The Kudelski Group achieves strongest-ever financial results in 2006

CHESEAUX — The Kudelski Group (SWX KUD.VX) announced today strongest-ever 2006 results. Total revenues, other operating income and net gain on sale of TicketCorner amount to CHF 756.2 million, increasing by 8.5% from the previous year. Adjusted pro forma Group revenues grew by 21.1% from 2005. The Kudelski Group posts record levels CHF 150.2 million EBIT (+24%) and CHF 138.5 million net income, 59.6% above previous year. In 2007, the Group expects continued growth and a solid profitability.

For the first time, Digital TV broke the CHF 500 million revenue mark, with a particularly robust development in Europe, growing by 17% compared to the previous year. Within three years, the Kudelski Group has multiplied its European Digital TV revenues close to fivefold, by establishing the quality and performance standard for conditional access solutions for satellite and cable operators. In addition to growing in the established business lines, the Kudelski Group now drives an increasingly large share of its revenues from new segments, such as the terrestrial, IPTV and mobile markets and from newly introduced product lines such as EPG (Electronic Programming Guides), Digital Video Recorder and Push Video on Demand solutions, advanced smart cards and CAMs (Conditional Access Modules). In 2006, revenues from new lines doubled compared to the previous year and are expected to again double in 2007 to exceed the CHF 100 million mark.

Continued growth in DTV

The Kudelski Group’s strategy to offer integrated solutions to leading Pay TV operators has continued to gain wide market acceptance. New contracts include:

• YPSO/Numéricâble, the leading cable broadband operator in France, Belgium and Luxembourg, selected the Kudelski Group technology for the rollout of its Video-On-Demand (VOD) and interactive TV services. The Kudelski Group thereby will leverage its entire suite of digital television products to seamlessly introduce VOD into YPSO/Numéricâble’s existing cable infrastructure. Expanding on the solid base of Nagravision’s leading content protection system, which already secures Numéricâble’s services, the Kudelski Group will not only provide its latest Nagravision conditional access system to all of YPSO/Numéricâble operators, but also deliver three additional technologies: the OpenTV Core 2.0 and HTML client middleware to achieve portability across a wide range of set-top boxes; the Quative next-generation Service Delivery Platform (SDP) to provide full support for the operator’s interactive applications; the Lysis Content Management System (CMS) to drive the entire content distribution chain and workflow for on-demand content. The Kudelski Group will additionally handle full integration with YPSO/Numéricâble’s existing backend systems.
• INDI, the digital TV platform of the four Flemish public Cable providers (Interlectra, Integan, PBE and WVEM) has selected Nagravision to provide a complete integrated conditional access platform to secure its services which will soon include interactive HDTV channels and DVR services. INDI reaches one-third of the Flemish TV-market or 800 000 households in Belgium.

The Kudelski Group has also continued to make inroads into the promising markets of TV over mobile devices and IPTV:

• Italy’s second largest mobile operator Vodafone Italy has selected Nagravision to protect the content rights of its Digital Video Broadcasting Handheld (DVB-H) mobile TV service – Vodafone SKY TV. The Italian’s top three MNOs today have adopted the Nagra Mobile platform to secure their DVB-H services.
• In Spain, Nagravision has successfully collaborated with abertis telecom to integrate its conditional access technology into abertis telecom’s DVB-H platform for the company’s mobile TV technical tests.
• In Asia, Maxis Communications Bhd, Malaysia’s largest cellular operator, selected Nagra Mobile TV solution for a three-month DVB-H trial to test wireless television services. Full Mobile TV commercial launch is expected at the end of the year.
• In the United States, Nagravision has been selected by Hiwire LLC, a division of Aloha Partners (the largest 700 MHz spectrum owner in the US) to secure the deployment of its DVB-H multimedia platform delivery system.
• CNN/Turner/Time Warner, one of the world’s leading US content providers, has purchased an end-to-end DVB-H Nagra Mobile solution for the development and evaluation of their Mobile TV offering.
• Leveraging on the Group’s synergies, Abilis Systems, the Kudelski Group semiconductor company offering the world’s first single-chip, low-power Software-Defined-Radio (LP-SDR™) solution for mobile digital TV, and CyberLink Corp. (5203.TW), a world leader in digital home solutions, announced the joint development of a secure end-to-end mobile TV solution integrating Nagra Mobile TV conditional access system.
• Club Internet, France’s leading IPTV operator, has selected Nagravision’s Lysis Content Management System to manage its new Video-On-Demand service.

The Kudelski Group continues solid performance in all markets with strong momentum.

• In Eastern Europe covering the Romania, Hungary, Slovakia and Czech Republic markets, leading DTH operator RCS&RDS has increased in less than two years its subscribers number to 1.2 million at the end of 2006.
• In Poland, Cyfrowy Polsat reached one-million subscribers in 2006. The operator is expected to continue to enhance its offering with HDTV services.
• In the United States, DISH Network, the Echostar Corporation satellite operator, continued its growth by reaching 13 million subscribers at the end of 2006. DISH Network’s growth was boosted by the success of its DVR (4.6 million units sold in 2006) as well as by the launch of two new, advanced DVR, an expanding video-on-demand platform and a 30 HDTV channel offering.
• Telefónica has selected Nagravision to secure its DTH platform in Latin America. The Nagravision solution will enable the operator to seamlessly deploy its services in multiple countries across the continent.

Leveraging its leadership position in the R&D of innovative conditional access systems, Nagravision is offering a platform solution to enable operators to securely offer Pay TV channels over a PC – which is a growing delivery mode.

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