Supplemental Disclosure Material - Ono

will allow us to update our voice network and increase the quality of our services while reducing operating expenses. Our
business operations and revenues could be adversely affected if Huawei does not fulfill its obligations to us or if we
experience difficulties implementing our agreement with Huawei.
We currently depend on Motorola’s technology for the operation of our conditional access system, which we use to
transmit encrypted digital programs. In connection therewith, we entered into an agreement with Motorola under which
Motorola agreed to sell and install parts of the conditional access system (including hardware equipment such as set-top
boxes), to grant licenses for the respective intellectual property rights for the conditional access system, and to provide
maintenance, support and security services.
In 2010, we entered into an exclusive agreement with U.S. digital video company TiVo in order to offer next
generation TV services in Spain, providing a seamless convergence between internet and traditional television content. As
part of this strategy, we have committed to using Cisco set-top boxes. Our television operations going forward are therefore
dependent on TiVo’s know-how and software and Cisco’s hardware. We are in a transition period where we are phasing out
the use of Motorola’s software and hardware and commencing the introduction of Cisco’s hardware and TiVo’s software.
Our business operations and revenues could be adversely affected if (i) Motorola no longer maintains our
conditional access system during the transition period and if we are not able to replace the existing conditional access system
with the system required for next generation TV at a reasonable cost; (ii) the Motorola or Cisco conditional access system is
compromised by illegal piracy and access of non-subscribers to the system; and/or (iii) the Motorola or Cisco conditional
access system is incompatible with future broadband fiber technologies or products we intend to use. Furthermore, our
business operations and revenues could be adversely affected if TiVo and Cisco (either directly or through their
subcontractors) do not fulfill their obligations to us or if we experience difficulties implementing our agreements with them
into our product portfolio. In addition, we received our last shipment of Motorola set top boxes in 2010 and Motorola has
ceased production of these boxes. Going forward, we will have to rely on existing stock and refurbished units until we have
migrated our entire TV customer base to Cisco set-top boxes. If we experience delays in this migration, we may be unable to
meet client demand for set-top boxes which could adversely affect our operations and revenues.
We rely on Telefónica’s network to carry the traffic relating to our mobile telephony and broadband internet services.
We rely on our agreement with Telefónica for voice, data and other telecommunications services we provide to our
mobile customers. Our current agreement expires in 2013 and will have to be renegotiated. If the agreement with Telefónica is
not renewed or terminated, if Telefónica fails to deploy and maintain its network, or if Telefónica fails to provide the services
as required under the terms of our agreement and we are unable to find a replacement network operator on a timely and
commercial basis (or at all) we could be prevented from carrying on our mobile business altogether, or on less favorable terms
or with less desirable services. Additionally, any migration of all or some of our customer base to a new operator would be in
part dependent on Telefónica and could entail technical and commercial risks. Telefónica is also a commercial counterparty in
interconnection with us. Any disagreements with Telefónica may affect our commercial relationship with it.
Unanticipated network interruptions and events beyond our control may adversely affect our ability to deliver our products
and services.
Our business is dependent on the continued and uninterrupted performance of our network. System, network,
hardware and software failures have occurred before and could occur in the future and affect the quality of, or cause an
unexpected interruption in our service. These failures could result in costly repairs and affect customer satisfaction, thereby
reducing our customer base and revenues and damaging our brand image.
Moreover, if any part of our network or system infrastructure is affected by flood, fire or other natural disaster,
computer virus, terrorism, power loss or other unforeseen events, our operations and customer relations could be materially
adversely affected. Our disaster recovery, security and service continuity and protection measures may not be sufficient to
prevent loss of data or prolonged network downtime.
In addition, our business is dependent on certain sophisticated critical systems, including our switches and customer
service systems. The hardware supporting those systems is housed in a relatively small number of locations and if damage
were to occur to any of these locations or if those systems develop other problems, there could be a material adverse effect on
our business. For example, we depend on our customer billing system, to enable us to conduct our business and interact with
our customers. Any significant delays or interruptions in providing services could negatively impact our reputation as an
efficient and reliable telecommunications provider and consequently impair our ability to obtain and retain customers.
We depend on the ability to attract and retain key personnel without whom we may not be able to manage our business
effectively.
Our operations are currently managed by a number of key executives and employees. The loss of any key employee
could significantly impede our financial plans, product development, network completion, marketing and other plans, which
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