I. ZON Multimedia 2010

Transcription

1 March 2008

2 I. ZON Multimedia 2010

3 DISCLAIMER This presentation contains forward looking information, including statements which constitute forward looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of These statements are based on the current beliefs and assumptions of our management and on information available to management only as of the date such statements were made. Forward-looking statements include (a) information concerning strategy, possible or assumed future results of our operations, earnings, industry conditions, demand and pricing for our products and other aspects of our business, possible or future payment of dividends and share buy back program; and (b) statements that are preceded by, followed by or include the words believes, expects, anticipates, intends, is confident, plans, estimates, may, might, could, would, and the negatives of such terms or similar expressions. These statements are not guarantees of future performance and are subject to factors, risks and uncertainties that could cause the assumptions and beliefs upon which the forwarding looking statements were based to substantially differ from the expectation predicted herein. These factors, risks and uncertainties include, but are not limited to, changes in demand for the company s services, technological changes, the effects of competition, telecommunications sector conditions, changes in regulation and economic conditions. Further, certain forward looking statements are based upon assumptions as to future events that may not prove to be accurate. Therefore, actual outcomes and results may differ materially from the plans, strategy, objectives, expectations, estimates and intentions expressed or implied in such forward-looking statements. Additionally, some of these statements refer to board proposals to be submitted to ZON - Multimédia Serviços de Telecomunicações e Multimédia, SGPS, S.A. ( Multimedia or ZON ) AGM and subject to (i) its approval by Multimedia s shareholders, (ii) the market conditions and (iii) the ZON s financial and accounting position as revealed in the financial statements approved by Multimedia s AGM. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new information or future developments or to provide reasons why actual results may differ. You are cautioned not to place undue reliance on any forward-looking statements. ZON Multimedia is exempt from filing periodic reports with the United States Securities and Exchange Commission ( SEC ) pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934, as amended. The SEC file number for PT Multimedia s exemption is No Under this exemption, ZON Multimedia is required to post on its website English language translations, versions or summaries of certain information that it has made or is required to make public in Portugal, has filed or is required to file with the regulated market Eurolist by Euronext Lisbon or has distributed or is required to distribute to its security holders. This presentation is not an offer to sell or a solicitation of an offer to buy any securities. 1

4 STRONG POSITION IN PORTUGUESE TELECOMS AND ENTERTAINMENT MARKETS Subscribers. Thousands Long standing relationship with US majors Pay-TV Broadband 1,479 1,480 1, Extensive portfolio of independent producer film rights Leading player in cinema, video and DVD distribution, with 50% market share Employees: 62 Producer of own movie channels Revenues: 27 m Largest cinema network in Portugal (204 screens) Leading digital and 3D cinema company Voice 3,194 2,909 2,793** 49% market share of ticket sales Employees: 603 Revenues: 34 m Other businesses (equity stakes) TV Cabo Largest Competitor Employees*: 748 Revenues*: 467 m 50% SportTV 40% Lisboa TV ( ) * Includes TV Cabo, PT Conteúdos, SportTV (50% of revenues and FTEs) and ZON, SGPS ** Includes corporate Note: Revenues and number of employees refer to 3Q

5 STRONG OPERATIONAL PERFORMANCE IN FOURTH QUARTER OF 2007 Net adds. Thousands Pay-TV Broadband Voice Accelerated growth across all businesses RGUs* Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q *Revenue Generating Units. Includes Pay-TV, Funtastic Life, Broadband and Voice 3

6 CORE MARKETS CHARACTERIZED BY STRONG GROWTH Portuguese market Estimated revenues 2007 (E). M Estimated CAGR (%) ZON market share Main Portuguese players Revenues growth CAGR Pay-TV 595 8% 79% ZON 7.1 % Broadband % 23% Fixed voice a -6% <1% Vodafone Portugal 3.7 % Mobile % 0% TV Advertising 367 2% c 7% d PT (ex-multimedia and ex-vivo) 0.5 % Cinema and audiovisuals b 183 9% c 42% d Sonaecom -2.6 % Total % 12% a Excludes PTC revenues from wholesale; includes revenues from SoHo segment, SMEs and Corporations b Includes DVD, distribution and exhibition c Assuming growth rate is maintained over period d Share in 2006 Source: Screen Digest; Wireless Matrix; Company Reports 4

7 CONTINUED GROWTH EXPECTED IN PAY-TV Market evolution Main trends Growth driven by new entrants and platforms with both lowend and high-end offers Roll-out of IPTV likely to encourage competition in premium segments Launch of DTT licenses in 2008 enabling new low cost offers in the short to medium term Entry of new players in satellite business expected to increase competition Subscribers Millions Penetration in first homes Percentage CAGR ZON key strategic initiatives Leverage existing customer base to up-sell/cross-sell and thereby reduce churn Develop distinctive content offer, exploiting synergies with other ZON businesses and leadership in Pay-TV 5% 10% Launch new features to sustain a competitive advantage over IPTV competitors E 2010E 2010E Source: Screen Digest 5

8 STRONG GROWTH EXPECTED IN BROADBAND Market evolution Main trends Growth driven by computer penetration in households (growing at 7% per year) Speed increases dictated by competitive dynamics Increasingly competitive mobile broadband offers Launch of naked DSL products Subscribers Millions Penetration in first homes Percentage CAGR ZON key strategic initiatives Continually upgrade existing network in order to lead broadband market in terms of speed Target professional/soho segments with tailored offers in cabled areas Launch DSL based broadband offers to capture market potential in non-cable areas Broadband penetration in Pay-TV subscribers 2007 Ono Include off-net* 128 % 14% 10% Comhem 96 % Telecable Telenet UPC 69 % 50 % 30 % E 2010E Cablecom TVCabo(07) 29 % 37 %** * DSL offering for broadband ** Cable area Note: Portuguese data does not include mobile broadband Source: Financial reports; Screen Digest; Pyramid Research 6

9 INCREASING MARKET SHARE IN A STAGNANT FIXED VOICE MARKET Market evolution Main trends Growth driven by wider adoption of VoIP (low cost offers and add-on in bundles) Increasing pressure on incumbent line rental fee Strong cross-selling/up-selling of other operators through 2P/3P offers Subscribers Millions 1% 2% Penetration in first homes Percentage CAGR ZON key strategic initiatives Develop existing and new platforms, assuring continuous high quality service Leverage Pay-TV subscriber base to increase number of voice customers Voice penetration in Pay-TV subscribers 2007 Ono Telecable Include Include off-net* 78 % 175% Comhem Telenet 32 % 52 % UPC 23 % E 2010E * Indirect/naked access for voice ** Cable area 2010E Source:Financial reports; Press clippings; IDC Cablecom TVCabo (07) 19 % 8%** 7

10 ENTERING THE MOBILE MARKET Market evolution Main trends Fixed-mobile convergence Reduction of mobile networks termination cost Expected launch of new mobile licenses Emergence of MVNOs ZON key strategic initiatives Enlarge current offer to include mobile services, through an MVNO in order to Subscribers Millions % 2% Penetration in population Percentage CAGR Provide a mobility add-on to Netcabo customers Provide voice and data in non-cable areas Offer mobile voice solution to the 4.5 million individuals reached by ZON E 2010E Source: Wireless Matrix 8

11 IN SUMMARY Strategic Guidelines Key Initiatives Objectives 2010 Leadership in Triple Play Deliver excellence in customer service and operational efficiency Capture new growth opportunities Aggressively sell bundles with the best TV, broadband and voice products in the market Lead in broadband speed and provide new services supported by an upgraded network Provide differentiated and competitive content Guarantee excellence in customer service (real and perceived) Optimize the cost base (operational excellence) Promote the personal development and involvement of our people 7 Introduce a mobile communications offer through an MVNO agreement 8 Develop a specific offer for SoHos 9 Evaluate non-organic growth opportunities 1 billion euros in Turnover Double digit EBITDA growth More than 50% customers with bundles Best access network in Portugal Highest level of customer service A great company to work for Optimize the capital structure and establish an attractive shareholder remuneration program 9

12 II. Products and Network

13 LEADING THE TELECOM AND MEDIA MARKET Best TV product with enhanced content and features Leading broadband speed and pricing Competitive voice products Superior product offering/3p Leading commercial and support services Strong and diversified sales force/channels Further improvements in customer care Segmented bundling strategy Launching mobile products and services (MVNO) Focused SoHo offer Ubiquitous offer State-of-the-art network Continued cable coverage expansion Progressive technology network upgrade 11

14 FURTHER ENRICHING CONTENT OFFERING New channels launch HD introduction 24 Theme and niche channels (Sports) (Movies/series) Others (Movies) Clearly the best channel offer in Portugal Highest number of channels Exclusive HD content Exclusive channels in most relevant themes (e.g., children, movies, series) Satellite offer enhancement Launch of HD content Increase offer to more than 100 channels 12

15 LAUNCHING NEW TV FEATURES IN FIRST HALF 2008 Personal video recorder (with 250 GB) with new enhanced Electronic Programming Guide EPG) Pause Live TV Instant VoD Personalized channel grid Note: Electronic Programming Guide image merely illustrative 13

16 SPEED LEADERSHIP IN THE MARKET Recent increase in speed Leading internet speed in the market 2 Mbps 3 Mbps 4 Mbps 18 Mbps 6 Mbps 12 Mbps 24 Mbps 30 Mbps 30Mbps 24Mbps 24Mbps 24Mbps Mbps Light Mega Mega plus Mega max Mobile offers 14

17 ATTRACTIVE VOICE OFFER Competitive pricing Entry product. Euros per month 9.99* 5.99 Technological features Commercial leverage on number portability Multi-number product offer Flat fee product. Euros per month 22.82** Product promotion Voice pre-enabled for all new Netcabo customers Attractive voice promotion to all TV Cabo customers * Promotional line rental. Standard price ( per month) ** Includes line rental ( per month) 15

18 LAUNCH OF MVNO TO COMPLEMENT EXISTING OFFER Mobile broadband Mobility add-on to Netcabo customers New 4P products with mobile broadband Homezoning Voice and data offer to support non-cable areas with a wireline product Mobile voice Integrated telecommunications offer to about 1.5 million TVCabo households (4.5 million individuals) MVNO launch in

19 NEW OFFER TARGETING SOHOs BASED ON COMPETITIVE BROADBAND AND VOICE PRODUCTS Segments Products Number of SoHos Thousands Broadband 1 to 2 employees 3 to 4 employees 5 to 9 employees 10 to 14 employees 248 (54%) 106 (23%) 74 (16%) 32 (7%) ZON s first target due to lower platform upgrade needs These segments demand SME like complex solutions Multiple voice lines Fax POS Switchboard Tele-security Mobile voice and broadband 1 st Half 2008 core products 2 nd Half

20 MAIN OPERATIONAL OBJECTIVES FOR 2010 Number of subscribers. Thousands Accelerate RGU growth and increase the number of services Pay-TV P 100% 100% 4% 2007 Broadband 2010E 2P P % 26% 32% % 2010E 48% Voice E * Includes Pay-TV, broadband, voice and Funtastic Life RGUs* Millions

21 ADVANCED AND SCALABLE NETWORK Cable areas 2.8 million homes passed mainly in the most densely populated and highest income regions of Portugal (56% of total households, estimated 80% of GDP) 100% digitally enabled 98% bi-directional, enabling broadband services 97% VoIP compliant Network enabled for the roll-out of new services and broadband speed increases with low capex requirements Docsis 1.1 in place and upgrade to Eurodocsis 3.0 / wideband is being analyzed Superior long term broadband capability Control of key network elements Satellite areas Nationwide coverage of TV services through satellite network 8 transponders from Hispasat (recently added 1 transponder) 19

22 FURTHER NETWORK EXPANSION TO COVER ADDITIONAL 300 THOUSAND HOMES Cable areas (vs satellite) benefit from an improved service offer Increased capacity to offer additional channels (SD and HD) TV with interactive functionalities (e.g. VoD) driving further coverage expansion Homes. Millions 2.2 Integrated offering through cable network expansion 0.3 Broadband and voice offering through wholesale DSL Analogue TV signal in all rooms Increased internet speed offer Bidirectional connectivity for voice Non-cable areas in 2007 High interest to cover Highly populated and higher GDP areas Medium interest to cover Close to currently covered areas Low interest to cover Remote and low density areas 20

23 KEY NETWORK TARGETS Expand cable coverage Increase internet speed Network Capex Million euros Million homes Maximum speed. Mbps 15 % 15 % 100 % % 30 % Percentage of total households* 60% 56% 24 Network upgrade Network expansion Platform upgrades New functionalities Network Capex : between 140 and 180 million euros Total Network Capex decrease from to : 46% * Total households (first and second residences) 21

24 III. Financial Review

25 INCREASING MARKET VISIBILITY FOLLOWING SPIN-OFF Since the spin-off, market visibility of ZON has increased significantly Weekly volume of transactions Millions of shares Spin-off Jul Aug Sep Oct Nov Dec Jan Since the spin-off, 28% of ZON s capital has been traded Feb which allowed for higher diversification of the shareholder structure Shareholder structure Percent Caixa Geral de Depósitos Banco BPI Cinveste, SGPS Fundação José Berardo** Telefónica Espírito Santo Irmãos*** Banco Espírito Santo Joaquim Oliveira Ongoing Str. Inv., SGPS Cofina, SGPS Grupo Visabeira, SGPS Portugal Telecom, SGPS Free float Pre-spin-off 11.3 % 5.2 % 5.0 % 0 % 0 % 0 % 6.1 % 3.8 % 0 % 2.2 % 0 % 0 % 8.0 % 58.4 % Current* 13.9 % 7.7 % 6.1 % 5.6 % 5.5 % 5.0 % 4.0 % 3.8 % 3.2 % 2.2 % 2.2 % Grupo SGC, SGPS, SA 2% 0 % 38.9% * Qualified holdings disclosed to the company as of 29 February 2008 ** The holding of José Berardo is reciprocally attributed to Metalgest Sociedade de Gestão, SGPS *** Espírito Santo Irmãos 5% shareholding results from a position held by Teleresources Limited and whose voting rights are attributed to Espírito Santo Irmãos 23

26 STRONG HISTORICAL REVENUE GROWTH Revenue split Million euros CAGR Pay-TV % Broadband % Voice N.a. Audiovisuals* % Cinemas % Total % * Revenue decrease in 2005 due to loss of Playstation contract and Sony s video representation 24

27 ACCELERATION IN REVENUE GROWTH DRIVEN BY INCREASE IN RGUs Pay-TV Broadband Voice Number of subscribers Thousands 1,547 x1.12 1,700-1, x x E E E RGUs* Thousands 2,413 x1.50 3,500-3, E * Revenue Generating Units. Includes Pay-TV, Funtastic Life, Broadband and Voice 25

28 ARPU GROWTH DRIVEN BY PRODUCT BUNDLING RGUs* per subscriber TV Cabo. End of period x1.40 Blended ARPU TV Cabo. Period average. Euros x E ARPU/RGU* TV Cabo. Period average. Euros x E E ZON revenues in 2010: 950m- 1bn CAGR : 10%-12% * Revenue Generating Units. Includes Pay-TV, Funtastic Life, Broadband and Voice 26

29 ROOM FOR OPERATIONAL LEVERAGE IN CURRENT COST STRUCTURE Current cost structure Million euros Growth Direct costs Programming % 4.8% Monthly costs/rgu** TV Cabo. Period average. Euros per month Telecoms % -16% Other Marketing, Commercial & Customer Care % 9.1% Wages & Salaries % Others* % E Total % * Includes, among others, Support Services, Network, IT, Maintenance & Repairs and Provisions ** Revenue Generating Units. Includes Pay-TV, Funtastic Life, Broadband and Voice 27

30 SIGNIFICANT OPPORTUNITIES FOR COST EFFICIENCY IMPROVEMENTS Programming direct costs Marketing & Commercial Network maintenance & IT Customer care Other Renegotiate existing long-term agreements for Portuguese channels Move towards a flat fee cost structure to benefit from a larger customer base Focus on churn reduction Optimize sales channels Take advantage of increased scale Acquire network equipment from PT (annual savings of about 15 million euros already captured) Optimize the balance between insourcing and outsourcing in IT Promote self care, reducing the number of calls Optimize scripts and performance, specifically through the implementation of a new IVR Migrate internal communications to own VoIP structure Introduce centralized purchasing Conduct regular reviews of the cost base Assess internalization of contract with shared services division of PT 28

31 SOLID HISTORIC PERFORMANCE AND ACCELERATING FUTURE EBITDA GROWTH EBITDA Million Euros CAGR: 7.14% EBITDA margin 29.9% 31.1% 31.7% 30.8% 2010 EBITDA: million EBITDA CAGR 2007/10: 12-15% EBITDA margin 2010: % (~37% for TVCabo - cable and satellite) 29

32 LOWER AND ESSENTIALLY REVENUE DRIVEN CAPEX Capex/revenues Percentage Capex structure Annual average Capex 23.5% <15% Total 100% CPEs and connections 33% Network upgrade 18% Platform upgrade 7% Variable (dependent on gross-adds and technology adoption) Network expansion New functionalities IT Systems Other 13% 7% 9% 13% Fixed (pre-defined increase of coverage, pilots for new technologies, etc.) 30

33 SIGNIFICANT IMPROVEMENT IN KPIs IN Revenues EBITDA 2010E: million CAGR 07-10: 10% - 12% CAGR 04-06: 5% - 6% 2010E: million CAGR 07-10: 12-15% CAGR 04-06: 8%-9% CAPEX* Operational Free Cash Flow** P: <15% of revenues P: million per year Variation: - 6pp (vs ) Variation: +130% to 162% (vs ) * Does not include capex related to telecoms contract ** EBITDA capex - D Net working capital 31

34 LAUNCH OF INITIATIVES TO DRIVE CAPITAL STRUCTURE OPTIMIZATION International benchmark suggests leverage multiples of 2.5 to 3x Net debt/ebitda Virgin Media Liberty Global Telenet Sogecable ZON 2010 BSkyB Premiere PT Multimedia Polska ZON * ZON will aim to progressively achieve a level of Net debt/ebitda of x, which will translate into around 500 to 600 million euros increase in net debt by 2010 ZON will use the funds to selectively finance strategic initiatives and remunerate shareholders * Net debt without transponders and PT Telecom contract debt Source: Company and research reports; Datastream 32

35 DIVIDEND POLICY AND SHARE BUY-BACK PROGRAMME Ordinary dividend proposal* 20 cents per share expected ordinary dividend to be paid in 2008 Progressive dividend policy in following years pending on cash-flow generation and nonorganic investment opportunities Special dividend proposal* 30 cents per share expected special dividend to be paid in 2008 Share buy-back Up to 10% of share capital To be implemented in 2008 and 2009 (will ask for additional 18 months at next AGM) * Board proposals to be submitted to PTM's AGM and subject to (i) its approval by PTM's shareholders, (ii) the market conditions and (iii) the PTM's financial position as per the financial statements approved by PTM's AGM 33

36 Results Presentation Full Year February

37 STRATEGY EXECUTION ON TRACK Strategic Guidelines Key Initiatives Objectives 2010 Leadership in Triple Play Aggressively sell bundles with the best TV, broadband and voice products in the market Lead in broadband speed and provide new services supported by an upgraded network Provide differentiated and competitive content 1 billion euros in Turnover Double digit EBITDA growth Deliver excellence in customer service 4 5 Guarantee excellence in customer service (real and perceived) Optimize the cost base (operational excellence) More than 50% customers with bundles and operational efficiency 6 Promote the personal development and involvement of our people Best access network in Portugal Capture new 7 Introduce a mobile communications offer through an MVNO agreement Highest level of customer service growth opportunities 8 9 Develop a specific offer for SoHos Evaluate non-organic growth opportunities A great company to work for Optimize the capital structure and establish an attractive shareholder remuneration program

38 VERY STRONG RGU NET ADDITIONS Basic Subscribers [Net additions] Digital Extended Basic (49) [Net additions] Q107 Q207 Q307 Q Q107 Q207 Q307 Q Broadband Internet +25 RGU s +125 [Net additions] 38 [Net additions] Q107 Q207 Q307 Q Voice [Net additions] Q107 Q207 Q307 Q Q107 Q207 Q307 Q RGU s net additions in 4Q07 (95k) were the highest compared to any quarter in the last 3 years; In terms of FY07, RGU s net additions grew by 71.3% versus 2006; TV and Broadband net additions more than doubled in 2007, also helped by the introduction of 3P bundles.

39 OPERATIONAL HIGHLIGHTS RGUs % Basic Subscribers % Continued strong growth in RGUs throughout 2007, reaching more than 2.4 million services at the end of the year, 14.2% up on the previous year; Strong y.o.y. growth in pay-tv: 4.5% increase to subscribers at the end Broadband Internet +10.6% Voice of 2007; k new Broadband subscribers in 2007, up 10.6% y.o.y to 400 thousand 0 subscribers; Digital TV % Blended ARPU 29,1 30,8 +5.6% Increase in net average monthly voice additions, ending 2007 with 83 thousand voice customers; 270 Growth in ARPU of 5.6% to 30.8 euros in 2007 compared with 29.1 euros in

40 FINANCIAL HIGHLIGHTS 4Q07 Q.o.Q Y.o.Y. > Operating revenues % % > EBITDA 49.2 (6.5%) % > EBITDA excl. non recurring items % % > Net income (3.0) (128.1%) 48.9 (31.2%) > Net income excl. non recurring items (2.9%) % > EBITDA - CAPEX (36.6) (330.9%) 70.2 (10.3%) > EBITDA - CAPEX excl. non recurring items % % > Net financial debt (40.2%) 23.5 (40.2%) 1 The non recurring items affecting EBITDA were: the adjustment to provisioning criteria introducing more conservative assumptions for bad debt recovery and stocks, which had a negative impact in 4Q07 and a positive impact in 4Q06; the interconnection costs related with fraudulent promotional services which were detected at the beginning of 4Q07 and the accounting of personnel costs recorded in 4Q07 that relate to FY07; 2 The non recurring items affecting Net income in 2007 were: an impairment of audiovisuals and cinema assets, a write-off of obsolete pay-tv and broadband equipment, a write-off of obsolete cinema equipment and a number of spin-off related costs, the main components of which were advisory fees in preparation for the spin-off, work-force reduction costs, corporate rebranding costs and costs related with the separation of previously combined callcenters. In 2006, were adjusted the one-offs related with: the gain with a partial reversion of a provision for contingencies on the disposal of Lusomundo Media; the adjustment in the value of deferred taxes in connection with a reduction in the nominal tax rate in the beginning of 2007 and the initial recognition of deferred tax assets at Sport TV; 3 Net Debt excluding long-term Telecom Contracts and Transponders; 39

41 HIGHER REVENUES DRIVEN BY RGUs AND ARPU GROWTH Pay TV, Broadband and Voice % Revenues [Euro million] +7.4% (1.0) Audiovisuals % 2006 Pay TV, Broadband and Voice Audiovisuals Cinema Exhibition Other Cinema Exhibition % Continued growth in the customer base combined with higher ARPU had a positive impact of Euro 38 million on Pay TV, Broadband and Voice revenues; Audiovisual business revenues increased by 17.6% due to the recovery in Video / DVD sales and the increase in revenues from movie exhibition rights; Cinema Exhibition Division: growth supported by a 2.1% increase in tickets sold. 40

42 COSTS GREW MAINLY DRIVEN BY REVENUES W&S % Operational Costs [Euro million] 455,4 4,3 18,9 4,1 +8.8% 12,8 495,5 FY06 FY07 Commercial Costs % FY06 W&S Direct Costs Commercial Other FY07 FY06 FY07 W&S increase due to the insourcing of functions previously registered in outsourcing, changes in the corporate costcentre resulting from the spin-off, and the change in management and governing bodies; Direct Costs % Higher direct costs due to the increase in customer base, larger content offer and interconnection costs, and in line with revenue growth; Greater customer acquisition efforts led to a growth in marketing costs, but lower than RGU growth; FY06 FY07 Other costs would grow by 5.4% (bellow revenue growth) if non recurring provision costs were to be adjusted. 41

43 SOLID EBITDA GROWTH EBITDA +7.5% [Euro million] (2.1) +4.3% Provisions 0.8 Interconnect fraud costs 1.2 W&S Provisions 2006 adjusted for nonrecurrent adjusted for nonrecurrent Excluding non-recurring items - the adjustment to provisioning criteria, the interconnection costs related with fraudulent promotional services and the accounting of personnel costs recorded in 4Q07 that relate to FY07 - y.o.y EBITDA growth would be of 7.5%

44 GROWTH IN NET INCOME, IF ADJUSTED FOR NON-RECURRING ITEMS Net Income Net Income excl. non-recurring items [Euro million] [Euro million] ,9-31.2% ,4 +0.8% Other 0,2 Other 0,2 Income Taxes 10,9 Incom e Taxes (2.2) Financial Results 4,1 Financial Results 4,1 Other Expenses/Income (27.0) Other Expenses/Income (2.6) Income from Operations (10.5) Income from Operations 1, , ,9 Net Income reached Euro 48.9 million, representing a 31.2% decrease y.o.y. (if excluded of non recurring items, net income would have grown 0.8%); This decrease was mainly due to: Impact of non recurring items in EBITDA (as explained before); Impairment of Audiovisuals and Cinema assets (5,1 million euros); Spin-off related costs, the main components of which were advisory fees in preparation for the spin-off, corporate rebranding costs and costs related with the separation of previously combined call-centres (15.4 million euros); Additional write-off of obsolete pay-tv, broadband, and cinema equipment (3,7 million euros) and work force reduction costs (3 million euros), both of which were recorded at 9M07. 43

45 BASELINE CAPEX WITH SLIGHT DECLINE [Euro million] CAPEX yoy Baseline CAPEX (9.1%) Pay-TV, Broadband and Voice Infrastructure % Terminal Equipment (36.5%) Other (58.9%) Non Recurring CAPEX % Transponders (20.4%) Acquisitionf of TV Cabo Network Equipment Amendments to previous Telecom Contract % Total % CAPEX y.o.y. grows 13%, as a result of non recurring investments, namely the acquisition of the 8th Transponder, the amendments to previous long-term telecom contracts and the acquisition of dedicated TV Cabo network equipments from Portugal Telecom. It represents a CAPEX to revenues ratio of 21% in 2007 up from 19,9% in 2006; Baseline CAPEX (Euro 99.4 million) broadly in line with 2006, despite the continued investments made in the expansion and upgrade of its network to increase the penetration of homes passed cable areas and provide greater bandwidth. It represents a CAPEX to revenues ratio of 13,8% in 2007 down from 16,4% in 2006; 44

46 FINANCIAL FLEXIBILITY Net Debt Structure 1 [Euro million] % EBITDA / Interest Costs 2 [X] Equity Sw aps Free Cash Flow Dividends 102 (95) Financial Net Debt / EBITDA [X] , ,2 Free cash flow growth mainly due to the 59.4 million euros reduction in working capital, contrasting with the 2006 investment of 24.6 million euro; EBITDA Coverage ratio was 62 times, giving the company ample financial flexibility. Financial Net Debt 1 to EBITDA ratio even lower than in 2006, well below the average ratio for similar companies. 1 Net Debt excluding long-term Telecom Contracts and Transponders 2 Interest costs excluding long-term Telecom Contracts and Transponders interest costs 45

47 SHAREHOLDERS REMUNERATION Dividend per Share [Euro cents] 1 Extraordinary Dividend 25,0 27,5 30, ,0 20,0 Dividend per share of 20 cents plus an extraordinary dividend of 30 cents per share payable in Implementation of a progressive dividend distribution policy for the following years by means of the generation of cash flow and the needs of funds for non-organic growth opportunities E Share buy-back up to 10% of share capital, to be implemented in 2008 and DPS considering current number of shares 2 Proposal to be made in next AGM (pending approval) 46

48 IN BRIEF Very strong operational performance in 2007: Strong growth in customer base and RGUs 4Q07 is best ever quarter in terms of RGU growth in the last 3 years Consistent growth in blended ARPU Solid financial performance in 2007: Growth in EBITDA of 7.5%, if adjusted for non-recurring items Growth in Net Income of 0.8%, if adjusted for non-recurring items Substantial financial flexibility 47

49 FINANCIAL HIGHLIGHTS Euro million 4Q06 4Q07 07/ /06 Operating Revenues % % Pay TV, Broadband and Voice % % Audiovisuals % % Cinema Exhibition % % Other (3.2) (5.8) 81.1% (20.9) (21.9) 4.8% EBITDA (1) (6.5%) % Income from Operations (2) (67.4%) (9.6%) NET INCOME 10.7 (3.0) (128.1%) (31.2%) CAPEX % % EBITDA minus CAPEX 15.8 (36.6) (330.9%) (10.3%) Net debt (3) (40.2%) (40.2%) EBITDA margin (%) 29.7% 26.2% (3.5 p.p.) 31.7% 30.8% (0.9 p.p.) CAPEX as % of Revenues 20.8% 45.6% 24.8 p.p. 19.9% 21.0% 1.0 p.p. Net debt / EBITDA [x] (3) (6.7 p.p.) (8.0 p.p.) (1) EBITDA = income from operations + depreciation and amortisation. (2) Income from operations = income before financials and income taxes + work force reduction programme costs + impairment of goodwill + losses (gains) on disposal of fixed assets + other costs/income. (3) Net Debt excluding long-term Telecom Contracts and Transponders 48

50 OPERATIONAL HIGHLIGHTS 4Q06 4Q07 07/ /06 Pay TV, Broadband and Telephony Cinema Exhibition Homes Passed ('000) 2,651 2, % 2,651 2, % RGUs ('000) 2,112 2, % 2,112 2, % Basic Subscribers 1,480 1, % 1,480 1, % Digital Extended Basic % % Broadband Internet % % Voice Net Adds RGUs ('000) % % Basic Subscribers (10.6%) 1 67 n.m. Digital Extended Basic (46.8%) (30.5%) Broadband Internet (1.6%) n.m. Voice - 30 n.m n.m. Blended ARPU ( ) % % Pay-TV ARPU % % Broadband ARPU (2.4%) (1.3%) Revenues per spectator ( ) % % Tickets sold ('000) 2,177 2,093 (3.9%) 8,026 8, % 49