127k Zon boxes installed in 4Q09; pay TV subscribers stable

Monday, March 1st, 2010 

LISBON — ZON Multimedia Serviços de Telecomunicações e Multimédia, SGPS, S.A. (Lisbon:ZON) has released its results for 2009.

  • Pay TV subscribers stabilized at 1,594.8 thousand, reversing marginally negative trend in 1H09 with positive net adds in last two quarters of the year;
  • 152.2 thousand new customers subscribed to ZON’s high-end Pay TV offer “Funtastic” and 454.4 thousand subscribers have taken-up new ZON boxes, bringing the total to 545.5 thousand, representing 34.2% of the customer base.

ZON continues to defend its leading position in the Portuguese Pay TV market with a 64.4% market share according to the latest data reported by the regulator, ANACOM. ZON’s Pay TV subscriber base has remained relatively stable over the past quarters, at around 1.6 million, witnessing a return to positive net adds in the second half of 2009. FY09 Negative net adds of 18.7 thousand reflect a combination of growth in higher revenue generating, multiple service cable customers and a decline in the number of Single Play satellite customers.

By the end of FY09, ZON’s total Pay TV subscriber base was 1.595 million subscribers, of which 1.180 million subscribed to cable services and 414 thousand to satellite services.

High definition content is a key differentiating factor of ZON’s pay TV offer. In December ZON launched a specific Digital HD offer including 70 TV channels, 6 of which in HD. In total, ZON has the broadest range of HD content in the market, providing 11 HD channels covering areas such as sports (SportTV HD and Eurosport HD), Films and Series (TV Cine HD, MOV HD, AXN HD, FOX HD and FOX Life HD), Documentaries (National Geographic HD and myzen.TV HD), Children’s (Disney Cinemagic HD) and Music (Brava HDTV).

Customers are subscribing more and more to ZON’s higher-end Pay TV service “Funtastic” which offers over 114 channels. By the end of 2009, 648.1 thousand Pay TV customers were subscribing to the “Funtastic” offer, 30.7% more than in FY08, representing 40.6% of the total subscriber base.

Premium subscriptions also recorded a significant increase to 901.5 thousand at the end of FY09, due primarily to the inclusion of the TVCine movie channels in one of ZON’s leading Triple Play bundles – “ZON Filmes” and also due to the launch of a number of new channels such as “Brava TV” (classical arts and music channel), or Caça e Pesca (hunting and fishing channel).

New video and programming functionalities are gaining traction amongst customers, as can be seen from the significant growth in ZON HD PVR and non PVR set-top boxes installed. By the end of FY09, 545.5 thousand ZON Boxes were installed, of which 270.3 thousand had PVR functionalities. Usage of the ZON videoclub is increasing gradually as customers become more familiar with the service, although still representing a relatively small proportion of Pay TV revenues. Customers that use the videoclub are generating additional average monthly revenue of over 5 euros per month.

Trends in TV viewing are helping to drive the further take-up of Pay TV services in Portugal. Audience of Pay TV channels has been recording a continuous quarterly increase, when compared with free-to-air channels, having achieved an 18.3% share of audience in 3Q09 and representing growth of 30% in comparison with 14.1% in 3Q08.

Business Indicators (‘000):

                           1Q08     2Q08     3Q08     4Q08     1Q09     2Q09     3Q09     4Q09
                        -------  -------  -------  -------  -------  -------  -------  -------
Basic Subscribers*      1,560.5  1,557.0  1,539.1  1,613.5  1,595.4  1,591.4  1,594.7  1,594.8
  of which
  Digital "Funtastic"     399.8    416.9    445.9    495.8    539.6    574.9    613.1    648.1
  Premium Pay TV          832.6    820.9    834.8    837.2    835.3    908.3    914.8    901.5

* These figures are related to the total number of Pay TV basic customers, including the cable and satellite platforms. ZON
Multimédia offers several basic services, based on different technologies, directed to different market segments (residential, real estate and corporate), with a distinct geographical scope (mainland Portugal and the Azores and Madeira islands) and with a variable number of channels.

('000)                     4Q08   1Q09   2Q09   3Q09   4Q09
                          -----  -----  -----  -----  -----
Basic subscribers         1,614  1,595  1,591  1,595  1,595
  Cable subscribers       1,176  1,176  1,179  1,181  1,180
  Satellite subscribers     438    419    412    413    414

Zon boxes installed          91    184    292    418    545

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