iesy Repository GmbH - Irish Stock Exchange

BUSINESS
Unless otherwise indicated, market data is presented as of December 31, 2003 while iesy’s and ish’s subscriber data is
presented as of December 31, 2004.
Our Company
We are the largest cable television operator in the German states of Hesse and North Rhine-Westphalia, with
approximately 5.3 million subscribers. The regions in which we operate are characterized by attractive demographics for
providing services over cable networks. Hesse has the highest GDP per capita, and North Rhine-Westphalia has the highest
population density, in each case, of the nine former DTAG cable regions in Germany. We provide basic and premium cable
television, high speed Internet access and telephony services. Our network passes approximately 8.4 million homes out of
approximately 11.2 million total homes in the region, representing a 75.0% coverage rate, of which approximately 5.3 million
homes are connected to our network and subscribe to our services, a 63.1% penetration rate. The upgraded portion of our
network passes more than 1.5 million homes. The largest part of our business is the provision of basic cable television
services, which is characterized by stable revenues and cash flows. For the year ended December 31, 2004 on a pro forma
basis, we generated total revenues of €560.0 million and Adjusted EBITDA (as defined herein) of €262.2 million and €560.8
million of total revenues and €265.8 million of Adjusted EBITDA for the twelve months ended March 31, 2005.
The ish Acquisition
On March 11, 2005, iesy Hessen entered into a definitive agreement with Kabelnetz Ltd. to acquire ish (the “ish
Acquisition”). The ish Acquisition closed on June 24, 2005 and was funded by a combination of existing cash on hand and
the proceeds of the Refinancing and the Financing. See “The ish Acquisition” for further details.
Our increased scale and advanced infrastructure are expected to reduce costs, limit capital expenditures, decrease
reliance on suppliers, and open up new strategic opportunities. Economies of scale will allow us to purchase goods and
services more cheaply, deploy capital more efficiently and spread costs and investments across a larger revenue base. By the
end of 2005, our network and state-of-the-art network operations center (“NOC”) should technically enable us to distribute
premium cable television signals to the vast majority of our homes passed. Our increased scale together with our combined
technical platform also will make us a more attractive partner for broadcasters and content providers. The combined entity
will furthermore benefit from cost synergies as well as the harmonization of best practices and products across both iesy and
ish.
The integration of two businesses in adjacent regions will be facilitated by their similar network strategies, a shared
history of ownership by and separation from DTAG and similar corporate cultures. We intend to keep customer-oriented
functions localized and take a deliberate approach to integrating other areas of the combined business.
Our Products and Services
Our products and services include the following:
• Basic cable television. Our current basic cable offering consists of 30 to 36 analog television channels
(depending on the region served) and up to 39 analog radio channels. Furthermore, homes that have a set-top box
installed can also receive digital programming including that of the public broadcasters ARD and ZDF.
Subscription and installation fees for our basic cable television business generated €480.0 million, or 85.7%, of our
total revenues for the year ended December 31, 2004 and €117.6 million or 86.2% of our total revenues for the
three months ended March 31, 2005 on a pro forma basis. We also received carriage fees totalling €41.2 million
(7.4% of our total revenues) for the year ended December 31, 2004 and €10.6 million or 7.8% for the three months
ended March 31, 2005 on a pro forma basis from national, regional and local broadcasters for the distribution of
their programming over our network.
• Premium cable television. Our primary premium cable television offerings are marketed under the “ish Digital
TV” brand in North Rhine-Westphalia. Packages offered under this brand include ish Music, ish Active, ish
Lifestyle and ish Kino, which is a pay-per-view service provided by arrivo. Our premium cable television products
also include foreign-language program packages, and an English language program package introduced in the
fourth quarter of 2004 in Frankfurt and southern Hesse. We plan to extend the ish premium cable television
offerings to Hesse, and the iesy tv USA UK television offerings to North Rhine-Westphalia, and we also intend to
launch additional premium cable television services. This will be facilitated by the similar network strategies of
iesy and ish, technically allowing the NOC in Kerpen to service the vast majority of our homes connected by the
end of 2005. Our subscribers can also gain access to the premium cable television offerings of Premiere, the
dominant German pay television provider. We estimate that more than 600,000 cable television homes in Hesse
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