Annual report (20-F) - Ono

In March 2005, Cableuropa performed a capital increase of 196,728,848 shares that was fully
subscribed by GCO in exchange for the contribution of 100% of the capital stock of Retecal, following
which Cableuropa became the sole shareholder of Retecal. In March 2005, Cableuropa delivered to the
Mercantile Register the vertical merger projects for Mediterranea Norte, Mediterranea Sur, Valencia and
Retecal, all wholly-owned subsidiaries of Cableuropa.
B. Business Overview
We are a leading provider of integrated telephony, broadband Internet, and cable television
services to residential and business customers in Spain. We commenced operations in 1998 and, since that
time, have pursued a strategy of rapid penetration generating multiple revenue streams to grow our
business. As of December 31, 2004, we had 676,858 residential customers and 17,369 primarily small
and medium-sized business customers. During the year ended December 31, 2004, we generated revenue
of €443.4 million and EBITDA of €172.4 million, resulting in an EBITDA margin of 38.9%. During the
three months period ended December 31, 2004, we generated revenue of €119.3 million and EBITDA of
€46.3 million, resulting in an EBITDA margin of 38.8%.
Our 862 megahertz hybrid fiber coaxial network provides a high speed, high capacity, two-way
communications pathway with direct access to our customers. As of December 31, 2004 our backbone
network extended 7,575 route kilometers and our local networks extended 8,214 route kilometers, passing
over almost 2.3 million homes. Our addressable market is 5.6 million homes and 0.7 million businesses,
representing approximately 27% of the 20.8 million homes and 25% of the 2.8 million businesses in
Spain. We believe our franchise areas, especially those in our Mediterranean cluster, are growing rapidly
both in the number of homes constructed each year and in gross domestic product per capita. We are
continuing to expand our network in areas with attractive revenue potential.
The following table includes information regarding the build-out and reach of our network:
As at December 31,
Percentage Change
2002 2003 2004 2002/2003 2003/2004
Infrastructure:
Local access network (route
kilometers) 6,279 7,148 8,214 13.8% 14.9%
Backbone network (route
kilometers) 6,263 6,711 7,575 7.2% 12.9%
Cities with service 81 98 123 21.0% 25.5%
Homes passed 1,760,744 2,003,233 2,285,439 13.8% 14.1%
Homes released to marketing 1,469,061 1,743,266 2,038,172 18.7% 16.9%
Percentage of homes passed 83.4% 87.0% 89.2% — —
Our service offerings are comprised of telephony, broadband Internet and cable television
services to residential customers as well as voice and data telecommunications services to business
customers.
• Residential Telephony. We provide local, national and international telephony services
to 622,275 customers, representing 30.5% penetration in our franchise areas as of
December 31, 2004. In 2004, our residential telephony revenues were €210.8 million.
ARPU for our residential telephony services for the fourth quarter of 2004 was €30.1.
• Residential Internet. We are a leading provider of residential broadband Internet
services in our franchise areas. Our broadband Internet customer base grew by
approximately 44% in 2004, resulting in 268,355 broadband Internet customers and
representing 13.3% penetration as of December 31, 2004. In 2004, our total Internet
revenues were €89.6 million. ARPU for our broadband Internet services for the fourth
quarter of 2004 was €32.2.
• Residential Television. We are a leading provider of pay television services in Spain
with 369,496 customers, representing 18.1% penetration as of December 31, 2004. We
offer a wide selection of digital and analog cable television programming from basic to
premium packages. Each of our programming packages also provides easy access to our
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