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

3. Kabel Deutschland The Future of Cable in Germany, Köln 03.11.2003 Seite 2 Level 4 strategy - agenda Market environment and challenges Strategic weapons and options

4. Kabel Deutschland The Future of Cable in Germany, Köln 03.11.2003 Seite 3 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

5. Kabel Deutschland The Future of Cable in Germany, Köln 03.11.2003 Seite 4 Effects of price increase loss of subscribers Growing density of L4 networks increasing risk of L3 overbuild Growing urgency to act

6. Kabel Deutschland The Future of Cable in Germany, Köln 03.11.2003 Seite 5 Market environment and challenge - issues Customers & market L 4 competitors Pricing & Economics Subscriber development Market structure & shares Regional differences

7. Kabel Deutschland The Future of Cable in Germany, Köln 03.11.2003 Seite 6 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.

8. Kabel Deutschland The Future of Cable in Germany, Köln 03.11.2003 Seite 7 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 penetration with Multimedia equipment – still increasing The structure of the German market

9. Kabel Deutschland The Future of Cable in Germany, Köln 03.11.2003 Seite 8 Number of households (WE) by region Schleswig Holstein 1.340 Mio Mecklenburg Vorpommern 0.830 Mio Hamburg 0.922 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- Württe mberg 4.839 Hessen 2.840 Reg1Reg2Reg3Reg4Reg7Reg9 KBWiesyish 3.092 Mio 4.040 Mio 3.043 Mio 4.451 Mio 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 ranking 2 GNP 99,6 ranking 3 GNP 84,2 ranking 5 GNP 69,6 ranking 6 GNP 96,7 ranking 4 GNP 124,0 ranking 1 GNP 120,8 GNP 142,6 GNP 119,8 Regional break-down of the German market

10. Kabel Deutschland The Future of Cable in Germany, Köln 03.11.2003 Seite 9 Share of cable / satellite / terrestrial in KDG regions

11. Kabel Deutschland The Future of Cable in Germany, Köln 03.11.2003 Seite 10 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

12. Kabel Deutschland The Future of Cable in Germany, Köln 03.11.2003 Seite 11 Types of customer relationships Numbers of subscribers in Mio. / WE

13. Kabel Deutschland The Future of Cable in Germany, Köln 03.11.2003 Seite 12 Market environment and challenge - issues Customers & market L 4 competitors Pricing & Economics Subscriber development Market structure & shares Regional differences TV value chain

14. Kabel Deutschland The Future of Cable in Germany, Köln 03.11.2003 Seite 13 TV value chain Content creation Channel programing Network operations Signal delivery LE3 Inhouse network LE4 Marketing Customer service Billing Set Top Box Cable modem Studios & ChannelsL3-Operator N4-Operator Plan Build Operate Acquisition Retention Technical/product service Billing/collection Rental/ Provisioning TV Household/ Customer

15. Kabel Deutschland The Future of Cable in Germany, Köln 03.11.2003 Seite 14 Market environment and challenge - issues Customers & market L competitors Pricing & Economics Tariff structure Tariffs for L4 Relative economics Subscriber development Market structure & shares Regional differences TV value chain

16. Kabel Deutschland The Future of Cable in Germany, Köln 03.11.2003 Seite 15 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

17. Kabel Deutschland The Future of Cable in Germany, Köln 03.11.2003 Seite 16 Level 4 strategy - agenda Market environment and challenges Strategic weapons and options

18. Kabel Deutschland The Future of Cable in Germany, Köln 03.11.2003 Seite 17 What are our basic options to master the challenges? What are our relative competitive advantages? Strategic weapons and options – key questions

19. Kabel Deutschland The Future of Cable in Germany, Köln 03.11.2003 Seite 18 Strengthen cable against alternative media Market digital programmes Offer new interactive services in defined areas Basic Options Berlin and Munich

20. Kabel Deutschland The Future of Cable in Germany, Köln 03.11.2003 Seite 19 Cooperation models for Digital TV with LE4 Source:Marketing working group, Solon *Optional **for acquisition support StrongWeak Profit interest Level 4 (incl. B1) Interest in customer relationship Active sales support Segments and positions Housing Associations / Property Management / Others Professional Level 4Other L4 Demanding additional digital TV offers Prof. Housing Associations Property Mgmt / Others Transport modelSales partner modelReseller model One time acquisition fee** * Revenue share "Transport" Revenue share "Operations" Cooperation models *