iesy Repository GmbH - Irish Stock Exchange

(7) Revenue generating units, or “RGUs,” relate to sources of revenue, which may not always be the same as subscriber
numbers. For example, one person may subscribe to two different services, thereby accounting for only one subscriber
but for two RGUs.
(8) Calculated by dividing basic cable subscription revenues (including basic cable installation fees but excluding basic
cable carriage fees) for a period by the average number of total basic cable subscribers for that period and the number
of months for that period.
Basic Cable Television
As of March 31, 2005, iesy’s network passed approximately 1.9 million homes, of which approximately 1.2 million are
connected and subscribe to iesy’s services. The majority of iesy’s customers subscribe to a basic programming package
consisting of 30 to 35 television channels (depending on the region served) and up to 39 radio channels.
Subscriber Segments
iesy divides its subscribers into three specific market segments, each targeted with its own tailored marketing, sales and
advertising techniques:
Residential subscribers. Residential subscribers total approximately 522,000 (43.6% of iesy’s total subscribers) and
represent accounts with single or small multiple-dwelling units of up to five homes. These are generally owner occupiers and
can be marketed to individually. For the three months ended March 31, 2005, ARPU for residential customers amounted to
€11.71.
Housing associations. Housing associations account for approximately 433,000 subscribers (36.2% of iesy’s total
subscribers) and represent accounts with multiple-dwelling units of six or more homes. There are numerous subsegments
within this category, encompassing professional property investors, public property owners, property management firms and
financial investors. In addition, account management and developing strong personal relationships with customers is
important in this segment. Within this segment is included customers that not only own and operate their own Level 4
networks, but also operate and administer the networks of other housing associations and, accordingly, display certain
characteristics of professional Level 4 operators. While the majority of these housing associations subscribe to iesy’s services
pursuant to its standard terms and conditions, iesy has multi-year framework agreements with a number of its larger
customers within this segment. iesy intends to sign a greater number of housing associations to multi-year contracts to further
secure its basic cable subscriber base. Most housing associations enjoy volume-based discounts built into iesy’s standard rate
card. Housing associations that sign multi-year contracts typically receive additional discounts. For the three months ended
March 31, 2005, ARPU for housing associations was €6.30.
Professional Level 4 operators. The professional Level 4 operators (BN, EWT, PrimaCom and Tele Columbus)
account for approximately 242,000 subscribers or 20.2% of iesy’s total subscriber base but account for only 8.5% of iesy’s
total revenues in the three months ended March 31, 2005. These operators procure the basic television signal from iesy and
resell it generally to housing associations. Professional Level 4 operators generally enjoy volume-based discounts built into
iesy’s standard rate card, which create incentives for these operators to cluster behind individual connection points.
Historically, iesy has entered into agreements with professional Level 4 operators, which provided for a further discount to
iesy’s standard rate card. Operator-specific discounts, when combined with volume-based discounts built into the standard
rate card, result in substantially lower ARPU within this segment. While iesy’s ARPU for this segment has increased, some
professional Level 4 operators have opted to disconnect subscribers from its network. For the three months ended March 31,
2005, ARPU for professional Level 4 operators was €4.05. iesy’s costs associated with these customers are lower for a
variety of reasons, particularly since iesy is not responsible for certain Level 4 activities, including customer care. iesy seeks
to establish closer cooperation with Level 4 operators so that both parties can grow their respective businesses. For example,
iesy and both Tele Columbus and PrimaCom have agreed to co-brand their foreign language programming.
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