Supplemental Disclosure Material - Ono

order to achieve these targets, we are continuing to focus on further developing our customer base and product offering, as
well as implementing initiatives with the objective of improving profitability, maximizing liquidity and reducing leverage:
• Provide the best internet service in the market. Our strategy is to position ourselves as a high-quality,
innovative service provider with competitive prices, taking advantage of our own state-of-the-art network. We
strive for high quality of service and believe we compare favorably to competitors. The steps we have taken to
implement this strategy include the delivery of “real” (i.e., as advertised) internet speeds and the Docsis 3.0
system upgrade which was completed in February 2012. The upgrade enables us to provide faster and more
reliable internet services with speeds significantly higher than our currently commercialised speeds of
100 Mbps for residential customers and 200 Mbps for SMEs (we are currently the only provider in Spain to
offer this speed on a nation-wide basis). As of March 31, 2012, over 530 thousand customers subscribed to our
high-speed internet packages (30 Mbps and higher), representing approximately 37% of our residential
broadband customer base, which we believe makes us the leading provider of ultra-high speed internet in
Spain. We intend to continue focusing on marketing and deriving the commercial benefits from this service.
• Provide the best TV experience in the market. In June 2010, we established an alliance with U.S. digital video
company TiVo in order to offer a next generation TV service, using set-top boxes manufactured by Cisco, which
we believe provides a seamless convergence between internet and traditional television content. In October
2011, we officially launched our next generation TV service (TiVo) to customers in Madrid and Barcelona. We
have made this service available in regions that represent almost 62% of our network as of March 31, 2012. We
expect to further extend this innovative TV service to the remaining regions within our network coverage areas
in the coming quarters. As of March 31, 2012, this product had been available for five months, and during this
period we gained over 16 thousand customers. We believe this innovative TV product will help us to grow our
TV customer base, strengthen customer loyalty and increase revenues. We also believe it differentiates and
significantly upgrades our television offerings compared to others in the market by providing users with a
“best-in-class” experience and a wide variety of content that integrates broadcast and broadband television in a
way that goes beyond the confines of traditional pay television.
• Increase the number of high-quality customers. We are undertaking a more focused customer acquisition
strategy while at the same time protecting our customer base with loyalty initiatives. Our main strategy is to
grow market share of our residential services, but we are particularly focused on higher-quality customers,
which we believe can help us achieve higher ARPUs and lower net churn. Actions to implement this strategy
include the use of credit scoring, the implementation of activation and installation fees, selective application of
customer acquisition promotions and a change in marketing strategy to focus on more targeted campaigns. Our
advertising highlights the quality of our products in addition to the competitive prices at which we offer them.
• Expand up-selling and cross-selling initiatives. We seek to sell additional products and services to our
existing customers, a practice to which we refer as cross-selling, or transfer them to higher value services, a
practice to which we refer as up-selling. In particular, we intend to encourage our customers to subscribe for
additional services by offering bundled services, at prices lower than those provided by our competitors or by
us on an individual basis, or to transfer customers to higher broadband speeds and broader TV packages,
including our recently launched TiVo product, at similar or slightly higher prices. We believe that providing
existing customers with a variety of new and enhanced services with tiered pricing options encourages them to
take more than one of our services. Bundling and new pricing options are expected to increase the number of
our double- and triple-play customers and thereby increase our RGUs per customer and protect ARPU stability.
We also intend to continue developing customer loyalty by offering value-added services such as mobile voice
and broadband internet and internet security software.
• Grow our mobile voice and broadband customer base. We believe there is opportunity to grow our mobile
voice and broadband customer base which comprises mostly customers taking triple and quadruple-play
services from us. As of March 31, 2012, we had 189 thousand mobile residential lines and 13 thousand mobile
SME lines, which represents a relatively low penetration rate compared to our overall customer base. We
would like to grow our mobile services customer base because we believe that mobile services contribute to
greater customer loyalty and lower churn levels, contributing to higher revenues.
• Grow our SME business. We believe there is opportunity to grow our SME business and gain market share in
this business area. Different types of SME customers have different telecommunications service needs and
respond to different sales and marketing approaches. Quality is of paramount importance for SME customers
and we believe that we are well-positioned to deliver a quality service by utilizing our established proprietary
state-of-the-art network and by offering competitive solutions.
• Maintain cost discipline and maximize cash generation. We achieved positive free cash flow for the first time
in 2009. We increased our free cash flow by €89 million between 2009 and 2011, and we aim to continue to
improve free cash flow generation through the marketing and product development initiatives described above
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