United Group’s mobile network provides coverage to almost all of Slovenia’s population through its extensive //4G networks. Licenses for use of spectrum for 2G are valid through 2031, while spectrum for 3G is valid through 2021 (5 MHz on the 2100 band), 2023 (another 5 MHz on the 2100 band) and 2031 (5 MHz on the 900 band). In 2016, Telemach acquired additional spectrum in the 1800 MHz and 2100 MHz bands. This acquired spectrum allows United Group to expand its 3G and 4G networks. Use of frequencies in the LTE network currently includes 2x5 MHz in the 800 MHz spectrum band and 2x20 MHz in 1800 MHz spectrum band (which is the key spectrum band used for LTE services). These licenses are valid through 2029 (800 MHz) and 2031 (1800 MHz). As a condition to the grant of the 800 MHz 4G license, United Group is obligated to provide 4G network coverage to 50% of the Slovenian population within the second year of the award and 75% coverage within the third year. As at the date of this report, United Group is capable of providing 4G coverage to approximately 98.8% of the Slovenian population.

As at December 31, 2019, United Group had 550 thousand subscribers for its postpaid and prepaid mobile services and had a 22% share (based on number of subscribers) of the

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Slovenian mobile market, an increase of eight percentage points since the Tušmobil acquisition. During each month of 2018, Telemach Slovenia achieved more than 35% of gross additions in the mobile market. United Group’s principal focus is postpaid subscribers, who generate significantly higher ARPU and generally have lower churn rates than prepaid subscribers. As at December 31, 2019, contract subscribers accounted for 82% of United Group’s subscriber base. According to Solon, the total mobile telephony market in Slovenia was estimated at 2.4 million in 2017 compared to 464 thousand for Telemach Slovenia, which United Group believes represents significant growth potential in the mobile telephony market in Slovenia. Furthermore, the total mobile telephony market in Slovenia is expected to grow at a CAGR of 0.3% from 2.4 million in 2017 to 2.5 million in 2025.

New, highly innovative mobile telephony products were launched in September 2015. In April 2017, United Group updated its mobile packages, with more data, more calls and more text messaging, and introduced its UNIFI Travel Wi-Fi roaming application, providing access to more than 68 million Wi-Fi hotspots around the world. All products include free on- net calls with unlimited off-net national calls in medium and high-end packages and, with the introduction of new EU roaming regulations which took effect on June 15, 2017, customers can now utilize their text message and voice minute allotments across the EU with no roaming charges. Customers are encouraged to contract for a 24-month period with a discount offered on various mobile handsets. Cross sales of fixed and mobile services are additionally driven by a bundling discount which is offered to mobile customers who have at least one fixed service.

United Group strives to deliver an industry leading level of customer service to its subscribers, and it believes that its efforts in this regard have contributed to the relatively low churn rates of its customers when compared to that of its competitors.

For the year ended December 31, 2019, United Group’s mobile telephony services generated revenues of €80.3 million at an average ARPU of €10.8.

Wi-Fi Since 2011, United Group has been expanding its Wi-Fi hotspot service in Serbia, Slovenia, and Bosnia and Herzegovina, and the service is currently offered under its UNIFI brand. To increase its brand recognition, United Group currently offers the service for free, and it believes that this product is steadily gaining significant popularity. United Group intends to utilize UNIFI to complement its bundled offering and reduce customer churn as well as to incentivize the use of its products by potentially offering UNIFI free to only its subscribers. Moreover, United Group believes this service offers further monetization potential from users that are not customers of the Group. In 2017, SBB Serbia and Telemach Slovenia launched UNIFI Travel, a Wi-Fi service which is available in 120 countries, through more than 68 million hotspots.

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Multi-play Services United Group’s primary focus is to provide bundled services, which is a package of two or more of the following services: pay-TV, broadband internet services, fixed-line telephony and mobile telephony. This enables United Group’s customers to subscribe to these services in a convenient “one stop shop” manner at attractive prices that are lower when bundled than the sum of the stand-alone services of similar value. United Group believes that the several bundled options it has introduced allows customers to tailor their packages according to their requirements and offers them greater value for money compared to similar services offered by its competitors. As at December 31, 2019, approximately 80% of United Group’s cable customers subscribed to its multi play packages. United Group’s multi play packages has allowed it to increase its total RGUs for cable-based services to approximately 2.7 million RGUs as at December 31, 2019. United Group’s straightforward and unified triple-play offering, which includes pay-TV, broadband internet services, and fixed-line telephony, accounts for a significant percentage of its total new sales, comprising 82% of its gross additions in Slovenia, 33% of its gross additions in Serbia, and 25% of its gross additions in Bosnia and Herzegovina (for the year ended December 31, 2019). United Group’s triple-play product offering is simple and consistent across its markets, providing significant value for money for its customers with value growth potential over time by way of constant improvements such as new value added services, and its marketing campaigns for its triple play offerings are focused on transparent value propositions. United Group’s best-selling triple-play packages (based on the number of triple play gross additions in the year ended December 31, 2019) are: EON Light in Slovenia (accounting for 42% of triple-play gross additions in Slovenia); EON Full in Serbia (accounting for 56% of triple-play gross additions in Serbia); and EON Light in Bosnia and Herzegovina (accounting for 47% of triple-play gross additions in Bosnia and Herzegovina). United Group has consistently upgraded its triple-play offering for both new and existing customers, which has allowed it to raise prices over time.

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The following chart compares United Group’s triple-play packages at the time of launch to the offerings as at December 31, 2019. The triple-play package has offered increased value to customers since launch across all areas.

Business Product Offerings United Group utilizes its existing fixed-line network in Slovenia, Serbia, Bosnia and Herzegovina and Montenegro to offer a range of business products including virtual private networks, Wi-Fi spots, managed services and network capacity leases to telecommunications operators, financial institutions, public service customers and multinational companies. United Group is the first CISCO certified partner for B2B services in the region, and it aims to continually improve the service portfolio of its business products by providing innovative and high-quality solutions along with dedicated customer care. United Group offers tailor made solutions for modern businesses across various industry segments, as well as to carrier clients. One of United Group’s key customers in the region is Telekom . United Group provides network connection services for Telekom Austria’s towers as well as ‘last mile’ connection services for Telekom Austria’s B2B clients. Other key international partners include Romtelecom, Tele2, , Pantel Technologies, Inteliquent, Interoute, Level 3 and PCCW.

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Subscribers United Group sells its TV, broadband internet and fixed-line and mobile telephony services, either on an individual service subscription basis or on a bundled basis, to residential customers and business customers. United Group’s basic pay-TV subscription serves as a basis for cross-selling and up-selling and, with the exception of subscribers in Slovenia who prefer to subscribe only to its mobile telephony service, every subscriber needs at least a subscription for United Group’s basic pay-TV package to have access to its other services. Consumer subscriptions account for most of United Group’s revenues. Within the consumer market, United Group markets its services directly to subscribers in single dwelling units and multi dwelling units, such as apartment buildings. United Group provides its services pursuant to standard form fixed contracts lasting for 12 or 24 months.

United Group’s business subscribers typically purchase its broadband internet and voice and other data services. United Group generally targets small- to mid-size businesses in metropolitan regions. Business subscriber contracts usually extend over a period of 24 months and cannot be prematurely cancelled free of charge.

United Group believes it has a loyal customer base, which is the result of low churn rates due to its high-quality content, extensive network coverage and quality customer service.

Additionally, as its network covers the most affluent regions in Slovenia, Serbia, Bosnia and Herzegovina and Montenegro, United Group’s business benefits from low rates of services termination due to customers’ inability to pay.

Innovation

United.Cloud is United Group’s technology innovation and software development center that it established in 2016 with offices in Serbia and Slovenia. The centralization of United Group’s research and development team within United.Cloud provides a significant improvement in time to market for its quality and innovative products, with a high degree of customization and flexibility to ensure new product launches are in line with its corporate strategy. United Group can create unified multi service solutions to apply across all United Group’s markets, such as EON, with the ability to enter new markets quickly due to technological autonomy without a need to rely on outside developers, and its customers benefit from an improved user experience across its products. United Group regularly introduces new products with continuous development of its existing technology. Starting with D3 GO as a multiscreen option included in packages, the Group added additional features such as UNIFI, UNIFI Travel and UNIFON. In 2017, United Group introduced new platform – EON, which gives customers an improved TV experience on the Smart STB, Smart TV app, web, mobile phones and tablets. In 2019, United Group launched EON All-IP Smart STB enabling it to offer services to customers outside of United Group’s footprint. With regard to mobile telephony, United Group seeks to be the market leader with data and content-driven mobile packages. As a result, the Group was the first to introduce unlimited data packages. United

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Group’s continuous focus on product innovation has led to a strong track record of in-house development, as shown in the following chart:

A few of United Group’s recent innovations, including EON, UNIFI Travel and its self- help website and application, are described in more detail below. Following the launch of EON packages on cable and OTT for new customers, including the option of having an EON Smart Box (an Android based set top box which turns any TV into a Smart TV), 4K channels and EON Smart TV application, among others, the Group is working on EON 2.0 with a focus on market innovations and CEX improvement. The Group’s projects typically profile in home users with the “Who’s Watching” section and Wi-Fi Mesh. United Group also continues to invest in its network infrastructure. For example, Slovenia is a GIGA country and Novi Sad, Subotica and in Serbia are GIGA cities, while the Group’s plans for Belgrade are nearly complete with Kragujevac planned to be next and Sarajevo in Bosnia and Herzegovina is planned to be a GIGA city in 2020.

EON

EON is the Group’s next generation video delivery platform that allows customers to watch their favourite channels on a range of devices, including smartphones, tablets, laptops, and Smart TVs, with the ability to seamlessly “hand off” and resume watching from one device to the next. EON is the first platform in the region to allow viewers to watch TV through an application on a Smart TV. In establishing EON, which was developed out of the prior D3 platform, the Group has prioritized user customization through the introduction of user inputs such as reminders, favourites and search functions. The home screen includes editorial content within a modern and intuitive user interface. The VoD component is extensive, with a CatchUp feature allowing viewers to access content broadcasted within the previous seven days, totalling over 104 thousand hours of content available at any given time. EON gives users access to over 624 TV channels, 150 radio channels, and more than 23,000 VoD assets.

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United Group has also ensured that EON utilizes the latest media encryption technology in order to protect against piracy. The Group has an additional stream of game-changing updates to be introduced to EON over the next two years, including cloud DVR, download to go and improved connectivity with third-party devices and services. The Group’s partnership with will help it to release the 4K Ultra HD set-top box, which will fully integrate Google platforms such as YouTube and Google Play Store.

Network and Out of Footprint Services

United Group is able to offer its world class network to customers both at home and abroad, and it has enhanced customer connectivity through UNIFON, UNIFI and UNIFI Travel. UNIFON is a free mobile app, available for Android and Apple smartphones, that enables customers to access their landline through their mobile device. The free UNIFI application allows customers to view the locations of and access all UNIFI hotspots in Serbia, Slovenia, and Bosnia and Herzegovina.

United Group constantly works to expand its out of footprint services. For example, in 2015 and 2016, United Group completed time switch to MPEG 4, from MPEG 2, digital data compression technology within its DTH business, and developed its NetTV Plus next generation IPTV and OTT streaming platform to be able to provide the largest ex- channel selection to customers around the world.

Digital Platform

United Group’s digital platform provides a sustainable channel to future proof its platforms and to address evolving customer habits around access to media, digital content and advertising consumption.

Telecommunications

United Group’s digital platform is an important element of its user experience, and it has recently focused on innovations in its self-help platform, web portals and e-commerce. United Group’s self-help platform allows users to personalize their dashboards, access offers, pay bills and receive assistance. More than 161 thousand new customers registered for self- help in 2019. Additionally, in 2019, self-help had more than 800 thousand unique logins and was installed on over 135 thousand smartphones.

United Group utilized its web portals as a central hub for all marketing activity and offers access to support services and the ability to order products online. United Group’s web portals saw over 11 million unique visitors in 2019, up 50% from 2018, 60 million page views, up 20% from 2018, and an increase of 20% average page view time from 2018.

United Group’s e-commerce shop allows users to buy mobile and home products online. At the checkout, United Group offers service upgrades, special offers and promotions. United Group’s online orders, mobile conversion rate and mobile packages sales rose by 32%, 10% and 11% in 2019, respectively year-on-year.

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Media

United Group has grown its media content offerings on its digital platform. Two of United Group’s most successful digital media offerings are N1, its online news portal and Sport Klub, its regional sport news portal.

N1 is a mobile responsive web portal which constitutes a fully independent, stand- alone platform with automated content exchange. In Q4 2019, N1 had over 98 million page views on desktop, an increase of 44% year-on-year, over 12 million users, who spent approximately 5 minutes on average on the platform, and an event count of over 94 million on mobile devices in November and December.

United Group’s regional sports news platform, Sport Klub, is split across three separate web portals and a native mobile application for iOS and Android. In Q4 2019, Sport Klub had over 23.3 million page views on desktop, an increase of 55% compared to Q4 2018, over 3.5 million users (a year-on-year increase of 91%) who spent 4.4 minutes on average on the platform. The Sport Klub app had over 100 million event counts in November and December.

Following the Nova Croatia Acquisition, United Group acquired a large portfolio of Nova’s portals. The most prominent one, DNEVNIK.hr, was the most read portal in Croatia in 2019. According to data provided by a third-party industry consultant, the web site had 1,988 thousand actual users in December 2019.

Customer Services Along with content differentiation, customer service is a key pillar of United Group’s offering, and it believes it offers subscribers high-quality customer service in line with Western European standards. United Group’s customer service operations are responsible for all customer care activities, including handling queries and complaints from its customers. United Group operates dedicated customer contact centers in Ljubljana, Belgrade, Sarajevo and . As at December 31, 2019, United Group’s customer service team employed approximately 458 employees (423 full time equivalent). All customer service agents are regularly trained in soft skills and educated on new product offerings and advertising campaigns. As is common in Western Europe, United Group constantly measures its team’s response time and offers subscribers the option to provide feedback on its service immediately following the call. Additionally, United Group has a customer service team focusing on business retention which reaches out to existing subscribers prior to the expiration of such subscribers’ service contracts to extend the service contract and advertise its products. United Group also has a specialized team for sales and customer care in relation to its business services. United Group believes its customer service representatives are trained in accordance with Western European customer service standards and it receives consistently high scores in its subscriber satisfaction surveys.

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Billing United Group manages its entire billing operations internally. United Group bills all its customers directly, except for some that are included in a bulk contract (for example, with institutions such as senior homes). Residential customers that are subscribed to single play cable pay-TV services in Serbia or to DTH services are invoiced every two months and all United Group’s other subscribers are invoiced once a month for their usage. United Group bills its business customers on varying bases depending on the service rendered.

Marketing and Sales United Group’s marketing, sales and customer care department is responsible for designing and promoting new products and services to customers. In this regard, United Group is able to leverage its owned content channels to cross promote its other products and services to its customers because it can advertise those other products and services on its channels. United Group also markets and sells its products using a broad range of sales outlets, including through its leased retail stores which are located in attractive parts of town in its key regions and markets, including in Ljubljana, Belgrade and Sarajevo, third party stores, telesales and United Group and its partners’ websites. As at December 31, 2019, United Group’s marketing, sales and customer care teams comprised 1,751 employees (1,635 full time equivalent). United Group believes that its website currently provides a clear overview of its products prices and features, as well as further sales and marketing options. To strengthen its brand recognition, United Group has entered into a number of sponsorship agreements with local, regional and national sports associations. Additionally, United Group gives donations to social institutions, such as youth organizations, across the region.

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Network United Group employs a variety of network technologies to deliver its products and services to its customers. The following chart provides an overview of its network technologies, as well as the markets in which such network technologies are currently deployed. United Group expects 90% of its core network to be DOCSIS 3.1 ready by December 31, 2020. Technology for new greenfield homes passed deployment from 2017 is GPON (91,000 Homes passed as at December 31, 2019).

______

Source: Company Information

Cable

United Group provides its pay-TV, broadband internet infrastructure access and fixed- line telephony services through its extensive cable network which it believes is one of the most technologically advanced networks in Europe, the Middle East and Africa. United Group’s cable network covers approximately 1.85 million homes passed as at December 31, 2019 and generally covers the most affluent areas in its key markets. Specifically, as at December 31, 2019, United Group’s network passed approximately 339 thousand homes, or approximately 41% of all households6 in Slovenia; 1,087 thousand homes, or approximately 44% of all households in Serbia; 337 thousand homes, or approximately 29% of all households in Bosnia and Herzegovina; and 89 thousand homes, or approximately 44% of all households in Montenegro.

6 Last official data as of December 31, 2018.

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The fiber rich characteristic of United Group’s network offers better capacity, speed and quality advantages compared to copper-based DSL networks. In particular, an HFC cable network offers a larger bandwidth than ordinary copper cable and, unlike the latter, it is not significantly affected by attenuation (a reduction in the strength of the signal) or distortion (reduction in quality of the signal) when the signal is carried over a long distance. United Group offers significantly more bandwidth capacity than the average broadband customer uses. While broadband data consumption has increased across Slovenia (48 Gbps in 2015 to 179 Gbps in Q4 2019), Serbia (97 Gbps in 2015 to 500 Gbps in Q4 2019), and Bosnia and Herzegovina (45 Gbps in 2015 to 155 Gbps in Q4 2019), installed capacity is higher than the average used capacity by a significant margin, as shown in the charts below.

SBB 500 3,00 425 478 2,00 287 330

Mbps 1,00 0,00 2015 2016 2017 2018 2019

Total Broadband DOCSIS customer (active postpaid subscribers) Installed capacity per customer (Mbps) Avg used Mbps per broadband customer

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United Group’s HFC network is fully bi directional in Serbia and Bosnia and Herzegovina and approximately 96% of HFC homes passed in Slovenia are bi directional as at December 31, 2019. United Group’s bi-directional network enables it to deliver broadband internet, fixed- line telephony, and other interactive services such as VoD, to its customers throughout its cable network in addition to regular digital and services. United Group’s cable network is EuroDOCSIS 3.0 enabled, covering all cable broadband internet RGUs in Slovenia, Serbia and Bosnia and Herzegovina, enabling United Group to offer theoretical maximum speed levels of up to 1,600 Mbps with 32 allocated frequency channels. In Montenegro, United Group continues to upgrade the network to Group standards following its acquisitions. United Group believes it offers one of the highest available speeds in its cable footprint, ranging between 100-1,000 Mbps. United Group has industry leading node density. A lower node density mitigates the risk of network congestion and related reductions in quality of service. As at December 31, 2019, Telemach Slovenia had a node density of 293, Telemach BH of 251 and SBB Serbia of 216. United Group’s HFC network has homes passed per fiber optics node ratios of approximately 293:1 in Slovenia, approximately 216:1 in Serbia, approximately 251:1 in Bosnia and Herzegovina, and approximately 126:1 in Montenegro, which it believes is unrivalled in South Eastern Europe and compares favorably to Central and Eastern European cable benchmarks. This means United Group’s fiber optic nodes typically only extend a very short distance from subscribers’ homes and offices, with only the last few hundred meters connected through coaxial cables. This allows United Group to provide high broadband internet access speeds and advanced services to subscribers. United Group operates one of the most extensive backbone networks across the region with a national backbone consisting of approximately 8,839 kilometers owned and leased dense wavelength division multiplexing fiber links that extend across South Eastern Europe with international optical interconnections to , Frankfurt, Amsterdam and London. Such extensive fiber rich backbone not only supports United Group’s HFC cable network but also makes it a partner of choice for regional telecoms and other business customers. United Group rents ducts and poles from third parties as a part of its network. FttH is the technology of choice by United Group for greenfield expansion and new buildings in adjacent areas. As at December 31, 2019, United Group passed 91 thousand homes with FttH and had 34 thousand active users across its three core markets of Serbia, Slovenia, Bosnia and Herzegovina and Montenegro. In addition to FttH greenfield expansion, during the third quarter of 2018 United Group introduced Gigabit speeds in areas where digitalization of analog TV signals was completed.

United Group complements its cable network with DTH and mobile offerings. United Group contracts for satellite services with EUTELSAT, which transmits its satellite programming over their satellite networks to its customers. Data streams are sent to satellites that transmit the signal to local satellite receivers. United Group’s transponder allotment agreements with EUTELSAT are valid until December 31, 2024. Pursuant to a services agreement entered into with EUTELSAT in December 2014, SBB Serbia agreed to replace all

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its subscriber reception boxes in order to permit the reception of HD and MPEG 4 transmissions to United Group’s subscribers via the transponders currently allocated to SBB Serbia on the EUTELSAT 16A satellite. The replacement of such subscriber reception boxes affected approximately 340,000 households. EUTELSAT agreed to assist SBB Serbia in the replacement of such equipment in order to facilitate migration to MPEG 4 technology from MPEG 2 technology. The installation of the equipment commenced in February 2015 and has since been completed. Subject to certain milestones being met, EUTELSAT has agreed to participate in the costs incurred by SBB Serbia in connection with the replacement of the equipment. Furthermore, EUTELSAT has also agreed to provide SBB Serbia with certain discounts and also provide a certain amount of free additional satellite capacity from the MPEG 4 launch date until 2024.

Mobile Telemach Slovenia commenced a modernization program for Tušmobil’s mobile network immediately after its acquisition in April 2015. Within four months of the acquisition, the radio network on 560 mobile sites was modernized with a swap of complete 2G and 3G technology. Additionally, a 4G network was implemented alongside the existing network and prepared for a commercial launch in June 2015. By the end of 2015, the modernization of the microwave transport network was completed. United Group’s mobile network in Slovenia is completely IP enabled, with SRAN (single radio access network technology) providing full services on 2G, 3G and 4G networks. United Group currently provides 4G (LTE) and 4G+ (LTE A) coverage to approximately 99% and 97%, respectively, of the Slovenian population. In 2019, United Group added 74 additional mobile sites to its footprint. In 2020, United Group expects to launch a total of 63 new sites, which it expects will lead to 4G (LTE) and 4G+ (LTE A) coverage for approximately 99% of the Slovenian population. The technology upgrades and new sites are expected to increase United Group’s coverage, amplify network capacity and enhance customer experience.Network Maintenance United Group introduced a new preventative maintenance platform in 2016 to monitor its network by categorizing and ranking the nodes across its network and providing guidance about which system maintenance works are most needed, which has improved both its network quality and customer satisfaction experience. Furthermore, United Group’s internal maintenance regime is also stricter than industry standards. Licenses and Permits United Group believes it holds all necessary authorization and licenses to provide its services. The descriptions below summarize the licensing and permit framework for each of United Group’s four core operating jurisdictions.

Telemach Slovenia: To be authorized to operate as media and telecommunications service provider in Slovenia, Telemach Slovenia notified AKOS by providing a short description of its public communication network and its services. Telemach Slovenia subsequently entered

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the official register as a service provider. In addition, Telemach Slovenia holds several radio and mobile frequency licenses, the newest of which will expire in 2031.

SBB Serbia: Pursuant to the law on electronic communications, an operator of media and telecommunications services is not required to obtain a license for its general services. In order to provide its services, an operator must submit a request for registration to the RATEL which SBB Serbia did in 2011.

Telemach BH: Telemach BH holds licenses for the distribution of audiovisual media services and radio media services which are valid for ten years and will expire on December 31, 2026. These licenses can be extended by submitting a request to the Bosnian regulator at least three months before expiration. United Group also holds licenses to operate a public electronic communications network and provide fixed-line telephone services which are valid for an unlimited duration. United Group also holds a license for the use of telephone numbers and pre-code numbers, the validity of which is tied to the validity of the license for the provision of fixed-line telephone services.

Telemach MNE: Telemach MNE holds licenses for the distribution of audiovisual media services and radio media services which are valid for fifteen years and will expire in 2032.

Information Technology

United Group operates a modern information technology (“IT”) infrastructure in order to support its business. United Group’s IT systems are generally managed in house, who also receive external support from manufacturers and suppliers. United Group’s IT system consists of the following key segments: its operations support system (“OSS”), which supports its back office activities, including the operation of its network and provision and maintenance of its customer service; its business support system, which supports its customer facing activities such as billing, order management and its call center; and its mediation and provisioning system which monitors and facilitates subscribers’ network access rights and privileges to ensure the security of its resources and user privacy. In early 2017, Telemach Slovenia implemented SAP platforms, joining SBB Serbia and Telemach BH which had already implemented SAP platforms, and thus further facilitating integration. United Group’s OSS applications in Slovenia are currently managed in house. Meanwhile, United Group is in the process of implementing a third-party platform in Serbia and Bosnia and Herzegovina. United Group’s mediation and provisioning systems are currently managed in house with Telemach Slovenia using a different system from the other group companies. United Group will continue to focus on integrating and streamlining the different IT systems to standardize and further improve its IT solutions.

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Competition United Group faces competition from established market participants as well as new market entrants. The nature and level of the competition United Group faces varies for each of the products and services it offers and for each country in which it operates. Despite regional differences in the intensity of competition, United Group competes in each case on the basis of network quality, content advantage, product and service portfolio specifications, value for money proposition, marketing, installation speeds and customer care.

United Group’s competitors include, but are not limited to, providers of television, broadband internet, fixed telephony services using DSL or fiber connections and mobile telephony operators, including Telekom Slovenije, Telekom Austria and T2 in Slovenia, Telekom Srbija in Serbia and BH Telecom and HT Eronet in Bosnia and Herzegovina, and M Tel and Crnogorski Telekom in Montenegro. United Group also competes against DTH providers, including Digi and Polaris, and DTT providers in Slovenia. Furthermore, United Group faces competition from providers of television services using alternative and emerging digital technologies such as IPTV and OTT television. United Group also competes with other sources of news, information and entertainment such as social media platforms, newspapers, movie theatres, live sporting and music events, computer games and home video products.

Property and Equipment United Group’s principal asset is its network, which consists of numerous cables, telecommunications installations, including exchanges of various sizes and transmission equipment. United Group leases the headquarters of SBB Serbia Bulevar Peka Dapcevica 19 in Belgrade, Serbia, as well as SBB Serbia’s technical center in Kumodraska Street in Belgrade and several other office spaces throughout the country. United Group also leases the headquarters of Telemach BH and other minor offices and sales facilities throughout the markets in which it operates. Additionally, United Group owns most of the equipment needed for its core operations, including the sites housing network hubs. In Slovenia, United Group purchased Tušmobil’s headquarters in 2015 and relocated most of its operations to this location. United Group believes that its properties and equipment are in good condition and are suitable and adequate for its business operations. None of United Group’s significant properties are subject to material easements or other third-party proprietary interests that prevent or restrict the current business activities or that are believed to require major investments or costs going forward.

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Employees As at December 31, 2019, United Group employed 4,789 employees (4,566 full time equivalent) across Slovenia, Serbia, Bosnia and Herzegovina, Croatia, North Macedonia, Montenegro, Kosovo, Albania, Luxembourg, Switzerland and . The following table shows the number of full-time equivalent employees as at December 31, 2019, by category:

31 December 2019 Management 75 Support 539 Marketing 266 Engineering 330 Operations 2,356 Sales and Customer Care 1,369 Network 802 Administrative Support 178 Platforms 7 Media Production 897 Media Technics 102 Total 4,566

United Group believes that its relationship with its employees is satisfactory. During the last three years, the Group has not experienced any strikes or work outages, and currently nine of the Group’s employees are members of a labor union. Insurance United Group’s fixed assets such as technical and office equipment in its network operating centers, network hubs, and office locations are protected by insurance policies covering damage from fire and other catastrophes. United Group also has separate insurance covering losses from machinery breakdown and insurance for interruption operating costs. While United Group has no insurance against the risk of failure by subscribers to pay, it has alternative controls to mitigate this risk, including collection processes and arrangements with collections agencies. United Group provides directors’ and officers’ liability insurance for all members of its board of directors, as well as certain other persons within its Group. United Group believes that its existing insurance coverage, including the amounts of coverage and the conditions thereto, provides reasonable protection, taking into account the costs for the insurance coverage and the potential risks to business operations. However, United Group cannot guarantee that no losses will be incurred or that claims that go beyond the type and scope of the existing insurance coverage will not be filed against it.

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Legal Proceedings United Group is involved in a number of legal proceedings. Other than those discussed below, United Group does not expect the legal proceedings in which it is involved or with which it has been threatened to have a material adverse effect on its financial position or profitability. The outcome of legal proceedings, however, can be extremely difficult to predict with certainty, and no assurance can be offered in this regard.

Litigation Matters Relating to Telemach Slovenia (as Successor to Tušmobil)

Administrative Matters A block of spectrum that United Group was granted and uses for part of Telemach Slovenia’s 3G mobile network may be subject to a renewed tender or other regulatory action. The grant of this block of 2x5 MHz of spectrum in the 2100 MHz band in 2008 to Tušmobil (which in April 2015 was acquired by, and later merged into, Telemach Slovenia) was successfully challenged before the Slovenian administrative court. This block of spectrum is valid through 2023 and is used to operate part of Telemach Slovenia’s 3G mobile network. The grant of this block of spectrum was challenged by certain competitors on the grounds that Tušmobil obtained the spectrum (i) without satisfying certain requirements of a public tender (as AKOS published the call for invitations in the official gazette, as normally required by law, but it failed to publish the call for tenders on AKOS’ website, as was stipulated in its bylaws, which, allegedly, resulted in the competitors missing the opportunity to participate in the tender), and (ii) as a consequence of Tušmobil participating in the tender as the only interested party, obtaining such spectrum free of charge. The case arising from this challenge has been through various levels of reviews and decisions by AKOS, the Slovenian administrative court, the Slovenian Supreme Court and the Slovenian constitutional court. Some of these decisions reaffirmed the initial grant of this block of spectrum. However, the Slovenian administrative court ordered in November 2017 that the tender process be renewed and that Telekom Slovenije (a Slovenian competitor of Telemach Slovenia) be allowed to participate in the renewed grant process. In February 2018, Telemach Slovenia filed a request for the admission of a revision and an interim injunction against such decision, but in July 2018 the Slovenian Supreme Court rejected the request. Telemach Slovenia filed a request for review of the decision with the Slovenian constitutional court in September 2018, but in November 2018 the court decided not to accept the request for review. As a consequence, the decision of the Slovenian administrative court with respect to the renewal of the relevant part of the procedure for allocation of the block of spectrum is final. On May 31, 2019, following the Slovenian Administrative Court’s final decision in November 2017, AKOS issued a new decision by which it rejected Tušmobil’s request from January 30, 2008 (as amended on April 3, 2008) for allocation of spectrum in the 2100 MHz band and reversed its 2008 decision with effect from September 30, 2019. On June 30, 2019, United Group filed a lawsuit challenging AKOS’ May 31, 2019 decision together with a motion to issue an interim injunction to stay AKOS’ decision until the Slovenian Administrative Court reaches a final decision. On July 11, 2019, the Slovenian Administrative Court issued an interim

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injunction staying AKOS’ decision pending a final decision on the lawsuit, and therefore Telemach Slovenia is currently still entitled to use such spectrum. Consequently, AKOS discontinued all proceedings for a public tender for the spectrum. The proceedings before the Slovenian Administrative Court are currently pending. United Group cannot rule out that it may not be successful in a renewed tender or that a charge may be imposed by AKOS for the past use of the spectrum or that it may need to pay a fee or rent for use of the spectrum. See “Risk Factors—Risks Relating to Our Business and Industry. The Group has made and may make acquisitions or enter into transactions that may present unforeseen risks, and it may not realize the financial and strategic goals that were contemplated at the time of any transaction and, additionally, there are risks associated with the integration of any acquisitions.” In July 2016, AKOS announced its decision to conduct an auction for various mobile spectrum bands in Slovenia that remained unallocated. These included frequencies in the 1800 MHz band and the 2100 MHz band. AKOS set the reserve price at €2.6 million for each block of 2x5 MHz in the 1800 MHz frequency band, two blocks of which were available for auction, and €1.3 million for the block of 2x5 MHz in the 2100 MHz band, one block of which was available for auction. United Group submitted its tender for these frequencies on August 5, 2016. On August 29, 2016, AKOS issued a decision in United Group’s favor on the allocation of two blocks of 2x5 MHz in the 1800 MHz frequency band and one block of 2x5 MHz in the 2100 MHz frequency band for an aggregate amount of approximately €6.5 million. Telemach Slovenia’s license for the frequencies in the 1800 MHz band is valid through January 2031 and for the frequencies in the 2100 MHz band is valid through September 2021. United Group currently uses the additional 2x5 MHz of spectrum in the 2100 MHz band to operate part of Telemach Slovenia’s 3G mobile network and the 2x10 MHz of spectrum on the 1800 MHz band to operate part of Telemach Slovenia’s 4G mobile network. United Group believes that these additional frequencies granted in 2016 (and currently used by Telemach Slovenia) would help it mitigate the impact of any potential loss of the block of 2x5 MHz of spectrum in the 2100 MHz band that was granted to Tušmobil in 2008. For example, United Group would still be able to offer 3G services on its remaining blocks of 2x5 MHz of spectrum in the 2100 MHz band and 2x5 MHz of spectrum in the 900 MHz band, although it would likely be at reduced quality due to capacity issues. According to the Slovenian government, the multiband auction is expected to take place in the second quarter of 2020.

Criminal Matters Certain criminal matters were initiated in Slovenia against Telemach Slovenia (as successor to Tušmobil) and are still pending against Tušmobil’s former owner Mirko Tuš and a former head of AKOS. Pursuant to a bill of indictment that was filed in March 2015 (and amended in May 2019) by the public prosecutor in connection with these criminal matters, which were initially instigated by Tušmobil’s competitors in 2008, it is alleged that, among other things, Tušmobil and Mirko Tuš made illegal payments to a former head of AKOS to obtain the grant of a block of 2x5 MHz of spectrum in the 2100 MHz band in 2008. The bill of

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indictment filed by the public prosecutor also challenges AKOS’ decision in 2006 to allow Tušmobil to exchange a certain radio frequency band (1,800 MHz) for another band (900 MHz) at no charge and without obtaining the views of other interested parties. It is also alleged that Tušmobil and Mirko Tuš made illegal payments to the other defendant (the former head of AKOS) to obtain the exchange of frequencies at no cost. Due to the expiration of the statute of limitations, Telemach Slovenia as a legal entity has been found free of criminal liability (with the effect of finality) and related exposure to penalties or fines. However, as a beneficiary of the frequencies grant, Telemach Slovenia may be jointly and severally liable with other defendants (against which proceedings are still pending) for indemnification of the allegedly illegally gained benefit in the event any of the remaining defendants are found guilty. Following the conclusion of the pre-trial hearings, the criminal matters against the remaining defendant, the former head of AKOS, proceeded to trial and are currently ongoing, whereas the criminal proceedings against Mirko Tuš are being excluded from the other trials as of the date of this report. In a related development, in January 2016 the Republic of Slovenia made a claim against Mirko Tuš and Telemach Slovenia for indemnification in an amount of approximately €7.2 million. During the pre-trial hearings, Telemach Slovenia contested the grounds for, and challenged the amount of, this claim. While the bill of indictment filed by the public prosecutor in March 2015 had indicated that Tušmobil allegedly illegally gained benefit in an amount of approximately €7.2 million, representing a valuation of the potential charge for the frequency bands under challenge, which had been estimated by an expert appointed by the court for such purpose, Telemach Slovenia has contested and opposed, and intends to continue to contest and oppose this valuation. Further, if any of the remaining defendants is found guilty in any of these criminal matters, AKOS could in turn review, whether upon its own initiative or if ordered to do so by a competent authority, the grant of the block of 2x5 MHz of spectrum in the 2100 MHz band to Tušmobil and potentially annul its prior allotment decision and initiate new proceedings for the allotment of the block of spectrum. If any payment obligation is imposed against Telemach Slovenia or the criminal procedure would be closed with any negative impact in these matters, United Group, in turn, could seek to recover these amounts from Tušmobil’s seller based on certain provisions set forth in the transaction documents that United Group has entered into with Tušmobil’s seller. For instance, under the share sale and purchase agreement, United Group has recourse to up to €168 million in indemnification from the seller for losses arising from breaches of warranties related to financial crime, which it could seek to claim against in the event of a final, non- appealable judgment requiring Tušmobil to pay monetary fines or in the case of a negative impact to the conduct of business, reputation and assets of Telemach Slovenia resulting from the criminal procedure (which indemnification is not available for the separate AKOS proceeding described under “—Administrative Matters”). However, United Group may not be successful in any actions to claim indemnity or damages from Tušmobil’s seller in a timely manner or at all, and the indemnifying party may not have sufficient funds to fulfil its indemnification obligations. See “Risk Factors—Risks Relating to Our Business and Industry.

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The Group has made and may make acquisitions or enter into transactions that may present unforeseen risks, and it may not realize the financial and strategic goals that were contemplated at the time of any transaction and, additionally, there are risks associated with the integration of any acquisitions.” The AKOS administrative action and the criminal proceedings described above relate to the block of spectrum obtained by Tušmobil in 2008 (and the exchange of certain frequency bands in 2006), and do not affect the ownership or validity of the spectrum used for 4G/LTE and legacy 2G that Tušmobil was awarded in 2014 (for the period from 2014 to 2029) or the ownership or validity of the additional 3G and 4G/LTE frequencies allotted to Telemach Slovenia in 2016 (for periods until 2021 and 2031). Nevertheless, if the AKOS action or the pending criminal proceedings are determined in a manner adverse to Telemach Slovenia, and Telemach Slovenia is unable to continue to utilize the block of spectrum obtained in 2008, or is required to lease such block of spectrum in the future, or is required to pay a material amount as part of an indemnity, and Telemach Slovenia is not able to recover such amounts from the Tušmobil seller, such developments could have a material adverse effect on United Group’s financial position and profitability.

Dispute with Minority Shareholder of Ultra

In June 2012, United Media Limited, one of United Group’s subsidiaries, extended a loan in the principal amount of €2.0 million to Luxor Co d.o.o. Beograd (“Luxor”), United Group’s 50% co investor in TV Kanal Ultra d.o.o. Beograd (now in liquidation) (“Ultra”), to facilitate Luxor’s payment of certain debts that it owed to Ultra. The loan was secured by a pledge by Luxor of over 25% of the share capital Luxor owned in Ultra. Luxor defaulted on the loan, and consistent with the terms of the pledge agreement, in May 2013, Luxor transferred 25% of the share capital it owned in Ultra to United Media Limited for €2.0 million pursuant to a share transfer agreement. In April 2016, Luxor brought a claim against SBB Serbia alleging that SBB Serbia misrepresented the number of subscribers to which SBB Serbia would broadcast the channels that Ultra owns which, according to Luxor, in turn impacted the valuation of its stake in Ultra, thereby causing Luxor to transfer 25% of its stake for a value that was significantly lower than the fair market value of the stake, and is claiming damages in the amount of approximately €7.0 million. The trial court ruled in favor of SBB Serbia and Luxor appealed. In December 2018, the secondary appellate court dismissed Luxor’s appeal, rendering the trial court’s decision as final, but in February 2019, Luxor filed a revision against the final court decision. This proceeding before the Supreme Court of Cassation is currently pending. A parallel but related proceeding was initiated by Luxor on March 21, 2017 against Ultra, claiming that the director of Ultra allegedly acted, among other things, unlawfully and contrary to the interest of Ultra and Luxor, resulting in the diminishment of Ultra’s assets. Luxor is claiming damages of approximately €1.3 million and has requested that the director of Ultra be replaced with a court appointed representative to be employed by Luxor. United Group has responded to Luxor’s allegation claiming, among other things, the lack of evidence and the inaccuracy of the claim. The trial court issued a decision in United Group’s favor and

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Luxor appealed. In January 2019, the secondary appellate court dismissed Luxor’s appeal, rendering the first instance court’s decision as final. In May 2019, Luxor filed a revision against the final court decision. In 2018, Luxor initiated additional litigation for damages of approximately €6.6 million, demanding, among other things, a return of money allegedly owed by SBB Serbia to Luxor and to be made whole for insufficient payments allegedly made to Luxor by SBB Serbia. The trial court decided to stay the proceedings due to existence of a pending preliminary issue – a final decision of the Prosecutor or Criminal court regarding the criminal complaint which Luxor filed against TV Kanal Ultra Manager. Neither TV Kanal Ultra as respondent, nor Luxor as plaintiff, appealed this procedural decision to stay the proceedings, so that decision has become final. While any specific outcome of these claims is difficult to determine, United Group currently has no reason to believe that any adverse outcome of these claims would have a material adverse impact on its financial position or profitability.

Investigation by Serbian Tax Authority

On December 27, 2018, the Serbian Tax Authority notified United Group that it had begun a tax investigation of SBB Serbia for the year ended December 31, 2012. The Serbian Tax Authority issued a decision in March 2019 that it had recharacterized interest payments made by SBB Serbia under an intragroup loan agreement (and certain other transactions) as dividends, the payments of which would have been subject to a 5% withholding tax. The total contingent liability under this decision amounts to €21 million, including late interest. United Group has assessed these matters internally and through external consultants, and it is United Group’s view that there is no basis for the Tax Authority’s decision. United Group has appealed to the Serbian Ministry of Finance and received a prolongation of its obligation to pay any amounts until resolution of the appeal. The Serbian Tax Authority has also informed SBB Serbia that it is opening a tax review for the years 2013 through 2016. SBB Serbia intends to continue contesting the Serbian Tax Authority’s findings. United Group also initiated international arbitrage on the basis of the bilateral investment treaty between The Netherlands (location of United Group’s headquarters) and Serbia. The Dutch Ministry of Finance confirmed that it is preparing a case on the grounds of the double taxation agreement between the two countries.

Dispute with SOKOJ Relating to Copyright Infringement

In June 2010, SBB Serbia signed a contract with the Serbian music authors’ organization for collective protection of music copyright and related rights (“SOKOJ”) whereby it agreed to pay SOKOJ an amount of royalties related to intellectual property rights that SOKOJ holds and that SBB Serbia broadcasts to United Group’s cable pay-TV subscribers in Serbia. The amount of royalties payable by SBB Serbia under the agreement with SOKOJ was determined by a pre agreed fee tariff that was linked to the number of subscribers to whom SBB Serbia broadcasts content that was protected by SOKOJ. SOKOJ alleged that the number of subscribers to whom SBB Serbia broadcasts the content that it protects (and thus the

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number of subscribers for whom SOKOJ is entitled to claim payment under SBB Serbia’s agreement with SOKOJ) was significantly higher than the number of subscribers that SBB Serbia had previously disclosed to SOKOJ. SOKOJ initiated two claims, one in 2015 and a separate but related claim in 2017, related to this matter. Both claims involving SOKOJ were settled on September 9, 2019.

Dispute with Minority Shareholders of KATV HS d.o.o. and HKB net d.o.o.

United Group assumed a number of legal disputes in connection with its acquisition of KATV HS d.o.o. (“HS”), HKB net d.o.o. (“HKB”) and M&H Company d.o.o. (“M&H”) as part of the Bosnian Acquisitions in 2015. Specifically, United Group assumed certain claims brought by the minority shareholder of both HS and HKB, most of which claims have been brought against HS and HKB, as well as their former majority shareholders and former management. These include certain claims asserted in a civil law suits brought in the period from 2013 to 2015 seeking damages relating to alleged breaches of contractual and/or statutory duties by HS, HKB, M&H, the former majority shareholder and the former management of these companies. The aggregate amount claimed by the minority shareholder in these cases is approximately €12.2 million, plus interest and costs of the proceedings. These claims are in the preliminary stages of litigation, and no final, enforceable decision will be rendered until the claims have been adjudicated by both the court of first instance and (if appealed) the secondary appellate court. It is difficult to estimate the final amount of damages (which will, in due course, be subject to valuation by an expert appointed by the court) and when such adjudication would be completed. In June 2015, the minority shareholder of HS and HKB also brought a civil lawsuit seeking to annul Telemach BH’s purchase of HS and HKB. Specifically, the former minority shareholder contends that it was not provided with sufficient information to allow it to determine whether to exercise its statutory right of first refusal relating to the sale of HS and HKB. This claim is still in the preliminary stages. The aggregate purchase price United Group paid for the acquisition of HS and HKB was approximately €7 million. The minority shareholder has also brought a number of additional claims against Telemach BH and, in the alternative, HS, HKB and M&H relating to the corporate decision by which certain business opportunities were transferred to M&H from HS and HKB, allegedly undertaken by the former majority shareholder of these companies. While United Group does not believe that these claims are well founded, it has nonetheless out of an abundance of caution suspended the contracts for which these claims were initiated. The minority shareholder has also filed a criminal complaint with the office of the public prosecutor in Bosnia and Herzegovina alleging criminal wrongdoing by the former majority shareholder and former management of these companies. This proceeding is still in the investigative phase, and no indictment or other criminal charge has been filed. The status of, and information relating to, criminal investigations generally in Bosnia and Herzegovina is not publicly available.

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Disputes with SAZAS Relating to Infringement of Copyrights

United Group has been involved in various copyright actions with the Slovenian Association of Composers and Authors (“SAZAS”) since 2012. SAZAS is a Slovenian organization of music authors with the stated purpose of protecting copyrights to musical works. SAZAS brought a copyright infringement claim against United Group in 2012 demanding payments of royalties for cable retransmission of non-theatrical musical works in accordance with its unilaterally defined temporary tariff for cable retransmission of copyrighted musical works for the period between July 2012 and November 2012 for an aggregate amount of approximately €0.7 million. In all of these cases, the court of first instance issued decisions pursuant to which, on average, SAZAS was awarded 17% of the aggregate amount of its original claims. In one of these matters, the court of first instance rejected SAZAS’s claim. United Group has not succeeded in its appeals to the higher court challenging the obligation to pay compensation to SAZAS that was imposed on it by the court of first instance. The higher court adopted a position that SAZAS is entitled to payment in line with the tariff issued in 1998 amounting to approximately €0.18 per subscriber per month for cable retransmission of musical works in radio and TV programs (or approximately 17% of SAZAS’s initial claim). Both parties appealed these decisions to the Supreme Court of Slovenia. From May 2018 onwards, the Supreme Court has delivered several judgments and awarded SAZAS compensation amounting to approximately €0.20 per subscriber per month. United Group has already complied with the Supreme Court’s decisions and paid to SAZAS the awarded damages. Both parties filed a constitutional appeal against the Supreme Court’s decisions before the constitutional court of Slovenia. The proceedings are pending. In October 2015, United Group was notified that its appeal against a decision in favor of SAZAS in relation to its claim that United Group had failed to pay the court mandated compensation for broadcasters’ copyrights from April 2010 to October 2010 was rejected, and United Group subsequently paid SAZAS €1.0 million. United Group maintains that the applicable agreements were null and void during the period for which SAZAS is claiming unpaid fees and that SAZAS was not authorized to collect payments for broadcasters, and United Group has, for these reasons, appealed the matter to the Supreme Court. In March 2018, United Group received the Supreme Court’s decision rejecting its appeal. United Group has filed a constitutional appeal before the constitutional court of Slovenia against the Supreme Court’s decision. The proceeding is pending. In 2016, SAZAS commenced legal proceedings against all cable operators in Slovenia (including United Group) claiming copyright infringement and damages for the use of non- theatrical musical works in radio programs and in TV programs. While legal proceedings have been commenced against all cable operators in Slovenia, the damages that have been claimed against Telemach Slovenia are in an aggregate amount of approximately €1.7 million (€0.4 million for use of musical works by cable retransmission of radio programs and €1.4 million for use of musical works by cable retransmission of TV programs). In all these cases, the court of first instance delivered judgments. In the case for use of musical works by retransmission of radio programs for the period from January 2012 to June 2012 and December 2012 to

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November 2015, the court of first instance delivered a judgment by which SAZAS was awarded approximately 70% of its original claim, whereas in the case for use of musical works by retransmission of TV programs for the period from November 2010 to June 2012 and for December 2012, the court of first instance delivered judgments by which SAZAS was awarded approximately 20% of its original claim. United Group appealed all of these decisions to the higher court. In all cases related to retransmission of musical works in radio channels, the higher court has delivered a judgment partially granting United Group’s appeal and lowering the amount awarded to SAZAS by up to 50% of SAZAS’s original claim. Telemach Slovenia complied with the final judgment and paid the imposed amount to SAZAS, whereby in one case, the parties concluded a court settlement for a period of eight months, which had already been performed by Telemach Slovenia. The higher court has also delivered its decision in five proceedings on appeal related to the retransmission of musical works in TV programs; in two decisions the higher court rescinded the judgment of the court of first instance and remanded the case to the lower court while in the other three decisions, the higher court amended the judgment of the court of first instance in line with recent case law adopted by the Supreme Court in similar cases and increased the amount awarded to SAZAS to approximately 27% of SAZAS’s original claim. In one renewed proceeding, the court of first instance delivered a judgment awarding SAZAS with 30% of its initial claim, which United Group appealed to the higher court. In that case, the higher court dismissed SAZAS’s complaint, while it granted in part Telemach Slovenia’s complaint and modified the judgment rendered in the first instance so that SAZAS succeeded with approximately 25% of its original claim. United Group complied with these final decisions of the higher court and paid to SAZAS the awarded amounts. Furthermore, United Group submitted in all five cases a proposal for admission of revision before the Supreme Court against the higher court’s decision relating to retransmission of musical works in TV programs. SAZAS also filed a revision against the higher court’s decision to the Supreme Court. In four proceedings, the Supreme Court has already issued a decision rejecting United Group’s proposal for admission of revision; United Group filed a constitutional complaint in these proceedings. With the exception of the five court cases related to retransmission of musical works in radio channels, all other court cases initiated in 2016 are still pending. Accordingly, United Group cannot estimate the final amount of damages. In 2018, United Group received notice of four lawsuits initiated by SAZAS claiming damages for cable retransmission of musical works in TV programs for the period from January 2013 to December 2013 in an aggregate amount of approximately €0.2 million, plus late payment interest and legal costs. United Group responded to SAZAS’s claims and filed a statement of defense. In three cases, the court of first instance awarded SAZAS with approximately €0.17 and in another case approximately €0.20 per subscriber per month and late payment interest amounting to approximately 29% of SAZAS’s original claim, which United Group is appealing. The proceedings are pending. In 2019, United Group received notice of additional lawsuits initiated by SAZAS against Telemach Slovenia for payment of copyright compensation for cable retransmission of musical works on TV channels for the period from January 2014 to December 2014 and another for payment of copyright compensation for the period from November 2013 to December 2014

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in an aggregate amount of €1 million, plus late payment interest and legal costs. United Group has responded, requesting the court to dismiss SAZAS’s claim as unfounded or, alternatively, to establish a fair remuneration in accordance with Telemach Slovenia’s proposal. Several judgments have been issued by the first instance courts awarding SAZAS with approximately 30 to 40% of SAZAS’s original claims, all of which United Group is appealing. These proceedings are pending. With respect to these copyright infringement claims by SAZAS, United Group maintains that the fees payable to SAZAS can only be established by an agreement between SAZAS and the representative association of operators or that the fees should be determined by the Copyright Board, which has the legal authorization to fix the proper tariff whereas an entity such as SAZAS and the representative association of operators are not able to agree on a proper tariff. In addition, United Group maintains that according to the case law of the Court of Justice, each tariff should be aligned with the tariffs of related collective societies in comparable EU countries and should not be appreciably higher than those charged in comparable Member States. It is for the national court to examine whether the deviation of the tariff in question is sufficiently substantiated with objective reasons. In 2014, the Slovenian Intellectual Property Office (“URSIL”) issued an opinion stating that SAZAS had infringed the provisions of applicable law by publishing an interim tariff for cable retransmission. Additionally, with this decision URSIL required SAZAS to revoke the interim tariff. However, this opinion is not determinative. United Group has made what it believes to be appropriate reserves and will continue to defend these matters vigorously.

Dispute with RTV Slovenija

In May 2019, United Group received an enforcement order amounting to €0.53 million and late payment interest which was issued by the local court in response to a claim by RTV Slovenija. United Group responded by filing an objection based on which the court pursuant to the applicable procedural legislation rescinded the enforcement order and remanded the case to a regular court litigation procedure. RTV Slovenija is a broadcaster of Slovenian national TV and radio channels and is a member of EBU Cable Coordination. In 2015, cable operators in Slovenia (including United Group) entered into a license agreement with national broadcasters that were represented by EBU Cable Coordination for the period from October 2010 to December 2014. In this proceeding, RTV Slovenija claims remuneration for cable retransmission of Slovenian national channels for the period from October 2010 to December 2014. United Group has argued that due to the government mandated obligation to provide these channels, RTV Slovenija should allow operators to retransmit national channels without charge in accordance with applicable laws. The proceeding is pending.

Dispute with CME Media Enterprises B.V.

Requisite regulatory approval was not received to consummate United Group’s proposed acquisition of the Slovenian operations of CME Media Enterprises B.V. (“CME”) by the agreed long stop date for such acquisition, and CME exercised its option to terminate such

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proposed acquisition. Following such termination, CME notified United Group that a breakage fee of €4.4 million was payable by it in connection with such termination, which United Group believes it is not required to pay under the terms of the acquisition agreement with CME. United Group subsequently received from CME a request for arbitration in this matter in accordance with the Rules of the London Court of International Arbitration. The arbitration is currently ongoing, and United Group expects it to continue through 2020.

Dispute with BS Group d.o.o., Brus in Regard to Producer’s Rights

In 2016, BS GROUP DOO BRUS (“BS”) initiated legal proceedings against SBB Serbia before the Commercial Court in Belgrade, claiming damages in the amount of approximately €25 million. BS claims that SBB Serbia violated BS’s producer rights in respect of certain of its television series and by broadcasting them outside of Serbia. SBB Serbia has responded to the claims. Subsequently, a court expert report, dated December 6, 2019, concluded that broadcasts had occurred outside of Serbia. SBB Serbia objected to the Expert’s Report. This proceeding is in progress, and United Group believes this claim is without merit.

Sport Klub Divestiture Ruling and Investigation of Alleged Abuse of Dominant Position

On September 4, 2018, the Slovenian Competition Protection Agency ruled that United Group’s acquisition of United Media Distribution (then known as IKO Balkan) is incompatible with Slovenian competition rules. The Slovenian Competition Protection Agency also ordered United Group to divest the Sport Klub (SK) TV channels within six months and imposed a ban prohibiting United Group from broadcasting sports TV channels in Slovenia (with the exception of the existing Fight Channel) for the period of three years from the day United Group transfers the Sport Klub (SK) TV channels to a suitable buyer. The Slovenian Supreme Court has stayed the implementation of the Slovenian Competition Protection Authority’s divestment decision until a final decision on the merits of this case is issued. The legal remedy against the divestment decision is pending in front of the Administrative Court. In relation to this proceeding, the Slovenian Competition Protection Authority in a separate misdemeanor proceeding recently imposed on United Media Limited a fine of €3.7 million for delayed merger control filing. United Group filed a lawsuit against the decision on such fine with the Administrative Court. Proceedings in respect thereof are pending as of the date of this report. Moreover, independent from any final decision, a fine of up to a legal maximum of 10% of annual revenue of United Group could be imposed on it in a separate misdemeanor proceeding for not obtaining merger clearance prior to operating IKO Balkan. In previous decisions when the Slovenian Competition Protection Agency, following or in parallel with granting merger clearance, has levied fines against companies for exercising control prior to obtaining merger clearance, the percentage of the fine has been materially less than 10% of overall group revenue, and in an unrelated recent case, the Slovenian Competition Protection Agency fined an undertaking for failure to provide notification of a concentration in the amount of approximately €54 million, which, according to publicly available sources, amounted to approximately 1% of the relevant group’s revenue. United Group expects the merger approval proceeding to continue for the next 6 to 24 months. While United Group believes its lawsuit

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against the Competition Protection Agency’s decision is strong and legally substantiated, taking into consideration the complexity of the subject matter, the fact that the proceedings are in their initial stages and lack of relevant case law in Slovenia, however, United Group cannot give any assurance as to the outcome of this proceeding. In February 2015, the Slovenian Competition Protection Agency initiated an investigation regarding alleged abuse of dominant position by United Media Limited, IKO Balkan (now United Media Distribution) and its Slovenian subsidiary IKO Media PRO d.o.o. in the wholesale market for the supply of sport pay-TV sports channels in Slovenia for a period beginning around August 2012. This proceeding is currently pending as no statement of objections has been issued by the Slovenian Competition Protection Agency. Possible impacts of a decision adverse to United Group include: (i) an obligation to cease the infringement (if any); (ii) imposition of measures to remedy any proven abuse of dominant position; (iii) imposition of a monetary fine of up to 10% of the annual turnover of United Media Limited and United Media Distribution in the preceding business year; (iv) the imposition of a criminal charge; and (v) damages claims from third parties.

RATEL

On July 5, 2019, RATEL issued a decision declaring that Telekom Srbija and SBB Serbia are operators with joint SMP on the wholesale market for central access provided at a fixed location for mass market products. This decision resulted in the imposition of certain regulatory obligations on SBB Serbia, including an obligation to publish a new standard wholesale offer for services of broadband access. On July 30, 2019, RATEL notified SBB Serbia of its obligation to publish a standard wholesale offer for services of broadband access by September 30, 2019. On August 7, 2019, SBB Serbia filed a claim before the Administrative Court against RATEL’s decision and requested an injunction suspending its enforceability. The request for suspension was rejected twice, and the challenge to these decisions was dismissed twice. The challenge to the latter of the two dismissals is pending before the Supreme Court of Cassation. The challenge to RATEL’s decision is still pending before the Administrative Court. SBB updated the Administrative Court concerning all relevant subsequent market developments. United Group also informed European Union authorities of RATEL’s decision and its objection to it. Meanwhile, SBB Serbia on September 30, 2019, published a standard wholesale offer for services of broadband access. The offer was subsequently amended and republished on November 15, 2019, in response to comments made by RATEL, and then removed at the request of RATEL. On December 25, 2019, RATEL presented further comments to SBB Serbia in relation to the offer requesting, among other things, the insertion of certain provisions such as a requirement that operators will be provided access to special channels for distribution of media content, amendments of certain provisions of the offer, reductions of the link bandwidth for traffic delivery, and explanations of the calculations for certain fees. SBB provided its response to RATEL before the procedural deadline of January 20, 2020.

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MREŽA 3 d.o.o. Beograd and REM

MREŽA 3 d.o.o. Beograd (“Mreza”), the plaintiff, obtained two licenses for the provision of general media services from REM, the Serbian media regulator, on December 30, 2015 for two allotment regions in Serbia. SBB Serbia later published a tender for the allocation of a broadcasting agreement to media service providers on February 6, 2016. Mreza failed to take this opportunity to conclude a broadcasting agreement with SBB Serbia. The plaintiff claims direct damages consisting of the cost it incurred to start the business and the fee paid for the broadcasting license. SBB Serbia maintains that it does not have a “must carry” obligation to Mreza. There is a legal obligation not to discriminate when distributing a signal, and United Group believes that SBB Serbia did not discriminate against the plaintiff. Mreza claims damages of approximately €1.9 million. The Trial Court concluded the litigation proceeding in March 2020. The Group is currently waiting for its first instance decision.

RTS

RTS, the plaintiff, requested judicial determination of whether a breach of their rights as the broadcasting manufacturer of certain RTS channels (RTS 1, RTS 2, RTS 3 and RTS HD) had occurred due to distribution of these channels via EON. RTS claimed approximately €1.5 million in damages and a temporary injunction seeking to prohibit SBB Serbia from broadcasting the plaintiff’s programs. The Law on Electronic Media categorizes RTS programs as “must carry” channels, which all media operators in Serbia are obligated to carry, regardless of what platforms operators employ in their distribution. On February 26, 2019, the trial court determined a breach of RTS’ rights as the broadcasting manufacturer had occurred, and prohibited SBB Serbia from distributing RTS programs via EON but denied the claim for damages. The trial court also dismissed SBB Serbia’s counterclaim for a determination that SBB Serbia is permitted to broadcast and distribute RTS channels. Both SBB Serbia and RTS appealed this decision and are awaiting secondary appellate court review. RTS filed a further claim against SBB Serbia for the distribution of its channels through Total TV, Net TV Plus, Telemach Montenegro, Telemach Slovenia and Telemach Bosnia and Herzegovina without an appropriate contract and payment contributions. RTS claimed approximately €1 million in damages. The claim was received on December 27, 2019. SBB Serbia responded to the claim within the procedural term of 30 days from reception of the claim.

Beogradske Elektrane Beogradske Elektrane, a public utility company responsible for Belgrade’s power plants, and the City of Belgrade (collectively, the “BE Plaintiffs”) have filed a claim against SBB Serbia for €10 million, claiming unjust enrichment based on unauthorized use of their utility ducts for the installation of fiber optics infrastructure. The BE Plaintiffs have also petitioned the court to declare SBB Serbia’s optical fiber network an asset of common interest owned by the City of Belgrade. They also seek to impose an obligation on SBB Serbia to remove the network or to pay the BE Plaintiffs a fee in the amount of €100 million, which represents an amount designated by the BE Plaintiffs and, as such, should not be directly enforceable against

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SBB Serbia (even in the event the court rules in favor of the BE Plaintiffs) as the payment thereof represents only an alternative option for SBB Serbia to be allowed to maintain the network in case the court rules that the network should be removed. SBB Serbia submitted its response to the lawsuit on October 14, 2019. Subsequently, a preliminary hearing was scheduled for December 2019 but was adjourned to February 2020 first, and again to end of April 2020.

EPS (Serbian Electricity Utility Company)

JP EPS Distribucija, the plaintiff, who is Serbia’s state-owned electrical energy distributor, which owns the infrastructure (poles) that can also be used for the provision of services, and that is used by SBB and other operators, submitted a lawsuit on March 25, 2020. JP EPS requested SBB to remove its equipment from EPS’s poles and to pay damages of approximately €1.2 million. EPS claims that there is no legal ground for the usage of the infrastructure, due to the fact that the agreement has expired, although the Regulatory Agency for Electronic Communications (RATEL), in October 2019, adopted a decision ordering the joint usage of infrastructure which is actually the legal ground for the usage. However, RATEL failed to decide on the commercial and technical conditions of the joint usage, and therefore SBB challenged the RATEL decision in front of the Administrative Court. The dispute between JP EPS and SBB arose from the fact that EPS, as the only provider of the services of leasing of the electricity poles, decided to increase its leasing prices by more than 100%, which the Group believes was unjustified. This development compelled SBB to submit a complaint against this price increase to the Serbian Competition Protection Commission and to address RATEL to order the joint usage of the infrastructure. The deadline for submitting SBB’s response to the lawsuit response was April 24, 2020. However, this deadline will most likely be postponed due to the recently declared State of Emergency in light of Covid-19.

Slobodna Televizija

Slobodna Televizija, the plaintiff, requested a judicial determination of a breach of competition rules, including the alleged abuse of a dominant position by SBB, and alleged collusion of SBB and Adria News DOO, based on the alleged unlawful barring of the TV channel Slobodna Televizija from being made available in the SBB media distribution system. Slobodna Televizija claimed approximately €2.8 million in damages and asked the court to order SBB to provide a distribution agreement to Slobodna Televizija, specifying the terms and conditions of the distribution of the Slobodna Televizija TV channel. On February 14, 2020, SBB and Adria News DOO submitted their response to the lawsuit, arguing that the court is not authorized to determine the breach of competition rules, due to the fact that the case falls under the exclusive authority of the Serbian Competition Protection Commission. Furthermore, SBB and Adria News DOO claimed that the lawsuit does not fulfill the basic procedural requirements, and it is unsubstantiated. The preliminary hearing is scheduled for May 12, 2020.

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Key Operating Measures

United Group uses several key operating measures, including homes passed, unique cable subscribers, RGUs and ARPU, to track the performance of the business. None of these terms are measures of financial performance under IFRS, nor have these measures been reviewed by an outside auditor, consultant or expert. These measures are derived from management information systems. As these terms are defined by management, they may not be comparable to similar terms used by other companies. Please refer to Appendix 3 for definitions of the Group’s key operating measures. Unique Cable Subscribers, RGUs and ARPU

The following table sets forth key operating measures for United Group as of and for the twelve months ended December 31, 2019 and December 31, 2018. in 000 FY 2018 FY 2019 % Delta Key Operating Measures

Homes passed 1,833 1,852 1% 19 Unique cable subscribers 1,166 1,168 0% 3 RGUs 3,788 3,917 3% 129 Cable pay-TV 1,166 1,168 0% 3 Broadband internet 822 856 4% 34 Fixed -line telephony 644 695 8% 51 Mobile services 512 550 7% 38 DTH pay-TV 463 446 -4% (17) OTT 122 124 2% 2 Other services 59 77 30% 18 Penetration 63.6% 63.1% -1% -1% Broadband internet 44.8% 46.2% 3% 1% Fixed-line telephony 35.1% 37.5% 7% 2% Blended Cable ARPU (in €) 22.0 22.8 4% 0.8

Homes passed increased by 19 thousand, or 1%, from 1,833 thousand on December 31, 2018 to 1,852 thousand as at December 31, 2019, primarily due to organic network expansion.

As at December 31, 2019, the Group had 1,168 thousand cable pay-TV RGUs, an increase of 3 thousand compared to 1,166 thousand at December 31, 2018, resulting from organic growth.

The total number of DTH pay-TV RGUs amounted to 446 thousand as at December 31, 2019, a 4% decrease year-on-year.

54 FY 2019 HIGH YIELD REPORT

As at December 31, 2019, the Group had 856 thousand broadband internet RGUs, representing an increase of 4%, compared to 822 thousand at December 31, 2018. This is primarily attributable to an increase in multi-play subscriptions over this period and organic subscriber growth.

The total number of fixed telephony RGUs rose to 695 thousand as at December 31, 2019, an increase of 8% compared to 644 thousand at December 31, 2018. The positive trend is primarily due to an increase in multi-play subscriptions over this period and organic subscriber growth. The Group’s fixed-line telephony RGUs as at December 31, 2018 have been restated due to a reclassification of fixed-line telephony RGUs outside the Group’s network footprint to Other Services. This has resulted in a decline of 17 thousand RGUs, from 661 thousand to 644 thousand. This is mainly due to reclassifications at Telemach Slovenia, affecting 14 thousand fixed-line telephony RGUs.

Our OTT RGUs grew by 2% to 124 thousand, compared to 122 thousand at December 31, 2018.

Our mobile service RGUs increased from 512 thousand at December 31, 2018 to 550 thousand as at December 31, 2019. This is an increase of 38 thousand, or 7%, driven by organic growth in Slovenia.

Our total RGUs increased by 3%, from 3,788 thousand at December 31, 2018 to 3,917 thousand as at December 31, 2019. RGUs added over this period were a result of organic growth of cable pay-TV and mobile service, as well as the growing proportion of multi-play subscribers.

The following table provides a breakdown of the Group’s key operating measures for SBB Serbia, Telemach Slovenia, Telemach BH and Telemach MNE. in 000 SBB Serbia Telemach Slovenia Telemach BH Telemach MNE FY FY FY FY FY FY FY FY Footprint 2018 2019 YoY 2018 2019 YoY 2018 2019 YoY 2018 2019 YoY

Homes passed 1,086 1,087 0% 332 339 2% 334 337 1% 81 89 10% Unique cable 722 733 2% 198 197 0% 217 208 -4% 29 30 2% subscribers 66% 67% 60% 58% 65% 62% 36% 33% RGUs Cable pay-TV 722 733 2% 198 197 0% 217 208 -4% 29 30 2% DTH pay-TV 229 221 -3% 44 43 -3% 134 133 -1% 56 49 -13% OTT 10 13 22% 0 0 23% Broadband internet 488 513 5% 158 163 3% 157 159 2% 19 21 8% Telephony 361 403 12% 170 172 1% 101 105 4% 12 15 22% Mobile services 512 550 7% Other services 24 33 33% 33 44 31% 2 1 -39% Total RGUs 1,833 1,915 4% 1,115 1,170 5% 610 606 -1% 117 115 -2%

55 FY 2019 HIGH YIELD REPORT

The following table sets forth the Blended cable ARPU for SBB Serbia, Telemach Slovenia, Telemach BH and Telemach MNE generated by the products and services the Group offers.

SBB Serbia Telemach Slo Telemach BH Telemach MNE in € FY 2018 FY 2019 FY 2018 FY 2019 FY 2018 FY 2019 FY 2018 FY 2019 ARPU

Cable pay-TV 10.3 10.5 18.6 19.0 9.7 10.6 11.1 11.4 Broadband internet 10.3 10.7 17.7 18.3 9.6 9.9 8.3 8.2 Telephony 4.0 3.6 3.4 3.2 7.4 6.8 3.3 2.8 Mobile services 10.4 10.8 Blended Cable ARPU 19.0 19.7 35.6 36.7 19.9 21.2 17.6 18.4

DTH pay-TV 9.8 10.6 17.4 18.4 8.5 9.5 10.7 11.8

ARPU from broadband internet includes value-added services such as online backup, internet security and anti-virus solutions. One unique cable subscriber can be an RGU for cable pay-TV, fixed-line telephony, broadband internet or other services. DTH subscribers are DTH RGUs. SBB Serbia: Blended cable ARPU for SBB Serbia in FY 2019 amounted to €19.7. The 4.0% year-on-year increase was primarily a result of the continued positive impact of subscribers upgrading to multi-play packages and price increases in January 2019. DTH ARPU at SBB Serbia increased to €10.6 in FY 2019, from €9.8 in FY 2018, as a result of a price increase in August 2018. Telemach Slovenia: Blended cable ARPU for Telemach Slovenia in FY 2019 amounted to €36.7. The 3.0% year-on-year increase in blended cable ARPU per customer was driven by growth in the number of multi-play subscribers. A price increase, effective as of February 2019, had a positive impact on service revenues. The segment’s mobile ARPU for FY 2019 amounted to €10.8, representing the 4.0% year-on-year growth. DTH ARPU at Telemach Slovenia increased to €18.4 in FY 2019, from €17.4 in FY 2018, as a result of a price increase in February 2019. Telemach BH: Blended cable ARPU for Telemach BH in FY 2019 increased by 6.9% year-on-year to €21.2 as a result of growth in the number of subscribers for the multi-play offering and the effect of a price increase implemented in April 2019. DTH ARPU at Telemach Bosnia increased to €9.5 in FY 2019, from €8.5 in FY 2018, as a result of a price increase in January 2019. Telemach MNE: Blended cable ARPU for Telemach MNE in FY 2019 increased by 4.2% year-on-year to €18.4, mainly as a result of growth in the number of subscribers for the multi-play offering. DTH ARPU at Telemach MNE increased to €11.8 in FY 2019, from €10.7 in FY 2018, as a result of a price increase in January 2019.

56 FY 2019 HIGH YIELD REPORT

Results of Operations

In this report, the Group presents audited financial data for United Group for the twelve months ended December 31, 2019 compared to the twelve months ended December 31, 2018. Please refer to Appendix 2 for the key factors affecting the Group’s business and results of operations. For a description of the key line items, please refer to Appendix 4. in €000 FY 2018 FY 2019

Revenue 635,627 741,812 Other income 15,329 8,914 Content cost (103,274) (124,212) Satellite capacity cost (4,718) - Link and interconnection cost (41,054) (38,151) Cost of end-user equipment and other material cost (45,623) (50,269) Staff costs (99,011) (102,108) Media buying (20,020) (39,681) Other operating expenses (124,041) (119,402) Impairment loss on goodwill (9,255) - Impairment loss on trade and other receivables, including (12,563) (11,140) contract assets Impairment loss on other financial assets (2,563) (7,036)

IFRS EBITDA 188,834 258,727

Depreciation (99,642) (106,828) Depreciation (right-of-use assets) - (17,972) Amortization of intangible assets (68,483) (82,280) Results from operating activities 20,709 51,647

Finance income 7,343 4,221 Finance costs (71,005) (108,490) Net finance costs (63,662) (104,269)

Profit/(loss) before tax (42,953) (52,622)

Income tax (expenses)/benefit (3,046) (7,414) Minority share - - Profit/(Loss) for the period (45,999) (60,036)

Revenue

Revenue increased by €106.2 million, or 16.7%, year-on-year to €741.8 million for the year ended 31 December 2019. This increase was primarily due to continued successful cross- selling and price increases, as well as due to contribution and improved performance of companies acquired in 2018 and 2019.

57 FY 2019 HIGH YIELD REPORT

Revenue figures for the business segments below exclude intra-company transactions, which have been eliminated. in € m FY 2018 FY 2019 Change

SBB Serbia 205,134 219,999 7.2% Telemach Slovenia 219,469 229,562 4.6% Telemach BH 67,741 72,652 7.2% Telemach MNE 13,702 14,299 4.4% United Media 109,009 185,092 69.8% Other 20,572 20,208 (1.8%) Total 635,627 741,812 16.7%

SBB Serbia: Revenue for the SBB Serbia segment increased by 7.2% year-on-year to €219,999 thousand in FY 2019, primarily due to growth in the number of subscribers and RGUs (particularly through successful cross-selling) and the implementation of a price increase in January 2019.

Telemach Slovenia: Revenue for the Telemach Slovenia segment increased by 4.6% year-on-year to €229,562 thousand in FY 2019, primarily due to an increased number of subscribers in mobile telephony, higher mobile handsets sales and price increases in February 2019.

Telemach BH: Revenue for the Telemach BH segment increased by 7.2% to €72,652 thousand in FY 2019, primarily due to organic growth, as well as an increase in the number of subscribers for the multi-play offering (digital TV, broadband internet and fixed-line telephony) and price increase in April 2019.

Telemach MNE: Revenue for the Telemach MNE segment increased by 4.4% year-on- year to €14,299 thousand in FY 2019, from €13,702 thousand in FY 2018, due to an increase in the number of multi-play subscribers and organic growth.

United Media Group: External revenue at United Media Group increased by 69.8% year-on-year to €185,092 thousand in FY 2019, primarily due to the full year effect of acquisitions (NOVA TV and Direct Media/Pink) and organic growth. Total revenues of the Media Segment (including IC) grew by 46.8% year-on-year to €282,087 thousand.

Other Businesses: Revenue for the Other Businesses segment decreased marginally year-on-year, by €364 thousand or 1.8%, to €20,208 thousand in FY 2019.

Other income

Other income decreased from €15,329 thousand in FY 2018 to €8,914 thousand in FY 2019, primarily due to the divestment of Totalna TV Croatia in Q1 2018.

58 FY 2019 HIGH YIELD REPORT

Content costs

Content costs increased by 20% year-on-year to €124,212 thousand in FY 2019. This increase was primarily due to United Media’s acquisitions of TV channels (Nova TV in Croatia, Bosnia and Herzegovina and Montenegro) and increased sports rights costs.

Satellite capacity costs

No satellite capacity costs were reported in FY 2019 as this cost was capitalized in accordance with IFRS 16.

Link and interconnection costs

Link and interconnection costs decreased by 7% year-on-year to €38,151 thousand in FY 2019. This decrease was primarily due to lower mobile link and interconnection costs.

Cost of end-user equipment and other material costs

Cost of end-user equipment and other material costs increased by 10% year-on-year to €50,269 thousand in FY 2019. This increase was primarily due to the higher cost of sales for mobile handsets as a result of increased sales volumes and higher energy and fuel costs.

Staff costs

Staff costs increased by 3% year-on-year to €102,108 thousand in FY 2019. Of total staff costs in FY 2019, €21,659 thousand (FY 2018: €32,809 thousand) related to the non- cash impact of the application of IFRS 2 in relation to a Long-Term Incentive Scheme (the “LTIS”). On May 16, 2018, the shareholders of the Group’s ultimate , Adria Luxco S.à .l. entered into the LTIS for the benefit of certain members of the Group’s current and future management team. The LTIS consists of a payment by the shareholders of Adria Luxco S.à r.l. following completion of an initial public offering or a sale of the Group. The amount of the payment was calculated as a percentage of the proceeds received by the shareholders of Adria Luxco S.à r.l. and was based on the accumulated return on investment achieved by such shareholders. In addition, the increase in staff costs was due in part to continued expansion, both organic and through acquisitions, of the Group during 2018.

Media buying

Media buying increased to €39,681 thousand in FY 2019 (FY 2018: 20,020). This increase was due to the full year effect of Direct Media acquisition in September 2018.

Depreciation

Depreciation increased by 7% year-on-year to €106,828 thousand in FY 2019. This increase was primarily due to the expansion of United Group’s cable and mobile networks, increased investment in own-produced content and new assets resulting from acquisitions.

59 FY 2019 HIGH YIELD REPORT

Depreciation (right-of-use assets)

Depreciation increased to €17,972 thousand in FY 2019, from €nil in FY 2018, due to the implementation of IFRS 16 on January 1, 2019.

Amortization of intangible assets

Amortization of intangible assets increased by 20% year-on-year to €82,280 in FY 2019. This increase was mainly due to higher investments into programming rights and own production, as well as the addition of intangible assets of acquired companies.

Other operating expenses

Other operating expenses decreased by 4% year-on-year to €119,402 thousand in FY 2019. This decrease was primarily due to the implementation of IFRS 16 and lower legal and advisory fees related to M&A activities.

Net finance costs

Net finance costs increased by 64% year-on-year to €104,269 thousand in FY 2019, mainly attributable to higher interest expenses and costs of early redemption option that was exercised in the January 2020.

Loss before tax

Loss before tax increased to €52,622 thousand in FY 2019, from a loss of €42,953 thousand in FY 2018, primarily due to increased net finance costs.

60 FY 2019 HIGH YIELD REPORT

EBITDA reconciliation

EBITDA is a supplemental measure of financial performance that is not required by, or presented in accordance with, IFRS. United Group defines “EBITDA” as Profit/(Loss) for the period plus income tax (benefit)/expense, depreciation, amortization of intangible assets and net finance costs. EBITDA is not a measurement of performance or liquidity under IFRS and you should not consider EBITDA as alternatives to (a) net income as determined in accordance with IFRS as a measure of the Group’s operating performance, (b) cash for the period as a measure of the Group’s ability to meet our cash needs, or (c) any other measure of performance or liquidity under IFRS. United Group presents EBITDA and the ratios derived therefrom, because it believes that they are measures commonly used by investors and they are measures that are used in managing the business. EBITDA, as presented in this report, however, may not be comparable to similarly titled measures reported by other companies due to differences in the way these measures are calculated. The following table provides a reconciliation of Profit/ (Loss) for the period to EBITDA.

In €000 FY 2018 FY 2019 Change

Profit/(Loss) for the period (45,999) (60,036) (31%) Income tax (benefit)/expense 3,046 7,414 143% Depreciation 99,642 106,828 7% Depreciation (right-of-use assets) - 17,972 /a Amortization of intangible assets 68,483 82,280 20% Net finance costs 63,662 104,269 64% EBITDA 188,834 258,727 37% Non-operating expenses 71,792 36,667 (49%) Adjusted EBITDA 260,626 295,394 13%

In €000 31-Dec-19 Loss for the period (60,036) Income tax 7,414 Loss before tax (52,622)

Adjustments for: Net finance cost 104,269 Depreciation 124,800 Amortisation 82,280 EBITDA 258,727

Management fee - Shareholder related cost (note 36) 6,214 Other management related expenses 253 Legal and advisory fee - M&A related 11,023 Trade receivable impairment allowance - exceptional 507 Impairment loss of subscription costs 325 Intragroup adjustments 347

61 FY 2019 HIGH YIELD REPORT

Write-off of obsolete equipment 2,326 Donations 582 LTIS agreement (note 36) 21,659 Application of new accounting standard IFRS 16 (20,208) Other financial asset impairment allowance - exceptional 11,206 Additional IFRS 9 effect due to subsequent changes in default rates 1,551 Other expenses 882 Adjusted EBITDA 295,394

The following table provides a build-up of Annualized Last Two Quarters Adjusted Pro Forma EBITDA. in €000 L2QA

Annualized L2Q Adjusted EBITDA 290,532

Tele2 Standalone L2QA as of Dec 2019 53,540 Nova Croatia estimated additional carriage fees 4,155 Direct Media/Pink Acquisition estimated additional carriage fees 12,402 Annualized Last Two Quarters Adjusted Pro Forma EBITDA 360,629

The following table provides management estimation of a build-up of Annualized Last Two Quarters Adjusted Pro Forma EBITDA including Vivacom. in €000 L2QA

Annualized L2Q Adjusted EBITDA 290,532

Vivacom Standalone L2QA as of Dec 2019 202,096 Tele2 Standalone L2QA as of Dec 2019 53,540 Nova Croatia estimated additional carriage fees 4,155 Direct Media/Pink Acquisition estimated additional carriage fees 12,402 Annualized Last Two Quarters Adjusted Pro Forma EBITDA including 562,725 Vivacom

62 FY 2019 HIGH YIELD REPORT

Gross Leverage and Net Leverage Ratio on a Standalone Basis United Group’s gross leverage ratio (i.e. ratio of Group Gross Debt to Annualized Last Two Quarters Pro Forma EBITDA) as at December 31, 2019, decreased to 4.84x compared to 5.04x as at December 31, 2018. United Group’s net leverage ratio (i.e. ratio of Group Net Debt to Annualized Last Two Quarters Pro Forma EBITDA) as at December 31, 2019 decreased to 4.71x compared to 4.88x as at December 31, 2018.

In €000 FY 2019 a) Annualized Last Two Quarters Pro Forma EBITDA 360,629 b) Cash and cash equivalents7 46,590 c) Finance lease 107,068 d) SSRCF 84,000 e) Senior Secured Notes8 1,650,000 f) Other financial liabilities 9,742 g) IFRS 16 Lease liabilities adjustment (105,531) h) As adjusted Group Gross debt (c+d+e+f+g) 1,745,279 i) As adjusted Group Net debt (h-b) 1,698,689

j) Gross leverage (h/a) 4.84x k) Net leverage (i/a) 4.71x

7 Cash and cash equivalents figure does not include transaction costs related to bond issuance and consideration for Tele2.

8 Senior Secured Notes figure does not include transaction costs and redemption fee related to bond issuance.

63 FY 2019 HIGH YIELD REPORT

Gross Leverage and Net Leverage Ratio Estimate including Vivacom The table below provides certain credit statistics of the Group on a pro forma basis, on a pro forma basis for the Vivacom Acquisition and financing transactions related thereto. For the purposes of the table below, it is assumed that the proceeds of the PIK Notes were contributed into the Group as equity or as a deeply subordinated shareholder loan. United Group’s gross leverage ratio (i.e. ratio of Group Gross Debt to Annualized Last Two Quarter EBITDA) and net leverage ratio (i.e. ratio of Group Net Debt to Annualized Last Two Quarter EBITDA) as at December 31, 2019, decreased to 4.97x and 4.86x, respectively, compared to 5.04x and 4.88x as at December 31, 2018.

In €000 FY 2019 a) Annualized Last Two Quarters Pro Forma EBITDA 562,725 b) Cash and cash equivalents9 61,090 c) Finance lease 225,227 d) SSRCF 84,000 e) Senior Secured Notes10 2,700,000 f) Other financial liabilities 9,742 g) IFRS 16 Lease liabilities adjustment (222,708) h) As adjusted Group Gross debt (c+d+e+f+g) 2,796,261 i) As adjusted Group Net debt (h-b) 2,735,171

j) Gross leverage (h/a) 4.97x k) Net leverage (i/a) 4.86x

9 Cash and cash equivalents figure does not include transaction costs related to bond issuance and consideration for Tele2.

10 Senior Secured Notes figure does not include transaction costs and redemption fee related to bond issuance.

64 FY 2019 HIGH YIELD REPORT

Liquidity and Capital Resources

The Group’s primary sources of liquidity and funds for capital expenditure, acquisitions and other investments are expected to be operating cash flow, the existing revolving credit facility (“RCF”), potential additional issuances of debt securities, ancillary and bilateral lending facilities and finance leases. United Group’s ability to generate cash from its operations will depend on future operating performance, which is in turn dependent, to some extent, on general economic, financial, competitive, market, regulatory and other factors, many of which are beyond the Group’s control. United Group maintains cash and cash equivalents to fund the day-to-day requirements of the business. The Group holds cash primarily in euros as well as Serbian dinar, Bosnian mark and other currencies.

Historically, the Group has relied primarily on its Senior Secured Revolving Credit Facility and bilateral bank facilities, other debt facilities and cash flow from operations to provide funds required for investments in capital expenditure and operations.

As at December 31, 2019, the Group had €46.6 million in cash and cash equivalents11. In addition, as at December 31, 2019, United Group had €1,650.0 million in fixed and floating rate Senior Secured Notes12, along with a partially drawn Senior Secured Revolving Credit Facility of €67.0 million, a €17.0 million unsecured bilateral RCF in Serbia, lease liabilities in the amount of €107.1 million and other financial liabilities of €9.7 million. Cash Flow The table below summarises the consolidated cash flow for the Group for the twelve months ended December 31, 2019, compared to the twelve months ended December 31, 2018. in €000 FY 2018 FY 2019 Change Operating net cash flow 165,437 162,621 (2,816) Investing net cash flow (129,335) (216,597) (87,262) Financing net cash flow (25,241) 260,603 285,844 Net cash flow 10,861 206,627 195,766

Net cash from / (used in) operating activities

Net cash flows from operating activities decreased by €2,816 thousand, from a net cash inflow of €165,437 thousand in FY 2018 to a net cash inflow of €162,621 thousand in FY 2019. This is primarily due to higher interest and income tax cash outflows.

11 Cash and cash equivalents figure does not include transaction costs related to bond issuance and consideration for Tele2.

12 Senior Secured Notes figure does not include transaction costs and redemption fee related to bond issuance.

65 FY 2019 HIGH YIELD REPORT

Net cash from / (used in) investing activities

Net cash outflows used in investing activities increased by €87,262 thousand, from a net cash outflow of €129,335 thousand in FY 2018 to a net cash outflow of €216,597 thousand in FY 2019. This increase in cash outflows is primarily due to the funds raised in FY 2018 for the acquisitions of CME Croatia and Direct Media Group in 2018.

Net cash from / (used in) financing activities

Net cash flows from financing activities increased by €285,844 thousand, from a net cash outflow of €25,241 thousand in FY 2018 to a net cash inflow of €260,603 thousand in FY 2019, primarily due to the issuance of bonds in July 2019 for Tele 2 acquisition.

66 FY 2019 HIGH YIELD REPORT

Capital Expenditure

United Group’s capital expenditure relates primarily to the purchase of property and equipment, including expansion of the Group’s network in terms of capacity and new homes connected, purchase of modems and set-top boxes to be installed in customer premises, growth in RGUs and maintenance of the Group’s cable and mobile networks and infrastructure, purchase of intangible assets such as content, software, investments in core infrastructure and systems to facilitate the addition of new services and acquisitions. Therefore, capital expenditure is primarily driven by extending, upgrading and maintaining cable and mobile networks, the installation and in-home wiring for new subscribers, the cost of cable modems, including high-speed modems for subscribers to the Group’s high-speed broadband internet, as well as the acquisition and production of content. The Group’s capital expenditure has also historically included certain investments of a non-recurring nature, as well as costs to integrate acquired businesses.

Capital expenditure also includes increases in intangible assets (except the Group’s customer list and brand names) and does not include financial assets. As part of the Group’s strategy to focus on capital expenditure improving returns, it has implemented measures to ensure a more efficient usage of capital investment. United Group intends to manage capital expenditure to maintain its well-invested asset base. The members of the Group’s board review all material capital expenditure programmes.

Over the next several years, United Group expects that its capital expenditure will be largely success and capacity based. Success and capacity-based capital expenditure includes capital expenditure related to the expansion of the Group’s network footprint to additional homes and existing subscribers, the replacement of set-top boxes, expanding network capacity, new product and service development and expenditure incurred when connecting business subscribers to the Group’s network. Success based capital expenditure does not include capital expenditure for maintenance, upgrade and replacement of systems and infrastructure.

United Group plans to continue investing in services and infrastructure in order to maintain and strengthen its competitive position. For the year ending December 31, 2020, the Group estimates that its capital expenditure will be between approximately €256 million and €257 million, which is expected to include the following estimates: • €34.3 million on customer premise equipment (€41.6 million in 2019); • €38.2 million on the fixed network (€40.8 million in 2019); • €11.4 million on the mobile network (€14.3 million in 2019); • €6.5 million on IT (€3.7 million in 2019); • €12.9 million on IP equipment (€13.6 million in 2019); • €4.4 million on Video HE equipment (€4.3 million in 2019); • €7.6 million on development costs, including with respect to United.Cloud (€4.5 million in 2019);

67 FY 2019 HIGH YIELD REPORT

• €51.7 million on development of media, including acquisition of content and investment in TV equipment (€44.1 million in 2019); • €24.0 million on other capital expenditures of which acquisition costs represent €12.2 million (€21.0 million in 2019 of which acquisition costs represent €12.0 million); and • €65.7 million for Tele2 (including €37.3 million for mobile frequencies payable over 14- year period; 2021-2034). These estimates are budgeted amounts and may differ from the actual capital expenditure as the business requirements change.

CAPEX by Segment in €000 FY 2018 FY 2019 Change

SBB Serbia 61,190 65,655 7% Telemach Slovenia 57,234 53,070 (7%) Telemach BH 14,928 14,176 (5%) Telemach MNE Segment 5,174 3,992 (23%) United Media 44,359 49,413 11% Other 1,886 1,661 (12%) Total 184,771 187,968 2%

SBB Serbia: Capital expenditure for SBB Serbia increased by 7% year-on-year to €65,655 thousand in FY 2019, mostly due to higher customer premises equipment and network investments compared to FY 2018. Telemach Slovenia: Capital expenditure for Telemach Slovenia decreased by 7% year- on-year to €53,070 thousand in FY 2019, mainly due to as capex for FY 2018 included the one-time purchase of a new building in Ljubljana and lower cable network upgrade. Telemach BH: Capital expenditure for Telemach BH decreased by 5% year-on-year to €14,176 thousand in FY 2019, mostly due to lower customer premises equipment and IP equipment. Telemach MNE: Capital expenditure for the Montenegro segment decreased by 23% to €3,992 thousand in FY 2019, primarily due to a lower level of capitalized inventories compared to FY 2018.

United Media: Capital expenditure for United Media increased by €5,054 thousand to €49,413 thousand in FY 2019, due to investments in the production of new exclusive content for certain of the Group’s channels, the effect of acquisitions and the increased cost of sports rights.

Please refer to Appendix 5 for specific quantitative and qualitative disclosures about market risk and Appendix 6 for the Group’s critical accounting policies.

68 FY 2019 HIGH YIELD REPORT

Adjusted EBITDA-CAPEX increased from €75,855 thousand in FY 2018 to €107,426 thousand in FY 2019 due to faster EBITDA growth versus CAPEX growth.

in €000 FY 2018 FY 2019 Change Adjusted EBITDA 260,626 295,394 13% CAPEX 184,771 187,968 2% Adjusted EBITDA - CAPEX 75,855 107,426 42%

69 FY 2019 HIGH YIELD REPORT

Subsequent (Material Recent) Events

Acquisition of Tele2 On 31 May 2019, the Group concluded an agreement to acquire 100% of the issued and outstanding share capital of Tele2 d.o.o. Croatia for consideration of EUR 196,468 thousand subject to certain adjustments at the closing date. The Group financed the acquisition through the issuance of new bonds with the proceeds of the bonds paid into an escrow account in July 2019. The transaction closed on 3 March 2020.

The identification and valuation of identifiable intangible assets and property, plant and equipment involved management judgment and was performed with the assistance of valuation experts.

The following schedule summarizes the provisional determination of fair value of assets acquired and liabilities assumed at the acquisition date: in €000 Property, plant and equipment 77,857 Intangible assets 15,459 Right-of-use assets 44,398 Other financial assets 10,697 Contract assets 3,392 Deferred tax assets 5,017 Cash and cash equivalents 3,035 Inventories 8,475 Trade and other receivables 60,701 Prepayments 19,603 Loans and borrowings (69,934) Long term liabilities (2,955) Long term provision (13,261) Lease liabilities (33,325) Trade and other payables (43,126) Current tax liabilities (5,041) Lease liabilities (11,366) Total identifiable net assets acquired 69,626

Goodwill and all assets and liabilities have been measured provisionally, pending completion of an independent valuation. A significant part of goodwill was allocated to customer relationship and frequencies. Goodwill on the acquisition date amounted to EUR 126,842 thousand and will be allocated to the new operating segment which represents the lowest level at which it will be managed and monitored.

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Acquisition of Vivacom (BTC Group) and bond issue On 7 November 2019, the Group concluded an agreement to acquire the entire stake in Vivacom for a preliminary contribution of EUR 943 million subject to certain adjustments at closing date. The transaction is subject to customary regulatory approvals by the local competition authorities and is expected to be completed in 2020. In any event of non-satisfaction of the Closing Condition, and if the transaction agreed per the contract is not unwound, break fee up to EUR 20 million shall be applicable (Seller shall be entitled to payment from the Purchaser - for loss of opportunity for the Seller). On 23 January 2020, the Group issued bonds in the nominal amount of EUR 1,675 million. Bond is issued in three tranches. First tranche in the nominal amount of EUR 600 million bears interest rate of 3.125% and matures on 15 February 2026. Second tranche in the nominal amount of EUR 450 million bears floating interest rate of 3M Euribor+3.25% and matures on 15 February 2026. Third tranche in the amount of EUR 625 million bears interest rate of 3.625% and matures on 15 February 2028. Part of the issued bonds will be used for the purpose of acquisition of BTC Group and the other part was used for redemption existing bond of EUR 575 million which matures in 2022 and partial repayment of existing RCF. After the closing of acquisition of Vivacom, the Group will have RCF in the total available amount of EUR 250 million. Other acquisitions The Group concluded agreements or signed binding offers to acquire stakes in the following companies: EVJ Elektroprom trgovina, KRS, Elcatel, Ansat Krsko, Panel and Tako lako for a total preliminary consideration of EUR 11.8 million subject to certain adjustments at closing dates. The transactions are subject to customary regulatory approvals by the local competition authorities and are expected to be completed in 2020. COVID-19 The existence of novel coronavirus (COVID-19) was confirmed in early 2020 and has spread rapidly from mainland China across the globe, causing disruptions to businesses and economic activity. Many governments across the world have imposed travel restrictions, lock downs and social distancing with a view to reducing the spread of the virus and hopefully minimizing the number of fatalities. The Group considers this outbreak to be a non-adjusting post balance sheet event. The main priority has been the health and safety of employees and continuous provision of service. The Group has adhered to instructions issued by the state authorities, including travel restrictions and enforced working from home. Management believes that the impact on business is currently limited with no immediate material adverse operational impact. Management intends to continue following the various national and/or state authorities’ policies and, in parallel, intend to do utmost to continue operations as the situation evolves.

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Management has reasonable expectations that the Group has adequate resources to continue in operational existence for the foreseeable future. The results of management review of the Group’s market, operations and financials in the past year and a forecast for at least twelve months after the date of signing of the financial statements provides a sound basis for the appropriateness of using the going concern assumption in the preparation of the Group’s financial statements for the year ended 31 December 2019, though the existence of Coronavirus (COVID-19) means there is generally a level of uncertainty in the wider macro market. COVID-19 impact on Revenues and Adjusted EBITDA Based on the analysis performed for the remainder of the year 2020, fairly minimal impact to organic consolidated revenues is estimated (2-3% comparing to previous year). Revenue streams most likely affected are advertising, media selling, mobile handsets sales and mobile international roaming revenues. The management expects to be able to mitigate revenues shortfall by cost optimisation to still record a slight organic EBITDA growth for the year 2020 comparing to previous year. In addition to cost optimisation, the Group has amended its plans for Capex spend during 2020, where possible, without hindering the Group’s ability for future growth and quality of services provided. The Group’s telco segments have continued to meet customers’ expectations on service level and network operating centre has maintained normal service levels. Based on this, no significant change in customer base is expected. As customers are unlikely or unable to easily migrate during the crisis, somewhat lower gross adds and churn rates are expected for the year. Organic Revenues and Adjusted EBITDA of telco segment are expected to remain stable compared to last year. In its Media segment, the management expects decline in revenue by approximately 4-5% comparing to previous year. Postponing of certain sports events effected by reduction of revenue and relevant costs. Decline in media selling revenue will be offset by decline in relevant costs. All this combined by overall cost optimization efforts should result in relatively stable Adjusted EBITDA in Media segment compared to previous year. Acquisitions of Tele2 (completed in March 2020) and Vivacom (expected to complete mid-year 2020) will represent inorganic growth of the reported operational and financial performance of the Group in 2020. Impact of COVID-19 on the acquired companies is currently estimated to be similar to that of the Group’s existing telco operations. The expected PF contribution of the acquired companies has not materially changed given the crisis. As COVID-19 pandemic in the countries of the Group’s operations was generally announced in mid-march 2020, the impact of the crisis onto the Group’s performance in Q1 2020 was fairly minimal, with no material impact to the Group's revenues, profitability and cash flow.

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Mergers & Acquisitions

 On April 3, 2019, Netlogic d.o.o. Serbia merged with SBB d.o.o. Serbia.

 On May 31, 2019, the Group agreed to acquire Tele2 d.o.o. Croatia.

 On October 30, 2019, Skyline kabel d.o.o. merged with Telemach Slovenia d.o.o.

 On November 7, 2019, the Group agreed to acquire Vivacom Bulgaria (See “Subsequent (Material Recent) Events”)

 On November 23, 2019, the Group agreed to acquire FMC datacenter d.o.o.

 On December 31, 2019, FMC datacentre d.o.o. merged with Telemach Slovenia d.o.o.

United Group continually monitors M&A opportunities and is currently in the early stages of evaluating multiple potential opportunities. In line with its stated strategy, the Group is looking for acquisitions that are value accretive and offer substantial synergies with the Group’s existing operations.

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Group Background

United Group is the leading distributor of cable and satellite pay-TV in Slovenia, Serbia, Bosnia and Herzegovina and Montenegro, where it also provides broadband internet and fixed- line telephony services. Additionally, the Group offers mobile telephony services in Slovenia and distribute satellite pay-TV across the six countries of former Yugoslavia, Slovenia, Serbia, Bosnia and Herzegovina, North Macedonia and Montenegro.

United Group is the only pan regional distribution platform in a region of approximately 20 million people and is the leading multi-play provider in its primary markets, where the Group combines its services into packages, or bundles, which offer subscribers the convenience of being able to purchase television, broadband internet and telephony services from a single provider. This model provides significant opportunities to cross-sell the Group’s products.

United Group believes that it has been able to establish its business as one of the leading distribution platforms in its region due to the Group’s attractive content portfolio. This has been established through United Group’s ownership of specific key pay-TV channels, long term contracts with third parties, its well invested network that provides, among other things, one of the highest internet download speeds in the Group’s markets, and its high quality customer service which has led to low churn rates that the Group believes evidences a satisfied customer base.

Management Team

Many of the Group’s key management members have been with the business since its inception, including the Executive Chairman and Founder, Dragan Šolak, the Chief Executive Officer of the Group and Group Vice President – Marketing and Media, Victoriya Boklag and the Group Vice President - Operations, Violeta Vasilijević. The Group’s senior management team has substantial experience in the telecommunications, media and technology industries, as well as in banking, private equity and corporate finance. Many members of the senior management team have held a number of different positions within the business and have shaped the direction of its development and its organic growth within the region. Dragan Šolak—Founder and Executive Chairman of the Group. Mr. Šolak founded SBB in 2000 and has been a member of management since the Group’s inception. In 2009, Mr. Šolak assumed the role of Group Executive Chairman. In his current role, he continues to be involved in all aspects of the business and is responsible for the overall strategic leadership of the Group. Victoriya Boklag—Chief Executive Officer of the Group and Group Vice President— Marketing and Media. Ms. Boklag has been with the management team since the Group’s inception in 2000. Before taking over the role of United Group’s chief executive officer and vice president of marketing and media, Ms. Boklag held several positions in finance and commercial operations and acted as the chief executive officer of SBB. Ms. Boklag is also a member of the Board of SBB Foundation. She holds a BA degree from the ICU Kiev.

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Violeta Vasilijević—Group Vice President—Operations. Ms. Vasiljević has been with the management team since the Group’s inception in 2000. She is currently responsible for the technical and operating support for all of the Group’s administrative functions and products. Ms. Vasiljević holds a degree in Mechanical Engineering from the University of Kragujevac. Janez Živko—Vice President Finance. Mr. Živko joined the management team of United Group in March 2015. Prior to joining, Mr. Živko served as the CFO of the Petrol Group, one of the largest companies in Slovenia. He has also served in numerous roles at Gorenje Group over a period of seven years, including Director of Finance and Deputy CFO. Mr. Živko began his career in 1998 as a financial analyst and subsequently became financial controller for European operations at ACT Teleconferencing in Denver, Colorado. He holds an MBA (in Finance) from the University of Denver in Colorado, USA. Željko Batistić—Group Vice President—Technology. Mr. Batistić first joined the management team in May 2012. Prior to joining, Mr. Batistić was an experienced CATV manager and served at a Croatian cable operator at B.net Croatia from 2007 to 2012. Mr. Batistić holds a Master’s degree in Electrical Engineering from the Faculty of Electrical Engineering and Computing, University of Zagreb and an Executive MBA degree from Cotrugli Business School, Zagreb. Vladislav Ratajac—Group Vice President—Corporate Development. Mr. Ratajac joined the management team in 2011. Mr. Ratajac held positions at Mid Europa Partners from 2008 to 2011 and Deutsche Bank before joining the Group. Mr. Ratajac holds a degree in Economics from Rutgers University in New Jersey, USA. Dragica Pilipović Chaffey—Group Vice President—Corporate Affairs. Ms. Pilipović Chaffey joined the management team in 2009. Prior to her current role, Ms. Pilipović Chaffey held a number of senior posts within the European Bank for Reconstruction and Development (EBRD) from 2007 to 2009, and the IMF in Washington, D.C. Ms. Pilipović Chaffey holds an MBA from George Washington University, Washington, D.C., and a BA in Economics from the University of Belgrade. Steve Leroy—Group General Counsel. Mr. Leroy joined the management team in September 2018 as Group General Counsel. Before joining the Group, Mr. Leroy held a number of leadership roles at Discovery, Anheuser-Busch InBev, and The Coca-Cola Company. Mr. Leroy was also a lawyer in Brussels and chief of staff to the governor Antwerp in Belgium. Mr. Leroy holds a Master’s degree in Law from Katholieke Universiteit Leuven, Belgium; a Master’s degree in Commercial & Consular Sciences from Hautes Etudes Commerciales St. Louis (Groupe ICHEC), in Brussels, Belgium; a Master of Business Administration (MBA) from INSEAD, in Fontainebleau, France; and the specialized Master’s degree in EU Competition Law & Economics from the Brussels School of Competition, Belgium. Aleksandra Subotić—Chief Executive Officer—United Media. Ms. Subotić joined the management team in 2014. Previously, Ms. Subotić was a General Manager at Net TV Plus. Prior to joining us, Ms. Subotić worked as General Manager at Daniel SatTV, a satellite and cable network development company in Serbia, and at Total TV Info, a distribution company in Austria. She holds an MBA degree in Economics from Educons University.

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Adrian Ježina—Chief Executive Officer—Telemach Slovenia. Mr. Ježina joined the management team in 2017. Prior to joining, Mr. Ježina was the CEO of Siemens Convergence Creators Adria Region. He graduated in 2009 at the Faculty of Electrical Engineering, Mechanical Engineering and Naval Architecture in Split. He also holds an Executive MBA degree from the Cotrugli Business School. Admir Drinić—Chief Executive Officer—Telemach BH. Mr. Drinić serves as Chief Executive Officer of Telemach Bosnia and Herzegovina, having joined the Company in 2013 as Chief Operating Officer. His previous positions include member of the Securitas BiH Board of Directors, Chief Executive Officer of the B.I.G.A. Sarajevo security agency, and Chief Technology Officer of Gama Sigurnost Sarajevo. He holds a bachelor’s degree in economics from the University for Business Studies, Faculty of Economics, in , in 2009. Milija Zeković—Chief Executive Officer—SBB Serbia and Telemach Montenegro. Mr. Zeković joined the management team in October of 2018. Previously, he was Chief Executive Officer of Crnogorski Telekom from 2016 to 2017. He was also a member of the Executive Management Board of Crnogorski Telekom from 2008 to 2016. He holds a degree in Economics from the University of Montenegro. Nikola Francetić—Chief Executive Officer—Net TV Plus. Mr. Francetić joined the management team in October of 2018. Previously, he was head of content, broadcasting and media for Group from 2014 to 2018 and an executive director for content at T-HT Croatian Telekom from 2011 to 2014. He holds an MBA from the Bled School of Business in Slovenia and a degree in Experimental Physics from the University of Zagreb.

Shareholder Structure

Following the EBRD’s purchase of a minority stake in the Group in July 2019, BC Partners now owns approximately 52.3% of the Group’s shares, senior management approximately 38.5%, KKR approximately 6.8% and EBRD approximately 2.4%. BC Partners is a leading global investment firm. Founded in 1986 as one of the first pan-European buy-out investors, BC Partners has grown and evolved into a leading alternative investment firm, investing principally in larger businesses in Europe and North America. Since inception, BC Partners has completed 113 acquisitions with a total enterprise value of over €145 billion and is currently advising funds totaling over €20 billion.

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Appendices

Appendix 1 - Financial statements Income Statement in €000 FY 2018 FY 2019

Revenue 635,627 741,812 Other income 15,329 8,914 Content costs (103,274) (124,212) Satellite capacity costs (4,718) - Link and interconnection costs (41,054) (38,151) Cost of end-user equipment and other material cost (45,623) (50,269) Staff costs (99,011) (102,108) Media buying (20,020) (39,681) Impairment loss on goodwill (9,255) - Impairment loss on trade and other receivables, including contract assets (12,563) (11,140) Impairment loss on other financial assets (2,563) (7,036) Other operating expenses (124,041) (119,402) IFRS EBITDA 188,834 258,727

Depreciation (99,642) (106,828) Depreciation (right-of-use assets) - (17,972) Amortization of intangible assets (68,483) (82,280) Results from operating activities 20,709 51,647

Finance income 7,343 4,221 Finance costs (71,005) (108,490) Net finance costs (63,662) (104,269)

Profit/(loss) before tax (42,953) (52,622)

Income tax (expenses)/benefit (3,046) (7,414) Profit/(Loss) for the period (45,999) (60,036)

Currency translation differences (1,016) 339 Other comprehensive income (loss) for the period (1,016) 339

Total comprehensive income (loss) for the period (47,015) (59,697)

(Loss)/profit attributable to: Owners of the Company (48,279) (64,163) Non-controlling interests 2,280 4,127 (Loss)/profit for the period (45,999) (60,036)

Total comprehensive (loss)/income attributable to: Owners of the Company (49,295) (63,824) Non-controlling interests 2,280 4,127 Total comprehensive (loss)/income for the period (47,015) (59,697)

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Statement of Financial Position in €000 FY 2018 FY 2019 Assets Property, plant and equipment 401,405 419,175 Goodwill 761,335 766,348 Intangible assets 304,257 288,342 Investment property 336 285 Right-of-use assets - 109,474 Loans to related parties 30,000 5,980 Other financial assets 7,373 1,013 Non-current prepayments 161 327 Contract assets 4,148 5,513 Deferred costs 4,385 181 Deferred tax assets 4,156 4,251 Non-current assets 1,517,556 1,600,889

Inventories 22,172 19,138 Trade and other receivables 163,722 154,794 Short term loans receivables and deposits 5,711 8,115 Prepayments 35,609 34,570 Contract assets 12,926 22,614 Income tax receivable 7,480 9,014 Cash and cash equivalents 43,430 250,058 Current assets 291,050 498,303 Total assets 1,808,606 2,099,192

Equity Issued and fully paid share capital 125 125 Share premium 337,557 352,557 Capital reserves 32,809 54,468 Translation reserves (15,042) (12,475) Accumulated losses (296,887) (411,577) Equity attributable to owners of the Company 58,562 (16,902) Non-controlling interests 10,584 10,138 Total equity 69,146 (6,764)

Liabilities Loans and borrowings 69,902 68,206 Other financial liabilities - bonds 1,333,867 1,654,900 Long term liabilities 3,568 2,873 Long term provisions 24,652 24,054 Deferred operating lease income 3,859 4,383 Contract liabilities 2,065 1,859 Lease liabilities 1,006 87,260 Deferred tax liabilities 29,957 27,125 Employee benefits 631 794 Non-current liabilities 1,469,507 1,871,454

Trade and other payables 240,560 165,946 Current tax liabilities 10,516 9,762 Loans and borrowings 3,031 24,095 Deferred operating lease income 7,283 5,055 Contract liabilities 7,442 9,836 Lease liabilities 1,121 19,808 Current liabilities 269,953 234,502 Total liabilities 1,739,460 2,105,956 Total equity and liabilities 1,808,606 2,099,192

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Statement of Cash Flows in €000 FY 2018 FY 2019

Cash flows from operating activities (Loss)/profit for the period (45,999) (60,036) Adjustments for: - - Depreciation 99,642 124,800 Amortization 68,483 82,280 Impairment of trade and other receivables 12,007 10,411 Impairment of contract assets 556 729 Impairment of other financial assets 2,563 7,036 Impairment loss on goodwill 9,255 - Impairment loss on acquisition cost 1,321 325 Impairment of property, plant and equipment - 1,209 Impairment of inventories 1,023 1,161 Income tax expense/(benefit) 3,046 7,414 Long term provisions 764 (2,129) Share based payment 32,809 21,659 Gain on sale of subsidiary (7,654) - Net finance cost 63,662 104,269 Operating cash flows before WC changes 241,478 299,128

Changes in: Trade and other receivables (21,960) (2,177) Deferred revenue (5,954) (1,704) Deferred cost (2,487) (123) Contract assets (5,120) (11,782) Contract liabilities 3,665 2,188 Employee benefits (8) 163 Inventories 273 1,904 Prepayments (6,084) (2,342) Trade and other payables 30,589 (44,147) Cash generated from operations 234,392 241,108

Interest paid (62,164) (67,093) Income tax paid (6,791) (11,394) Net cash from operating activities 165,437 162,621

Cash flows from investing activities Acquisition of property, plant and equipment (130,081) (119,803) Acquisition of intangible assets (65,247) (65,834) Acquisition of subsidiaries, net of cash acquired (137,499) (53,825) Short-term loans receivables and deposit granted 205,000 - Short-term loans receivables and deposit repaid (1,118) (2,404) Cash inflow other non-current financial assets - 30,000 Cash outflow other non-current financial assets - (4,800) Other (outflows)/inflows (390) 69 Net cash (used in)/provided by investing activities (129,335) (216,597)

Cash flows from financing activities Proceeds from share premium - 15,000 Proceeds from bond issue - 757,000 Repayment of bond - (450,000) Proceeds from borrowings 204,400 226,920 Repayment of borrowings (217,243) (207,833) Transaction costs related to loans and borrowings - (7,573) Acqusition of non-controlling interest (3,799) (1,108) Repayment of derivate (1,546) 771 Repayment from lease liabilities (2018: Repayment of finance lease liabilities) (5,583) (20,810) Dividends paid (1,470) (51,764) Net cash from financing activities (25,241) 260,603

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Net (decrease)/increase in cash and cash equivalents 10,861 206,627 Cash and cash equivalents at 1 January 32,560 43,430 Effects of movements in exchange rates on cash in hands 9 1 Cash and cash equivalents at end of period 43,430 250,058

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Appendix 2 - Key Factors Affecting Our Business and Results of Operations The performance of the Group’s businesses, its results of operations and the key operating measures discussed below have been, and will continue to be, affected by a variety of factors. Certain of these factors are discussed below.

Products, Services and Content

United Group’s results are impacted by the product mix as well as the Group’s ability to introduce new products and upgrades and successfully sell those products and upgrades to increase RGUs and ARPUs. United Group continually evaluates the suite of products and services provided to subscribers to ensure that it remains competitive with other providers in its markets and has an opportunity to increase the Group’s subscriber base and the number of products sold to subscribers. United Group accomplishes this through product innovation, investments in technology and acquisitions of complementary businesses. For example, the Group has expanded its product offering by introducing fixed-line services to offer multi play packages in Slovenia, Serbia, Bosnia and Herzegovina and Montenegro, including , broadband internet access, fixed-line telephony, as well as mobile telephony services in Slovenia.

United Group believes that media and communications services customers will increasingly choose bundled products because of the convenience and enhanced value resulting from obtaining TV, broadband internet and telephony services from a single provider for one price. As at December 31, 2019, 82% of the Group’s customer base13 in Slovenia, 78% of its customer base13 in Serbia and 85% of its customer base13 in Bosnia and Herzegovina subscribed for one of the Group’s multi-play packages.

United Group seeks to be the leader in its markets in pay television content and have entered into long term strategic partnerships with key international and regional content owners. The Group has also acquired leading regional content owners in key television sub segments (sports, lifestyle, children and films), such as providers of the Sport Klub family of channels (which includes Sport Klub, Klub and fishing and hunting channels) and Cinemania. United Group’s ability to maintain the quality of its content impacts the Group’s ability to sell pay television offerings, as well as bundled packages.

The Group’s product mix can also impact margins. For example, the mobile telephony business and the content business generally have lower margins compared to the cable-based business. The Group’s success in growing these businesses may impact the product mix and therefore may affect UG Adjusted EBITDA margins.

13 Under new methodology: unique cable subscribers by bundle.

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Pricing of our Products and Services

Increasing demand for attractive content and higher broadband speeds allows the Group to increase the prices at which services are provided while maintaining relatively low churn rates. United Group regularly reviews the prices of its products and services, however, and in the past has adjusted subscription fees as necessary in line with inflation, changes in foreign exchange rates or in response to market conditions and content costs. Changes in the pricing of the Group’s products and services will impact the revenues and margins that are generated from these products and services and impact its ability to attract new customers. For example, the Group’s multi play bundles offer subscribers higher value in terms of channels, speeds functionality and add on features. The pricing of all services, including multi play bundles, is dependent on market conditions, pricing by competitors with similar offerings and the perceived quality of the Group’s products versus other products. In relation to the Basic TV package, the Group was also subject to price regulation in Serbia until January 2017. From January 2017, the price of the Basic TV package in Serbia is no longer subject to price regulation. However, such price regulation might be reinstated in the future.

Subscriber Churn

The television, broadband internet and telephony industries exhibit churn as a result of high levels of competition. In addition to competitive alternatives, churn levels may be affected by changes in prices or competitors’ prices, the Group’s level of subscriber satisfaction, subscriber mortality and the relocation of subscribers, as well as from the termination of agreements. An increase in churn may lead to increased costs and reduced revenues when subscribers cancel services as the Group incurs additional marketing and advertising costs to find new subscribers.

Increasing demand for attractive content and higher broadband speeds allows the Group to increase the prices at which it provides these services while maintaining relatively low churn rates. United Group believes its relatively low churn rates provides recurring cash flows and visibility with respect to future revenues. The Group has historically experienced low churn rates in its television, broadband internet and fixed-line telephony businesses, and the churn experienced in these businesses has primarily been driven by customers moving outside of the Group’s current geographic area of services as well as termination of services due to their inability to pay, with only a limited amount of churn driven by competition. United Group believes that launching telephony in its markets, further driving digitization, providing subscribers with multi play packages (including quad play in Slovenia, as described in more detail below), expanding the Group’s cable footprint to broaden geographic reach and benefiting from increasing disposable incomes in the region (reducing the likelihood of customers’ bad debt), will enable the Group to maintain low churn rates for cable pay-TV.

The churn rates for mobile post paid subscribers are higher than the churn rates for fixed-line telephony services, as it is easier for mobile subscribers to switch to competitors as there are no infrastructure limitations.

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United Group believes that the control of a mobile network in Slovenia, following its acquisition of Tušmobil, has allowed it to develop an attractive suite of fixed mobile convergence services in Slovenia which, among other things, has had the effect of reducing the churn of mobile postpaid subscribers in Slovenia. Since the acquisition of Tušmobil, the number of quad play subscribers in Slovenia has increased to 32% of subscribers in Slovenia, from 1% of subscribers prior to the acquisition. In addition, the Group has successfully reduced the blended annual churn rate of mobile postpaid subscribers to 10% at December 31, 2019 from 18% at January 31, 2016. This is primarily due to the Group’s attractive products and services and an increase in the number of new mobile postpaid subscribers (each with new contractual obligations). The Group defines blended annual churn as net lost subscribers (the number of customers that either on a voluntary or involuntary basis no longer subscribe for a certain service) divided by the number of all unique cable subscribers at the beginning of period, which result is then annualized. The churn rate of mobile prepaid subscribers is relatively higher due to the non-contractual nature of the relationship with such subscribers.

Cost of Services Provided

United Group’s most significant costs include:

(i) carriage fees paid to international and regional broadcasters such as Fox, Discovery and Pink, in order to carry their programs on the Group’s distribution network,

(ii) licensing fees payable to sports rights owners such as UEFA, the English Premier League, Spanish Primera League, ATP and Formula 1, in order to develop content for the Group’s own channels

(iii) satellite capacity costs,

(iv) payroll costs,

(v) internet and interconnection fees,

(vi) costs of materials used to connect subscribers to our network and

(vii) costs for marketing and sales.

Most of the Group’s costs, such as a portion of the network operations, customer care, billing and administration costs, are relatively fixed, while a portion of the Group’s marketing and customer services cost is variable. The Group’s content acquisition costs are mostly fixed, and a decreasing portion of these costs are subscriber based. Where possible, the Group aims to negotiate fixed rate content costs. This approach allows input prices of its content to be anticipated and products priced accordingly. The costs associated with the growth of the business, such as RGU acquisition costs, which are primarily comprised of campaign costs and sales costs for attracting new subscribers, are variable costs.

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A large portion of the Group’s costs is content costs, accounting for 25% of operating expenses (excluding depreciation and amortization of intangible assets) for the year ended December 31, 2019. While United Group owns a portion of its content, the Group is dependent on broadcasters and other content owners for most of its programming. The Group pays license fees to several regional and international broadcasters in order to broadcast their programs. For content purchased by subscribers, the Group generally pays a revenue share of the retail price, subject, for certain on demand content, to fixed minimum guarantees. For packaged on demand content (subscription video on demand), the Group pays on a per subscriber basis, sometimes with minimum guarantees. United Group generally expects that its content costs (above the minimum amounts) will increase in line with increased revenues from digital pay-TV and on demand content. In the past, the Group has successfully obtained rebates and discounts for its content, but these may not continue in the future.

United Group pays fees to satellite operators to uplink and transmit its content to DTH subscribers, and also uses other network operators to connect telephone calls of customers to customers of their respective networks (interconnection). Generally, the amount paid in interconnection fees in any period will depend on the level of usage of the Group’s services.

Staff costs are impacted by the number of personnel employed, the experience levels at which such persons are employed and increases in salaries and bonuses due to performance factors. Labor costs of technicians, spent on the construction and upgrade of the network and acquisition of subscribers, are capitalized as tangible and intangible assets.

RGU acquisition costs include campaign costs and sales costs. The Group aims to recover RGU acquisition costs over the duration of the service contract. Factors that contribute to the successful recovery of RGU acquisition costs include operational efficiency, the density of the subscriber base and direct relationships with subscribers, which enables the Group’s not to rely on intermediaries to interact with its customers.

Network and Technological Advances

The Group’s ability to provide new high definition and on demand digital TV services, broadband internet access at higher speeds and telephony services to subscribers depends, in part, on the ability to upgrade and maintain the Group’s network. The Group incurs capital expenditure charges in periods over which these upgrades are made, with the aim of recouping these investments through increased revenues and profitability.

The Group’s ability to compete effectively and maintain or increase the customer base depends on its ability to anticipate and react quickly to technological developments and evolving industry standards and develop successful new and enhanced products and services to adapt to changes in the market. United Group invests in new or enhanced technologies, products or services in periods over which industry standards change, or to upgrade technologies. Additionally, capital expenditure costs are incurred relating to the replacement of existing equipment.

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Foreign Currency Exchange Rates

United Group operates across the Balkan region generating revenues in many local currencies, which fluctuate from time to time in relation to the euro. Revenues in Slovenia and Montenegro are generated in euro. SBB Serbia, Telemach BH and Nova TV record their financial results in their respective functional currencies (the Serbian dinar, the Bosnian and Herzegovinian mark and Croatian kuna, respectively), which are then translated into euros in preparing the consolidated financial statements. In FY 2019, 55% of revenue was generated in euros or currencies pegged to the euro, with 38% of revenue generated in the Serbian dinar and 7% of revenue generated in Croatian kuna. While the Bosnian and Herzegovinian mark is pegged against the euro at a fixed exchange rate of BAM 1.9558 per €1.00, the Serbian dinar and Croatian kuna fluctuate freely against the euro. In FY 2019, the value of the Serbian dinar increased approximately 0.5% relative to the Euro compared to FY 2018. However, due to the historic indexation of the Serbian dinar against the German mark, which was replaced by the euro in 2002, the Group believes the Serbian consumer price index closely tracks the depreciation of the Serbian dinar against the euro which has historically allowed the Group to “pass through” a portion of the impact of the depreciation of the dinar to customers. The Group believes that its pricing strategy reflects this “pass through” principle. In FY 2019, the value of the Croatian kuna decreased approximately 0.3% relative to the Euro compared to FY 2018. The Croatian National Bank’s chose the stability of the exchange rate of the Croatian kuna against the euro as the nominal anchor of the monetary policy and occasionally participates in the foreign exchange market, mostly when it considers the exchange rate fluctuation to be or may become excessive.

United Group presents its consolidated financial statements in euros. As a result, the Group must translate the assets, liabilities, revenue and expenses of all operations with a functional currency other than the euro into euro at then-applicable exchange rates. Consequently, increases or decreases in the value of these currencies against the euro may affect the value of assets, liabilities, revenue and expenses with respect to the Group’s non-Euro businesses in the consolidated financial statements, even if their value has not changed in their original currency. These translations could significantly affect the comparability of results between financial periods and result in significant changes to the carrying value of assets, liabilities and stockholders’ equity.

Additionally, certain expenses, primarily content and satellite costs, are in euro and U.S. dollar. Where the Group is unable to match sales received in foreign currencies with costs paid in the same currency, the results of operations are impacted by currency exchange rate fluctuations. A substantial portion of indebtedness is denominated in euro. In March 2015, the Group entered into a EUR/USD currency hedge agreement, pursuant to which it hedges a part of its exposure to the U.S. dollar. The Group entered into an additional EUR/USD currency hedge agreement in May 2016 pursuant to which it hedged the remaining portion of its exposure to the U.S. dollar for the year 2016. An additional EUR/USD hedge was implemented in February 2017, which hedged most of its 2017 USD exposure. As there has been no material

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change in exposure to the U.S. dollar in 2019, the Group did not enter into any additional currency hedge agreements during the period ended December 31, 2019.

Growth in our Markets

Three of the Group’s key markets, Serbia, Bosnia and Herzegovina and Montenegro, are generally characterized by lower internet broadband household penetration rates compared to elsewhere in Western Europe and the CEE region and both Serbia and Bosnia and Herzegovina have lower pay television household penetration rates compared to elsewhere in Western Europe and the CEE region. As a result, growth in the Group’s markets have been higher than in certain CEE region and Western Europe jurisdictions. The Group believes this is primarily due to the increasing importance of high-quality broadband internet and an increasing convergence of the Group’s regions with the EU. Slovenia is a more mature market, with subscriber rates similar to the CEE region, and as a result, growth in that market will depend more on the Group’s ability to effectively compete with other market participants and to continue to offer high quality customer propositions. In each of the aforementioned markets, a number of factors will impact the rate of growth of pay television, broadband internet and telephony industries, including economic conditions, political stability, increases in infrastructure and an increased distribution of wealth. Furthermore, these industries may not grow at the same rate as they have in the past.

Regulation

The Group’s operations are subject to various regulations in Europe and in its regional markets. The Group is generally free from price regulation other than, prior to January 2017, with respect to the Basic TV package in Serbia, due to SBB Serbia’s prior SMP in the Serbian pay-TV market. Since the beginning of 2017, the Group is no longer considered a significant market in the pay-TV market in Serbia, thus the Basic TV package is no longer subject to price regulation, though this may change in the future. SBB Serbia is, however, currently deemed to have SMP on the wholesale market for call termination in public telephone networks and the wholesale market of central access at a fixed location for mass market products, which imposes certain regulatory obligations. Prior to the change to the Group’s status in the pay-TV market in Serbia, in January 2017, the pricing of the Basic TV package in Serbia, which accounted for 12% of revenue for the year ended December 31, 2017, and which is used as a platform to up- and cross-sell products, was regulated and the Group was not permitted to increase the price for such packages without regulatory approval. In 2015, the Group’s first application for a price increase for this package was not accepted by the Serbian regulator; however, the second application, in November 2015, was accepted by the Serbian regulator, and the Group implemented price increases for its Basic TV package in Serbia on January 1, 2016. The Group also implemented price increases in January 2018, which the Serbian Commission for Protection of Competition investigated, but ultimately accepted. In addition, the Group may be subject to conditions imposed in connection with competition authority clearances as it continues to expand its business through bolt on, value accretive acquisitions and may be subject to market power analysis from the relevant

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regulators, which could force the Group to adjust its prices or sell various parts of the businesses.

Tax Treatment in Local Jurisdictions

The results of the Group’s operations depend on tax treatment under the tax laws and regulations of local jurisdictions. For instance, in Serbia, taxable income can be reduced in the same proportion as capital expenditure for the year in Serbia divided by the carrying amount of assets in Serbia. Due to significant capital expenditure in Serbia in 2016, the Group believes it has satisfied the requirements to be granted a ten-year tax beneficial status, expiring in 2025, and recorded beneficial tax treatment for the SBB Serbia segment for the year ended December 31, 2017, 2018 and 2019. Additionally, under thin capitalization rules in Serbia, interest and related costs under intercompany loans are recognized as deductible expenses to the extent the intercompany loans do not exceed four times the borrower’s equity. In 2016, SBB Serbia capitalized €82.7 million of intercompany loans, so the Group received a tax allowance of four times the interest expense relating to such capitalized intercompany loans. In 2017 and 2018 SBB Serbia did not capitalize any intercompany loans. In March 2019, the Serbian Tax Authority notified the Group that it had recharacterized interest payments made by SBB Serbia under an intragroup loan agreement (and certain other transactions) as dividends, which would have been subject to a 5% withholding tax, and found a total liability of €21 million, including late interest. The Group has appealed the decision and received a deferral of its obligation to pay any amounts until resolution of the appeal. United Group also initiated international arbitrage on the basis of the bilateral investment treaty between The Netherlands (location of United Group’s headquarters) and Serbia. The Dutch Ministry of Finance confirmed that it is preparing a case on the grounds of the double taxation agreement between the two countries.

Furthermore, in Slovenia, Telemach Slovenia may use a tax allowance for investment in equipment and intangible assets (available for investments made after January 1, 2008), whereby the tax allowance is limited to 40% of the value of the assets, up to the amount of the tax base. In 2016, 2017, 2018 and 2019 Telemach Slovenia used the tax allowance for investments in the amount of €1.5 million, €7.8 million, €15.8 million and €12.1 million, respectively.

In Bosnia and Herzegovina, a taxpayer who invests more than BAM 20.0 million (€10.2 million) in production assets (property, plant and equipment) within the territory of Bosnia and Herzegovina for five consecutive years is relieved from 50% of taxation on such investments for a period of five years, starting from the first year in which it has invested at least BAM 4 million (€2.0 million). Telemach BH received relief of BAM 6.3 million (€3.2 million) in 2016 pursuant to this provision. In 2017, 2018 and 2019, Telemach BH received a tax allowance for investments in the amount of BAM 4.5 million (€2.3 million), BAM 6.1 million (€3.1 million) and BAM 3.5 million (€1.8 million), respectively. In Bosnia and Herzegovina, a taxpayer receives a tax allowance when it employs certain types of employees, and in 2017, 2018 and 2019, Telemach BH received a tax allowance for certain new employees in the

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amount of BAM 790 thousand (€0.4 million), BAM 1.3 million (€0.7 million) and BAM 1.0 million (€0.5 Million), respectively.

Implementation of New Accounting Policies

IFRS 16 introduces a single, on-balance sheet lease accounting model for lessees. A lessee recognises a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. There are recognition exemptions for short-term leases and leases of low-value items available on the voluntary basis. Lessor accounting remains similar to the current standard – i.e. lessors continue to classify leases as finance or operating leases.

Definition of lease Previously, the Group determined at contract inception whether an arrangement was or contained a lease under the IFRIC 4 and IAS 17. The Group now assesses whether the contract is or contains lease based on the new definition of lease. Under IFRS 16, a contract is, or contains, a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange of consideration.

The Group applies the practical expedient to grandfather the definition of a lease on transition. This means that it will apply IFRS 16 to all contracts entered into before 1 January 2019 and identified as leases in accordance with IAS 17 and IFRIC 4.

As a lessee The Group leases many assets including properties, satellite capacity, facilities and infrastructure which were previously recognized under operating lease.

Previously, the Group recognised operating lease expense on a straight-line basis over the term of the lease, and recognised assets and liabilities only to the extent that there was a timing difference between actual lease payments and the expense recognised.

Under IFRS 16, the Group recognises new assets and liabilities for its operating leases of satellite, office facilities, part of infrastructure, as well base stations and the right of use of a water and land surface. The nature of expenses related to those leases has been changed because the Group will recognise a depreciation charge for right-of-use assets and interest expense on lease liabilities.

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The carrying amount of right-of-use assets and lease liabilities, excluding previously recognized finance leases, are presented below:

In €000 31-Dec-19 01-Jan-19 Land and properties 7,314 8,437 Machinery and equipment 30,359 31,637 Office premises 23,542 24,083 Optic fibers 20,016 20,468 Motor vehicles 451 302 Other 27,792 33,180 Total right-of-use assets 109,474 118,107

In €000 31-Dec-19 1-Jan-19 Current lease liabilities 18,780 17,122 Non-current lease liabilities 86,751 93,442 Total lease liabilities (excluding amount of the previously recognized finance lease liability) 105,531 110,564

As a lessor

Where the Group is a lessor in a lease which transfers substantially all the risks and rewards incidental to ownership to the lessee, the assets leased out does not present identifiable assets, though it is used by the Group as well, e.g. cable network.

Transition and impacts on transition

The Group applies the simplified transition approach and does not restate comparative amounts for the year prior to first adoption. Right-of-use assets for property leases is measured on transition as if the new rules had always been applied. All other right-of-use assets are measured at the amount of the lease liability on adoption (adjusted for any prepaid or accrued lease expenses).

The change in accounting policy affected the following items in the balance sheet on 1 January 2019:

In €000 1-Jan-19 RoU assets increase/(decrease) 118,107 Prepaid expenses increase/(decrease) (7,543) Lease liabilities (increase)/decrease (110,564)

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EBITDA and operating result for 31 December 2019 increased as a result of the change in accounting policy. Net loss is higher by EUR 3,011 thousand due to change in accounting policy. The following segments were affected by the change in policy:

In €000 EBITDA Operating profit/(loss) Net loss Serbia Group 7,907 (421) (2,341) Slovenia Group 8,094 2,236 (418) Bosnia Group 1,243 171 (99) Montenegro Group 174 1 (23) Media Group 2,790 205 (130) Total positive/(negative) impact on 20,208 2,192 (3,011) Group's reportable segment information

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Appendix 3 - Definitions of Key Operating Measures

Homes passed: represents all homes connected to our network directly and through third party networks. We provide our services to subscribers directly over our network and over certain cable networks owned by third parties with whom we have entered into exclusive or non-exclusive agreements to provide our services over their networks.

Unique cable subscribers represent the number of individual end-users who have subscribed to one or more of our cable-based services. In all of our cable markets, cable pay- TV is the basic service that a cable unique subscriber is typically required to subscribe to in order to receive our other services such as broadband internet access and telephony. A unique cable subscriber may subscribe to several different services, thereby accounting for only one unique cable subscriber, but several RGUs. Cable pay-TV RGUs includes the sum of our analog and digital cable pay-TV RGUs in Slovenia and our total analog cable pay-TV RGUs (without separately counting analog cable RGUs that have purchased digital top ups) in Serbia, Bosnia and Herzegovina and Montenegro provided within our network footprint.

OTT RGUs consists of our NetTV Plus and out of footprint Eon subscribers. Broadband internet RGUs represents residential broadband internet provided within our network footprint. Fixed-line telephony RGUs represents residential fixed-line telephony provided within our network footprint. Mobile RGUs represents mobile telephony services provided to customers in Slovenia, where we have operated as an MNO since our acquisition of Tušmobil in April 2015. Prior to April 2015, we provided mobile services to our customers as an MVNO. Other services includes multichannel multipoint distribution service-based services, ADSL internet services and cable services provided outside of our network footprint. Penetration represents the number of RGUs at the end of the relevant period as a percentage of the number of homes passed by our network. Blended cable ARPU is calculated by adding together, for each month in a given period, the total cable pay-TV, broadband internet and fixed-line telephony revenues (including fixed-line telephony usage revenues and excluding minor installation fees) for that particular month divided by the average number of cable pay-TV RGUs for that month and then dividing that sum by the total number of months in the period. Blended cable ARPU does not include mobile ARPU. We calculate mobile ARPU by adding together, for each month in a given period, the total mobile telephony revenues (excluding revenues generated by customers of other networks roaming on our network and excluding wholesale revenues) for that particular month divided by the average number of mobile RGUs for that month and then dividing that sum by the total number of months in the period.

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DTH subscribers represent the number of individuals across the six South Eastern European markets (Slovenia, Serbia, Bosnia and Herzegovina, Croatia, Montenegro and North Macedonia) who have subscribed to our DTH pay-TV services. We believe that most of these subscribers are outside of our cable footprint. Typically, DTH subscribers are only able to subscribe to DTH based pay-TV services and represent a single RGU. However, we are re selling ADSL services purchased from our competitors in the respective markets to DTH subscribers.

Average monthly revenue per user, (“ARPU”): A measure we use to evaluate how effectively we are realizing potential revenues from subscribers. ARPU is calculated by adding together, for each month in a given period, the total subscription-related revenues for that particular month divided by the average number of subscribers for that month and then dividing that sum by the total number of months in the period.

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Appendix 4 - Description of Key Line Items

Revenue: Generated from the following services: cable television, broadband internet, DTH-TV, value-added services (such as OTT), telephony subscriptions and telephony usage, content and other sources (primarily related to the sale of end-user equipment). Revenues generated from our bundle subscriptions are allocated to the individual products of standard cable, broadband internet and telephony subscriptions based on the individual product prices for each product as a percentage of the sum of the individual product prices. Revenue for these services is charged and recognised in the period in which these services are provided. We recognise revenues for connection fees upon delivery of installation and we defer and amortize connection fees over the average remaining useful life of the customer relationship. Other income: Arises mainly from the sale of programming rights, advertising and lease of cable network. Content cost: Include author rights and royalties paid to procure our content, and include fees paid to channel providers, primarily related to foreign television channels. Our content fees are predominantly determined on a flat monthly amount and to a lesser extent on a per-subscriber basis. Satellite capacity cost: Relate to the lease of satellite capacity from third-party providers, which currently is EUTELSAT. These costs are impacted by the type and value of commercial discounts obtained from satellite providers. Link and interconnection cost: These costs relate to fees payable in order to transfer data over third-party networks. Internet connection links are leased from various parties. Materials cost: Include costs to procure set-top boxes, other products, such as telephones and routers, and materials used to connect subscribers to our network. Staff costs: Include wages and salaries, social security costs, pension costs and other post-employment benefits and the cost of temporary and external personnel, adjusted for own work capitalized based on direct labour hours spent on projects which are capitalized. Depreciation cost: Depreciation cost relates to the depreciation and impairment of our property, plant and equipment over their useful lives. Amortization of intangible assets: Relates to the amortization and impairment of our intangible assets over their useful lives. Our intangible assets include our customer base and direct subscriber acquisition costs, which, for our cable and DTH customers, are capitalized and amortized over the estimated useful life of the customer relationship. For our mobile customers, subscriber acquisition costs are capitalized and amortized over a period of twenty-four months (the estimated life of the post-paid customer contract), while our mobile customer base is capitalized and amortized over its estimated useful life. Intangible assets also include goodwill, computer software, licenses and content such as sport rights.

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Other operating expenses: Includes rent of premises, poles and ducts, marketing and promotion expenses, legal and administrative fees and maintenance costs. Finance income: Includes interest income on funds invested (including short-term bank deposits) and foreign currency gains. Finance costs: Include interest expense on borrowings and foreign currency losses. Income tax (expense)/benefit: Comprises current and deferred income tax and is recognized in our statement of comprehensive income, except to the extent that such expense or benefit relates to an item that is recognized as equity in our balance sheet, or in our statement of other comprehensive income. Operating income: Represents the amount of profit generated from business operations, and includes total revenues less total operating expenses (including cost of goods sold, personnel expenses, contracted work, materials and logistics, marketing and sales, office expenses, other operating expenses, amortization, depreciation and impairments).

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Appendix 5 - Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

Our income and cash flow from operations are affected by changes in market interest rates. Some items on our balance sheet, such as cash and bank balances, interest bearing investments and borrowings, are exposed to interest rate risk.

Borrowings under the Existing Revolving Credit Facility and the Existing Floating Rate Notes bear, and the Notes will bear, interest at varying rates, and as a result we will have interest risk with respect to this debt. Interest rate hedging arrangements are not in place as of the Issue Date with respect to the debt under our Existing Revolving Credit Facility, the Existing Floating Rate Notes and the Notes. For fixed rate debt, interest rate changes affect the fair market value of such debt, but do not impact earnings or cash flow.

Currency Risk

Currency risk arises when future commercial transactions or recognized assets or liabilities are denominated in a currency that is not the functional currency of the Group entity holding the asset or obligation. As a result of our operations in various countries, we generate a significant portion of our sales and incur a significant portion of our expenses in currencies other than the euro. Our primary exposure is to the Serbian dinar. For the year ended December 31, 2019, 38% of our revenue was denominated in Serbian dinar and 62% was denominated in euros or other currency. The Bosnia and Herzegovinian mark is pegged to the euro, while Croatian kuna and North Macedonian dinar are relatively stable. In March 2015, we entered into a EUR/USD currency hedge agreement, pursuant to which we hedge our exposure to the U.S. dollar. We entered into an additional EUR/USD currency hedge agreement in May 2016 pursuant to which we hedged the remaining portion of our exposure to the U.S. dollar for the year 2016, and in February 2017, we entered into an additional EUR/USD currency hedge to cover most of our 2017 U.S. dollar exposure. As there has been no material change in exposure to the U.S. dollar in 2019, we did not enter into any additional currency hedge agreements during the period ended December 31, 2019.

Translation Risk

Translation risk is the risk that the value in euro of the consolidated profit and loss statement and balance sheet will fluctuate due to changes in foreign exchange rates connected with the translation of our subsidiaries that do not have the euro as their functional currency. Since January 1, 2016, almost all our indebtedness has been denominated in euro.

Transaction Risk

Transaction risk is the risk of exchange losses incurred by the Group throught purchases and sales in currencies other than the local currency of the subsidiaries concerned.

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Appendix 6 – Critical Accounting Policies

For a description of our critical accounting estimates and judgments, see Note 6 to the Adria MidCo B.V. Group Consolidated Financial Statements as of and for the year ended December 31, 2019. Our significant accounting policies and changes of accounting policies, including IFRS 16 (Leases), are described in Notes 3 and 4 to the Audited Financial Statements.

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Appendix 7 – Adria Midco BV Group Consolidated Financial Statements

For a description of other items, according to our reporting requirements, please refer to the notes to our Adria Midco BV Group Consolidated Financial Statements for year ended December 31, 2019, which inter alia include a description of financial, credit and liquidity risk factors (Notes 5 and 22), business combinations (Note 21), debt instruments (Note 32) and legal matters (Note 37).

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Appendix 8 – Related parties transactions

Related parties’ transactions are disclosed in the Adria Midco B.V. Group Consolidated Financial Statements for Year ended December 31, 2019, Notes 36.

Balances and transactions with related parties of the Group

Balances with related parties (in €000) Relationship 31-Dec-19 31-Dec-18

Loans to related parties Mr. Šolak Other significant shareholder - 30,000 Adria Topco B.V. Parent 5,980 - Total 5,980 30,000

Trade and other receivables Mr. Šolak Other significant shareholder - 2,713 Adria Topco B.V. Parent - 1,180 Total - 3,893

Trade and other payables Adria Topco B.V. Parent 14 14 TechHill Plaza d.o.o. Other related party 219 218 Dansav Plaza d.o.o. Other related party 18 18 Total 251 250

Accrued liabilities Gerrard Enterprises LLC Other significant shareholder 4,986 3,128 Total 4,986 3,128

The Group made a loan in an aggregate principal amount of EUR 30,000 thousand to Mr. Šolak, pursuant to a loan agreement dated 15 September 2016 based on arm’s length terms, to enable Mr. Šolak to acquire shares of equivalent value in parent company, Adria Luxco S.à r.l, which he owned indirectly through a company he controlled. These shares in Adria Luxco S.à r.l. acquired by Mr. Šolak have been pledged in favour of the Group to secure the obligations of Mr. Šolak under the loan agreement. Maturity of the loan was defined as earliest of the i) 6 March 2020, ii) Exit or iii) 6 months from the date of written notice to repay the loan. Total amount of the loan and interests was repaid on 4 March 2019.

Transactions with related parties (in €000) Relationship 31-Dec-19 31-Dec-18 Other operating expense Management fee - Shareholder related cost & Co. L.P. Other related party 347 2,188 Gerrard Enterprises LLC Other significant shareholder 5,834 4,233 Cable Management Company ltd Other related party 33 134 Total Management fee - Shareholder related cost 6,214 6,555

Rent of premises, poles and ducts TechHill Plaza d.o.o. Other related party - 721 Dansav Plaza d.o.o. Other related party - 833 Total Rent of premises, poles and ducts - 1,554 Total Other operating expense 6,214 8,109

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Interest income Mr. Šolak Other significant shareholder 227 1,202 Adria Topco B.V. Parent - - Total Interest income 227 1,202

Guarantee

The Group has guaranteed a loan of the other related party Gerrard Aircraft GMBH in the amount of EUR 2,814 thousand (31 December 2018: EUR 3,584 thousand). The guarantee expires on 13 April 2020. The Group considers that its exposure in respect of this guarantee is remote. Other Related Party Transactions

For additional information on related party transactions see note 36 to the consolidated financial statements of Adria Midco B.V. as of and for the financial year ended 31 December 2019, note 36 to the consolidated financial statements of Adria Midco B.V. as of and for the financial year ended 31 December 2018, note 31 to the consolidated financial statements of Adria Midco B.V. as of and for the financial year ended 31 December 2017, Note 30 to the consolidated financial statements of Adria Midco B.V. as of and for the financial year ended 31 December 2016.

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Appendix 9 – Risk factors

In addition to financial, credit and liquidity risk factors, which are discussed in the Adria Midco BV Group Consolidated Financial Statements for year ended December 31, 2019, Notes 5 and 22, there are also Risks Relating to Our Business and Industry, which are listed below. The cable television, broadband internet, DTH and telephony markets in the regions in which we operate are highly competitive.

We face significant competition in each of our product and service segments and may face competition from new entrants in the future. The nature and level of the competition we face varies for each of the products and services we offer and by region, but we generally compete on the basis of quality of content, network quality, marketing, product and service portfolio specifications, customer care, sales and marketing services as well as price. Our competitors include, but are not limited to, television providers, including providers using alternative and emerging digital technologies such as Internet Protocol Television (“IPTV”) and OTT content owners; DTH-TV providers; broadband internet and telephony services providers; public switched telephone network (“PSTN”) or fiber connections; and in Slovenia and other MNOs, including those using LTE technology. In addition, continued consolidation within the media industry may allow more competitors to offer bundles of digital television, fixed-line telephony, mobile telephony and broadband services, and consolidation by competitors could allow them to benefit from economies of scale that we do not benefit from. As a result, we may compete against companies with easier access to financing, more comprehensive product offerings, greater personnel resources, greater brand name recognition and experience or longer-established relationships with regulatory authorities and customers, resulting in fewer regulatory burdens with which they are required to comply.

Communications technologies and consumer electronics, as well as the way information, communication and entertainment is offered, are constantly changing, and the impact of such changes can be difficult to predict. Current and future competitors may expand their product and service offering more rapidly or adapt to new or emerging technologies more quickly than us (for example Telekom Srbija in Serbia and M:TEL in Montenegro have quickly upgraded their GPON platforms), or may offer their products and services at a lower price than ours, for example where our services are priced at the high end of the market, which could cause us to lose subscribers, force us to lower our prices or otherwise adversely affect the margin of profit we are able to achieve from our services. In particular, we face the following risks in relation to each of our product offerings:

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Television

While competition among cable pay-TV providers in Serbia and Bosnia and Herzegovina is currently low due to minimal cable overbuild, we face competition in the Serbian television market from other methods of television services distribution, such as DTH and IPTV over DSL. Our main competitor in Serbia is the state-owned incumbent Telekom Srbija. During 2018 and 2019, Telekom Srbija purchased several independent cable operators, offering pay-TV, telephony and internet services, as well as the DTH users of Polaris Media, a Serbian DTH platform, strengthening Telekom Srbija’s presence in the Serbian market. Our main pay-TV competitor in Bosnia and Herzegovina is the incumbent in the ethnic region in which we operate, BH Telecom. Competition in the pay-TV market in Slovenia is strong, and there is extensive competition for the provision of Fiber-to-the-Home (“FttH”) services between Telekom Slovenije and T2, especially in metropolitan areas. Our main competitors in the Slovenian pay-TV market are Telekom Slovenije, T2 and A1 (formerly Si.Mobil) after it acquired Amis (the fourth triple-play provider). Competition in Montenegro is strong, and the primary competitors are Crnogorski Telekom (IPTV and Fiber-to-the-x (“FTTx”)) and M:TEL (FTTx and HFC). Both operators have a very large market share and a large number of users.

Additionally, we face increased competition from non-traditional television services based on new internet technologies, including OTT television services. OTT television services deliver pay-TV content “on top” of an existing broadband internet connection directly to a television, PC, laptop, tablet or mobile devices. OTT service providers leverage existing infrastructures and are often not required to implement capital intensive models associated with traditional data providers like us. While internet television services, including OTT services, have historically not presented serious competition due to limited available content as well as the lack of sufficiently fast internet connections, we cannot rule out that increased availability of OTT content as well as advances in broadband internet connection speeds will lead to increased competition from internet service providers in the future.

Broadband Internet

Although there is currently little overlap with other cable internet providers or with FttH operators, in both Serbia (mainly in the Belgrade region) and Bosnia and Herzegovina, we face strong competition in these markets from other broadband internet services, such as ADSL and VDSL broadband connections. Our main competitors for broadband internet services are Telekom Srbija in Serbia and BH Telecom and Telecom RS in Bosnia and Herzegovina. Continued upgrades to the quality of DSL-based broadband internet service to VDSL and potentially even faster DSL-based variants and the possibility of widespread FttH installations would have a negative impact on our competitive position in the broadband internet market.

Due to extensive overbuild and high levels of broadband internet penetration in Slovenia, we face significant competition in the broadband internet market segment from fiber broadband internet providers such as Telekom Slovenije, T2 and A1. In particular, we compete

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against Telekom Slovenije’s xDSL and VDSL services. Additionally, Telekom Slovenije offers DSL internet services to nearly all homes in our cable footprint. Moreover, mobile operators are increasingly able to utilize a combination of powerful handsets and high bandwidth technologies such as LTE and universal mobile telecommunications system (“UMTS”) technologies. Additional competition may come from satellite technologies and operators that use microwave access (“WiMax”) technologies. In the Montenegrin broadband internet market, Crnogorski Telekom utilizes FTTx, ADSL and VDSL broadband, and M:TEL currently utilizes HFC, which will soon replace the FTTx on its network.

Fixed-line Telephony

In the liberalized Serbian and Bosnian telephony markets, we compete with the respective state-owned former monopolies, Telekom Srbija in Serbia and BH Telecom and Telecom RS in Bosnia, who dominate the fixed-line PSTN telephone market. We believe that the Slovenian telephony market is relatively mature and market share changes are mainly driven by the combination of the price and quality of the services provided by bundled offerings. Our main competitors in Slovenia are Telekom Slovenije, T2, and A1, and our main competitor in Montenegro is the incumbent operator Crnogorski Telekom.

Further, we operate in an industry that is affected by fixed-line to mobile telephony substitution, and as a result there may be decreased demand for our fixed-line telephony services. We may be affected in each of the markets in which we operate by providers of free Voice over Internet Protocol ("VoIP") services such as Apple’s FaceTime service or WhatsApp which have considerably improved their speech quality over the last few years and can be accessed from any device connected to the internet, including smartphones.

Mobile Telephony

Following our acquisition of Tušmobil in April 2015, we began providing mobile telephony services in Slovenia as an MNO. Accordingly, we face strong competition for subscribers from established competitors, including in particular Telekom Slovenije and A1 Telekom Austria in Slovenia, as well as other mobile telecommunications that may enter the Slovenian mobile market (such as Hofer Telekom, which recently entered the Slovenian mobile market). Certain competitors have undertaken or announced intentions to undertake acquisitions in the mobile telecommunications markets in which we operate. For example, A1 Telekom Austria announced in April 2018 that it planned to spend approximately €1 billion on acquisitions, including potentially in the South Eastern Europe region in which we operate. PPF Group, a private investment group in Europe, completed its acquisition of the telecommunications assets of Group in Serbia, Montenegro, Hungary and Bulgaria in July 2018. Any other planned acquisitions by competitors, if consummated, could negatively impact our business, such as by reducing our market share or forcing us to undertake more capital expenditure or to lower prices.

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To the extent we were to lose market share to any competitors, our revenues may decline. If we fail to increase our market share in line with our expectations, we will be less profitable, which will adversely affect our business, financial condition and results of operations. Additionally, our competitors may improve their ability to attract new subscribers, or provide their offerings or services at lower prices to increase their respective market shares, which would make it more difficult for us to retain our current subscribers or expand our subscriber base without us lowering our prices or increasing our subscriber retention cost. In order to compete, we may have to lower prices, which may reduce our margins and/or increase our marketing and promotional expenses, each of which may cause our operating profit to decline significantly.

Bundled Offerings

Customers of video and telecommunications services are increasingly expecting service providers to offer high-quality bundles of television, broadband internet and telephony services. Many of our competitors, including Telekom Slovenije in Slovenia, Telekom Srbija in Serbia, Telecom RS, HT Eronet and BH Telecom in Bosnia and Herzegovina and Crnogorski Telekom and M:TEL in Montenegro, offer bundled packages of services. Several of these bundles include mobile phone services, which we only offer in Slovenia. If our bundled products are not able to compete effectively in the markets in which we operate, our business, financial condition and results of operations could be materially adversely affected.

Increased competition, or our inability to provide cable and DTH pay-TV, broadband internet and telephony services at competitive prices, may have a material adverse effect on our business, results of operations, and financial condition.

Difficult economic conditions may reduce subscriber spending for our pay television, broadband internet, and fixed-line and mobile telephony services and reduce our rate of growth of subscriber additions.

Our ability to grow or maintain our business may be adversely affected by weakening global or domestic economic conditions, wavering consumer confidence and unemployment as well as the impact of state-implemented austerity measures. For example, in 2014, the Serbian government implemented austerity measures, including increased rates of taxation and a reduction in public sector wages, which if continued or adopted in our other markets, could continue to have an impact on our customers’ disposable income in Serbia or our other markets. As customers may view spending for most of our services, such as pay-TV, as discretionary, the risks associated with certain segments of our business become more acute in periods of a slowing economy or recession as consumers may delay purchasing decisions or reduce or reallocate their discretionary funds. Current customers may elect to downgrade their packages or move to other less costly providers, and new customers may opt to take out our lower-end broadband and pay-TV packages rather than more expensive ones or may opt to become customers of less costly competitors, or not to subscribe to pay-TV services at all.

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We are also exposed to risks associated with the potential financial instability of our customers, many of whom may be adversely affected by a general economic downturn. This may lead to a higher number of non-paying subscribers. Suppliers and distributors may also be more cautious in supplying goods to us and may request additional credit enhancements or more restrictive payment terms. While the impact of an economic slowdown on our business is difficult to predict, it could have a material adverse effect on our revenues and our cash flow.

Our operating results will be adversely affected if we cannot generate strong advertising sales.

We generate revenue from the sale of advertising on or in our television stations and broadcast and cable networks. Expenditures by advertisers tend to be cyclical, reflecting overall economic conditions, as well as budgeting and buying patterns. A decline in the economic prospects of advertisers or the economy in general could alter current or prospective advertisers’ spending priorities as well as advertising pricing. Demand for our products is also a factor in determining advertising rates. For example, ratings points for our television stations and broadcast and cable networks are factors that are weighed when determining advertising rates, and with respect to our television stations and broadcast and television networks, when determining the affiliate rates received by us. In addition, newer technologies, including new video formats, streaming and downloading capabilities via the internet, video-on-demand, personal video recorders and other devices and technologies are increasing the number of media and entertainment choices available to audiences. Some of these devices and technologies allow users to view television or films from a remote location or on a time-delayed basis and provide users the ability to fast-forward, rewind, pause and skip programming and advertisements. These technological developments could affect the attractiveness of our offerings to viewers, advertisers and/or distributors. Failure to effectively anticipate or adapt to emerging technologies or changes in consumer behavior could have an adverse effect on our business. Further, a decrease in advertising expenditures, reduced demand for our offerings or the inability to obtain market ratings that adequately measure demand for our content on personal video recorders and mobile devices could lead to a reduction in pricing and advertising spending, which could have a material adverse effect on our results of operations and cash flows.

We have made and may make acquisitions or enter into transactions that may present unforeseen risks, and we may not realize the financial and strategic goals that were contemplated at the time of any transaction and, additionally, there are risks associated with the integration of any acquisitions.

As part of our business strategy, we pursue strategic and opportunistic acquisitions of service providers, content providers and cable assets. Any of these transactions could be material to our financial condition or results of operations. Despite our successful track-record,

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we cannot guarantee that we will be able to continue making such acquisitions and our ability to acquire new businesses may be limited by many factors, including availability of financing, debt covenants, complex ownership structures among potential targets and government regulation and competition from other potential acquirers. In addition, our debt burden may increase if we borrow funds to finance any future acquisition, which could have a negative impact on our cash flows and our ability to finance our overall operations and make cash interest payments on the Notes.

Even if we are successful in acquiring new businesses, the integration of such businesses, including the integration of the Target, may prove to be more difficult than we initially anticipated and could create unforeseen operating difficulties and expenditures. Acquisitions pose certain risks, for example, difficulties or delays in consolidating operations and achieving anticipated synergies, cost savings, revenues and cash flow enhancements, growth, operational efficiencies and other benefits; diversion of managerial resources away from our day-to-day business operations; potentially dilutive issuances of equity securities to the extent that we issue new shares to fund an acquisition; and the assumption of unexpected liabilities and undisclosed risks.

Furthermore, certain contracts of the businesses acquired by us contain “change of control” provisions that require the acquired company to notify the counterparty of a potential change of control, or contain language that could be interpreted as allowing, subject to certain conditions, the counterparty to terminate the contract. Although the agreements governing certain of our acquisitions require the target to use commercially reasonable endeavors to obtain consents or waivers relating to such “change of control” provisions prior to closing of the acquisitions, such consents and waivers are generally not a condition to closing. If a substantial number of these contracts have been, are or will be terminated as a result of our acquisition, we may be forced to enter into new contracts on less favorable terms, or we may be unable to secure replacements. While we strive to mitigate unexpected liabilities and risks though contractual protections in our acquisition documentation, we cannot ensure that such protections will be effective. For instance, although the share sale and purchase agreement pursuant to which we acquired Tušmobil contains warranties related to, among other things, compliance with laws, licenses and consents and financial crime, and provides, subject to certain qualifications and limitations, for indemnification from the seller in the event of breach of warranties, we cannot guarantee that we will be successful in any claims that we may bring for breach of warranties based on the agreement or that any recovery made under this agreement would cover the potential losses arising out of any such breach. If we enter into an acquisition agreement, but the acquisition is not consummated, we may be liable for break- up fees or other payments, which may, in some cases, be material.

The agreements with respect to the Nova Croatia Acquisition and the Direct Media/Pink Acquisition do not provide us an indemnity in the event of potential remedies related to any ongoing litigation and investigations in connection with such acquisitions. In connection with the Nova Croatia Acquisition, CME B.V. has given certain customary representations and

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warranties related to the Nova Croatia. There can be no assurance that we will be able to enforce any claims relating to breaches of such representations and warranties, and CME B.V.’s liability, in respect of the Nova Croatia Acquisition, the Seller’s liability with respect to breaches of their representations and warranties is limited.

Any acquisition we undertake or have undertaken may be subject to regulatory approval or review by competition authorities which could delay, limit or prevent its completion or could prevent us from realizing the benefits from any such acquisition following its completion.

Acquisitions we undertake may require the approval of governmental authorities (at both national and European levels), which can block, impose conditions on, or delay the process which could result in a failure on our part to proceed with announced transactions on a timely basis or at all. Past acquisitions by the Group, including recent acquisitions, are or may become subject to review by competition authorities within the relevant jurisdictions. Such competition authorities may take the position that merger control filings were required, and should we fail to meet such requests or requirements in a timely manner, the relevant governmental authority may impose fines and, if in connection with a merger transaction, may require corrective measures, such as mandatory disposition of assets or divestiture of operations.

For example, our acquisition of Ikom was cleared by the Serbian Commission for Protection of Competition (“CPC”) on March 13, 2017 under certain conditions (the “Clearance Decision”). Following a Phase II investigation, the CPC concluded that the concentration had the potential of distorting competition on the retail market for the distribution of media content in Belgrade by further strengthening SBB Serbia’s already dominant position. The Clearance Decision set out the following conditions, subject to which the clearance was granted: (i) a duty to divest parallel secondary cable infrastructure in locations where an overlap between SBB Serbia and Ikom exists; (ii) a two year duty to inform the CPC on all changes of the retail prices of media content distribution services; and (iii) a duty to make an offer to Ikom’s customers to conclude one of the contracts that are otherwise available in SBB Serbia’s offering. In line with the timeline set out in the Clearance Decision, the parallel cable infrastructure has been sold to BeotelNet-isp d.o.o. Beograd pursuant to an agreement concluded on October 12, 2018.

In September 2018, the Slovenian Competition Protection Agency ruled that United Group’s acquisition of United Media Distribution (then IKO Balkan) in 2012 is incompatible with competition rules. The Slovenian Competition Protection Agency ordered United Group to divest the activity of broadcasting Sport Klub (SK) TV channels within six months and imposed a ban prohibiting United Group from broadcasting sports TV channels in Slovenia for three years from the date of divestment (with the exception of the existing Fight Channel). The activity of broadcasting Sport Klub (SK) TV channels includes purchasing rights for transmitting audiovisual sport TV content for Sport Klub TV channels, producing Sport Klub

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(SK) TV channels and offering Sport Klub (SK) TV channels to operators in the wholesale TV channel market, in each case, limited to the territory of Slovenia. In October 2018, the Slovenian Supreme Court issued the interim injunction proposed by United Group and stayed the implementation of the Slovenian Competition Protection Authority’s divestment decision until a final decision on the merits of this case has been issued. The legal remedy against the divestment decision is pending before the Slovenian Administrative Court. In relation to this proceeding, the Slovenian Competition Protection Authority in a separate misdemeanor proceeding imposed on United Media Limited a fine of €3.7 million for delayed merger control filing. United Group filed legal remedy, which is currently pending. Moreover, independent from any final decision related to the merger approval, in addition to an obligation to comply with the decision, a fine of up to a legal maximum of 10% of annual revenue of United Group could be imposed on us in a separate misdemeanor proceeding for not obtaining merger clearance prior to operating IKO Balkan. In previous decisions when the Slovenian Competition Protection Agency has, following or in parallel with granting merger clearance, levied fines against companies for exercising control prior to obtaining merger clearance, the percentage of the fine has been materially less than 10% of overall group revenue, and in an unrelated recent case the Slovenian Competition Protection Agency fined an undertaking for failure to notify a concentration in the amount of approximately €54 million, which, according to publicly available sources, amounted to approximately 1% of the relevant group’s revenue. Although the decision on divestiture only relates to Slovenia, it may have negative consequences for United Group in other markets, including on our reputation brand equity and perceived value proposition, which could have a negative impact on United Group’s business and results of operations.

In February 2015, the Slovenian Competition Protection Agency initiated a proceeding regarding the abuse of dominant market position by United Media Limited, IKO Balkan (now United Media Distribution) and its Slovenian subsidiary IKO Media PRO d.o.o. in the wholesale market for the supply of pay-TV sports channels in Slovenia for a period beginning around August 2012. This proceeding is currently pending as no statement of objections has been issued by the Slovenian Competition Protection Agency. Possible impacts of a decision adverse to United Group include: (i) an obligation to cease the infringement (if any); (ii) imposition of measures to remedy proven abuse of dominant position; (iii) imposition of a monetary fine of up to 10% of the annual turnover of United Media Limited and United Media Distribution in the preceding business year; (iv) the imposition of a criminal charge; and (v) damages claims from third parties. We cannot predict the outcome of this proceeding, and we can offer no assurances as to the effects of a decision adverse to United Group.

Any risks associated with acquisitions or future acquisitions could have a significant negative impact on United Group’s business, financial condition and results of operations.

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Acceptance of our content, particularly our television programming, by the public is difficult to predict, which could lead to fluctuations in revenues.

Television production and distribution are uncertain businesses since the revenues derived from the production and distribution of a television series depend primarily upon its acceptance by the public, which is difficult to predict. The commercial success of a television program also depends upon the quality and acceptance of other competing television programming released into the marketplace at or near the same time, the availability of a growing number of alternative forms of entertainment and leisure time activities, general economic conditions and their effects on consumer spending and other tangible and intangible factors, all of which can change and cannot be predicted with certainty. Audience ratings for a television program are generally a key factor in generating revenues from other distribution channels, such as content licensing. Given the production costs that are incurred prior to airing a new television program, the profitability of television production and the recovery of upfront costs depend on the program’s popularity upon and following the initial airing. A decline in the ratings or popularity of our entertainment, sports or news television programming, which could be a result of the loss of talent or rights to certain programming, could adversely affect advertising revenues in the near term and, over a longer period of time, adversely affect our results of operations.

We do not have guaranteed access to all of our television content and are dependent on our agreements, relationships and cooperation with content owners, including broadcasters and collective rights associations.

The success of our business depends on, among other things, the quality and variety of the television content delivered to our customers. We depend on our agreements, relationships and cooperation with third parties for the majority of our content. We receive content for our cable and DTH pay-TV services pursuant to licenses with content owners, including high quality regional and international television networks such as FOX, ViaSat and Universal channels. Additionally, we produce our own content through our in-house content company.

While we intend to negotiate additional access to continue to expand our pay-TV product range, rights to premium or high definition (“HD”) content may in the future be obtained by our competitors on an exclusive basis and therefore not be available to us. Additionally, we may be unable to secure content on an exclusive basis and may have to share broadcasting rights with our competitors, which could lead to a dilution of our brand name. Furthermore, our competitors may be able to secure content which is more popular than ours, and changes in our subscribers’ content preferences could result in a decrease of the popularity of our content and an increase in the popularity of our competitors. While we have successfully developed our video-on-demand and other interactive services as well as our own television content in the past, our ability to source content will be increasingly important and will depend on our ability to maintain relationships and cooperation with content owners and

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broadcasters for both standard and HD content as well as our ability to accurately predict our customers’ content preferences. Furthermore, our NetTV Plus OTT content platform, which distributes local ethnic content to former Yugoslav expats around the world, relies on the availability of a number of local free-to-air channels and no-fee contracts for the distribution of such content. In the past, we have faced difficulties obtaining such local content free of charge or negotiating contracts with local TV channel providers on satisfactory terms, which difficulties have in the past led to the removal of some of these channels. Additionally, from time to time, we face disputes over the rights to certain of the OTT content that we show. If we fail to produce, obtain or retain on satisfactory terms sufficient popular and quality programming for our digital cable and DTH services, or local content for our OTT content platform; if the content we provide is only popular for a short period of time; if our competitors secure content that is more popular than ours; or if the popularity of our content declines, our ability to attract customers from competitors to our services, retain current customers, compete effectively with free TV channel providers or recoup our content production costs may be limited, which could have a material adverse effect on our business, financial condition and results of operations.

Additionally, as we depend upon such content owners for the provision of content to attract and retain customers, content owners may have considerable power to renegotiate the license fees we pay them. Most license agreements are renewed on a regular basis, typically every three years. We may be unable to renew such contracts on terms that are similar to those of the current agreements, which could result in an increase in our content costs or, if we are unable to agree on the terms of service, the cancellation of such license contracts. The loss of certain content could, in turn, affect our customer base. Difficulties encountered with content suppliers may result in disruptions in our operations, loss of profitability and damage to our reputation, financial condition or results of operations.

Any failure to keep pace with technological changes and evolving industry standards could harm our competitive position and, in turn, have a material adverse effect on our business.

The broadband internet, television and fixed-line and mobile telephony services sectors are characterized by rapid and significant changes in technology. We will need to anticipate and react to these changes and develop successful new and enhanced products and services quickly enough to adapt to the changing market. This could result in the need to make substantial investments in new or enhanced technologies, products or services, and we may not be able to adopt such technology due to insufficient capital or for other reasons, such as incompatibilities with our systems. In addition, new technologies, such as LTE and VoIP (over fixed-line and mobile technology), 3D TV or IPTV, may become dominant in the future, rendering our current technologies and systems obsolete.

In particular, we expect certain communications technologies that are currently under development or have recently been introduced, namely in the future and 4G LTE currently,

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which allows for faster data transmission and lower unit cost per gigabyte transferred traffic compared to 3G, to become increasingly important in our market. We currently hold a 4G license in Slovenia. However, if we are unable to effectively compete in the 4G market or keep pace with technological developments (particularly the roll out of our 4G network at a pace comparable to that of our competitors) we could lose subscribers or fail to attract new subscribers, which would impact subscriber churn, or incur substantial costs and investments in order to maintain our subscriber base or service the growing traffic, all of which could have a material adverse effect on our business, financial condition and results of operations.

The availability of any new features developed for use in our industry can have a significant impact on a subscriber’s initial decision to choose our or a competitor’s products. We may not be able to develop or partner with third-party suppliers to gain access to technical advances before our competitors, match technological innovations by our competitors or design systems that meet subscribers’ requirements. Our ability to effectively anticipate and adapt successfully to changes in technology in our industry and provide new or enhanced services in a timely and cost-effective manner, or successfully anticipate the demands of our subscribers, will determine whether we will be able to increase or maintain our subscriber and revenue base. As a result, new or enhanced technologies, services or offerings we introduce may fail to achieve sufficient market acceptance or experience technical difficulties. For example, we do not expect that previously installed internet modems or set-top boxes will be able to support all of the enhancements we may introduce to our broadband internet and television services over time. If we fail to respond adequately to technological changes, we could lose subscribers and experience a decrease in revenues and, as a result, our business, financial condition and results of operations would be materially and adversely affected.

Additionally, the cost of implementing emerging and new technologies could be significant and we may fail to obtain the necessary financing. If we are unable to obtain such financing at attractive terms or at all, we might not be able to make the necessary technological changes or upgrades and our business, financial condition and results of operations could be materially and adversely affected.

We are subject to significant government regulation and supervision, as a result of which we may be affected by unforeseen changes in regulation and government policy which may increase our costs and otherwise adversely affect our business.

Changes in laws, regulations or governmental policy affecting our activities and those of our competitors could significantly influence how we operate our business, our ability to offer certain products and services and our ability to introduce new products and services. For example, regulatory changes relating to our activities and those of our competitors, such as changes relating to third-party access to cable networks, the costs of interconnection with other networks or the prices of competing products and services, or any change in policy allowing more favorable conditions for other operators, could adversely affect our ability to set prices, enter new markets or control our costs.

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Our ability to introduce new products and services may also be affected if we cannot predict how existing or future laws, regulations or policies would apply to such products or services. In addition, our business and the industry in which we operate are subject to investigation by regulators, which could lead to enforcement actions, fines and penalties or the assertion of private litigation claims and damages. Any such action could harm our reputation and result in increased costs to the business.

We are exposed to currency exchange fluctuation and currency instability risks in Europe that could have an adverse impact on our liquidity, financial condition and cash flows.

The reporting currency of our business is the euro. While Slovenia and Montenegro use the euro as official currency, and while the value of the Bosnian mark is pegged to the euro, we collect subscriber fees in Serbia, Bosnia and Herzegovina, Croatia and North Macedonia in the respective local currencies. For the year ended December 31, 2019, we generated 38% of our revenues in Serbian dinar. At the same time, the vast majority of our costs to operate our business as well as our capital expenditure are paid in euro. The Serbian dinar has fluctuated in the past (including through inflation), and may fluctuate in the future, resulting in significant and unpredictable foreign exchange losses and gains. If the euro appreciated in value against the Serbian dinar or other local currencies, and we were unable to pass-through increased costs to our customers or if we were unable to exchange the various local currencies into euro at all, our revenue would decrease which would make it more difficult to generate the cash necessary to continue our operations without disruptions, cover our costs and meet our capital expenditure requirements.

Additionally, economic events in recent years affecting European economies have raised a number of questions regarding the stability and overall standing of the European Monetary Union. Credit risk in these countries and in other Eurozone countries, especially in Slovenia, could have a negative impact on our business. Concerns also remain regarding the overall stability of the euro and the suitability of the euro as a single currency given the diverse economic and political circumstances in individual euro member states. The departure or risk of departure from the euro by one or more Eurozone countries or the abandonment of the euro as a currency, or the reintroduction of an individual currency in Slovenia, as well as the de-pegging of the BAM from the euro, could have major negative effects on our existing contractual relations with our customers, and could adversely affect the economy in Slovenia and Bosnia and Herzegovina. In particular, the departure of Slovenia from the euro would increase our exposure to changes in currency rates. Any of these developments could affect our ability to refinance our liabilities and have a significant negative impact on our business, financial condition and results of operations.

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Legal, political and economic uncertainty in the Eurozone, including the expected exit of the United Kingdom from the European Union and the European sovereign debt crisis, may adversely impact current trading arrangements, be a source of instability in international markets and create significant currency fluctuations, which could have a material adverse effect on our business, results of operations and financial condition.

The United Kingdom (“UK”) held a referendum on June 23, 2016, to determine whether the UK should leave the EU or remain as a Member State, and the outcome of that referendum was in favor of leaving the EU. Under Article 50 of the 2009 Lisbon Treaty (“Article 50”), the UK was set to cease to be a Member State when a withdrawal agreement is entered into, or failing that, two years following the notification of an intention to leave under Article 50, unless the European Council (together with the UK) unanimously decides to extend this period. On March 29, 2017, the UK formally notified the European Council of its intention to leave the EU, which meant that absent an extension, the UK would have ceased to be a member of the EU on March 29, 2019. However, the European Council granted an extension until October 31, 2019 and, when such deadline passed without the finalization of a withdrawal agreement, a further extension until January 31, 2020. On the latter date, the UK officially left the EU, following the approval of a withdrawal agreement. Until a transition period that ends on 31 December 2020, EU laws and regulations will continue to apply in the UK, and changes to the application of these laws and regulations are unlikely to occur during negotiations on an agreement governing the future relationship between the UK and the EU. In view of the Covid- 19 crisis, the UK Government could decide to ask for an extension of the transition period beyond 31 December 2020 to have more time to complete these negotiations. The EU has assured the UK that it would grant such an extension.

Due to the size and importance of the UK economy, the uncertainty and unpredictability concerning the UK’s legal, political and economic relationship with Europe after the UK exits the EU may continue to be a source of instability in the international markets, create significant currency fluctuations, and/or otherwise adversely affect trading agreements or similar cross-border cooperation arrangements (whether economic, tax, fiscal, legal, regulatory or otherwise) for the foreseeable future, including beyond the date of the UK’s withdrawal from the EU. While relatively unlikely, it is also possible that the exit of the UK from the EU will lead other EU Member States to consider leaving the EU, which could be an additional source of instability in the international markets. Further, other EU Member States within the Eurozone could decide to discontinue their use of the euro as their functional currency. The expected exit of the UK (or the possible exit of any other country) from the EU, the potential withdrawal of Scotland and even Northern Ireland from the UK, or prolonged periods of uncertainty relating to any of these possibilities, could result in significant macroeconomic deterioration, including, but not limited to, further decreases in global stock exchange indices, increased foreign exchange volatility (in particular a further weakening of the pound sterling and euro against other leading currencies), and decreased GDP in the EU or other markets in which we operate. In addition, there are increasing concerns that these

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events could push the UK or Eurozone into an economic recession, any of which, were they to occur, would further destabilize the global financial markets.

Our operations are also subject to risks from high levels of sovereign debt in certain European countries, which combined with weak economic growth and high unemployment, could lead to fiscal reforms (including austerity measures), sovereign debt restructurings, higher levels of volatility and potential disruptions in the credit and equity markets. With regard to currency instability issues, concerns exist in the Eurozone with respect to individual macro-fundamentals on a country-by-country basis, as well as with respect to the overall stability of the European Monetary Union and the suitability of a single currency to appropriately deal with specific fiscal management and sovereign debt issues in individual Eurozone countries. The realization of these concerns could lead to the exit of one or more countries from the European Monetary Union and the re-introduction of individual currencies in these countries or, in more extreme circumstances, the possible dissolution of the European Monetary Union entirely. The capital market disruption that would likely accompany any such event could have a material adverse impact on our liquidity and financial condition. Furthermore, any redenomination event would likely be accompanied by significant economic dislocation, particularly within the Eurozone countries, which in turn could have an adverse impact on demand for our products, and accordingly, on our revenue and cash flows. As we generate revenue in a number of different currencies, including euro, Serbian dinar and Bosnian mark, increased currency fluctuation could have a material adverse impact on our results of operations.

For these reasons, legal, political and economic uncertainty in the Eurozone could have a material adverse effect on our business, results of operations and financial condition.

Our operations in some markets are constrained by political factors and our business might be affected by factors or changes in the political, judicial, economic or security environment in the countries in which we operate.

We currently operate in six countries across South Eastern Europe and the governments of these countries differ with respect to structure, stability and level of regulation. As some of our operations, such as price increases for our Serbian analog pay-TV products, network expansions and construction or acquisition of cable assets, depend on governmental approval and regulatory decisions, we may make decisions influenced by political considerations rather than fully exploiting our contractual or legal rights, in order to avoid negatively affecting our relationship with national, regional or local authorities, including regulators. Additionally, the respective governments in our core markets currently own a majority stake in our biggest competitors in those markets: Telekom Slovenije in Slovenia, Telekom Srbija in Serbia and BH Telecom and HT Eronet in Bosnia and Herzegovina. As a result of this, our competitors might have special privileges with regulatory authorities or receive other forms of governmental support. Accordingly, our operations may be constrained by the relevant political environment and may be adversely affected by such constraints.

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Each of the countries in which we operate has a short legislative, judicial and administrative history and it is not possible to predict with certainty the effect of current and future legislation on our business. Company, commercial, contract, customs, currency, property, banking, bankruptcy, competition, securities, labor, tax and other laws and regulations in the countries in which we operate (including those concerning privatization and the compensation of former owners) are still developing and continue to be substantially revised. There is little precedent for how these laws and regulations will be interpreted or implemented either by the courts or government agencies. Existing and future laws and regulations may be applied inconsistently. These factors could result in market uncertainty, lack of clear criteria and in many cases could lead to excessive regulation. In the jurisdictions in which we operate, we may experience difficulties or delays in obtaining permits or other governmental authorizations.

Additionally, the judicial systems of certain of the countries in which we operate may not be fully independent of social, economic and political forces, and many courts in these countries experience a high volume of case backlogs. This often results in inconsistent judicial interpretation of laws and regulations and excessive delays in court proceedings. Relatedly, certain market participants in the countries in which we operate may conduct their operations without regard for applicable laws or regulations, which creates competitive disadvantages for other participants. As a result of the foregoing, we may operate with competitive disadvantages or may not be able to enforce our legal rights efficiently or successfully, including title to our intellectual property, under the laws of the countries in which we operate.

Additionally, in certain countries in which we operate, political, security and economic changes may result in political and regulatory uncertainty and civil unrest. Furthermore, the majority of countries in which we operate are emerging economies and as such are more susceptible to adverse global economic trends and higher inflationary pressure, which could have a negative effect on the growth of our business or operations, increase our operating costs or decrease consumer demand and spending power. Each of these factors could, individually or in the aggregate, have a material adverse effect on our business, reputation, financial conditions or result of operations.

Additionally, in certain countries in which we operate, political, security and economic changes may result in political and regulatory uncertainty and civil unrest. Furthermore, the majority of countries in which we operate are emerging economies and as such are more susceptible to adverse global economic trends and higher inflationary pressure, which could have a negative effect on the growth of our business or operations, increase our operating costs or decrease consumer demand and spending power. Each of these factors could, individually or in the aggregate, have a material adverse effect on our business, reputation, financial conditions or result of operations.

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We do not hold valid use permits for parts of our cable network.

We currently do not hold use permits for a portion of our lines in Serbia. Due to the fact that a cadaster of lines has just begun to function and we are still taking steps to proceed with our registration of the lines in the cadaster, the legal status of our cable infrastructure can only be established by reviewing the documents pertaining to the construction of our network, including the construction and use permit. As a result, we might face difficulties establishing conclusive ownership of a portion of our cable network in the future. While current market practice allows us the continued use of our entire cable network despite not holding adequate use permits, we cannot guarantee that this practice will continue to remain in effect. In addition, certain construction and use permits in Bosnia and Herzegovina, and Montenegro, may be incomplete or deficient. Should existing requirements to hold such permits be more strictly enforced in the future, and should we be unable to obtain such permits, our business, financial condition, results of operations and cash flow might be negatively affected.

We may not have title to use certain parts of our communication network in Slovenia, and a part of our communication network in Slovenia is not registered in the Slovenian Public Utilities Cadastre.

Mainly due to different approaches to building our communication networks and numerous takeovers of local operators in the past, we may not currently have title to use certain parts of our communication network in Slovenia. While the current market practice allows us the continued use of our entire communications network in Slovenia despite this, we cannot guarantee that this practice will continue to remain in effect, and we may incur additional costs in respect of obtaining (or failing to obtain) title to use every part of our communication network.

Furthermore, a portion of our communication network in Slovenia is not registered in the Slovenian Public Utilities Cadastre. While we are taking actions to make all appropriate registration, it cannot be excluded that, among other things, a fine ranging from €50 thousand to €400 thousand could be imposed on us for failure to register.

In addition, we depend on lease agreements for some parts of our communication network in Slovenia, and we may be exposed to increase in rents.

We may not realize any or all of the adjustments to Last Two Quarter Pro Forma Adjusted EBITDA included in this Bondholder report.

This bondholder report presents pro forma adjusted financial data which includes various assumptions. These assumptions are based on our current estimates, and they involve risks, uncertainties, assumptions and other factors that may cause actual results, performance or achievements to be materially different from any anticipated future results, performance or achievements expressed or implied by such pro forma adjusted financial data. The pro forma

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adjustments to UG EBITDA include adjustments for annualized cost savings related to overhead costs, production costs and multiplex costs, accounting adjustments due to differences between our accounting policies and the accounting policies of the acquired companies, and adjustments for the annualized effect of price increases. Some of the factors that could cause our future financial performance to differ materially from that expressed or implied by such pro forma adjusted financial data include: not achieving the level of EBITDA and/or the level of cost savings that we expect; failing to achieve our anticipated level of subscriber growth; changes in the accounting principles or policies that are applied; lower than anticipated prices for our services; or if the relevant acquisitions are delayed or not completed in whole or in part. If any of these factors or others cause our actual financial performance to differ significantly from that implied by the pro forma financial data presented, they could have a material adverse effect on our business, results of operations, financial condition or prospects.

We may face difficulties in increasing our subscriber base or our subscription fees or up selling new products to current subscribers.

Our revenue growth primarily results from the growth of our subscriber base and increase in our subscription fees. We may not be able to sustain the level of subscriber growth, and further increases in subscription fees may meet customer resistance and lead to increases in churn rates. If we are unable to execute our business strategy, the pay-TV, broadband internet and fixed-line and mobile telephony markets in the regions in which we operate do not continue to grow as we expect, or we encounter other unforeseen difficulties in acquiring new subscribers or selling additional products and services to existing subscribers, we may experience a material adverse effect on our business, financial condition and results of operations.

Additionally, a number of free television channels are available across the markets in which we operate. Historically, the migration of subscribers from unmanaged free has been slow. While we believe that our product offering is of a higher quality than the television channels available free of charge, there can be no assurance that the speed with which customers migrate from free television services to pay-TV services will increase, and consequently, we cannot guarantee that pay-TV penetration rates across South Eastern Europe will converge on the higher penetration rates characteristic of other major Western European markets which may, in turn, adversely affect our business.

Customer churn may adversely affect our financial performance.

Customer churn refers to those subscribers who cease subscribing to one or more of our products and services. In the ordinary course of our business, we experience a loss of customers due to their choice to obtain services from a competitor (including from competing types of services, such as OTT TV services in lieu of cable pay-TV, or mobile telephony in lieu of fixed-line service), relocation of our customers to areas not covered by our network and

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cancellation of services for customers who, after several reminders, do not pay our invoices. For example, our annual cable pay-TV subscriber churn rates for the year ended December 31, 2019 were 10% for the Telemach Slovenia segment, 11% for the SBB Serbia segment and 12% for the Telemach BH segment.

Factors impacting churn in our consumer subscriber base include existing customers moving outside of our current geographical area of service as well as termination of services contracts by us due to existing customer’s inability to pay, as well as competition. For example, any interruption of our services, the removal or unavailability of programming or any other customer service problems, whether or not attributable to us, could contribute to increased subscriber churn or cause us to fail in our goal of reducing the level of churn of our pay-TV, broadband internet and fixed-line and mobile telephony services. Additionally, price increases (by us or across the industry) could lead to increased subscriber churn.

Subscriber churn reduces our subscription base and causes us to incur additional costs to replace the cancelled subscribers, such as advertising and marketing costs. A significant increase in our churn rates may require us to incur additional costs to replace subscribers lost to cancellation. Additionally, even with increased marketing efforts, we cannot guarantee that we will be able to replace the subscribers who left us at all. Therefore, if a significant number of our subscribers cancel or do not renew their contracts with us, our business, financial condition and results of operations could be materially affected. Additionally, we incur upfront cash expenses for the installation of our cable-TV and internet equipment and handset subsidies with new customers which we recoup over the duration of the services contract. As a result, should an increased number of subscribers cancel our services before we can recoup these initial cash expenses, this would have a negative effect on our business and results of operations.

Our marketing and advertising expenses may increase in the future.

Historically, we have had low marketing and advertising budgets and have competed on the quality of our content and services instead. Should we be unable to compete on the quality of our content and services in the future, for example as a result of loss of content to our competitors, we might need to increase our marketing and advertising efforts, which would lead to an increase in marketing expenses. If we are unable to offset such increases in marketing and advertising expenses with increased prices for our products and services, our profitability, results of operations and financial condition might be negatively affected.

Failure in our technology or telecommunications systems as a result of technical errors, cyber security breaches or other factors could significantly disrupt our operations.

Our success depends on the continued and uninterrupted performance of our information technology, HFC network systems, mobile network and customer service centers.

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If any part of our HFC network, mobile network or IT infrastructure or any of our customer service centers is compromised or damaged by flood, fire or other natural disaster, terrorism, illegal piracy, power loss, system failure, denial-of-service attack, cyber-attack or other catastrophe, our operations could be materially adversely affected. Disaster recovery, security and service continuity protection measures that we currently have or may in the future undertake, and our monitoring of network performance, may be insufficient to prevent losses.

In addition, our business is dependent on sophisticated critical systems, such as our customer service systems and billing systems. Despite the presence of back-up-systems, we can provide no assurances that our network and technical systems will not be damaged by physical or electronic breakdowns, cyber-attacks, computer viruses or similar disruptions. In addition, unforeseen problems may create disruptions in our information technology systems. There can be no assurance that our existing security system, security policy, back-up systems, physical access security and access protection, user administration and emergency plans will be sufficient to prevent data loss or minimize network downtime. Sustained or repeated disruptions or damage to our network and technical systems that prevent, interrupt, delay or make it more difficult for us to provide products and services to our customers in accordance with the agreements we have with our customers may trigger claims for payment of damages or contractual remedies and would cause considerable damage to our reputation, lead to the loss of customers and require repairs or replacement of part of our network, all of which could have an adverse effect on our business, financial condition and results of operations.

Additionally, we rely on hardware, software, technical services and customer support provided by third parties. We do not control the proper functioning of such third-party equipment, and to the extent hardware, software, technical services and customer support provided by third parties fails, our business operations may be adversely affected. For example, in 2015 our mobile operations in Slovenia were disrupted for a four-hour period due to technical problems with our mobile network.

Further, any security breaches, such as misappropriation, misuse, penetration by viruses, worms or other destructive or disruptive software, leakage, falsification or accidental release or loss of information maintained in our information technology systems (or those of our business partners) and networks, including customer, personnel and vendor data, could damage our reputation, result in legal and/or regulatory action against us, and require us to expend significant capital and other resources to remedy any such security breach. The occurrence of any such network or information system-related events or security breaches could have a material adverse effect on our business and results of operations.

We operate in a capital-intensive business that may result in depreciation or impairment costs, or prevent us from generating positive returns.

The pay-TV, broadband internet and fixed-line and mobile telephony markets in which we operate are capital intensive and significant capital investments are required to add

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customers to our network, including for equipment and labor costs. In addition, an increase in our customers’ internet usage or demand for higher bandwidth may require us to further invest in the capacity of our network. As a result, we expect that technological innovation as well as ongoing customer growth will lead to additional capital expenditure. In addition, any new or enhanced products or services we introduce, including internet and telephony products, may require an upgrade of local and in-house networks, in which case we may be required to cover a portion, or all, of the costs of such upgrade. Our current assumptions regarding the costs associated with the maintenance and further development of our cable and mobile networks, including the implementation of new standards, may prove to be inaccurate. No assurance can be given that our future investments and network upgrades will generate a positive return or that we will have adequate capital available to finance such future upgrades. In addition, rapidly changing technology requires careful review of life cycles for our assets and may result in additional depreciation or impairment costs. If we are unable to, or elect not to, pay for costs associated with adding new customers, expanding or upgrading our network or making our other planned or capital expenditure, or if we experience unexpected material depreciation or impairment costs, or do not manage our project portfolio effectively to ensure the proper allocation of resources between projects, our growth could be limited and our competitive position could be harmed.

We depend on third-party providers of hardware, software, satellite services, network access and customer support.

We rely on third-party vendors to supply us with a significant amount of customer equipment such as receiver boxes, hardware, including mobile handsets, software, satellite services, and operational or technical support necessary to operate our network and systems and provide our services.

In many cases, our services depend on the technical specifications of equipment or software of a particular provider such as the method of content encryption, making it difficult for us to quickly change supply, maintenance or other essential relationships in the event that our provider refuses to offer us favorable prices, fails to provide the support that we require, or ceases to produce equipment or provide satisfactory customer service. Additionally, if our suppliers were to discontinue certain products or services, were unable to provide equipment to meet our specifications or interrupt the provision of equipment or services to us, or seek to charge us prices that are not competitive or withdraw discounts that have been previously agreed, we may have to find alternative suppliers. Switching to alternative suppliers could cause us to experience difficulties or delays, or to incur significant costs, or if we were unable to replace such services or products in a timely and cost-efficient manner, our business and profitability could be materially adversely affected.

We are a party to a number of roaming agreements, under which we will be provided with network services allowing us to offer mobile telephony services to our subscribers in areas where we do not have our own network coverage. The loss of any of these agreements

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could have a material adverse effect on our business, financial condition and results of operations.

In addition, an increase in the number and volume of calls by our subscribers served on the networks of the other MNOs could require future negotiations for lower national roaming/network sharing prices in order to maintain or decrease the cost of national roaming/network sharing, which may not be achievable. If any of the events described above were to occur, our national roaming/network sharing or interconnection costs could increase. In the event that this disrupts our network access or coverage in a manner which we cannot resolve through our other agreements, we may have to increase our capital expenditure in order to extend our radio network or enter into agreements with other network access providers on terms that may not be as favorable as the terms of the terminated agreement. If any of these events were to occur, or if we face an increase in costs incurred under one of our national roaming/network sharing agreements, it would have an adverse impact on our financial condition and results of operations, or, if we are not able to fund capital expenditure to extend our radio network, such failure would affect the level of services which we can offer which could mean that we would lose subscribers or fail to attract new subscribers, which could, in turn, have a material adverse effect on our business, financial condition and results of operations.

Our reputation as a supplier and service provider of high quality pay-TV, broadband internet and fixed-line and mobile telephony offerings or the value associated with our brands may be adversely affected.

Our business depends on our reputation and our ability to maintain good relationships with our subscribers, suppliers, employees and local regulators. The brands under which we sell our products and services, including Telemach in Slovenia and Bosnia and Herzegovina, Telemach and M-kabl in Montenegro, SBB in Serbia, Total TV for our DTH platform throughout South Eastern Europe (with the exception of Croatia beginning in January 2018, due to the divestiture of our Total TV operations in Croatia in connection with the Nova Croatia Acquisition) are well-recognized brands in their respective jurisdictions. In addition, we own and operate some of the strongest brand names in the region, including Sport Klub, Cinemania, Grand Production and the Ultra family of pay-TV channels. Our reputation, brand image and competitive advantage may be harmed either through product defects, such as the failure of our network, branded routers and branded TV equipment (including failures or defects of equipment provided by third parties), or shortfalls in our customer service, such as a failure to provide reliable product maintenance or assist with connection problems. Any harm done to our reputation, business relationships or brand value as a result of our actions, or actions of others could have a significant negative effect on us and on the value of our brands which could have a material adverse effect on our business, financial condition and results of operations.

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Furthermore, our relationships with our subscribers are of particular importance. Subscribers generally judge our performance through their interactions with the staff at our monitoring centers, the reliability of our products and our maintenance performance for any products that require repair. If we fail to meet our subscribers’ expectations, we may lose subscribers or have greater difficulty attracting new subscribers, which could have a material adverse effect on our business, financial condition and results of operations. We have also experienced in the past, and may experience in the future, a slightly negative perception of our brand by certain groups of the population in Bosnia and Herzegovina as a result of the recent political history of the region and our perceived Serbian identity. Any damage to the value of our brands caused by any of the foregoing or other factors could have a material adverse effect on our business, financial condition and results of operations.

Our business may be adversely affected by the alleged health risks of antenna sites and the use of mobile telephones.

We are aware of allegations that there may be health risks associated with the effects of electromagnetic signals from antenna sites, mobile telephones and other telecommunications devices. We cannot provide assurances that further medical research and studies will not establish a link between the radio frequency emissions of mobile handsets or telecommunications base stations and these health concerns. The European Commission has been investigating these concerns since 1995. Should such allegations manifest, regulatory authorities in our countries of operation could increase regulation of mobile telephones and telecommunications base stations. Additionally, the actual or perceived risk of telecommunications devices, press reports about risks or any litigation relating to such risks could adversely affect us through a reduction in the size or growth rate of our customer base, a decline in usage by our customers, or through increased litigation costs and could have an adverse effect on our financial condition and results of operations.

We may not be able to attract or retain personnel who are key to our business.

We depend on our key management and personnel, including our group chairman and founder, Dragan Šolak, all of whom we believe are highly skilled and many of whom have been with our various businesses since their inception. As the markets in which we operate are highly competitive, there is significant competition in attracting and retaining qualified personnel in the telecommunications industry, especially individuals with experience in the cable sector. Despite our key management and personnel’s long history of service and involvement in and commitment to our business, we cannot assure you that we will be successful in retaining the services of our key management or personnel or that we would be successful in hiring and training suitable replacements without undue costs or delays. As a result, the loss of any of these key employees could cause significant disruptions in our business operations, which could materially adversely affect our results of operations.

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The operation of our business depends in part on agreements with our competitors.

While we compete with Telekom Srbija, Telekom Slovenije, the incumbent Bosnian operators and Crnogorski (Montenegrin) Telekom in the respective television, internet and telephony markets, we also rely on long-term services and assets provided by them. For example, we lease cable duct space used for parts of our cable network and purchase telephony interconnection services and mobile network services from Telekom Slovenije in Slovenia, and rely on lease agreements with Telekom Srbija and HT Eronet for cable duct space and the use of their fixed telephone lines in Serbia and Bosnia and Herzegovina. Furthermore, Telekom Slovenije provides us with fiber-optic connection lines for certain areas.

Our ability to offer our services to our customers depends on the performance of the respective partner to such lease and services agreements of their respective obligations under these arrangements. Pursuant to the terms of such lease and services agreements, the respective other party has the right to terminate the services under the agreements in certain circumstances and under certain conditions or has the right to unilaterally increase prices. For example, in 2011, Telekom Srbija significantly raised prices for the use of their duct space. The termination of any material portion or all of such lease or service agreements would require us to find alternative solutions and it may be difficult to establish an alternative at a reasonable price, which would adversely affect the value of our business. Additionally, our business relationships with our state-owned competitors might be affected by a close alignment between the state’s interests and our competitor’s business operations as a result of which our competitors might, for example, enjoy special privileges with regulatory authorities. Additionally, should we be unable to successfully negotiate moderate price increases, or should we be unable to pass-through price increases to our customers, our profitability, financial condition and results of operation might be affected.

We may not be successful in maintaining the necessary regulatory authorization or licenses needed to operate our business and such authorizations and licenses may be invalid or may be subject to termination, revocation or material alterations in the event of a breach or to promote public interest.

We currently hold numerous regulatory authorizations and licenses necessary to operate our business. In addition, we hold numerous radio frequency licenses in Slovenia and Serbia, of which the latest are set to expire in 2031 and 2026, respectively. We cannot assure you that all of our authorizations or licenses are valid, that we will be able to maintain all authorizations and licenses necessary to operate our business or that we will be able to renew our authorizations or licenses when they expire. The loss of any of our authorizations or licenses or a material modification of the terms of any existing or renewed licenses may have a material adverse effect on our business, financial condition, results of operations and cash flow. For instance, some competitors successfully challenged in front of the Slovenian administrative court the grant of a block of spectrum in 2008 to Tušmobil (which in April 2015

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was acquired by, and later merged into, Telemach Slovenia), which we use for part of our 3G mobile services. We cannot rule out either that, in the repeated tender for this block of spectrum, we may ultimately be unsuccessful in securing all of the spectrum or that we may need to pay a fee or rent for use of the spectrum.

Additionally, like all other broadcasters, we must comply with national broadcasting laws and regulations, and the terms and conditions of our licenses in order to maintain our licenses. If we are held to be in material breach of any applicable law or the terms and conditions of our licenses, our licenses may be revoked. In addition, if our activity under our licenses is carried out in a manner that is deemed to conflict with applicable law or the terms and conditions of our licenses, and we fail to remedy such conflict within the applicable grace period, our licenses may be revoked. Any revocation of our licenses could adversely affect our business, financial condition, results of operations and cash flow.

We may be unable to secure spectrum in the future, which would prevent or impair our plans or limit the need for our services and products.

Our ability to provide certain services to customers is highly dependent on our access to sufficient spectrum. However, the amount of available spectrum suitable for our operations is limited and the process for obtaining it is complex. We therefore cannot guarantee that we, or our customers, will have sufficient access to spectrum to maintain and develop our services in the future. We believe that spectrum licenses will be particularly important for competing in the 4G and 5G network during the next five to ten years. There can be no guarantee that we will be successful in our efforts to outbid competitors for blocks of frequency in these bands in upcoming auctions. In addition, should the governments of the countries in which we operate decide to reallocate spectrum to 5G, then we may be required to obtain additional spectrum to maintain our existing product offering. We believe that spectrum success in coming spectrum auctions will be pivotal to meet the growing capacity demand in the mobile market and to accommodate new 5G services.

In addition, a new mobile network operator could successfully enter the mobile telecommunications market in the countries in which we operate. Although the long-term nature of the licenses granted in spectrum auctions could constitute significant barriers to entry for potential new competitors, a new MNO could develop and operate a network infrastructure in a specific geographical region in which we operate.

If any new MNO were to successfully enter our mobile telecommunications market as a competitor or existing operators were to combine or share their resources or infrastructure, it could materially reduce our market share and could overall have a material adverse effect on our business, financial condition and results of operations.

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EU regulation of the levels of roaming charges may in the future have a material adverse effect on our business.

EU regulators have imposed price restrictions applicable to all operators in the EU (both at the retail and wholesale level). In particular, in 2007, the European Regulation (EC) No 717/2007 of the European Parliament and the European Council of June 27, 2007 on roaming on public mobile telephone networks within the European Community (the “Community”) amending Directive 2002/21/EC came into effect, as well as, in 2009, Regulation (EC) No 544/2009 of the European Parliament and of the European Council of 18 June 2009 was introduced amending Regulation (EC) No 717/2007 on roaming on public mobile telephone networks within the Community, both provided for a steady reduction in mobile retail and wholesale prices for voice calls, SMS and data. On June 13, 2012, however, the aforementioned Regulation (EC) No 544/2009 was repealed by Regulation (EU) No. 531/2012 of the European Parliament and of the European Council of June 13, 2012 on roaming on public mobile communications networks within the EU. Pursuant to the latter regulation, the maximum retail prices and average wholesale prices for roaming mobile services (calls, mobile data and SMS) decreased on July 1, 2013 and decreased further on July 1, 2014, and were fully eliminated on June 15, 2017. Additionally, a “decoupling regime” has been introduced to increase competition in the international roaming market, and the result has been a reduction in international roaming retail prices to below the regulatory caps. This “decoupling regime” came into effect on July 1, 2014 and introduced market participants in the form of alternative roaming providers. Additionally, the “decoupling regime” foresees local break-out services (the ability for foreign MNOs to target our outbound roaming customers to directly offer them data- only services on their networks). Such services would be paid directly by such roaming customer to the visited roaming network.

Furthermore, certain countries in the region, including Serbia, Bosnia and Herzegovina, and Montenegro, are party to a regional initiative for a phased reduction of roaming prices between such countries. In the region, from July 1, 2019, mobile calls cost €0.19 per minute, SMS service costs €0.06 per message and mobile data costs €0.18 per megabyte (all prices exclusive of VAT). The initiative also calls for the abolition of all roaming costs with effect from July 2021. This could create increased price pressure on roaming charges that forces us to lower our prices further to match the market standard or risk losing customers to other providers. Reduction of prices of mobile roaming services, as well as operation of alternative roaming providers may have a material adverse effect on our business, financial conditions and results of operations.

There can be no assurance that our countries of operations will continue to successfully implement their respective political and economic reforms and agendas.

In recent years, the six countries in which we operate have implemented significant political and economic reforms aimed at, inter alia, reducing economic and structural

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imbalances, increasing the flexibility of their respective economies, including liberalization of the media and telecommunications sectors and creating a business friendly environment that is conducive to foreign investment.

While Slovenia joined the European Union in 2004 and has generally made the transition to a functioning market economy, the political and economic reforms implemented by the respective governments of Croatia, despite having joined the European Union in 2013, and of Serbia, Montenegro, North Macedonia, and Bosnia and Herzegovina are at a less developed stage than Slovenia.

Since the end of the Yugoslav wars in 1995, all six countries have made significant progress towards becoming more democratic and liberalized market economies; however, rebuilding Serbia’s, Bosnia and Herzegovina’s, Montenegro’s, Croatia’s and North Macedonia’s political and economic systems and infrastructure to a CEE or Western European standard will require further investment and may take some years to complete. We cannot assure you that Serbia, Bosnia and Herzegovina, Montenegro, Croatia and North Macedonia will achieve their intended aims with the implemented reforms, that a political environment supportive of these reforms will be maintained or that the governments in the respective countries will not implement regulations or fiscal or monetary policies, or otherwise take actions which could have a material adverse effect on our business.

Additionally, the key risk to stability in Serbia remains the status of Kosovo’s independence, and the country’s history of political instability makes it difficult to predict the occurrence of events or circumstances, such as war or hostilities, and no assurance can be given that we would be able to sustain our current profit levels in Serbia if adverse political events or circumstances were to occur.

The foregoing political and economic challenges in the countries in which we operate could have a material adverse effect on our business, financial condition and results of operations.

We may become subject to more extensive regulation due to our scale.

The European Union competition framework imposes pricing and other potential requirements on entities deemed to have significant market power (“SMP”) in non-competitive relevant markets in which they operate. Among other markets, the European Commission has identified “wholesale broadband access” and “the termination on an individual fixed network” as relevant markets. The European Union competition framework has been implemented in Slovenia; Croatia has largely aligned its law with the EU requirements; and Serbia, albeit not yet an EU Member State, continues its efforts to harmonize its law with the European framework and has recently promulgated new rules applicable to the electronic communications sector. Due to SBB Serbia’s prior leading position in the Serbian pay-TV market, we were previously designated as having SMP in the Serbian distribution of media

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content market. As a result, the pricing of our analog pay-TV service (“Basic TV”) package, which accounted for 12% of our revenue for the year ended December 31, 2019, and which we use as a platform to up and cross sell our products, was regulated and we were not permitted to increase the price for such packages without regulatory approval. For instance, in Serbia, while we have not been subject to any significant fines by local competition authorities in the last five years, Serbian law provides for fines of up to 10% of total annual revenue generated in Serbia. Telemach Slovenia is deemed to have SMP in: (i) voice call termination in an individual public mobile telephone network (inter-operator market); (ii) call termination in an individual telephone network at a fixed location (inter-operator market); and (iii) call termination in an individual public telephone network of Tušmobil at a fixed location (inter-operator market).

SBB Serbia is currently deemed to have SMP on the wholesale market for call termination in public telephone networks and the wholesale market of central access at a fixed location for mass-market products. Being designated as having SMP may carry with it: an obligation to publish data from accounting records, technical specifications, network characteristics, terms and conditions for supply and use or validity periods of the offer and prices; an obligation to only engage in nondiscriminatory conduct; an obligation to keep separate accounts for interconnection and access services; an obligation to provide access and use of parts of our network infrastructure and associated facilities to third parties; price controls and cost based accounting; an obligation to make available a minimum set of leased lines; an obligation to offer operator selection and operator pre selection services; and regulation of retail services, including an obligation to unbundle products and services. In addition, the Bosnian regulator has published a market analysis, which is still under public debate and is not binding and effective, proposing to identify us as having SMP on the retail market for distribution of AVM and radio services.

Telemach BH and MNE were also determined to have SMP on the wholesale market for call termination in the individual public network at a fixed location.

There is a risk that we could be found to have SMP in other geographical markets in which we operate if local regulators identify these areas as relevant markets in which there is not sufficient competition. The designation of our business as an SMP provider could result in requiring us to provide other service providers access to our network for purposes of providing competing broadband and broadcasting services at regulated prices, and impose other restrictions on how we operate our network and market our services, including the imposition of a requirement to obtain additional permits and licenses for our operations. Granting such access would limit the bandwidth available to us to provide other products and services to our customers. Such regulation could, among others, (i) impair our ability to use our bandwidth in ways that would generate maximum revenue, (ii) create a shortage of capacity on our network, which could limit the types and variety of services we could provide to our customers, (iii) strengthen our competitors by granting them access in our network and lowering their

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costs to offer competing products and services and (iv) have a significant adverse impact on our profitability.

Furthermore, we may be subject to fines for infringements of relevant local competition laws. We have recently been subject to competition proceedings in Bosnia related to our provision of sports content, and in 2015 and 2017, United Media Distribution, a former subsidiary of the Group, was fined approximately €250,000 for an allegation of continuing abuse of dominance. We have taken steps to address the concerns of the Bosnian competition authorities, including offering our sports content to third parties on terms that are comparable to those on which we offer this content to our Group companies. However, some competitors and the association of cable operators in Bosnia and Herzegovina have requested further fines in relation to these matters.

In addition, we are subject to proceedings in Slovenia related to competition rules connected to alleged abuse of dominant market position and with respect to certain of our acquisitions.

We cannot guarantee that we will not be subject to further regulatory scrutiny in respect of (i) our market position in Slovenia, Serbia, Bosnia and Herzegovina, Montenegro or any other jurisdiction in which we operate, (ii) matters involving merger control filings or (iii) exclusive and restrictive content contracts, and may be liable to pay fines or other sanctions in the future, especially as local law and local customs continue to be updated based on CEE or Western European legal standards.

Changes in labor laws may make it more costly to operate our business in the future.

We are exposed to the risk of strikes, work stoppages and other industrial actions. While the substantial majority of our employees currently are not members of labor unions, we cannot guarantee that a larger portion of our employees will not associate with such unions in the future, especially as the labor standards in our countries of operations converge with CEE or Western European standards. As a result, we might also become subject to collective bargaining agreements which could regulate, inter alia, the general labor conditions of our employees, working hours, holidays, termination, provisions and general payment schemes for wages. Moreover, strikes and other industrial actions, as well as the negotiation of collective bargaining agreements or salary increases in the future, could disrupt our operations and make it more costly to operate our facilities, which in turn could have a material adverse effect on our business, financial condition and results of operations.

Furthermore, our business operations might be negatively affected by changes in local labor law and labor market practice, such as the imposition of, or increases in, minimum wages, or a more restrictive interpretation of the status of alternative hiring arrangements as employment. While we believe we are currently in line with local, regional and national labor

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market practices, there can be no assurance that labor laws, market practice, or enforcement focus, will not change. Should we fail to comply with relevant labor laws and regulations, we might be exposed to fines which could have a negative impact on our profitability, financial condition and result of operations.

Sensitive customer data is an important part of our daily business and leakage of such data may violate laws and regulations which could result in fines reputational damage and customer churn, and adversely affect our business.

In the normal course of our business, we accumulate, store and use data which is protected by data protection laws. The data protection authorities in the jurisdictions in which we operate have the right to audit us and impose fines if they find we have not complied with the applicable laws and adequately protected customer data. Although we take precautions to protect customer data in accordance with the applicable privacy requirements, it is possible that sensitive data may leak in the future due to human error, technological failure, database piracy or security breaches or other circumstances. We cooperate with third-party service providers, for instance for the provision of call center services, and independent sales agents, and we cannot exclude the possibility that such third parties could also experience system failures involving the storage or transmission of proprietary information. In addition, although the terms of our contracts restrict the usage of customer data, we cannot guarantee that they will abide by the contractual terms. Violation of data protection laws by such third-party or by ourselves may result in fines, reputational damage and customer churn as well as the misappropriation of confidential information, interruptions in our operations, and damage to computers, and may adversely affect our business, financial condition and results of operations.

We may be exposed to database piracy or other database security breaches which could result in the leakage and unauthorized dissemination of information about our subscribers, including their names, addresses, home phone numbers, individual tax numbers and other personal data. Furthermore, the breach of security of our database and illegal sale or other unauthorized release of our subscribers’ personal information could materially adversely impact our reputation, prompt lawsuits against us by individual and corporate subscribers, lead to violations of data protection laws and adverse actions by the telecommunications regulators and other authorities, lead to a loss in subscribers and hinder our ability to attract new subscribers. If severe customer data security breaches are detected, regulatory authority can sanction us, and such sanction can include suspension of operations for some time period. In addition, we may be exposed to cyber-attacks, which could result in equipment failures or disruptions in our operations. Our inability to operate our network as a result of such events may result in significant expense or loss of market shares. These factors, individually or in the aggregate, could have a material adverse effect on our business, financial condition, and results of operations.

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We are subject to European data protection laws and regulations. These laws and regulations regulate numerous important aspects of our business and place material constraints on our interactions with consumers. The General Data Protection Regulation (Regulation EU/2016/679, “GDPR”), entered into force on May 25, 2018 and covers legal areas relating to the protection as well as the free movement of personal data and provides for potential penalties of up to €20 million or 4% of total worldwide annual turnover for cases of non-compliance. As data protection authorities continue to release guidance on the implementation of GDPR obligations, the legal framework will evolve and best-practice examples will continue to emerge and may require us to adapt our policies in compliance. GDPR requires us to ensure that data minimization is embedded across the Group so that only the appropriate amount of data required for any particular purpose is processed, that we delete any unnecessary datasets, and that we anonymize data wherever possible. The implementation of these obligations creates increased compliance risk that may lead to regulatory intervention. For example, in 2018 Telemach Slovenia was subject to proceedings initiated by AKOS concerning the storage of traffic data relating to prepaid users and the implementation of measures for the timely deletion of, and prevention of unauthorized access to, subscriber data which could have resulted in a fine ranging between €50,000 and €400,000. In these proceedings, Telemach Slovenia was found to be compliant. In addition, any irregularities could expose us to claims for damages by subscribers.

Furthermore, we provide mobile, broadband and landline voice services to a number of public and private financial institutions, government entities and corporate customers with data security requirements. These customers may continue to increase their data security requirements, and we may be required to undertake additional investments in order to adhere to these enhanced data security requirements, as well as evolving statutory and regulatory requirements, including obtaining and maintaining certain ISO certifications, improving access rights management systems and developing a corporate data encryption infrastructure. As a result, we may undertake additional capital expenditure to satisfy data security requirements. If we are unable to satisfy such data security requirements, customers could decide to terminate their contracts with us, and such terminations may have a material adverse effect on our business, financial condition, and results of operations.

We are involved in a number of civil, administrative and criminal legal proceedings which, if adversely determined, could have a material adverse effect on our financial position and profitability, or could lead to reputational damage that could have a material impact on our business.

From time to time, we may become involved in legal or regulatory proceedings, claims or investigations, including by governmental bodies, licensing authorities, customers, suppliers, competitors, former employees, class action plaintiffs and others. Should any of these matters be decided against us, it could have a material adverse impact on our ability to conduct our business and on our financial condition. On an ongoing basis, we attempt to assess the likelihood of any adverse judgments or outcomes to these proceedings or claims,

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and to take all necessary steps to adequately defend our interests, although it is difficult to predict final outcomes with any degree of certainty and we can offer no assurances in this regard.

We are currently involved in a number of legal proceedings that have arisen in the ordinary course of our business, including disputes related to intellectual property rights.

From time to time, we may also become involved in litigation matters pending against entities that we acquire. For example, KATV HS d.o.o. and HKB-net d.o.o., two small cable operators in Bosnia and Herzegovina that we acquired in July 2015 are subject to disputes with their minority shareholders relating to a prior sale of these companies. This claim is in the preliminary stages. The outcome of these disputes is difficult to anticipate and could have an adverse effect on our financial position and profitability if the final, non-appealable judgments in these matters are not consistent with our current expectations.

Further, Telemach Slovenia, as successor to Tušmobil, which we acquired in April 2015, has had certain criminal proceedings pending against it and its then owner Mirko Tuš since 2015. A final court decision in February 2019 recognized that the statute of limitations had expired for Telemach Slovenia. Although following this decision Telemach Slovenia can no longer be found to be criminally liable, Telemach Slovenia may still be required to make an indemnification payment as a recipient of an alleged illegal benefit, if any of the other alleged offenders (against whom the criminal proceedings are still continuing) are found to be criminally liable. The outcome of these proceedings, although difficult to predict, could have a material adverse effect on our financial position and profitability if the final, non-appealable judgment in this matter is not consistent with our current expectations, and we are not able to successfully recover such amounts from Tušmobil’s seller. In addition, Telemach Slovenia had certain administrative proceedings against it in which the grant of a block of spectrum which we use for part of our 3G mobile services was successfully challenged in front of the Slovenian administrative court, and which is expected to be subject to a new competitive tender process. We may not be successful in the subsequent tender for this block of spectrum or we may need to pay a fee or rent for use of the spectrum. Either of these outcomes or similar outcomes could adversely affect our financial position and profitability.

Additionally, Nova TV d.d. is subject to ongoing litigation and investigations, which if decided against it may have an adverse effect on our business. The agreement with respect to the Nova Croatia Acquisition does not provide us with an indemnity in the event of potential remedies related to any ongoing litigation and investigations in connection with such acquisitions.

We cannot assure you that the costs, charges, liabilities or other regulatory outcomes associated with these matters will not be material, or that those costs, charges, liabilities or regulatory outcomes will not exceed any amounts reserved for them in our financial statements. In future periods, we could be subject to cash costs or non-cash charges to

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earnings if any of these matters are resolved unfavorably to us. Additionally, any reputational damage associated with such legal or regulatory proceedings could have a material impact on our business.

Our intellectual property rights and other security measures may not fully protect our operations.

Some of our products contain proprietary or licensed content that is transmitted through our pay-TV channels. We rely on trademark, copyright and other intellectual property laws to establish and protect our rights to this content. However, our intellectual property rights and other security measures may not fully protect our operations, and we cannot guarantee that the intellectual property rights we rely on will not be challenged, invalidated or circumvented. Further, we cannot guarantee that we will be able to renew our rights to such content when the term of protection for any such trademark or copyright expires, and any failure to protect our content, technology and know how could result in loss of customers to our competitors and decreased profits.

Even if our intellectual property rights remain intact, we cannot assure you that security and anti-piracy measures will prevent unauthorized access to our services and piracy of our content. Third parties may be able to copy, infringe or otherwise profit from our proprietary and licensed content, without our, or the respective right holders’, authorization. The risk of piracy is especially acute in our pay-TV business segment. Media piracy occurs in many parts of the world, including South Eastern Europe, and is facilitated by technological advances and the conversion of media content into digital formats, which makes it easier to create, transmit and share high quality unauthorized copies, on videotapes and DVDs, from pay-per-view through set-top boxes and through unlicensed broadcasts on free-to-air TV and the internet. In addition, the lack of internet-specific legislation relating to trademark and copyright protection creates additional challenges for us in protecting our intellectual property rights in cyberspace. The unauthorized use of our intellectual property may adversely affect our business by harming our reputation and by decreasing the confidence our business partners rest in our ability to protect our proprietary and licensed content.

If third parties claim that we breached their intellectual property rights, we may be forced to make significant expenditures to either defend ourselves against such claims, license rights to the third-party’s technology or to identify ways to conduct our operations without breaching such rights.

The success of our business depends to an extent on the use of intellectual property rights, in particular rights to advanced technological solutions, software and programming content. We cannot guarantee that we have not breached or that we will not in the future breach the intellectual property rights of third parties. Any alleged breach could expose us to liability claims from third parties. In addition, we might be required to obtain a license or acquire new solutions that allow us to conduct our business in a manner that does not breach

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such third-party rights and we may be forced to expend significant time, resources and money in order to defend ourselves against such allegations. The diversion of management’s time and resources along with potentially significant expenses that could be involved could materially adversely affect our business, financial condition, results of operations and prospects.

We are subject to increases in operating costs and inflation risks which may adversely affect our earnings.

We are subject to increasing operating costs. We are also impacted by inflationary increases in salaries, wages, benefits and other administrative costs. While we aim to increase our subscription rates to offset increases in operating costs, we may not be successful in doing so. For example, see “-We may become subject to more extensive regulation due to our scale.” Price increases are also associated with expenses, in particular, service costs. As a result, our operating costs may increase faster than associated revenues, resulting in a material adverse effect on our business, financial condition and results of operations.

We may be adversely affected by changes to tax legislation or its interpretation or increases in effective tax rates in the jurisdictions in which we operate.

We are subject to taxation in multiple jurisdictions, in particular, in the Netherlands, Luxembourg, Slovenia, Serbia, Bosnia and Herzegovina, and Montenegro. Our effective tax rate and tax liability will be affected by a number of factors in addition to our operating results, including the amount of taxable income in particular jurisdictions, the tax rates in those jurisdictions, tax treaties between jurisdictions, the manner in which, and extent to which, we transfer funds to and repatriate funds from our subsidiaries, accounting standards and changes in accounting standards, and future changes in the law. If the Group’s tax positions are challenged by relevant tax authorities, the imposition of additional taxes could require the Group to pay taxes that the Group currently does not collect or pay or increase the costs of the Group’s services to track and collect such taxes, which could increase the Group’s costs of operations or the Group’s effective tax rate and have a negative effect on the Group’s business, financial condition and results of operations. For example, the Serbian Ministry of Finance Tax Authority (the “Serbian Tax Authority”) recently conducted a tax investigation of SBB Serbia for the year ended December 31, 2012 and issued a penalty of €21 million which has been deferred pending an appeal. See “Business—Legal Proceedings—Investigation by Serbian Tax Authority.” As we operate in more than one tax jurisdiction and may therefore incur losses in one jurisdiction that cannot be offset against income earned in a different jurisdiction, we may pay income taxes in one jurisdiction for a particular period even though on an overall basis we incur a net loss for that period. In addition, the tax systems in the markets in which we operate are unpredictable, which gives rise to uncertainties in our tax planning. The occurrence of any of the foregoing tax risks could have a material adverse effect on the Group’s business, financial condition and results of operations.

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A substantial portion of our assets are represented by goodwill, and we may never realise the full value thereof or we may be required to write down the value of our goodwill.

Total goodwill of the Company, which represents the excess of cost over the fair value of the net assets of the businesses we acquire, was € 766.3 million, or 37% of the Company’s total assets, as at December 31, 2019. We perform goodwill impairment testing on an annual basis, and no impairment losses were recognized in the year ended December 31, 2019, while we incurred impairment loses on goodwill of €9.3 million in the year ended December 31, 2018. If we were to conclude that a future write down of our goodwill is necessary, we would have to record the appropriate charge, which could result in a material adverse effect on results of operations. A write-down of our goodwill may result from, amongst other things, deterioration in our performance or a decline in expected future cash flows.

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Appendix 10 – Material Debt Instruments (Other than the Notes)

Revolving Credit Facility Agreement

Overview and Structure

On July 13, 2017, the Parent and certain of its subsidiaries entered into a super senior revolving credit facility agreement (the ‘‘Existing Revolving Credit Facility Agreement’’) with, among others, UniCredit Bank AG, London Branch as facility agent, UniCredit Bank AG, London Branch as English security agent, UniCredit Bank Serbia JSC Belgrade as Serbian security agent, UniCredit Bank Serbia JSC Belgrade as payment agent and the financial institutions named therein as arrangers and lenders. In connection with the 2019 Refinancing, pursuant to an additional facility notice dated May 3, 2019, the Company received additional commitments from certain Existing Revolving Credit Facility Lenders in an aggregate amount equal to €100 million in relation to the Existing Revolving Credit Facility, increasing the commitments under the Existing Revolving Credit Facility from €100 million to €200 million with effect from May 14, 2019. Certain Existing Revolving Credit Facility Lenders have agreed to extend the maturity of the Existing Revolving Credit Facility to July 15, 2025 (with such maturity automatically being reduced to (i) February 1, 2024, if the Existing 2024 Notes are not fully refinanced by such date or (ii) February 15, 2025, if the Existing Floating Rate Notes are not fully refinanced by such date). In addition, following receipt of additional commitments from certain Existing Revolving Credit Facility Lenders, the Existing Revolving Credit Facility Agreement will provide for a €250 million super senior revolving credit facility (the ‘‘Existing Revolving Credit Facility’’), conditioned on completion of the Vivacom Acquisition within a specified timeframe.

The Existing Revolving Credit Facility may be utilized by any current or future borrower thereunder in euros, U.S. dollars and (other than in respect of loans by a Serbian Lender (as defined below)), Sterling or any other currency which is readily available and freely convertible into euro, by the drawing of cash advances, the issuance of letters of credit, bank guarantees and/or the establishment of ancillary facilities. The Existing Revolving Credit Facility may be used for (directly or indirectly) financing or refinancing the general corporate purposes and/or working capital requirements of the Group (including, for the avoidance of doubt, capital expenditure and/or acquisitions).

In addition to the Existing Revolving Credit Facility, the Existing Revolving Credit Facility Agreement includes the ability to incur additional facilities either as new facilities or additional tranches of the Existing Revolving Credit Facility subject to certain conditions being met.

The final maturity date of the Existing Revolving Credit Facility following the Existing Revolving Credit Facility Extension and 2020 Increase is July 15, 2025 (with such maturity automatically being reduced to (i) February 1, 2024, if the Existing 2024 Notes are not fully refinanced by such date or (ii) February 15, 2025, if the Existing Floating Rate Notes are not

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fully refinanced by such date) (the ‘‘Maturity Date’’), and the Existing Revolving Credit Facility may be utilized until the date falling one month prior to the Maturity Date.

Interest and Fees

Loans under the Existing Revolving Credit Facility Agreement will initially bear interest at rates per annum equal to LIBOR or, for loans denominated in euro, EURIBOR, plus a margin of 3.50% per annum (which is subject to reduction in accordance with a ratchet linked to the leverage ratio). Loans made by a Serbian Lender to a Serbian Borrower will bear an additional margin of 1.10% per annum.

A commitment fee is payable on the aggregate undrawn and uncancelled amount of the Existing Revolving Credit Facility until the end of the availability period for the Existing Revolving Credit Facility at a rate of 35% of the margin applicable to the Existing Revolving Credit Facility from time to time. Default interest is calculated as an additional 1% on the overdue amount.

Guarantees and Security

The Existing Revolving Credit Facility is required to be guaranteed by each Material Subsidiary (defined to include any member of the Group with more than 5% of the consolidated EBITDA calculated on a last twelve-months basis or gross assets of the Group) and additional members of the Group required to ensure that guarantors represent at least 80% of the consolidated EBITDA of the Group calculated on a last twelve-months basis and 80% of the gross assets of the Group subject to and in accordance with the agreed security principles set out in the Existing Revolving Credit Facility Agreement.

The Existing Revolving Credit Facility is secured by certain material assets of such guarantors subject to and in accordance with the agreed security principles set out in the Existing Revolving Credit Facility Agreement.

The agreed security principles in the Existing Revolving Credit Facility Agreement provide that certain assets will not be pledged (or the liens not perfected):

 if providing such security would be prohibited by general statutory limitations, financial assistance, capital maintenance, corporate benefit, fraudulent preference, ‘‘earnings stripping,’’ ‘‘controlled foreign corporation’’ or ‘‘thin capitalization’’ rules, tax restrictions, retention of title claims and similar matters or providing security would be outside the applicable pledgor’s capacity or conflict with fiduciary duties of directors or cause material risk of personal or criminal liability after the use of reasonable endeavors to overcome such obstacle;  if the cost of providing security is not proportionate to the benefit accruing to the lenders;

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 if there is material incremental cost involved in creating security over all assets of the entity in question (the ‘‘Relevant Entity’’) in a particular category of assets, only the material assets in that category will be subject to security;

 if certain security may be provided by the Relevant Entity granting a promise to pledge coupled with an irrevocable power of attorney as opposed to a definitive legal mortgage or pledge over the relevant asset;

 if it is expressly acknowledged that it may be either impossible or impractical to create security over certain categories of assets, security will not be taken over such assets;

 if providing such security requires consent before such assets may be secured or where providing such security would give a third-party the right to terminate or otherwise amend any rights, benefits and/or obligations of the borrower, guarantors or any of its subsidiaries in respect of those assets or require any of them to take any action materially adverse to their interests and where (subject to certain conditions being met) such consent cannot be obtained after the use of reasonable endeavors;

 if providing such security would have a material adverse effect (as reasonably determined in good faith by such subsidiary) on the ability of such subsidiary to conduct its operations and business in the ordinary course as otherwise permitted by the indenture and any requirement under the agreed security principles to seek consent of any person or take or not take any other action shall be subject to this principle;

 if the aggregate of notarial costs and all registration and like taxes relating to the provision of security exceeds an agreed amount;

 if the assets are, or the relevant member of the Group is, located outside the security jurisdictions, which are Slovenia, Bosnia and Herzegovina, the Netherlands and Luxembourg;

 in the case of security from or over, or over assets of, any joint venture or similar arrangement, any minority interest or any entity that is not wholly-owned; and

 in the case of assets subject to security in favor of a third-party. Representations and Warranties

The Existing Revolving Credit Facility Agreement contains certain customary representations and warranties (subject to customary qualifications and with certain representations and warranties being repeated).

Covenants

The Existing Revolving Credit Facility Agreement contains certain of the incurrence covenants and related definitions (with certain adjustments) that are set forth in the indenture governing the Existing Notes. In addition, the Existing Revolving Facility Agreement requires

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the Group to comply with a springing financial covenant consisting of a maximum net Leverage Ratio, subject to a drawstop in case of breach.

Events of Default

The Existing Revolving Credit Facility contains events of default which are, with certain adjustments, the same as those applicable to the Notes and set forth in the section entitled ‘‘Description of the Notes—Events of Default.’’ These events of default (which are subject to certain materiality exceptions and cure periods) entitle the Majority Lenders (as defined therein) to accelerate all or part of the utilization and terminate their commitments and to enforce the guarantees and security under or in relation to the Existing Revolving Credit Facility.

Slovenian loan facility

On August 26, 2015, Telemach Slovenia, as borrower, entered into a term loan agreement in the principal amount of €7,870,000 with Nova Ljubljanska banka d.d. (‘‘NLB’’), as lender. The proceeds of this loan were used to finance the purchase of the Group’s headquarters in Slovenia in August 2015. The loan bears interest at a rate per annum equal to one-month Euribor plus a margin of 3.40%, with a minimum interest rate per annum of 3.40%. Telemach Slovenia is required to repay the loan in full in forty-nine consecutive monthly instalments, forty-eight of which are required to be in the amount of €72,202 and the final instalment is required to be in the amount of €4,404,304. The agreement allows for an interest payment holiday of one year. The loan is required to be repaid in full in August 2020.

As security for the loan, Telemach Slovenia has provided a pledge over the building purchased from the proceeds of the loan and, by way of additional support, has provided ten blank promissory notes to NLB.

This loan agreement allows for voluntary repayments of outstanding borrowings subject to the delivery of a prepayment notice thirty business days prior to the date of such repayment. A prepayment fee of 0.75% of the prepayment amount (for three to five years from the drawing of the loan) would apply in the event of a voluntary prepayment.

The loan agreement contains customary representations and warranties and certain restrictive covenants. Under the terms of the loan agreement, without the prior consent of NLB, Telemach Slovenia may not grant new loans, give sureties to third persons, dispose of its property other than in the ordinary course of its business or otherwise sell assets for less than their book value. This loan is also subject to certain financial covenants. For example, Telemach Slovenia is required to maintain a percentage of capital to assets equal to, or greater than, 20% and to maintain a net leverage ratio of less than, or equal to, 4.5x.

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Serbian revolving facilities

Raiffeisen facility-€20,000,000

SBB Serbia entered into a €20 million Serbian law governed revolving credit facility agreement (the ‘‘€20 million Serbian Revolving Credit Facility Agreement’’) dated May 9, 2016 and as amended on March 7, 2017 (and as amended and/or amended and restated from time to time) with Raiffeisen banka a.d. Beograd (‘‘Raiffeisen’’). As support for this loan, SBB Serbia delivered to Raiffeisen five blank bills of exchange accompanied by authorizations for collecting under these bills of exchange. The loan provides for additional support to be delivered upon request.

The revolving facility made available pursuant to the €20 million Serbian Revolving Credit Facility Agreement (the ‘‘€20 million Serbian Revolving Credit Facility’’) may be utilized either in foreign currency or in euro (or in the Serbian dinar equivalent of euro). The €20 million Serbian Revolving Credit Facility may be used for the financing of general corporate and working capital purposes. The €20 million Serbian Revolving Credit Facility is available to SBB Serbia until August 31, 2020 and terminates on September 30, 2020, upon which date SBB Serbia is required to repay the loan in full by way of a bullet payment.

Foreign currency denominated loans under the €20 million Serbian Revolving Credit Agreement bear interest at a rate per annum equal to one-month EURIBOR plus a margin of 2.75%, or at a rate per annum of 2.9%. The election between fixed and variable interest rate is to be specified by the SBB Serbia in each drawdown notice. Dinar denominated loans under the €20 million Serbian Revolving Credit Agreement bear interest at a rate per annum equal to one-month BELIBOR plus a margin of 1.6% per annum. Interest is payable monthly.

The €20 million Serbian Revolving Credit Facility Agreement allows for voluntary repayments of outstanding borrowings subject to the delivery of a prepayment notice three business days prior to the date of such repayment. A prepayment fee of 1% of the prepayment amount applies if the requisite prepayment notice is not provided.

The €20 million Serbian Revolving Credit Facility Agreement contains certain customary representations (subject to certain exceptions and qualifications and with certain representations being repeated), including, but not limited to, status and incorporation, capacity and authority, authorizations, consents and third-party claims and provides for certain customary events of default including cross defaults. The €20 million Serbian Revolving Credit Facility Agreement requires SBB Serbia to maintain certain bank accounts in specified currencies. SBB Serbia is also required to (i) channel at least 50% of its Serbian dinar inflows based on the collection of receivables to the account it holds with the Serbian Lender and to deposit with Raiffeisen at least 50% of the total Serbian dinar-denominated deposits, if any and (ii) channel at least 50% of its foreign currency transactions, including foreign currency inflow based on the collection of receivables to the account it holds with Raiffeisen and to deposit with Raiffeisen at least 50% of the total foreign currency-denominated deposits, if any. SBB Serbia is also required, among other things, to provide annual reports; allow access

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to its business books following a request from Raiffeisen; allow representatives of Raiffeisen to perform specified control procedures with respect to any utilization of the €20 million Serbian Revolving Credit Facility in order to determine whether it has been used for intended purposes; and to comply with certain intercompany subordination obligations.

Without the prior consent of Raiffeisen, SBB Serbia is restricted from, among other things, entering into any other loan facility, creating any encumbrance on its present or future assets in Serbia, changing (directly or indirectly) its existing ownership structure and acquiring stakes or shares in other companies.

UniCredit Facility—€10,000,000

SBB Serbia entered into a €10 million facility with UniCredit Bank Serbia JSC Belgrade on January 24, 2019 (the ‘‘UniCredit Revolving Credit Facility’’). This facility is available as a revolving line and is approved in euros, however payment and repayment may be made in Euros (in cases permitted under applicable FX regulations) or in Serbian dinars in which case applying the middle exchange rate of the National Bank of Serbia on the date of payment or repayment, as applicable. Credit under the facility will be available until January 23, 2022. The availability period may be extended based on written application made 15 days prior the expiration of the facility agreement. If the extension is approved, SBB Serbia is obligated to pay a fee of 0.10% of the entire amount under the facility agreement.

This facility may be used for general corporate purposes including working capital financing and mergers and acquisitions. As security under this facility agreement, SBB Serbia provided five signed blank bills of exchange and a corporate guarantee issued in favor of UniCredit Bank Serbia JSC Belgrade by Adria Midco. The interest rate of this facility is equal to the six-month Euribor rate plus 2.50% per annum paid monthly. SBB Serbia also paid a one-time fee equal to 0.10% of the entire amount of the line. The final repayment date of the facility is January 24, 2022.

Within the availability period, SBB Serbia is, inter alia, obligated not to initiate any dissolution proceedings without delivering prior notice and receiving approval. This facility contains a change of control provision that imposes an obligation on SBB Serbia not to change the ownership structure without prior consent of the lender under this facility, such that Adria Serbia Holdco B.V. directly or indirectly ceases to own 100% of the shares in SBB Serbia and Adria Midco ceases to directly or indirectly own at least 51% of the voting shares.

Eurobank Facility—€20,000,000

A €20 million facility with Eurobank a.d. Beograd (the ‘‘Eurobank Revolving Credit Facility’’). This facility consists of two credit line agreements in an aggregate amount not to exceed the dinar equivalent (applying the middle exchange rate of the National Bank of Serbia on the day of disbursement) of €10 million which SBB Serbia entered into on June 21, 2018 with the repayment period for any loan made under these agreements not to exceed 24 months from the date of the agreements. Interest for loans made under these agreements is

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calculated at a rate equal to the sum of the applicable three month Euribor rate and 2.35% for the line of credit denominated in the dinar equivalent of €10 million and at a rate equal to the sum of the applicable three month Belibor rate and 1.45% for the line of credit denominated in RSD. As security, SBB Serbia delivered twenty blank bills of exchange accompanied by authorizations for collecting under these bills of exchange. Pursuant to the credit line agreements, the Company also issued a corporate guarantee in the amount of €10 million which covers SBB Serbia’s liabilities towards the lender which will remain valid until the full settlement of all of SBB Serbia’s obligations under the credit line agreements. The facility also contains a change of control provision that imposes an obligation on SBB Serbia to notify the lender of any change of 50% ownership or more, unless the acquirer is the Company or its affiliate, within 30 days of such change. If the lender determines that the new shareholder does not have the required creditworthiness, it can accelerate loans drawn under the credit line. The line of credit denominated in the dinar equivalent was amended at the date August 1st 2019 to for additional €10 million to the total amount of €20 million with change of interest rate to the sum of the applicable three month Euribor rate and 2.55% with the same availability period. Pursuant to this amendment, SBB Serbia provided a new corporate guarantee issued in favor of Eurobank Serbia Belgrade by Adria Midco to the amount of €20 million which covers SBB Serbia’s liabilities towards the lender which will remain valid until the full settlement of all of SBB Serbia’s obligations under the credit line agreement. Erste Bank Facility—€4,600,000

A €4,600,000 facility with Erste Bank a.d. Novi Sad. The facility is a credit line agreement in an aggregate amount not to exceed the dinar equivalent (applying the middle exchange rate of the National Bank of Serbia on the day of disbursement) of €4,600,000, which Direct Media entered into on June 18, 2018 (as subsequently amended on June 21, 2018) extending until March 21, 2023. Interest is calculated at a rate equal to the sum of the applicable one-month Euribor rate and 3.95%. As security, Direct Media delivered ten blank bills of exchange accompanied by authorizations for collecting under these bills of exchange, a pledge over all existing and future receivables of Direct Media under a business cooperation agreement with another entity and a pledge over all existing and future receivables of Direct Media under a business cooperation agreement with Media Point d.o.o. Beograd. Other loan facilities

We have certain other loan facilities with local banks and certain other guarantees to fund acquisitions and for general business purposes, including but not limited to, the following: Intesa Loan Facility—€2,000,000

A €2,000,000 facility with Banca Intesa a.d., Beograd. The facility is a credit line agreement in an aggregate amount not to exceed the dinar equivalent (applying the middle exchange rate of the National Bank of Serbia on the day of disbursement) of €2,000,000, which Direct Media entered into on June 25, 2019 extending until June 25, 2020. Interest is calculated at a rate equal to the sum of the applicable one-month Euribor rate and 2.20%. As

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security, Direct Media delivered four blank bills of exchange accompanied by authorizations for collecting under these bills of exchange. Intesa Loan Facility—€120,000

A €120,000 facility with Banca Intesa a.d., Beograd. The facility is a credit line agreement in an aggregate amount not to exceed the dinar equivalent (applying the middle exchange rate of the National Bank of Serbia on the day of disbursement) of €120,000 which Big Print entered into on July 3, 2019 extending until June 25, 2020. Interest is calculated at a rate equal to the sum of the applicable three-month Euribor rate and 3.50%. As security, Big Print delivered four blank bills of exchange accompanied by authorizations for collecting under these bills of exchange and a Corporate Guarantee given by Direct Media d.o.o. Beograd. Intercreditor Agreement

To establish the relative rights of certain of our creditors under our financing arrangements, the Parent, Adria Serbia Holdco B.V., SBB Serbia, Adria Cable B.V., Adria Media B.V., Bosnia Broadband S.à r.l., Slovenia Broadband S.à r.l., Telemach BH, Telemach Slovenia, Telemach Rotovž d.d. (now Telemach UG d.o.o.), Telemach Tabor d.d. and the Issuer (together with any other entity which accedes or otherwise becomes a party to the Intercreditor Agreement as a debtor, the ‘‘Debtors’’) entered into an Intercreditor Agreement dated July 13, 2017 (as amended from time to time), with, among others, UniCredit Bank AG, London Branch as English security agent, UniCredit Bank Serbia JSC Belgrade as Serbian security agent and UniCredit Bank Serbia JSC Belgrade as Payment Agent. The Trustee in respect of the SSN Notes shall accede to the intercreditor agreement as a Senior Notes Trustee on the Issue Date.

The Intercreditor Agreement is governed by English law and sets out, among other things, the relative ranking of certain indebtedness of the Debtors, the relative ranking of certain security granted by the collateral providers, when payments can be made in respect of certain debt of the Debtors, when enforcement action can be taken in respect of that indebtedness, the terms pursuant to which certain of that indebtedness will be subordinated upon the occurrence of certain insolvency events and turnover provisions.

Due to, among other things, restrictions under Serbian law, the Intercreditor Agreement provides for the appointment of a security agent in relation to the Security Documents governed by the laws of Serbia and a security agent in relation to the Security Documents not governed by the laws of Serbia.

The Intercreditor Agreement additionally provides for Hedge Counterparties and Operating Facility Lenders to receive guarantees and indemnities from the Debtors on substantially the same terms (including the relevant limitations) as such guarantees and indemnities are provided by the obligors to the finance parties under the Senior Facilities Agreement.

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