Telewest Communications Plc Chosen Provider of Multiple Broadband Services to Homes and Businesses in Our
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TELEWEST COMMUNICATIONS PLC CHOSEN PROVIDER OF MULTIPLE BROADBAND SERVICES TO HOMES AND BUSINESSES IN OUR AREAS, FIRST TO LAUNCH UNMETERED INTERNET ACCESS, LARGEST WALLED GARDEN SERVICE IN THE UK, FOCUS ON INTERACTIVE TV DEVELOPMENT, EUROBELL ACQUIRED NOVEMBER 2000 BRINGING NUMBER OF HOMES PASSED TO 4.9 MILLION, STATE-OF-THE-ART NETWORK, TOP QUALITY BRANDED CONTENT, RAPID DATA TRANSMISSION AND REMOTE HOSTING, BROADBAND REVOLUTION, FULLY FUNDED BUSINESS PLAN, BLUEYONDER AVAILABLE ACROSS OUR REGIONS, DEVELOPING A TRULY INNOVATIVE GAME PRODUCT, HIGHEST INDUSTRY REVENUE PER HOUSEHOLD, 65% DUAL PENETRATION, 35% HOUSEHOLD PENETRATION REPRESENTING 1.7 MILLION HOMES, ADDED 217,000 INTERNET SUBSCRIBERS DURING 2000, BLUEYONDER HI-SPEED WILL REVOLUTIONISE CONSUMER INTERNET EXPERIENCE, TRANSFORMING FROM TRADITIONAL TELECOM OPERATOR TO TOTAL BUSINESS COMMUNICATIONS PROVIDER, OFFERING ENHANCED TELEPHONY SERVICES USING OUR INTELLIGENT NETWORK, ONE OF THE LARGEST COMPETITORS TO BT IN THE UK BUSINESS MARKET PLACE, FLEXTECH LARGEST SUPPLIER OF BASIC PAY-TV, 18.5 MILLION CUSTOMERS CHOOSE TO VIEW OUR CHANNELS EVERY WEEK, DRIVING DEVELOPMENTS OF CROSS PLATFORM ENTERTAINMENT SERVICES, CREATING THE NEXT WAVE OF MULTIMEDIA BROADBAND CONTENT, SERVICES AND APPLICATIONS, BROADBAND GAMES, STRONG GROWTH FROM UKTV, FLEXTECH ACHIEVED RECORD YEAR IN AUDIENCE DELIVERY, ACTIVE DIGITAL BEST VALUE BUNDLED DIGITAL TV AND TELEPHONE, INTERACTIVE GAMES SHOWCASE UNIQUE BENEFITS OF DIGITAL TV, BROADBAND PROVIDER OF CHOICE, MULTIPLE BROADBAND SERVICES, BLUEYONDER HI-SPEED INTERNET, PERMANENT CONNECTION, ALWAYS-ON, WALLED GARDEN INTERACTIVE TELEVISION, FREE TV E-MAIL, ACCESS TO SHOPPING, GAMES AND INFORMATION SERVICES THROUGH THE TV, DIGITAL TV SERVICES, RESIDENTIAL TELEPHONY, UNMETERED DIAL-UP INTERNET ACCESS – SURFUNLIMITED, OVER 150 LEADING BRANDS, IN OUR TV WALLED GARDEN SERVICE HIGH BANDWIDTH FIBRE-COAXIAL NETWORK, MULTI-FIBRE OPTIC NATIONAL BACKBONE NETWORK, RAPID TWO WAY DATA TRANSFER, 4.9 MILLION HOMES PASSED, 425,000 BUSINESSES PASSED, 1.7 MILLION RESIDENTIAL CUSTOMERS, 66,500 BUSINESS CUSTOMERS TAKING 366,000 BUSINESS LINES, 1.5 MILLION TELEPHONE CUSTOMERS, 1.2 MILLION CABLE TELEVISION CUSTOMERS, 287,000 INTERNET CUSTOMERS, UKTV JOINT VENTURE WITH THE BBC, COMBINATION OF BROADBAND NETWORK AND CONTENT, PORTFOLIO OF CHANNELS AND WEBSITES, 9.6 MILLION FLEXTECH SUBSCRIBERS, BROADBAND CONTENT OWNERSHIP, STATE-OF-THE-ART BROADBAND INTERACTIVE NETWORK, DEVELOPMENT OF NEXT GENERATION BROADBAND SERVICES, FOCUS ON THE CUSTOMER, WWW.TELEWEST.CO.UK R PORTFOLIO OF VOICE AND DATA PRODUCTS FOR BUSINESS CUSTOMERS, BROADBAND CABLE MODEM SERVICE FOR SMALL U O L BUSINESSES, BLUEYONDER WORKWISE, INTERACTIVE ENTERTAINMENT GUIDE, OVER £1 BILLION REVENUES 1.2 MILLION CABLE O C TELEVISION CUSTOMERS, TO SEE US IN COLOUR WWW.TELEWEST.CO.UK CHOSEN PROVIDER OF MULTIPLE BROADBAND SERVICES TO HOMES AND BUSINESSES IN OUR AREAS, FIRST TO LAUNCH UNMETERED INTERNET ACCESS, LARGEST WALLED GARDEN SERVICE IN THE UK, FOCUS ON INTERACTIVE TV DEVELOPMENT, EUROBELL ACQUIRED NOVEMBER 2000 BRINGING NUMBER OF HOMES PASSED TO 4.9 MILLION, STATE-OF-THE-ART NETWORK, TOP QUALITY BRANDED CONTENT, RAPID DATA TRANSMISSION AND REMOTE HOSTING, TO SEE US IN IN US SEE TO BROADBAND REVOLUTION, FULLY FUNDED BUSINESS PLAN, BLUEYONDER AVAILABLE ACROSS OUR REGIONS, DEVELOPING A TRULY INNOVATIVE GAME PRODUCT, HIGHEST INDUSTRY REVENUE PER HOUSEHOLD, 65% DUAL PENETRATION, 35% HOUSEHOLD PENETRATION REPRESENTING 1.7 MILLION HOMES, ADDED 217,000 INTERNET SUBSCRIBERS DURING 2000, BLUEYONDER HI-SPEED WILL REVOLUTIONISE CONSUMER INTERNET EXPERIENCE, TRANSFORMING FROM TRADITIONAL TELECOM OPERATOR TO TOTAL BUSINESS COMMUNICATIONS PROVIDER, OFFERING ENHANCED TELEPHONY SERVICES USING OUR INTELLIGENT NETWORK, ONE OF THE LARGEST COMPETITORS TO BT IN THE UK BUSINESS MARKET PLACE, FLEXTECH LARGEST SUPPLIER OF BASIC PAY-TV, 18.5 MILLION CUSTOMERS CHOOSE TO VIEW OUR CHANNELS EVERY WEEK, DRIVING DEVELOPMENTS OF CROSS PLATFORM ENTERTAINMENT SERVICES, CREATING THE NEXT WAVE OF MULTIMEDIA BROADBAND CONTENT, SERVICES AND APPLICATIONS, BROADBAND GAMES, STRONG GROWTH FROM UKTV, FLEXTECH ACHIEVED RECORD YEAR IN AUDIENCE DELIVERY, ACTIVE DIGITAL BEST VALUE BUNDLED DIGITAL TV AND TELEPHONE, INTERACTIVE GAMES SHOWCASE UNIQUE BENEFITS OF DIGITAL TV, BROADBAND PROVIDER OF CHOICE, MULTIPLE BROADBAND SERVICES, BLUEYONDER HI-SPEED INTERNET, PERMANENT CONNECTION, ALWAYS-ON, WALLED GARDEN INTERACTIVE TELEVISION, FREE TV E-MAIL, ACCESS TO SHOPPING, GAMES AND INFORMATION SERVICES THROUGH THE TV, DIGITAL TV SERVICES, RESIDENTIAL TELEPHONY, UNMETERED DIAL-UP INTERNET ACCESS – SURFUNLIMITED, OVER 150 LEADING BRANDS, IN OUR TV WALLED GARDEN SERVICE HIGH BANDWIDTH FIBRE-COAXIAL NETWORK, MULTI-FIBRE OPTIC NATIONAL BACKBONE NETWORK, RAPID TWO WAY DATA TRANSFER, 4.9 MILLION TO SEE US IN COLOUR WWW.TELEWEST.CO.UK HOMES PASSED, 425,000 BUSINESSES PASSED, 1.7 MILLION RESIDENTIAL CUSTOMERS, 66,500 BUSINESS CUSTOMERS TAKING 366,000 BUSINESS LINES, 1.5 MILLION TELEPHONE CUSTOMERS, 1.2 MILLION CABLE TELEVISION CUSTOMERS, 287,000 INTERNET CUSTOMERS UKTV JOINT VENTURE WITH THE BBC, COMBINATION OF BROADBAND NETWORK AND CONTENT. ANNUAL REPORT 2000 TO SEE US IN COLOUR WWW.TELEW WEST.CO.UK Financial highlights 2000 REVENUE £1.129bn EBITDA £247m MONTHLY£37.45 REVENUE PER HOUSEHOLD 1 FINANCIAL HIGHLIGHTS 2 CHAIRMAN’S STATEMENT 5 TELEWEST TODAY 6 CHIEF EXECUTIVE’S STATEMENT 18 FINANCIAL REVIEW 28 BOARD OF DIRECTORS 30 FINANCIAL STATEMENTS 1 TELEWEST IS ONE OF BRITAIN’S LEADING BROADBAND COMMUNICATIONS AND MEDIA GROUPS SERVING THE RESIDENTIAL AND BUSINESS MARKETS. THE ACQUISITION OF FLEXTECH IN APRIL 2000 MAKES US THE BIGGEST PROVIDER OF BASIC CHANNELS TO THE UK PAY-TV MARKET. IN 2000 WE HAVE MADE FURTHER PROGRESS IN TRANSFORMING THE COMPANY INTO THE BROADBAND COMMUNICATIONS PROVIDER OF CHOICE WITHIN OUR AREAS OF OPERATION WITH THE CONTINUED ROLL-OUT OF DIGITAL TV AND LAUNCH OF HI-SPEED INTERNET SERVICES. £1,129m £793m £539m 2000 WAS ANOTHER YEAR OF GROWTH FOR TELEWEST REVENUE INCREASED 42% TO £1,129 MILLION 98 99 00 £247m £222m £146m EBITDA INCREASED 11% TO £247 MILLION 98 99 00 £37.45 £34.92 £33.58 MONTHLY REVENUE PER HOUSEHOLD INCREASED 7% TO £37.45 98 99 00 Search www.telewest.co.uk/financialhighlights 2 Chairman’s Statement Cob Stenham For your attention 106 2000 was a year of change for Telewest. Change from analogue to digital as we deployed digital TV and blueyonder, our hi-speed internet service. Change as we launched the UK’s first unmetered access ISP. Change as we merged Flextech with Telewest. Any one of these would be enough to test an organisation, but to accomplish all in one year was a credit to our employees and I am pleased to say we have emerged a stronger and more confident company. Telewest is now better placed than ever to capitalise on the fast-growing demand for digital communications from both residential and business customers. The changes in technology that are hastening a broadband world are transforming the prospects of companies such as ours, even if the financial markets are currently cynical about the sector’s ability to deliver. As with all technological transformations, that process has not always been easy. Migrating analogue cable TV customers to digital has been painful at times, but we now have made 500,000 digital TV sales. Our new web-access products took time and effort to roll-out effectively, but we already have almost 300,000 dial-up internet customers and getting on for 18,000 subscribers to our blueyonder hi-speed offering, which transforms the experience of surfing the web for its users. The strength of this business is in the bundle of services we can offer our consumers. Cable is the only effective means of offering telephone, television, data and non-time-metered internet or hi-speed broadband services all in one package. This network power allows us to tap a wider range of revenue streams. For the consumer it means more choice and functionality. All our digital TV homes have access to e-mail and to the Active Digital walled garden – essentially a shopping mall with more than 150 retail brands. This allows customers sitting in front of their TV sets to e-mail, bank, shop and organise their travel. 3 8,000 more business customers UK’S LEADING PROVIDER OF BROADBAND SERVICES 6,000more residential customers The business division has also been leveraging our network to produce new and important sources of revenue. It launched its own hi-speed internet service, blueyonder workwise, in a joint venture with Cobweb, the ISP for small and medium sized businesses. This is providing high value services to those customers and has seen encouraging demand. We further demonstrated our belief in the value of UK cable businesses when we bought from Deutsche Telekom, Eurobell, the last remaining independent cable operation of significance in this country. The Eurobell franchises bring our total number of homes passed to nearly five million. The acquisition is particularly good news for our business division as it brings Gatwick airport into franchise to add to our existing coverage of Heathrow. Our content division, Flextech, has demonstrated the value of a vertically integrated 0 business, particularly as it continues to develop broadband content and interactive services. UKTV, our joint venture with the BBC, reported strong growth and in the final quarter of 2000, it turned EBITDA positive for the first time. We announced a joint venture with Vis entertainment to design, develop and commission games for the broadband and interactive digital