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The Regulatory Framework for Electronic Communications: Regulation v. Competition European Parliament Hearing – May 30, 2005 Duco Sickinghe (CEO)

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Presentation on theme: "The Regulatory Framework for Electronic Communications: Regulation v. Competition European Parliament Hearing – May 30, 2005 Duco Sickinghe (CEO)"— Presentation transcript:

1 The Regulatory Framework for Electronic Communications: Regulation v. Competition European Parliament Hearing – May 30, 2005 Duco Sickinghe (CEO)

2 This presentation includes forward-looking statements. These forward-looking statements include all matters that are not historical facts, statements regarding Telenets intentions, beliefs or current expectations concerning, among other things, Telenets results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which Telenet operates. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Specific factors that might cause these uncertainties include, but are not limited to: Telenets business plan, which may undergo changes in the future; Telenets history of losses; Telenets substantial leverage and restrictions contained in the agreements governing its debt; the potential fluctuations in Telenets operating results; Telenets competition; Telenets potential inability to attract and retain subscribers; rapid technological change and evolving industry standards in the markets for Telenets services and Telenets ability to introduce new technologies or services; Telenets ability to maintain and upgrade its network and obtain adequate equipment; Telenets integration of its recent acquisitions; adverse regulatory, legislative, tax or other judicial developments; and factors that are not known at this time. Telenet cautions you that forward-looking statements are not guarantees of future performance and that its actual results of operations, financial condition and liquidity and the development of the industry in which Telenet operates may differ materially from those made in or suggested by the forward-looking statements contained in this presentation. In addition, even if Telenets results of operations, financial condition and liquidity and the development of the industry in which Telenet operates are consistent with the forward-looking statements contained in this presentation, those results or developments may not be indicative of results or developments in future periods. Telenet does not undertake any obligation to review or confirm analyst expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise after the date of this presentation. The Notes described herein have not been registered under US Securities Act of 1933, as amended (the US Securities Act), or any state securities laws. This communication is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 (the Order) or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2) of the Order (all such persons together being referred to as relevant persons). Any person who is not a relevant person should not act or rely on this communication or any of its contents. The securities referred to in this document have been sold. Safe Harbor

3 Introduction to Telenet Telenet in a snapshot …

4 Telenets location in Europe 95% Cable TV penetration

5 Competitive infrastructures lead to higher broadband growth Source : ECTA Facility-based competition is most effective : countries close to 50/50 % DSL- Cable have highest BB penetration Broadband wholesale pricing should not hinder make or buy decission Infrastructure investment is best assurance for creating growth & innovation

6 Source: ISPA, Telenet analysis Flanders leading broadband penetration

7 Result: Telephony growth in a Declining Market Bron: BIPT, IDC, Belgacom & Telenet analyse Enkel PSTN lijnen (excl. ISDN); RES+SOHO

8 Where have we come from? M net free cash flow Total Debt/ LQA Ebitda 5,1x Cash on balance sheet 146 M Ample access to liquidity Revenue in Million

9 Telenet today: a balanced revenue mix In 2005: internet > CATV First player in VOIP in Europe 2004 Analog Cable TV BB Internet Total Revenues: Million Fixed Telephony Telenet Solutions Canal+

10 Triple Play: Other cable operators (Coax networks) (Revenue Split 2004) Cable TV BB Internet Telephony DTV/Premium TV Corporate Services (B) Sources: Analyst reports Other Operator Benelux Other Operator Western Europe

11 Economies of scale – Revenue 2004 Total N/A 5540 m 681 m 8:1 3:1 10:1 N/A 4,8% revenue of Belgacom

12 Many challenges are coming on multiple fronts … Competition Price & performance pressure Strong financing means New players in each market Belgacom in iDTV Mobile players in fixed services Fixed players in mobile services Technology New platforms/frequencies IP convergence Consumers One supplier One integrated customer service Lower pricing Services VoIP MVNO iDTV Mobile video, … Triple play & convergence

13 … and are primarily driven by triple play and convergence at each level Services Networks Access devices Players New platform frequencies (WiMax, DVB-H) Evolution to all IP Fixed/mobile convergence Data Home gateways Fixed/mobile handsets Telcos into TV services Fixed players into mobile services (MVNO) Mobile players into fixed services (xDSL) In the long run, any service on any network via an integrated access device by any player VoiceVideo

14 … and are evolving in order to allow for a full triple play with everything over IP COAX DataVideoVoice Network Transport Service IP / MHP / DVB FIBERxDSLWIFIUMTS

15 TV over DVB: Interactive Digital TV Set-top box probably best medium to close Belgian digital divide Cost of Set-top box is about 20% of price PC Broadband penetration Cable penetration 55% 34% PC penetration 43% Internet penetration Opportunity digital TV 95% COAXxDSLMVNOWiFiFIBER IPDVB MHP DATAVIDEOVOICE NETWORK TRANSPORT SERVICE

16 Convergence leads to Triple Play offerings BUT assymetric regulation still required 1. Mobile WiMAX spectrum should be granted to alternative operators: i) in order to serve as mobile complement and to ii) tackle F2M substitution iii) level playing field with mobile & fixed incumbents 2. VoIP Need to regulate VoIP services offered by the incumbent: Especially cost based retail pricing for incumbent This decision will further the goal of building sustainable competition in local telephone markets. Under this decision, incumbent local exchange carriers – those with market power – cannot price their local VoIP services below cost to stifle competition. (CCTC, May 12, 2005) Regulatory issues (i)

17 Regulatory issues (ii) 3. Access to content i) Danger of leverage of financial power by incumbent ii) Public broadcasters should remain neutral (non-exclusivity contracts) iii) Technology neutral approach towards copyright Timing transposition new Regulatory Framework Belgian Electronic communication bill adopted by Parliament April 21, 2005

18 Conclusions Infrastructure competition: The best performing countries in the Union and abroad are characterised by a significant degree if facility-based competition […] Commission Communication (COM (2004) 369final) NRAs should allow the infrastructure-based rivals to the incumbent to set call termination charges which allow them to recover the efficiently incurred costs of an operator of their size and topology. OVUM study, Barriers to competition, Nov 2003 Asymmetric regulation is still required to achieve sustainable competition across the European Union (Mobile spectrum, VoIP, access to content)

19 Regulation v. Competition


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