Annual report (20-F) - Ono

Key Strengths
pay-per-view services. In 2004, our cable television revenues were €104.0 million.
ARPU for our cable television services for the fourth quarter of 2004 was €25.8.
• Business and other Services. We provide voice and data telecommunication services
principally to small and medium sized enterprises, although our business customers also
include several larger corporate clients and public institutions. As of December 31,
2004 we had 17,369 business customers. The number of our business customers
increased by approximately 32% during 2004. In 2004, our business and other services
revenues were €38.9 million. ARPU for our business services for the fourth quarter of
2004 was €210.
We believe that our competitive strengths will enable us to benefit from the substantial demand
for integrated communications services in our franchise areas. Our competitive strengths include:
• Proven ability to acquire subscribers. As a customer focused organization with an
effective marketing strategy, we have achieved rapid growth of customers and
penetration. As of December 31, 2004, we had achieved an overall customer
penetration rate of 33.2%. Our experience shows that penetration rates have continued
to increase in franchise areas where the build-out is substantially complete. This is
highlighted by the fact that our penetration rate has risen to over 40% in areas, such as
Cádiz and Albacete, where we have marketed our services for more than five years.
• Ability to provide bundled services. We currently provide a variety of bundled service
offerings in order to maximize revenues from each of our customers. Our bundled
services are comprised of a combination of some or all of our services, offering our
customers the convenience of having a single provider for their communication,
entertainment, and information needs. By offering bundled services, we can price our
services more aggressively than individual services offered by our competitors. We
believe this result in higher customer loyalty and increased penetration. As of
December 31, 2004, approximately 20% of our total residential customers received
three services and approximately 67% received either two or three services. At that date
we had achieved penetration rates of 30.5%, 13.4% and 18.1% for residential
telephony, Internet and cable television services, respectively, resulting in RGUs per
residential customer of 1.87.
• Technologically advanced broadband network. Our 862 megahertz network provides a
high speed, high capacity two-way communications pathway with direct access to the
customer. This allows us to offer multiple services and will allow us to deliver new
broadband services, such as interactive digital television services and video-on-demand
with limited additional cost.
• Ability to control costs. We believe that our ability to control costs is an important
element of both our operating and financial performance. We believe that the level of
capital expenditure necessary to make our networks accessible to each additional home
passed in Spain is significantly lower than that of many comparable European
companies during a similar stage of their development. This is primarily due to the high
urban population density in Spain; our ability to build portions of our network above
ground; and our ability to efficiently obtain local access and rights of way permits from
local authorities. To further control and reduce our operating costs, we focus on
streamlining our business processes, renegotiating supplier contracts and the
outsourcing of certain functions.
• Highly-skilled management team. Our management team has extensive experience in
managing telecommunications and media companies in Spain, other countries in
Europe, the United States and Canada. Eugenio Galdón, the founder of Cableuropa, was
instrumental in the liberalization of the Spanish telecommunications and cable
television markets and has managed several of Spain’s largest media companies.
Richard Alden, our Chief Executive Officer, joined us in 1998 and has extensive
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