iesy Repository GmbH - Irish Stock Exchange

iesy experienced higher than usual churn levels in early 2005 as annual subscriber contracts came up for renewal for
the first time since iesy’s 2004 price increase. See “Risk Factors—Risks Relating to Our Business—Customer churn, or the
threat of customer churn, may adversely affect our business.”
In the longer term, we believe that the introduction of premium cable television and high speed Internet products and
services will help to maintain subscriber levels, particularly among the residential and housing association customers.
However, conditions may change due to, among other things, further industry consolidation and market developments, and
this may encourage further disconnections in the future. See “Risk Factors—Risks Relating to Our Business—Customer
churn, or the threat of customer churn, may adversely affect our business.”
Under iesy’s existing customer care and billing systems, iesy tracks the number of customer contracts that are added
and terminated. These numbers include, among other factors, contract renewals and terminations attributable to churn (which
is the number of subscribers that disconnect from iesy’s network and do not reconnect under a new contract). Churn is caused
by a number of factors, the principal factor being house moves, as well as competition and pricing. See “Risk Factors—Risks
Relating to Our Business—We operate in competitive industries, and competitive pressures could have a material adverse
effect on our business” and “Business—Competition.”
Although iesy’s ability to reduce its customer churn rate is limited by certain factors, such as customers moving outside
iesy’s network service area, managing its customer churn rate is a significant component of iesy’s business plan. To help
meet these objectives, we intend to continue to maintain iesy’s high level of customer care, improve and introduce new
product offerings and enhance iesy’s direct contact with customers.
ARPU
ARPU (average revenue per unit) is a measure we use to evaluate how effectively we are realizing potential revenues
from customers. ARPU is generally calculated on a yearly, quarterly or monthly basis by dividing total sales generated from
the provision of services by the average number of subscribers served in that period and by the number of months in the
period.
The basic cable ARPU for the year ended December 31, 2003 was €7.86. During the latter part of 2003, iesy
established segmental revenues reporting which has allowed iesy from January 1, 2004 to report ARPUs on a segmental
basis. Detailed below is ARPU by the three months ended March 31, 2004 and 2005, and for the year ended December 31,
2004:
88
Year ended Three months ended
December 31,
March 31,
2004 2004 2005
Subscriber segment (€)
Residential (1) 11.43 11.23 11.71
Housing associations (2) 6.22 6.14 6.30
Professional Level 4 operators (3) 3.97 3.80 4.05
Basic cable ARPU (4) 8.20 8.06 8.32
(1) Calculated by dividing residential basic cable subscription revenues (including installation but excluding carriage fees)
for the year ended December 31, 2004 by the average number of residential subscribers for that period and the number
of months for that period. Residential subscribers typically comprise accounts of one to five dwelling units.
(2) Calculated by dividing housing associations basic cable subscription revenues (including installation but excluding
carriage fees) for the year ended December 31, 2004 by the average number of housing association subscribers for that
period and the number of months for that period. Housing associations include 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.
(3) Calculated by dividing professional Level 4 operators basic cable subscription revenues (including installation but
excluding carriage fees) for the year ended December, 2004 by the average number of professional Level 4 operators
subscribers for that period and the number of months for that period. Professional Level 4 operators are comprised of
BN, EWT, PrimaCom, and Tele Columbus.
(4) Calculated by dividing basic cable subscriber 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.
iesy’s basic cable subscriber ARPU has increased by 3.2% from €8.06 for the three months ended March 31, 2004 to
€8.32 for the three months ended March 31, 2005, and by 4.3% from €7.86 per subscriber in the year ended December 31,