Telenet Opens Your World Annual Report 2005 Internet Customers (000S) Telephony Customers (000S) Revenue (In Million Euro) EBITDA (In Million Euro - US GAAP)
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THE MULTIPLE FACETS OF GROWTH Telenet opens your world Annual Report 2005 Internet customers (000s) Telephony customers (000s) Revenue (in million euro) EBITDA (in million euro - US GAAP) 624 364 737,5 330,6 528 286 681,1 299,6 235 413 230,1 187 181 502,3 301 307,1 82,6 196 104 172,3 85 -18,6 2000 2001 2002 2003 2004 2005 2000 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 Internet customers (000s) Telephony customers (000s) Revenue (in million euro) EBITDA (in million euro - US GAAP) Total iDTV boxes sold 624 364 Capital Expenditure (in million euro - US GAAP) Total debt / EBITDA ratio 737,5 18 330,6 528 16.8 286 200,5 681,1 16 299,6 100,000 235 176,7 413 14 230,1 187 181 502,3 141,5 12 301 10 307,1 82,6 Telenet in a nutshell 100,4 196 104 8 6.72 172,3 67,4 6 4.96 85 3.85 4 -18,6 2 2000 2001 2002 2003 2004 2005 2000 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 Aug 05 Sept Oct Nov Dec Jan 06 0 2001 2002 2003 2004 2005 2002 2003 2004 2005 Internet customers (000s) Telephony customers (000s) Revenue (in million euro) EBITDA (in million euro - US GAAP) Total iDTV boxes sold 624 Capital ExpenditureFinancial (in million euro364 - US GAAP) Total debt / EBITDA ratio Consortium GIMV 18 737,5 330,6 528 4.00% 9.69% 286 Other 16.8 681,1 299,6 200,5 (0.3% Suez and 0.3% banks) 16 100,000 235 413 Interkabel 176,7 230,1 Mixed 187 14 4.15% 502,3 intercommunales181 141,5 12 301 & Electrabel 16.50% 10307,1 82,6 196 104 100,4 8 6.72 172,3 6 85 67,4 4.96 3.85 -18,6 Free float 4 Liberty Global 43.91% 2 2000 2001 2002 2003 2004 2005 Consortium2000 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 Aug 05 Sept Oct Nov Dec Jan 06 21.50% 0 Total number of shares: 2001 2002 2003 2004100,204,8532005 2002 2003 2004 2005 Total iDTV boxes sold Shareholders January 2006 Financial Capital Expenditure (in million euro - US GAAP) Total debt / EBITDA ratio GIMV Consortium 18 9.69% Other 16.8 4.00% 200,5 16 (0.3% Suez and 0.3% banks) 100,000 176,7 Interkabel 14 Mixed 4.15% intercommunales 141,5 12 & Electrabel 10 16.50% 100,4 8 6.72 67,4 6 4.96 3.85 4 Free float Liberty Global 43.91% 2 Aug 05 Sept Oct Nov Dec Jan 06 Consortium 0 21.50% Total number of shares: 2001 2002 2003 2004 2005 2002 2003 2004 2005 100,204,853 Shareholders January 2006 Financial Internet Internetcustomers customers (000s) (000s) TelephonyTelephony customers customers (000s) (000s) RevenueRevenue (in million (in euro) million euro) EBITDA (inEBITDA million (in euro million - US euro GAAP) - US GAAP) GIMV Consortium 4.00% 9.69% Other 624 624 364 364 (0.3% Suez and 0.3% banks) 737,5 737,5 330,6 330,6 Interkabel 528 528 Mixed 286 286 681,1 681,1 299,6 299,6 4.15% intercommunales 235 235 413 413 230,1 230,1 & Electrabel 187 187 181 181 502,3 502,3 16.50% 301 301 307,1 307,1 82,6 82,6 196 196 104 104 172,3 172,3 Free float 85 85 Liberty Global 43.91% -18,6 -18,6 Consortium 21.50% Total number of shares: 2000 20002001 20012002 20022003 20032004 20042005 2005 2000 20002001 20012002 20022003 20032004 20042005 2005 2001 20012002 20022003 20032004 20042005 2005 2001 20012002 20022003 20032004 20042005 2005 100,204,853 Shareholders January 2006 Total iDTVTotal boxes iDTV sold boxes sold Capital ExpenditureCapital Expenditure (in million (in euro million - US euro GAAP) - US GAAP) Total debtTotal / EBITDA debt / ratioEBITDA ratio 18 18 16.8 16.8 200,5 200,5 16 16 100,000 100,000 176,7 176,7 14 14 141,5 141,5 12 12 10 10 100,4 100,4 8 8 6.72 6.72 67,4 67,4 6 6 4.96 4.96 3.85 3.85 4 4 2 2 Aug 05 AugSept 05 SeptOct OctNov NovDec JanDec 06 Jan 06 0 0 2001 20012002 20022003 20032004 20042005 2005 2002 2002 2003 2003 2004 2004 2005 2005 FinancialFinancial GIMV GIMVConsortiumConsortium 4.00% 4.00%9.69% 9.69%Other Other (0.3% Suez(0.3% and Suez 0.3% and banks) 0.3% banks) InterkabelInterkabel Mixed Mixed 4.15% 4.15% intercommunalesintercommunales & Electrabel& Electrabel 16.50% 16.50% Free floatFree float Liberty GlobalLiberty Global 43.91% 43.91% ConsortiumConsortium 21.50% 21.50% Total numberTotal numberof shares: of shares: 100,204,853100,204,853 ShareholdersShareholders January January2006 2006 > Telenet has 1,468 employees > Telenet uses 13 subcontractors who jointly employ 750 employees > Telenet works with 3,000 suppliers, over 300 media partners and 600 distributors > Telenet contacts 13,000 customers every day > Telenet has almost 200,000 unique visitors to its websites > Telenet has a turnover of 738 million euro > Telenet has 624,000 Internet customers, 364,000 telephony customers, 1,589,000 cable TV customers, 75,000 digital television customers and 176,000 ‘Triple Play’ customers > Telenet Solutions serves 893 large customers, 27,087 SMEs, 174,402 self-employed businesspeople and professionals > Telenet has 1,000 WiFi Hotspots > Telenet offered 6,000 hours of courses; over 9,000 people atten- ded our training courses > Telenet is responsible for 7 social sponsorship projects CONTENTS TELENET IN A NUTSHELL 1 THE MISSION OF TELENET 2 LETTER FROM THE CHAIRMAN AND THE CHIEF EXECUTIVE OFFICER A YEAR OF TEAMWORK AND GROWTH 6 BOARD OF DIRECTORS 8 REPORT BY THE MANAGEMENT INNOVATING, GROWING, KEEPING CUSTOMERS SATISFIED 9 Results meet objectives 11 The Management Team 12 The residential market 16 Our Telenet Solutions Division 17 Wireless data from Telenet 18 Our Strategy for 2006 20 The Financial Report 24 The Social Report and internal collaboration 24 Our organisation 26 Corporate culture 27 A company for growth 28 Safety and prevention 29 Technology for the future 32 Our customers 34 TELENET IN YOUR HOME 36 Internet 38 Telephony 40 Television 52 tELENET SOLUTIONS THE DIVISION FOR BUSINESSES, SMEs, INDEPENDENTS AND GOVERNMENT AUTHORITIES 59 tELENET WIRELESS DATA 62 CORPORATE SOCIAL RESPONSIBILITY AT TELENET ACCESSIBILITY FOR ALL 66 tHE FINANCIAL ANNUAL REPORT Mission - Vision - Strategy Our mission Telenet wants to contribute to a positive social development of people and businesses via innovative and accessible services for communication, information and leisure. Our vision As a service provider, we want to play a decisive role in the confluence of television, internet and telephone services. The development of iDTV offers all consumers access to that confluence. Our strategy Telenet seeks to respond to present and future customer needs in a reliable manner. Telenet develops high-quality products and services. We support customers so that they can live and work with ease. opmaak AR 2005 Telenet ENG.indd 1 3/5/06 12:27:34 PM Letter from the Chairman and the Chief Executive Officer A year of teamwork and growth opmaak AR 2005 Telenet ENG.indd 2 2/5/06 3:27:26 PM 005 was a satisfying and positive operational year for Telenet. In addition, financial and commercial results were in line with our forecasts. Our strategy, as explained during our stock market flotation, has been developed successfully. Telenet succeeded in achieving strong growth in turnover, EBITDA and EBIT. The number of customers rose significantly. We made substantial investments in our growth, customer service and the development of new services. The net loss before exceptional charges on debt repayments reduced further. At the end of the year, we made substantial progress towards achieving break-even profitability. In early 006, we reached the important milestone of million Internet and telephony subscribers. These subscribers are important foundations for developing our business further in the future. Our telephony business grew faster than the market. In Internet, we kept our market share virtually constant through the year. The strong service offering by Telenet for households, including our FreePhone, FreePhone Anytime, FreeSurf and ExpressNet products contributed to our expan- sion in this market. The major challenge in 005 was the introduction of Telenet Digital TV, our inter- active digital television service. The launch, which was executed simultaneously across our whole network, was an enormous operational endeavour. The transi- tion to this new era went hand in hand with the introduction of a unique, innova- tive service and the challenge of shifting a number of analogue channels to our digital offering. During January 006, we surpassed another milestone with the sale of the 00,000th Digibox for the reception of Telenet Digital TV. We were delighted with this progress. Telenet Solutions was the result of the merger between Telenet Business and Codenet. The resulting operation is based in our offices in Diegem. The team was reinforced and the product portfolio supplemented for larger companies, government and SMEs. opmaak AR 2005 Telenet ENG.indd 3 2/5/06 3:27:31 PM Letter from the Chairman and the Chief Executive Officer Digital television added a completely new business activity for Telenet Solutions. De- spite serious price erosion due to fierce competition, Telenet Solutions enjoyed ac- celerating growth towards the end of 005. Our wireless Internet service (WiFi) grew in two areas: first, the number of hotspots almost tripled; and subsequently, the use of wireless Internet also increased three- fold.