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2007, an Exciting Year Continuous Growth

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2007, an Exciting Year Continuous Growth 2007, AN EXCITING YEAR 2007 has been an exciting year for Euskaltel. Firstly because it has consolidated itself as the leader in the integral offer of fixed telecommunications, achieving market shares unprecedented in the experience of European operators alternative to the old monopolist: 48% Broadband, 40% Landline Telephony, 35% Digital Television. Euskaltel intends to extend the Broadband throughout the territory of the CAPV, universal Broadband, by introducing different technologies. On the one hand, through its network of ultimate generation fibre optic, which now has 260,000 kilometres deployed throughout the CAPV; on the other hand, via Wimax technology which allows for wireless Broadband for rural municipalities and area in Euskadi (the Basque Country) which do not have Internet access; and thirdly, through HSPA technology (High Speed Packed Access), high speed Internet or mobile Broadband. Secondly, because it has started a new mobile telecommunications project which is pioneering and innovative in Europe, becoming the first case of a European independent virtual mobile operator with its own network and therefore full capacity to develop all kinds of services whether fixed, mobile or convergent. Thirdly, because both capacities are developed by Euskaltel with universal access networks using ultimate generation technology, which places the Basque Country in the European avant-garde insofar as broadband cover and quality. The business experience in Euskadi shows that by properly combining excellence in the service, continuous innovation and professional and human capital, any business project can achieve success. CONTINUOUS GROWTH Euskaltel closed the 2007 financial year with a net result of 33 million euros, derived from operating revenue of over 336 million euros, and is the first alternative European cable operator to achieve such high levels of market penetration and shares (European reference for regional operators). Particularly significant in companies. It has maintained continuous growth both in terms of market share and in the number of customers and contracted services. In Broadband the increase in customer base was almost 20%, 7% in Direct Access Fixed Telephony and 15% in Mobile Telephony, with the incorporation of 30,000 new customers since the end of the migration process to the Euskaltel network (31st March 2007). Euskaltel’s good management result is based on the excellent behaviour of the businesses based on the fixed fibre optic network, both in fixed telephony as well as in the great evolution of Euskaltel’s Broadband. In 2007 Euskaltel gave a qualitative jump in its strategy to increase its leadership in Broadband supported by the capacity offered by its ultimate generation fibre optic network: it automatically doubled the speed of all of the market’s Broadband products maintaining the prices and it established 1 mega as the minimum Internet connection speed. The Basque operator’s accumulated investments exceed 1,300 million euros, of which nearly 100 million was invested in 2007. This investment was mainly devoted to deploying its networks, both fixed – the fibre optic network in Euskadi is now 255,000 kilometres long, 30,000 more than in the previous year - , and its new mobile telephony network. Purchases from Basque supplies are in excess of 200 million euros. The EBITDA is over 106 millones euros, 5.1% more than in the previous year. Landli ne Telephony During 2007 the landline telephony actions have focused on gaining new customers and the sale of more products to the customer base: flat rates and call discounts. In order to encourage new customers various promotions were launched during the year: 3 months for 1 euro, All league matches .. The sale of products to the customer base was performed through telesales supported by various specific promotions for each action. In Direct Access Euskaltel achieved penetration of almost 50% in the municipalities where its network is deployed. The effort made in gaining new customers has considerably increased the number of customers with own network, 7%, and now stands at 299,018 customers between homes and businesses. As regards Indirect Access, 2007 has seen the continued drop in customers, and the year closed with 46,025 lines with consumption. Data The “Connect-Lan” product has also been extended in 2007 with the aim of consolidating it as Euskaltel’s star product for company connectivity. “Connect-Lan” allows offices to be connected via a data network with features similar to a local network. It also offers high bandwidth and service guarantee, characteristics which ensure the correct functioning of applications with Voice with IP or access to critical data. The different locations are connected by private virtual data networks with fibre optic access (10M, 100M or 1000M) amongst others. During this year ADSL access has been included which allows companies to be offered the correct solution to connect with their offices when said offices have indirect access or are situated outside of the CAPV (Indirect ADSL). Furthermore, level 3 VPNs have been developed which add the possibility of a new type of virtual private network. They are particularly suitable to provide a solution for very large networks which connect a large number of offices, or for when most of the traffic on the network is IP traffic. On the other hand, work has started on a new access typology, cable-modem type, which will allow companies to be offered connectivity at very attractive prices for offices with generically deployed direct access. Internet With the aim of maintaining and consolidating broadband leadership in the CAPV various very significant actions have been performed: Des pega s peed replac em ents : Replacing the Despegas offer in order to maintain our mass consumption product as the market leader in terms of speed. The offer has tripled speeds whilst maintaining prices: it now offers 1M as the most basic speed and 6M where previously 3M was offered. Also the new 1M mode offers duplicated upload speed (256K as opposed to 150K). The prices for the faster speeds have also been significantly lowered (12 and 24M) and a new duo has been launched “Dúo Despega1M” at 29€ The replaced offer can be seen in the following chart: Despega Monthly fee Before Afterwards Now Afterwards Despega 300K/150 Despega 1M/256 23 € 23 € Dúo Despega 1M/256 + calls X 29 € Dúo Despega 3M/600 + calls Dúo Despega 6M/600 + calls 39 € 39 € Dúo Despega 12M/600 + calls Dúo Despega 12M/600 + calls 75 € 49 € Dúo Despega 24M/1M + calls Dúo Despega 24M/1M + calls 120 € 75 € Not only has the Despega offer (flat rate) been replaced, but also the rest of the Despega products (Despega Recarga, Despega Contrato and Despega por Volumen) Tem porary s us pens i on of Des pega: In order to offer a response to all requirements this product was started for those customers who during certain periods, for example holidays, do not use the service. It allows them to save on the monthly fee during said period as Euskaltel applies a discount of 100%. The maximum suspension period allowed per year is 3 months. Tri pli ng the s peeds of Di rec t ADSL Broadband: This technology is used to offer Broadband to business clients situated in industrial estates. In 2007 the migrations have ended which allowed the customers who already had Direct ADSL Broadband to increase the speed at the same price. Online Office Replacement, our collaboration product aimed at companies: The most important changes following the replacement were: ∞ Change to the product name: Before Euskalnet Empresa, now Oficina Online. The offer is simplified, reducing the number of profiles and there are 2 new services: Send SMS from the PC and Notifications, which allows for SMS to be received on the mobile telephone notifying receipt of emails that the customer has defined. ∞ The customer can self-contract new profiles using their Control Panel without having to call Euskaltel All of these new functions are added to those already existing: ∞ Email account, agendas, lists of contacts, shared files, teamwork, personal productivity. ∞ Access from anywhere: access to all of the listed services from any mobile device or any Internet connection. ∞ Security and Tranquillity: Euskaltel administers the systems and the security and as such you do not have to worry about back-up copies, eliminating virus or avoiding spam. ∞ New “Seguridad Internet PC” version: This product guarantees computer security against external threats: virus, spyware, hackers, trojans, etc. All supported by an ultimate generation tool from PANDA SECURITY and which Euskaltel offers at an exceptional price. The new 2007 version incorporates the following improvements: ultimate generation antivirus, firewall personal, prize-winning anti-Spyware, protection against online fraud and automatic daily updates. Cable Television (CATV) The number of customers with access to the thematic TV increased 6.8% in 2007, reaching 280,000 homes. The Digital Television customers remained stable. The cable television service is marketed to the direct access customers within the Ventana, the company’s commitment to the residential market. The Ventana is an integrated product for homes, which offers apart from telephony Internet access and three types of TV; Thematic television which offers approximately 19 channels, depending on the local broadcasters in each area, Mini Interactive Digital Television and Interactive Digital Television, with which the client can choose from 3 packages the one that is most in accordance with their requirements and with over 50 channels each. Both Mini Interactive Digital Television and Interactive Digital Television offer the customers access to pay-per-view cinema and football. Since May 1999 Euskaltel has its own digital television distribution hub and is the first operator in Spain to have this technology. Using this service the customer can access a large number of thematic channels including amongst others documentaries, cinema, sports, children’s programmes, music and news. Euskaltel offers its users a pay-per-view (PPV) service with a wide variety of newly-released films, adult cinema and sporting events.
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