iesy Repository GmbH - Irish Stock Exchange

In the domestic market, the German telecommunications regulator fixes the terms on which DTAG provides
interconnection to competitors as well as access to the unbundled local loop so that competitors have direct access to
customers. The terms for interconnecting DTAG’s telephone network with the networks of other national network operators
and service providers are contained in bilateral contracts.
In the last couple of years, the growing penetration of Internet has spawned Voice over Internet Protocol (VoIP)
services. At the end of 2004, approximately 15 companies provided VoIP services in Germany to some 400,000 users, nearly
all through reliance on DSL, whereof approximately 50% are believed to be frequent users. Cable operators in other
international markets offer this service, frequently bundled with television and Internet access services to create a full “tripleplay”.
In Germany, the former owners of KBW and ish pursued a full “triple play” strategy. As a consequence, both operators
were endowed with the technological infrastructure and know-how which enables a VoIP roll-out. Neither company has been
promoting telephony services as a standalone offer, but in a bundle with its Internet access products. KBW offers telephony
services as a bundle with its Internet access services at no incremental base fee, whereas ish’s telephony service may be
subscribed for a monthly fee of €5.00 in addition to ish’s Internet service offerings. iesy and KDG do not offer telephony
services.
Hesse Market Overview
The central German state of Hesse has approximately six million inhabitants, representing 7.3% of the total German
population and is home to most of the Rhine-Main area, a densely populated conurbation that encompasses Frankfurt, one of
the largest financial centers in Europe, and Wiesbaden, the capital of Hesse. Hesse’s per capita GDP is the highest of the nine
former DTAG cable regions in Germany. GDP per capita has increased by an annual rate of approximately 1.1% since 2000
resulting in a higher disposable income. Moreover, Hesse has a relatively diverse population, with approximately 821,000
foreign inhabitants, approximately 13.5% of the total population. The urban areas of Hesse are also among the most densely
populated regions in Germany. In addition, Hesse’s population density is characterized by a high proportion of inhabitants
living in multiple-dwelling units, which would support a cost effective potential upgrade of the cable network.
We believe that such economic and demographic characteristics make Hesse an attractive region for a cable services
provider relative to the other German Federal States (Bundesländer). High population density leads to certain cost
efficiencies in the implementation and operation of cable network infrastructure. Higher levels of disposable income are
likely to lead to greater demand for new services offered via cable. Finally, high numbers of foreign residents indicate that a
significant market exists for foreign language pay television offerings.
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2000 2001 2002 2003 CAGR (1)
Population (million) (1) 6.068 6.078 6.092 6.089 0.12%
Density (population / km²) 287 288 289 288 0.11%
GDP (€ billion) 183.4 188.1 188.8 190.1 1.20%
GDP / Capita (€) 30,224 30,948 30,991 31,220 1.09%
Population breakdown (million)
German citizen 5.228 5.244 5.263 5.268 0.25%
Foreign nationalities 0.840 0.834 0.829 0.821 -0.76%
(1) Size of Hesse as of the end of 2003 was 21,115 km 2 .
Source: Hessisches Statistisches Landesamt
According to industry sources as of December 2004, Hesse has about 2.75 million television homes, approximately 1.4
million or 51.3% use cable television, approximately 1.3 million or 45.6% use satellite and approximately 0.1 million or
3.1% use terrestrial transmission via antenna.
North Rhine-Westphalia Market Overview
North Rhine-Westphalia is one of the most densely populated regions in Germany, with approximately 18 million
inhabitants and an average population density of 530 people per square km, compared to a national average density of 231
people per square km. The region includes nine of the 20 largest cities in Germany, including Cologne, Essen, Dortmund,
Düsseldorf and Duisburg with populations exceeding 500,000 inhabitants, and has 30 cities with populations exceeding
100,000 inhabitants. The region has a GDP of €470 billion accounting for approximately 22% of total German GDP. GDP
per capita has increased by an annual rate of approximately 1.4% since 2000 resulting in a higher disposable income.