iesy Repository GmbH - Irish Stock Exchange

Furthermore, ish entered into the Betacrypt agreements concerning the licensing of software for the operation of our
conditional access system.
Our business operations and our revenues could be adversely affected if (i) Nagra or the parties of the Betacrypt
agreements no longer license, supply or maintain our conditional access system and if we are not able to replace the existing
conditional access system by another conditional access system; (ii) the Nagra or Betacrypt conditional access system is
compromised by illegal piracy and access of non-subscribers to the system; and (iii) if the Nagra or Betacrypt conditional
access system is incompatible with future broadband cable technologies or products we intend to use.
We rely on DTAG and certain of its affiliates for a significant part of our network. Any disruption or termination of our
arrangements with DTAG would materially and adversely affect our business and results of operations.
We have entered into various long-term agreements with DTAG and certain of its affiliates that are significant to our
business, including for the lease of cable duct space as well as the use of fiber optic transmission systems, tower and facility
space. In addition, we purchase electrical power required for the operation of our network through DTAG. Our ability to offer
our services to our customers depends on the performance of DTAG and its affiliates of their respective obligations under
these arrangements. In particular, we rely on DTAG to provide us with timely access to co-located facilities, especially for
the purposes of maintaining and repairing our network and avoiding or rectifying network outages. Our rights under the
SLAs cannot be assigned without the consent of DTAG, other than in exceptional cases, as defined in the SLAs. DTAG has
the right to terminate such arrangements in certain circumstances and under certain conditions. See “Business—Business of
iesy—Supply—SLAs with DTAG” and “Business—Business of ish—Supply—SLAs with DTAG.” For example, if DTAG
decides to discontinue using cable ducts carrying our cable without replacing the ducts it may terminate our rights to use the
ducts under certain limited conditions. Otherwise DTAG must use reasonable efforts to provide iesy and/or ish, as the case
may be, with a replacement duct.
iesy and ish both entered into the BRN-agreements with DTAG under which DTAG is to install, make available and
operate fixed-line broadband and broadcasting distribution networks. These networks, which are made up of optical leased
lines, replace the AMTV technology and analog lines as well as, in the case of iesy, the Diamant system. DTAG has the right
to terminate such BRN-agreements in certain circumstances and under certain conditions.
In the event we fail to fulfill our payment obligations or are otherwise in breach of contract under the SLAs or the
BRN-agreements, DTAG would be entitled to terminate the SLAs or the BRN-agreements, respectively. The termination of
any material portion or all of the SLAs or the BRN-agreements by DTAG would seriously affect the value of our network or
business. Continuing our business upon such termination would, if possible at all, require a sizeable payment to purchase the
relevant facility from DTAG or a sizeable investment to replicate the lost facilities or services and could have a material
adverse effect on our business, financial condition or results of operations. In many cases we would not be able to find
suitable alternative service providers at comparable cost, or within a reasonable timeframe.
We depend on equipment and service suppliers that may discontinue their products or seek to charge us prices that are not
competitive, either of which may adversely affect our business and profitability.
We have important relationships with several suppliers of hardware and services that we use to operate our cable
television network and systems. In many cases, we have made substantial investments in the equipment or software of a
particular supplier, making it difficult for us in the short-term to change supply and maintenance relationships in the event
that our initial supplier refuses to offer us favorable prices or ceases to produce equipment or provide the support that our
cable television network and systems require. For example, ish relies on third party suppliers such as Nagra, which provides
the conditional access system and smart cards for its premium cable television services, and Convergys Information
Management Group Inc., which provides ish a license to use the “Cablemaster” software for its customer support and billing
operations. If equipment or service suppliers were to discontinue their products or seek to charge us prices that are not
competitive, our business and profitability could be materially adversely affected.
Our assumptions about the low cost of upgrading selected parts of our network to provide high speed Internet services
may be inaccurate. Failure to maintain our cable television network or make other network improvements could have a
material adverse effect on our operations and impair our financial condition.
Our current assumptions regarding the costs associated with maintenance and upgrades of our cable television network
may prove to be inaccurate. In particular, both iesy and ish intend to compete in providing high speed Internet services on the
basis of technologies that may be implemented with low costs and without extensive upgrades to its existing network, which
may not prove to be feasible. If capital expenditures exceed our projections, for example because of the need to replace
ageing network components, our costs will increase.
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