Report on ONO Midco, SAU and its subsidiaries as of December 31 ...
Report on ONO Midco, SAU and its subsidiaries as of December 31 ...
Report on ONO Midco, SAU and its subsidiaries as of December 31 ...
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Our net churn (b<strong>as</strong>ed <strong>on</strong> the l<strong>as</strong>t quarter <strong>of</strong> each period) for our residential fiber business incre<strong>as</strong>ed from 13.9% in 2009,<br />
to 15.5% in 2010 <strong>and</strong> to 18.8% in 2011. This incre<strong>as</strong>e w<strong>as</strong> primarily driven by some customers dropping their telecommunicati<strong>on</strong><br />
services to preserve their disposable incomes, al<strong>on</strong>g with the incre<strong>as</strong>ed promoti<strong>on</strong>al activity experienced in the Spanish<br />
telecommunicati<strong>on</strong> market that h<strong>as</strong> impacted a porti<strong>on</strong> <strong>of</strong> our most price sensitive customers (mainly single play customers).<br />
Going forward we intend to c<strong>on</strong>tinue focusing <strong>on</strong> stabilizing net churn with the implementati<strong>on</strong> <strong>of</strong> a series <strong>of</strong> initiatives to<br />
promote customer loyalty (such <strong>as</strong> our recently launched 15 Mbps upgrade campaign), the development <strong>of</strong> better products (such<br />
<strong>as</strong> DOSCIS 3.0, TIVO, mobile), improved customer care, customer segmentati<strong>on</strong> tools <strong>and</strong> tactical promoti<strong>on</strong>s.<br />
Broadb<strong>and</strong> Internet: In 2011, broadb<strong>and</strong> internet customers incre<strong>as</strong>ed by 49 thous<strong>and</strong>, or 3.6%, to 1,429 thous<strong>and</strong> <strong>as</strong><br />
<strong>of</strong> <strong>December</strong> <strong>31</strong>, 2011. Broadb<strong>and</strong> internet customers <strong>as</strong> a proporti<strong>on</strong> <strong>of</strong> total residential fiber customers incre<strong>as</strong>ed by 2.9<br />
percentage points to 79.1% in 2011. Our residential broadb<strong>and</strong> internet penetrati<strong>on</strong> incre<strong>as</strong>ed to 20.3% at the end <strong>of</strong> 2011 from<br />
19.6% at the end <strong>of</strong> 2010. The incre<strong>as</strong>e w<strong>as</strong> a result <strong>of</strong> our efforts to acquire customers with this service combined with teleph<strong>on</strong>y<br />
or <strong>on</strong> a triple-play b<strong>as</strong>is <strong>as</strong> well <strong>as</strong> our focus in high-speed interent <strong>of</strong>ferings. As <strong>of</strong> <strong>December</strong> <strong>31</strong>, 2011, over 424 thous<strong>and</strong><br />
customers subscribed to our high-speed internet packages (30, 50 or 100 Mbps), which represents approximately 30% <strong>of</strong> our<br />
broadb<strong>and</strong> customer b<strong>as</strong>e. We believe these excellent commercial results positi<strong>on</strong> <strong>ONO</strong> <strong>as</strong> the market leader in high-speed<br />
Internet in Spain. In February 2012, we completed the deployment <strong>of</strong> DOCSIS 3.0 technology in the Canary Isl<strong>and</strong>s <strong>and</strong> currently<br />
we have the capacity to deliver high-speed Internet <strong>of</strong> up to 100 Mbps to over 7 milli<strong>on</strong> homes within our network coverage are<strong>as</strong>,<br />
representing our entire fiber customer b<strong>as</strong>e.<br />
In 2010, broadb<strong>and</strong> internet customers incre<strong>as</strong>ed by 54 thous<strong>and</strong>, or 4.1%, to 1,380 thous<strong>and</strong> <strong>as</strong> <strong>of</strong> <strong>December</strong> <strong>31</strong>, 2010.<br />
Broadb<strong>and</strong> internet customers <strong>as</strong> a proporti<strong>on</strong> <strong>of</strong> total residential fiber customers incre<strong>as</strong>ed by 3.6 percentage points to 76.2% in<br />
2010. Our residential broadb<strong>and</strong> internet penetrati<strong>on</strong> incre<strong>as</strong>ed to 19.6% at the end <strong>of</strong> 2010 from 18.9% at the end <strong>of</strong> 2009.<br />
Televisi<strong>on</strong>: In 2011, fiber televisi<strong>on</strong> customers decre<strong>as</strong>ed by <strong>31</strong> thous<strong>and</strong>, or 3.2%, to 923 thous<strong>and</strong> <strong>as</strong> <strong>of</strong> <strong>December</strong><br />
<strong>31</strong>, 2011. Fiber televisi<strong>on</strong> customers <strong>as</strong> a proporti<strong>on</strong> <strong>of</strong> total residential fiber customers decre<strong>as</strong>ed by 1.6 percentage points in 2011<br />
to 51.1% <strong>as</strong> <strong>of</strong> <strong>December</strong> <strong>31</strong>, 2011. The penetrati<strong>on</strong> <strong>of</strong> fiber televisi<strong>on</strong> services decre<strong>as</strong>ed by 0.5 percentage point to 13.1% at the<br />
end <strong>of</strong> 2011. The decre<strong>as</strong>e in televisi<strong>on</strong> customers w<strong>as</strong> mainly derived from the negative macroec<strong>on</strong>omic envir<strong>on</strong>ment uder<br />
whiche we have operated in that h<strong>as</strong> forced our most price sensitive customers to drop the televisi<strong>on</strong> service to preserve their<br />
disposable incomes.<br />
In October 2011, we <strong>of</strong>ficially launched, our next generati<strong>on</strong> TV service (TIVO) to customers within Madrid <strong>and</strong><br />
Barcel<strong>on</strong>a <strong>and</strong> in February 2012 we made this service available in Valencia, Sant<strong>and</strong>er <strong>and</strong> Murcia (these regi<strong>on</strong>s represent c.37%<br />
<strong>of</strong> the Pay TV market in Spain). We expect to further extend this innovative TV service to other regi<strong>on</strong>s within our network<br />
coverage are<strong>as</strong> in the coming quarters. As <strong>of</strong> <strong>December</strong> 2011 almost 8 thous<strong>and</strong> customers subscribed to this unique TV product<br />
what represents c.4% <strong>of</strong> our TV customer b<strong>as</strong>e in Madrid <strong>and</strong> Barcel<strong>on</strong>a. Although to date this product h<strong>as</strong> <strong>on</strong>ly been launched <strong>on</strong><br />
a limited b<strong>as</strong>is, we believe that there are early signs <strong>of</strong> positive market acceptance. We expect that this new TV product will help<br />
us to provide our customers with a best in cl<strong>as</strong>s experience <strong>and</strong> a wide variety <strong>of</strong> c<strong>on</strong>tent that integrates broadc<strong>as</strong>t <strong>and</strong> broadb<strong>and</strong><br />
televisi<strong>on</strong> in a way that goes bey<strong>on</strong>d traditi<strong>on</strong>al pay televisi<strong>on</strong> features. We believe these unique functi<strong>on</strong>alities will help us to<br />
incre<strong>as</strong>e the number <strong>of</strong> our TV customers <strong>and</strong> revenues going forward.<br />
In 2010, fiber televisi<strong>on</strong> customers decre<strong>as</strong>ed by 22 thous<strong>and</strong>, or 2.2%, to 953 thous<strong>and</strong> <strong>as</strong> <strong>of</strong> <strong>December</strong> <strong>31</strong>, 2010. Fiber<br />
televisi<strong>on</strong> customers <strong>as</strong> a proporti<strong>on</strong> <strong>of</strong> total residential fiber customers decre<strong>as</strong>ed by 0.8 percentage points in 2010 to 52.7% <strong>as</strong> <strong>of</strong><br />
<strong>December</strong> <strong>31</strong>, 2010. The penetrati<strong>on</strong> <strong>of</strong> fiber televisi<strong>on</strong> services decre<strong>as</strong>ed by 0.4 percentage point to 13.6% at the end <strong>of</strong> 2010<br />
from 13.9% at the end <strong>of</strong> 2009. During 2010, the decre<strong>as</strong>e in televisi<strong>on</strong> customers w<strong>as</strong> mainly due to the fact that we ce<strong>as</strong>ed<br />
<strong>of</strong>fering this product <strong>on</strong> a st<strong>and</strong>-al<strong>on</strong>e b<strong>as</strong>is <strong>and</strong> focused <strong>on</strong> acquiring customers with teleph<strong>on</strong>y <strong>and</strong> broadb<strong>and</strong> bundles, which<br />
enjoy lower net churn rates, <strong>and</strong> a disc<strong>on</strong>tinuati<strong>on</strong> <strong>of</strong> promoti<strong>on</strong>s relating to “TV Esencial”, a low-cost televisi<strong>on</strong> package.<br />
Teleph<strong>on</strong>y: In 2011, the number <strong>of</strong> teleph<strong>on</strong>y customers incre<strong>as</strong>ed by 22 thous<strong>and</strong>, or 1.3% to 1,708 thous<strong>and</strong> <strong>as</strong> <strong>of</strong><br />
<strong>December</strong> <strong>31</strong>, 2011. Teleph<strong>on</strong>y customers <strong>as</strong> a proporti<strong>on</strong> <strong>of</strong> total residential fiber customers incre<strong>as</strong>ed by 1.5 percentage points to<br />
94.6% at the end <strong>of</strong> 2011. This incre<strong>as</strong>e w<strong>as</strong> primarily due to our efforts to acquire customers taking bundles with teleph<strong>on</strong>y <strong>and</strong><br />
the lower net churn experienced in customers taking this service. This service is showing resistance to the decre<strong>as</strong>e in the<br />
customer b<strong>as</strong>e <strong>and</strong> minutes <strong>of</strong> use, remaining str<strong>on</strong>g in terms <strong>of</strong> nati<strong>on</strong>al fixed-to-fixed calls; although fixed-to-mobile <strong>and</strong><br />
internati<strong>on</strong>al call volumes remain weak.<br />
In 2010, the number <strong>of</strong> teleph<strong>on</strong>y customers incre<strong>as</strong>ed by 20 thous<strong>and</strong>, or 1.2% to 1,686 thous<strong>and</strong> <strong>as</strong> <strong>of</strong> <strong>December</strong> <strong>31</strong>,<br />
2010. Teleph<strong>on</strong>y customers <strong>as</strong> a proporti<strong>on</strong> <strong>of</strong> total residential fiber customers incre<strong>as</strong>ed by 1.8 percentage points to 93.1% at the<br />
end <strong>of</strong> 2010.<br />
Residential ADSL Services<br />
Residential ADSL services are comprised <strong>of</strong> services <strong>of</strong>fered through full unbundling <strong>of</strong> the local loop. These services<br />
provide us with revenues from m<strong>on</strong>thly fees from teleph<strong>on</strong>y <strong>and</strong> broadb<strong>and</strong> internet services <strong>and</strong> usage charges from teleph<strong>on</strong>y<br />
services. The following table sets forth customers, RGU <strong>and</strong> revenue from our residential ADSL services <strong>and</strong> percentage change<br />
over the period.<br />
62