Kabel Deutschland The Future of Cable in Germany Ernst Uhlig / Director Level 4 03. November 2003...

Kabel Deutschland

The Future of Cable in Germany

Ernst Uhlig / Director Level 4

03. November 2003

Köln

Kabel DeutschlandThe Future of Cable in Germany, Köln 03.11.2003 Seite 2

Level 4 strategy - agenda

•Market environment and challenges

• Strategic weapons and options


•What does the industry structure and dynamics look like today?•How severe is the HL4 challenge? Is it getting worse or better?•What is the economic impact on KDG?

Market environment and challenges – key questions


• Effects of price increase loss of subscribers•Growing density of L4 networks increasing risk of L3 overbuild

Growing urgency to act


Market environment and challenge - issues

Customers & market

L 4 competitors

Pricing & Economics

• Subscriber development

• Market structure & shares

• Regional differences


Growth potential from new households limited

•Number of households in Germany– 1998: 37.340 Mio.– 1999: 37.984 Mio.– 2000: 38.383 Mio.– 2001: 38.681 Mio.

Only slight increase of total number

Number of new houses:2002: 0,290 Mio.


• Total number of private households 2003: 38.443 Mio.• Equipment of private households with:– Personal Computer: 57,2 %– Internet Usage: 36,0 %– TV: 95,9 %–DVD-Player: 14,1 %– Video Recorder: 68,9 %

Already overall high penetrationwith “Multimedia“ equipment – still increasing

The structure of the German market


•Number of households (WE) by region

Schleswig Holstein

1.340 Mio

Mecklenburg

Vorpommern

0.830 Mio

Hamburg0.922 Mio

Nieder-sachsen

3.684 Mio

Bremen

0.356 Mio

Berlin

1.859 Mio

Brandenburg

1.184 Mio

Thüringen

1.109 Mio

Sachsen

2.133 Mio

Sachsen-Anh.

1.209 Mio

Rheinland-

Pfalz

1.853 Mio

Saarland

0.514 Mio

Bayern

5.632 Mio

Baden-

Württember

g

4.839

Hessen

2.840

Reg1 Reg2 Reg3 Reg4 Reg7 Reg9 KBW iesy ish

3.092 Mio

4.040 Mio

3.043 Mio

4.451Mio

2.367 Mio

5.632 Mio

4.839 Mio

2.840 Mio

8.416 Mio

NRW

8.416

GNP – Gross National Product ( Year 2000, EU = 100)

GNP

111,8

ranking2

GNP

99,6

ranking3

GNP

84,2

ranking5

GNP

69,6

ranking6

GNP

96,7

ranking4

GNP

124,0

ranking1

GNP

120,8

GNP

142,6

GNP

119,8

Regional break-down of the German market


0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

Region 1 Region 2 Region 3 Region 4 Region 7 Region 9

cable (in %)

Sat (in%)

Terr. (%)

Share of cable / satellite / terrestrial in KDG regions


LE4 and housing associations

L3 operator (KDG)

L4 operator (e.g., TC, PC, ewt, Bosch)

Housing companies / associations

TV households / end customers

Own head end


Types of customer relationships

Standard marketFormer

DeTeKSDirect

WoWi & HA

Level 4 operators TC-Group

Bosch Primacom

ewt

Otherlevel 4

providers

2.951 748 3.342

2.591 388

10.020

Direct customers + own level 4 customers

6.321

Direct & indirect WoWi & HA

3.699

Numbers of subscribers in Mio. / WE



Customers & market

L 4 competitors

Pricing & Economics




• TV value chain


TV value chain

Content creation

Channel programin

g

Network operations

Signal delivery

LE3

Inhouse network

LE4

Marketing

Customer service

Billing

Set Top Box

Cable modem

Studios & Channels L3-Operator

N4-Operator

PlanBuild

Operate

Acquisition Retention

Technical/product service

Billing/collection

Rental/ Provisionin

g

TV Household/Customer



Customers & market

L competitors

Pricing & Economics

• Tariff structure• Tariffs for L4• Relative economics




• TV value chain


- €

1,00 €

2,00 €

3,00 €

4,00 €

5,00 €

6,00 €

7,00 €

8,00 €

9,00 €

10,00 €

10 50 100 250 500 1000

WE/ÜP

Entgelt alt

Entgelt aktuell

Before Nov 02

After Nov 02

20

standard market

individual market

• standard market: average price increase 26 % • individual market: average price increase 33 % – not

“linear“

Pricing – before and after November 02

All prices are „Pauschal“


Level 4 strategy - agenda

•Market environment and challenges

• Strategic weapons and options


•What are our basic options to master the challenges?•What are our relative competitive advantages?

Strategic weapons and options – key questions


• Strengthen cable against alternative media• Market digital programmes• Offer new interactive services in defined areas

Basic Options

Berlin and Munich


Cooperation models for Digital TV with LE4

Source:Marketing working group, Solon

* Optional** for acquisition support

Strong Weak

Profit interest

Level 4 (incl. B1)

Interest in customer relationship

Active sales support

Segments and positions

Housing Associations / Property Management / Others

Professional Level 4 Other L4

Demanding additional digital TV offers

Prof. Housing Associations

Property Mgmt / Others

Transport model Sales partner model Reseller model

One time acquisition fee** *

Revenue share "Transport"

Revenue share "Operations"

Cooperation models

*

Kabel Deutschland The Future of Cable in Germany Ernst Uhlig / Director Level 4 03. November 2003...

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