Report on ONO Midco, SAU and its subsidiaries as of December 31 ...

More documents

Recommendations

Info

providing telephony services to the public are obliged to provide users with number portability right if so requested, in the terms of the applicable regulations. The General Law on Telecommunications and the Markets and Access Regulation require the operators to share some of the costs associated with this service. According to the Markets and Access Regulation the following types of number portability must be available: • change of operator for the provision of fixed telephony services to the public, as long as the service and the geographical location do not change; • change of operator for the provision of mobile telephony services to the public, even in the event of the type of mobile telephony service changing; and • change of operator for special rate services and personal numbering, as long as the service does not change. The CMT has approved Circulars 1/2008 and 3/2009 establishing the principles intended to guarantee number portability to users. In December 2009, the CMT began proceedings to modify portability operations with the objective of reducing the time for a customer to change its telephony operator. The new portability term will be 24 hours instead of the current term of five days. This new term will apply to mobile telephony as of June 2012 and may apply in the future to fixed telephony. In February 2011, the CMT published a decision on the regulation about portability cost for fixed telephony. With respect to geographic numbering, the decision reduced the cost from €8.78 to €2.78 per portability request. The same decision also sets the price for intelligent network number portability. Occupancy Rights Electronic communications operators deploying networks have the right to occupy the public domain, benefit from expropriation procedures and be granted rights of way or easements over the property of third parties, subject to certain conditions. The General Law on Telecommunications obliges authorities to guarantee the occupancy rights and the last amendments gives the power to the MIET to impose the infrastructures sharing in public and private property. The sharing using will be formalized through operator’s agreements. Should an infrastructure sharing agreement not be reached, the CMT is entitled to solve the conflict. Payments Telecommunications operators are required to make certain payments. Most importantly, they are required to pay to the CMT a maximum annual fee of 0.20% (amounting to 0.10% as of January 1, 2012) of their gross telecommunications revenue less certain interconnection, connectivity and other related costs. Operators also pay a separate annual municipal fee (obtained in each Municipality) of, initially, 1.5% of gross revenue in order to use the local public domain and certain other local fees and taxes. Holders of spectrum concessions are required to pay on an annual basis to the MIET the spectrum fee in the terms set forth in the General Law on Telecommunications, implementing regulations on this matter and the Budget Act for the relevant year. As a consequence of being granted the spectrum concessions in the 2.6 GHz. frequency band in the regions of Catalunya, Cantabria, Comunidad Valenciana, Madrid, Murcia, Navarra, La Rioja, Ceuta and Melilla, we are subject to the spectrum fee. For year 2012, the expected aggregate spectrum fee paid by ONO amounts to approximately €632 thousand. In addition, pursuant to the RTVE Financing Law, we are required on a yearly basis to contribute 1.5% of our television revenues and other audiovisual communication revenues (since September 2009) and 0.9% of our telecommunication revenues (since January 2010) to subsidize the sustainability of the Spanish public broadcasting entity, RTVE. However, the RTVE Financing Law has been the subject of a number of legal and regulatory proceedings. In particular, in March 2011 the EU Commission decided to refer France and Spain to the European Court of Justice because they continue to impose specific charges on the turnover of telecoms operators in breach of EU law. The European Commission considers the “telecoms taxes”‘ in France and Spain (0.9%) to be incompatible with EU telecommunications rules, which require specific charges on operators to be directly related to covering the costs of regulating the telecoms sector. Meanwhile, operators, including ONO, are challenging certain aspects of the 0.9% and 1.5% contribution requirements before the Spanish Supreme Court. Telephony Customer Charges Telephony operators, other than operators with SMP, are generally free to set end-user prices. In its second round of market analysis, the CMT issued a Decision in March 2009 defining the retail market for access to the public telephone network at a fixed location for residential and non-residential customers. It declared Telefónica an operator with SMP and imposed on Telefónica certain specific obligations. Among other things, the CMT obliged Telefónica to provide line Operator Selection and retail access to users. Access prices are subject to control by the CMT. In particular, Telefónica’s line rental is regulated under an IPC-X mechanism whereby IPC refers to the consumer price index and X (a factor which will be set by the CMT 12 months before implementation). Telefónica is not allowed to apply geographically differentiated line rental fees. According to a decision dated September 2011 for the fiscal year 2012 factor X is equal to IPC, which means that Telefónica is not allowed to increase access prices. Telefónica is obliged to inform the CMT of retail offers 21 days in advance so that the CMT can assess whether they are anticompetitive. This does not apply to the so-called “customized offers” to customers spending over €12,000 per year. Retail call prices are altogether deregulated, as is Telefónica’s one-off connection fee. 50
A general provision against anticompetitive prices has also been adopted by the CMT in connection with Telefónica’s retail offers when they include voice line rental and internet broadband access. In this regard, the criteria and methodology adopted by the CMT in a decision dated July 2007 (to assess when and under which conditions individual price offers, as well as double and triple-play bundles, might be considered anticompetitive) are still applicable. Universal Service, Public Service Obligations and Other Obligations of Public Character The General Law on Telecommunications, coupled with the Service Regulation, provides that electronic communications operators may be requested to provide certain universal services, comply with other public service obligations to be imposed for general interest reasons or with obligations of public character. Universal service covers a range of electronic communications services which must be provided to all users at a reasonable price, regardless of their geographical location. This includes access to the fixed telephony network and to the provision of telephony services to the public (including functional access to the internet, allowing bandwidth communications at a downlink speed of 1 Mbit per second), availability of directory information (excluding telephone directory enquiry services), sufficient provision of public pay phones and access to fixed telephony for the disabled and those with special social needs (who will be offered different options or bundled tariffs than those offered under normal commercial conditions). The General Law on Telecommunications provides that the MIET shall designate the operator(s) entrusted to ensure the universal service. The operator(s) may be different in each region and different services included within the scope of the universal service may be provided by different operators. Should other operators be interested in rendering these services, the General Law on Telecommunications provides for a public bidding procedure to designate the operator(s) in charge. With respect to the provision of directory services a recent amendment of the Service Regulation establishes that if the provision of the service is not guaranteed by the market, the MIET will designate the operator entrusted to provide it, in the terms set forth in the same. Telefónica is still considered the sole operator providing universal service across the entire territory of Spain until December 31, 2016. Other operators, besides Telefónica, may be required to provide universal service in the future. The CMT may determine that providing universal service imposes a competitive disadvantage on the operators that provide these services and that the net cost of these services should be allocated among certain operators in accordance with criteria to be determined by the CMT. The mechanism to compensate for these costs will be the National Universal Service Fund. Contributions to the National Universal Service Fund must be made by the operators in accordance with the Services Regulation. It provides that a National Fund for Universal Service will be created and that the costs will eventually be allocated among operators on the basis of gross ordinary revenue. Contributions are required to be proportional to the activity carried out by the relevant operator obliged to contribute to the financing of the universal service and will be determined by the CMT pursuant to the rules established in the Services Regulation. The CMT has calculated the cost of universal service in Spain for years 2003-2005 and has also established the criteria that will be used to distribute this cost among electronic communications operators, including Telefónica itself. In September 2008, the CMT confirmed that the net cost of universal service (€182.77 million in the aggregate for years 2003-2005) is to be paid by Telefónica, Movistar, Vodafone and Orange. The CMT decision on the cost of universal service was appealed by Telefónica, Orange and Vodafone. The Court has already rendered its decision on this appeal partially accepting Telefónica’s claim, requiring the CMT to review the valuation of certain costs. The CMT decision on universal service cost distribution has also been appealed by Orange and Vodafone. In November 2010, the Court ruled against Vodafone’s position and upheld the CMT distribution criteria. Applying the holding of the court to our circumstances, we would not be required to contribute to the financing of universal service in Spain for the 2003–2005 period. This judgment has been appealed before the Spanish Supreme Court. Orange lost a case on the same matter in June 2011 on technical procedural grounds not related to the regulations on the financing of universal service which also has been appealed before the Spanish Supreme Court The CMT had also approved a decision in March 2009 whereby the net cost of universal service provided by Telefónica in 2006 is set at €75.34 million. This cost is to be paid by Telefónica (38.89%), Movistar (30.50%), Vodafone (19.95%) and France Telecom (10.66%). In December 2009, the CMT has set the universal service cost for 2007 at €71.09 million and according to a decision dated July 2010, the cost is to be paid by Telefónica (38.20%), Movistar (30.38%), Vodafone (20.93%) and France Telecom (10.50%). Vodafone has also appealed the CMT Resolution on cost distribution for the years 2006 and 2007. In addition, Orange has appealed the CMT Resolution on cost distribution for the year 2006. Finally, in December 2010, the CMT set the universal service cost for 2008 at €74.85 million. This cost is to be paid by Telefónica de España, S.A.U. (37.37%), Telefónica Móviles España. S.A.U. (30.32%), Vodafone España, S.A.U. (22.14%) and France Telecom España, S.A. (10.17%), pursuant to a decision of the CMT dated September 2011. Vodafone and Orange have also appealed this CMT decision. Lastly, in December 2011, the CMT approved a decision whereby the net cost of universal service provided by Telefónica in 2009 will be set at €46.78 million. The above decisions on distribution of the cost of universal service do not preclude the regulator changing the terms of distribution in the future, including requiring other operators to finance the cost of universal service. In addition to universal service, the Government may impose other public service obligations on operators to assist with public safety or national defense. The Government may impose other public service obligations (pending a report from the CMT) 51
Page 1 and 2: Report on ONO Midc
Page 3 and 4: • Operating free cash flow do not
Page 5 and 6: • the effect of changes in the re
Page 7 and 8: CONTENTS INFORMATION ON THE COMPANY
Page 9 and 10: RECENT DEVELOPMENTS Key operating e
Page 11 and 12: SUMMARY FINANCIAL INFORMATION AND O
Page 13 and 14: Reconciliation of EBITDA, operating
Page 15 and 16: RISK FACTORS In addition to other i
Page 17 and 18: We do not expect to generate suffic
Page 19 and 20: RISKS RELATING TO OUR BUSINESS We m
Page 21 and 22: altogether. In addition, the broadb
Page 23 and 24: evenues could be adversely affected
Page 25 and 26: • Regulations relating to accessi
Page 27 and 28: Wholesale & Other: We provide carri
Page 29 and 30: espectively), which stands in contr
Page 31 and 32: Our Products and Services We curren
Page 33 and 34: We offer all our broadband customer
Page 35 and 36: services, ranging from simple fixed
Page 37 and 38: coming years. For example, in June
Page 39 and 40: technology, although depending on O
Page 41 and 42: Supplier Network Equipment Next Gen
Page 43 and 44: not belonging to a group (following
Page 45 and 46: Telecommunications Law, the MIET ha
Page 47 and 48: The right to provide electronic com
Page 49: As holders of spectrum concessions
Page 53 and 54: programs and content in order to in
Page 55 and 56: SELECTED HISTORICAL CONSOLIDATED FI
Page 57 and 58: MANAGEMENT’S DISCUSSION AND ANALY
Page 59 and 60: aggregate price of these services p
Page 61 and 62: Residential Services Residential re
Page 63 and 64: Operating data in units % change Fi
Page 65 and 66: Operating Expenses Our operating ex
Page 67 and 68: Net Financial Expense Our net finan
Page 69 and 70: Cash flows from investing activitie
Page 71 and 72: Currency Risk While the vast majori
Page 73 and 74: MANAGEMENT DIRECTORS AND SENIOR MAN
Page 75 and 76: Starman AS, Elipso Finance and Vest
Page 77 and 78: Víctor Guerrero is our Director of
Page 79 and 80: The amounts and percentages of shar
Page 81 and 82: filing and the court has to evaluat
Page 83 and 84: DESCRIPTION OF OTHER INDEBTEDNESS T
Page 85 and 86: Maturity: Tranche A and Tranche B m
Page 87 and 88: the event that at the end of each C
Page 89 and 90: Senior Secured Notes On October 22,
Page 91 and 92: • Second, in payment of the follo

Report on ONO Midco, SAU and its subsidiaries as of December 31 ...

Create successful ePaper yourself

Delete template?

Save as template?