The Regulatory Framework for Electronic Communications: Regulation v. Competition European Parliament Hearing – May 30, 2005 Duco Sickinghe (CEO)

The Regulatory Framework for Electronic Communications:

Regulation v. Competition

European Parliament Hearing – May 30, 2005

Duco Sickinghe (CEO)

This presentation includes forward-looking statements. These forward-looking statements include all matters that are not historical facts, statements regarding Telenet’s intentions, beliefs or current expectations concerning, among other things, Telenet’s results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which Telenet operates. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Specific factors that might cause these uncertainties include, but are not limited to: Telenet’s business plan, which may undergo changes in the future; Telenet’s history of losses; Telenet’s substantial leverage and restrictions contained in the agreements governing its debt; the potential fluctuations in Telenet’s operating results; Telenet’s competition; Telenet’s potential inability to attract and retain subscribers; rapid technological change and evolving industry standards in the markets for Telenet’s services and Telenet’s ability to introduce new technologies or services; Telenet’s ability to maintain and upgrade its network and obtain adequate equipment; Telenet’s integration of its recent acquisitions; adverse regulatory, legislative, tax or other judicial developments; and factors that are not known at this time.

Telenet cautions you that forward-looking statements are not guarantees of future performance and that its actual results of operations, financial condition and liquidity and the development of the industry in which Telenet operates may differ materially from those made in or suggested by the forward-looking statements contained in this presentation. In addition, even if Telenet’s results of operations, financial condition and liquidity and the development of the industry in which Telenet operates are consistent with the forward-looking statements contained in this presentation, those results or developments may not be indicative of results or developments in future periods. Telenet does not undertake any obligation to review or confirm analyst expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise after the date of this presentation.

The Notes described herein have not been registered under US Securities Act of 1933, as amended (the “US Securities Act”), or any state securities laws.

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The securities referred to in this document have been sold.

“Safe Harbor”

Introduction to TelenetTelenet in a snapshot …

Telenet’s location in Europe

Netherlands

Belgium

Wallonia

Flanders

Germany

Luxembourg

95% Cable TV penetration

Competitive infrastructures lead to higher broadband growth

(31 dec 2004)

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 100%

share of largest technology B

road

ban

d p

enet

rati

on

per

h

ou

seh

old

Denmark

The Netherlands

Belgium

Portugal

Austria

Sw eden Finland

ItalyUKSpain

LuxembourgFrance

Germany

GreeceIreland

Source : ECTA

Facility-based competition is most effective : countries close to 50/50 % DSL- Cable have highest BB penetration

Broadband wholesale pricing should not hinder ‘make or buy’ decission

Infrastructure investment is best assurance for creating growth & innovation

34%

39%43%

45%48%

50%52%

55%

3%

10%

18%

26%23%

30%

36%

2000 2001 2002 2003 2004 2005 E 2006 E

Hou

seho

ld p

enet

rati

on (

%)

Broadband

Internet

PC

Source: ISPA, Telenet analysis

Flanders leading broadband penetration

Result: Telephony growth in a Declining Market

Bron: BIPT, IDC, Belgacom & Telenet analyseEnkel PSTN lijnen (excl. ISDN); RES+SOHO

2%

7%

11% 12%15%

18%

0

200

400

600

800

1.000

1.200

1.400

1.600

1.800

2.000

1999 2000 2001 2002 2003 2004 E

0%

5%

10%

15%

20%

25%

30%

35%

40%Belgacom Telenet Market share

Where have we come from?

89,3

681,1

2000 2004

2004

• € 75 M net free cash flow

• Total Debt/ LQA Ebitda 5,1x

• Cash on balance sheet € 146 M

• Ample access to liquidityRevenue in € Million

Telenet today: a balanced revenue mix

• In 2005: internet > CATV

• First player in VOIP in Europe

20042004

Analog Cable TV

BB Internet

Total Revenues: € 681.1 Million

Fixed Telephony

Telenet Solutions

Canal+

Triple Play: Other cable operators (Coax networks)(Revenue Split 2004)

27%3%

56%

2%

12%

Cable TV BB Internet Telephony DTV/Premium TV Corporate Services

28%

9%30%

10%

23%

(B)

Sources: Analyst reports

21%

62%

11%

6%

Other Operator Benelux

Other Operator Western Europe

Economies of scale – Revenue 2004

0 500 1000 1500 2000 2500

Carrier & others

Video

Internet & data

Fixed Voice

Mobile

€ Millions0 500 1000 1500 2000 2500

Total

N/A

N/A

5540 m€ 681 m€8:1

3:1

10:1

N/A 4,8% revenue of Belgacom

Many challenges are coming on multiple fronts …

Competition • Price & performance

pressure• Strong financing means• New players in each

market−Belgacom in iDTV−Mobile players in fixed services

−Fixed players in mobile services

Technology • New

platforms/frequencies• IP convergence

Consumers • One supplier• One integrated customer

service • Lower pricing

Services • VoIP• MVNO• iDTV• Mobile video, …

Triple play & convergence

… and are primarily driven by triple play and convergence at each level

Services

Networks

Access devices

Players

•New platform frequencies (WiMax, DVB-H)•Evolution to all IP

•Fixed/mobile convergence

•Data

•Home gateways

•Fixed/mobile handsets

•Telco’s into TV services•Fixed players into mobile services (MVNO)•Mobile players into fixed services (xDSL)

In the long run, any service on any network via an integrated access device by any player

•Voice •Video

… and are evolving in order to allow for a full triple play with everything over IP

COAX

DataVide

oVoic

e

Network

Transport

Service

IP / MHP / DVB

FIBER xDSL WIFI UMTS

TV over DVB: Interactive Digital TV

• Set-top box probably best medium to close Belgian digital divide

• Cost of Set-top box is about 20% of price PC

Broadband penetration

Cable penetration

55%

34%

PC penetration

43%Internet penetration

Opportunitydigital TV

95%

COAX xDSL MVNOWiFi FIBER

IP DVB MHP

DATAVIDEOVOICE

NETWORK

TRANSPORT

SERVICE

Convergence leads to Triple Play offerings

BUT assymetric regulation still required 1. Mobile

WiMAX spectrum should be granted to alternative operators:

i) in order to serve as mobile complement and to

ii) tackle F2M substitution

iii) level playing field with mobile & fixed incumbents

2. VoIP

Need to regulate VoIP services offered by the incumbent:

Especially cost based retail pricing for incumbent

“This decision will further the goal of building sustainable competition in local telephone markets. Under this decision, incumbent local exchange carriers – those with market power – cannot price their local VoIP services below cost to stifle competition.” (CCTC, May 12, 2005)

Regulatory issues (i)

Regulatory issues (ii)

3. Access to content

i) Danger of leverage of financial power by incumbentii) Public broadcasters should remain neutral (non-exclusivity contracts)iii) Technology neutral approach towards copyright

Timing transposition new Regulatory Framework

Belgian Electronic communication bill adopted by Parliament April 21, 2005

Conclusions

• Infrastructure competition:

“The best performing countries in the Union and abroad are characterised by a significant degree if facility-based competition […]”

Commission Communication (COM (2004) 369final)

“NRAs should allow the infrastructure-based rivals to the incumbent to set call termination charges which allow them to recover the efficiently incurred costs of an operator of their size and topology.”

OVUM study, Barriers to competition, Nov 2003

• Asymmetric regulation is still required to achieve sustainable competition across the European Union (Mobile spectrum, VoIP, access to content)

Regulation v. Competition