iesy Repository GmbH - Irish Stock Exchange
iesy Repository GmbH - Irish Stock Exchange
iesy Repository GmbH - Irish Stock Exchange
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SUMMARY<br />
This summary highlights certain information contained in this Prospectus. This summary does not contain all the<br />
information you should consider before investing in the Notes. You should read this entire Prospectus carefully, including<br />
“Risk Factors,” “Operating and Financial Review and Prospects of <strong>iesy</strong>,” “Operating and Financial Review and Prospects<br />
of ish,” the <strong>iesy</strong> and ish financial statements and the notes to those financial statements.<br />
Our Company<br />
We are the largest cable television operator in the German states of Hesse and North Rhine-Westphalia, with<br />
approximately 5.3 million subscribers. The regions in which we operate are characterized by attractive demographics for<br />
providing services over cable networks. Hesse has the highest GDP per capita, and North Rhine-Westphalia has the highest<br />
population density, in each case, of the nine former DTAG cable regions in Germany. We provide basic and premium cable<br />
television, high speed Internet access and telephony services. Our network passes approximately 8.4 million homes out of<br />
approximately 11.2 million total homes in the region, representing a 75.0% coverage rate, of which approximately 5.3 million<br />
homes are connected to our network and subscribe to our services, a 63.1% penetration rate. The upgraded portion of our<br />
network passes more than 1.5 million homes. The largest part of our business is the provision of basic cable television<br />
services, which is characterized by stable revenues and cash flows. For the year ended December 31, 2004 on a pro forma<br />
basis, we generated total revenues of €560.0 million and Adjusted EBITDA (as defined herein) of €262.2 million and €560.8<br />
million of total revenues and €265.8 million of Adjusted EBITDA for the twelve months ended March 31, 2005.<br />
The ish Acquisition<br />
On March 11, 2005, <strong>iesy</strong> Hessen entered into a definitive agreement with Kabelnetz Ltd. to acquire ish (the “ish<br />
Acquisition”). The ish Acquisition closed on June 24, 2005 and was funded by a combination of existing cash on hand and<br />
the proceeds of the Refinancing and the Financing. See “The ish Acquisition” for further details.<br />
Our increased scale and advanced infrastructure are expected to reduce costs, limit capital expenditures, decrease<br />
reliance on suppliers, and open up new strategic opportunities. Economies of scale will allow us to purchase goods and<br />
services more cheaply, deploy capital more efficiently and spread costs and investments across a larger revenue base. By the<br />
end of 2005, our network and state-of-the-art network operations center (“NOC”) should technically enable us to distribute<br />
premium cable television signals to the vast majority of our homes passed. Our increased scale together with our combined<br />
technical platform also will make us a more attractive partner for broadcasters and content providers. The combined entity<br />
will furthermore benefit from cost synergies as well as the harmonization of best practices and products across both <strong>iesy</strong> and<br />
ish.<br />
The integration of two businesses in adjacent regions will be facilitated by their similar network strategies, a shared<br />
history of ownership by and separation from DTAG and similar corporate cultures. We intend to keep customer-oriented<br />
functions localized and take a deliberate approach to integrating other areas of the combined business.<br />
Our Products and Services<br />
Our products and services include the following:<br />
• Basic cable television. Our current basic cable offering consists of 30 to 36 analog television channels<br />
(depending on the region served) and up to 39 analog radio channels. Furthermore, homes that have a set-top box<br />
installed can also receive digital programming including that of the public broadcasters ARD and ZDF.<br />
Subscription and installation fees for our basic cable television business generated €480.0 million, or 85.7%, of our<br />
total revenues for the year ended December 31, 2004 and €117.6 million or 86.2% of our total revenues for the<br />
three months ended March 31, 2005 on a pro forma basis. We also received carriage fees totalling €41.2 million<br />
(7.4% of our total revenues) for the year ended December 31, 2004 and €10.6 million or 7.8% for the three months<br />
ended March 31, 2005 on a pro forma basis from national, regional and local broadcasters for the distribution of<br />
their programming over our network.<br />
• Premium cable television. Our primary premium cable television offerings are marketed under the “ish Digital<br />
TV” brand in North Rhine-Westphalia. Packages offered under this brand include ish Music, ish Active, ish<br />
Lifestyle and ish Kino, which is a pay-per-view service provided by arrivo. Our premium cable television products<br />
also include foreign-language program packages, and an English language program package introduced in the<br />
fourth quarter of 2004 in Frankfurt and southern Hesse. We plan to extend the ish premium cable television<br />
offerings to Hesse, and the <strong>iesy</strong> tv USA UK television offerings to North Rhine-Westphalia, and we also intend to<br />
launch additional premium cable television services. This will be facilitated by the similar network strategies of<br />
<strong>iesy</strong> and ish, technically allowing the NOC in Kerpen to service the vast majority of our homes connected by the<br />
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