Annual Report 2015 Content NextGentel Holding ASA - At a glance ........... 3 Board of Directors’ Report 2015 ...................... 4 NextGenTel Holding ASA - NextGenTel Holding ASA - Consolidated accounts 2015 .......................... 10 Annual accounts 2015 .................................... 49 Consolidated statement of financial position .. 11 Income statement .......................................... 50 Consolidated statement of profit or Balance sheet ................................................ 51 loss and comprehensive income ..................... 12 Cash flow statement ...................................... 52 Consolidated statement of Notes to the financial statements ................... 53 changes in equity ........................................... 13 Note 1. Operating revenues ..................... 54 Consolidated statement of cash flows ............ 14 Note 2. Wages and social costs ............... 54 Notes to the consolidated Note 3. Other operating expenses ............ 55 financial statements ....................................... 15 Note 4. Finance ........................................ 56 Note 1. Reporting entity ........................... 15 Note 5. Intangible assets .......................... 56 Note 2. Basis of preparation .................... 15 Note 6. Taxes ........................................... 57 Note 3. Financial risk management .......... 22 Note 7. Investment in subsidiaries ............ 58 Note 4. Important accounting estimates and discretionary assessments ..... 22 Note 8. Restricted bank deposits, drawing rights and guarantees .................. 58 Note 5. Operating segments .................... 24 Note 9. Equity capital ............................... 58 Note 6. Property, plant and equipment ..... 26 Note 10. Share capital and shareholder Note 7. Intangible assets .......................... 27 information ................................. 59 Note 8. Trade and other receivables ......... 29 Note 11. Other current liabilities ................ 60 Note 9. Cash and cash equivalents ........... 29 Note 12. Intercompany balances ................ 61 Note 10. Capital and reserves ................... 30 Note 13. Loans & borrowings ..................... 62 Note 11. Trade and other payables ............. 31 Note 14. Transactions with related parties .. 63 Note 12. Loans and borrowings ................. 32 Note 15. Guarantees .................................. 63 Note 13. Leasing ........................................ 33 Note 16. Provisions for contingent Note 14. Income tax expense, deferred liabilities ...................................... 63 tax assets and liabilities ............... 34 Note 15. Deferred income/revenue ............. 35 Note 16. Other revenues ............................ 35 Note 17. Wages and social costs ................ 36 Note 18. Other expenses ............................ 36 Note 19. Finance income and finance cost .. 37 Note 20. Earnings per share ....................... 37 Note 21. Operating leases .......................... 38 Note 22. Related parties ............................. 38 Note 23. Remuneration of key executives ... 39 Directors’ responsibility statement ................ 64 Note 24. Guarantees ................................. 41 Auditor’s report .............................................. 65 Note 25. Financial instruments .................. 42 Guidelines on Corporate Governance ........... 67 Note 26. Business combination .................. 47 Company facts ................................................ 72 NextGenTel Holding ASA Annual Report 2015 2 NextGentel Holding ASA - At a glance ,000 2 46 61 , 0 0 0 0 0 0 , Customers: 0 2 1 427,000 RGU’s Norway, consumers Norway, businesses International 8 470 60 Annual revenue: 1,400* NOK million 0 7 NextGenTel’s mission is to be a major force in defining and providing fixed and mobile internet communications to the con- sumer and small businesses. *including Kvantel full year revenues. NextGenTel Holding ASA Annual Report 2015 3 Board of Directors’ Report 2015 The NextGenTel Group’s activities, as stated in the ar- speed broadband in the consumer market to inte- ticles of association, are to develop and sell IP based grated data communications solutions in the business services and communications solutions, operate con- market. The company had at year-end 2015 installed sultancy activities and participate in other enterprises. more than 154,000 broadband connections across The ordinary general meeting in 2015 approved a Norway. proposal to change the name of Telio Holding ASA to NextGenTel Holding ASA. NextGenTel has the NextGenTel’s vision is to provide the best broadband strongest brand name in Norway and the change of experience in Norway. Its mission is to be a low-price name of the parent company will support the identity vendor of broadband services to the consumer market to the NextGenTel brand in the Norwegian market. and to selected segments of the business market and The name change was effective from 6 May 2015. the public sector. NextGenTel operates in a mature NextGenTel Holding ASA is listed on the Oslo Stock market with price competition and significant migra- Exchange and is traded under the ticker’ NGT’. tion from xDSL to new access technologies. The NextGenTel Group has operations in Norway, The company is realizing the digital home with ser- Denmark, Switzerland and the Netherlands, where vices including internet access, mobile, VoIP, TV, secu- Norway is the dominating market currently repre- rity and storage, based on access over xDSL, fiber and senting 94.2% of total revenues. The largest entity mobile network through partners. in the Group is NextGenTel AS, which was acquired with effect from 1 February 2013. In 2015, the Next- In the business market, NextGenTel provides complete GenTel Group provided services under both the Telio solutions, independent of access technology, to large and NextGenTel brands to end users in Norway and and small enterprises, directly or through partners. through the Telio brand in Denmark and Switzerland. In the Netherlands, distribution is arranged through ‘white label’ agreements under local brands. Market development Broadband Intra-group mergers According to the Norwegian Communications Au- thority, Norway had 2 million broadband subscribers In order to achieve a more efficient and powerful oper- in the first half of 2015. This represents an increase of ation in the Norwegian market, the Board of Directors 3.4% compared to first half of 2014. of NextGenTel AS and its sister company Telio Telecom AS at the end of 2014 decided to merge the two enti- xDSL was launched at the end of year 2000 and is ties with effect from 1 January 2015. The merger was the broadband access technology with the largest formally registered 22 January 2015. market share. 35.6% of broadband subscriptions in the consumer segment was over xDSL and has seen In October 2015 it was decided to merge the subsidi- a reduction during the last years. The number of sub- ary Broadpark AS and the sister company Gojitek AS scribers over cable TV has increased over several years with NextGenTel AS. These mergers were also effec- and represents the second largest access technology tive from 1 January 2015 (the mergers were formally with 31.1% of consumer subscriptions. However, registered 5 December 2015). The mergers will pro- broadband over fiber is the access technology with vide for a more efficient operation and reduce admin- the largest increase during first half 2015. 31% of istrative tasks. consumer subscriptions are based on fiber at the end of first half 2015. The Norwegian operation According to the Norwegian Communications Au- thority, 78% of Norwegian households had broad- NextGenTel provides broadband and broadband ser- band access at the end of first half 2015. During 2015, vices adapted to the customer’s needs, from high- NextGenTel has been the third largest provider in the NextGenTel Holding ASA Annual Report 2015 4 Norwegian broadband market in terms of number of telephony. NextGenTel had 82,300 VoIP customers at lines. The growth in number of broadband lines over the end of 2015. xDSL has been reduced during 2015 and this devel- opment is expected to continue in 2016. Broadband Digital TV - NextTV over cable and fiber have had the largest growth in NextTV is the company’s digital TV offering compris- recent years. NextGenTel follows a strategy to provide ing all the standard TV channels in addition to a wide broadband products and services to both the consum- range of movies and series. The service is based on er and corporate market across access technologies a TV platform developed by an external partner. The (mainly xDSL, fiber and mobile). company had 15,400 digital TV customers at the end of 2015. Further growth in the customer base Total number of broadband lines at the end of 2015 is expected in 2016. NextTV is also available for fiber was 154,000, a reduction of 6,000 lines during the customers, directly or over other providers’ open or year. The net loss of customers was 5,000 in 2014. closed networks. The company is focusing on providing customer expe- rience and network operations of high quality to meet Mobile services customer needs in the best possible way. NextGenTel is providing mobile and mobile broadband services through an MVNO (Mobile Virtual Network Regulation of fiber Operator) agreement with Netcom. This product is Effective from January 2015, the Norwegian Com- provided to both the consumer and corporate seg- munications Authority imposed