Hosted IPTV Service our partner approach to IPTV subscriber growth Alexander Vaglarov Vestitel BG Jsc

Agenda IPTV Hosting – service definition Bulgaria – key market data Our Strategic position IPTV Hosting benefits Our current offer Next steps

Sources: TV studios Film Studios Content Aggregators Vestitel: Content Management Encoding Encryption Provisioning Quality Monitoring Billing Skins Marketing L2 Support Partner/ISP: Access network (FTTC/B/H) ‏ Customers Service Bundling (2 Play/3Play) ‏ Promotions Field support Customer Enjoying Services TV Hosting – Service Eco-System

Bulgaria-Macro-Economic Picture Indicator Change (in %) Vs Previous Year GDP6,26,36,26,25 Industrial Production 6,75,99,25,2 Unemployment10,196,95 Number of Households (HH) Population (end of 2007)

Bulgaria - TV Market 2008 TV penetration > 90%, average 1,6 TV/HH CATV and DTH penetration– 70 % of HH(1,75 Mil.) ‏ CATV consolidated– 42% of HH,>38% by 2 players CATV operators offer 3 Play, started in 2006 CATV ARPU – about 12 EUR/month incl. VAT DTH penetration - 28% of HH, ARPU 9 EUR/month Digitalization of TV – regulatory push till 2012 Web TV – started in 2007, niche product IPTV – first steps, but the future

30% of HH connected to BB Internet (700K) ‏ Average growth per year about 6% Illegal content decreased dramatically Bulgaria – BB Internet Market 2008

Our Strategic position Vestitel installed high quality IPTV Eco-system Vestitel collected 2 years of IPTV experience Vestitel’s own FTTB/H network development was too slow – building permissions Next 2-3 years will be critical for IPTV positioning in BG - 2 main players can survive IPTV needs scale, to be profitable Partners are needed to scale

Our Strategic position 3 strategic partner choices Cable TV BTC (incumbent) ‏ LAN ISPs FTTC/B/H biggest stake in BB Internet (in total)‏ FTTC/B/H – best for IPTV fragmented >400 good customer contact need 2 and 3Play to grow and protect positions ! Investments, no TV experience, QoS, multicast biggest customer base in one hand own IPTV project cancelled financially strong ! xDSL limitations, slow, decision making process, risk of starting own service Competitors

Our market approach – LAN ISPs Local focus – partner ISP with good reputation No set-up fee, pay as you grow ISP ability to create own bundles – 2 & 3Play Motivating GM for ISP (TP= CP/2) margin split of all VAS (e.g. VoD) ‏ Free STBs for the service testing & start (100) ‏ Free training for sales and technicians Marketing support through (co branding) ‏

Customers: High Picture Quality (fully digital technology) ‏ Interactive service, content navigation ISPs: Short time to market, protect market position Easy start, low risk for ISP Economies of scale for STB and content Content providers : Controlled content distribution Vestitel: one of the 2 main IPTV players in BG IPTV Hosting win - win solution

IPTV service started in just 7 steps

Our current offering 74 TV channels + 20 radio stations ISP individual vision – „Logo” & “Skin” Centralized Provisioning and Billing 24/7 Layer 2 service support Price for Sofia – 5.87 EUR/Subscriber/month Marketing Support through split of VoD and Pay TV margins 2 STB models ( Motorola, 2-nd STB integr. in progress ) ‏

Features – now and next steps Streaming TV- existing (74 ch) ‏ Video on Demand - existing (Promo) ‏ EPG & Reminders- existing Individual TV profiles - existing Information portal - existing HDTV – planned Q2/2009 Time-shifted TV – planned Q3/2009 People metrics – planned E/2009 Targeted Advertising – planned 2010 NPVR – planned 2010

Thank you for the attention! Alexander Vaglarov Illustration by Barton Stabler