Hosted IPTV Service our partner approach to IPTV

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

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

Bulgaria-Macro-Economic Picture

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

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

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 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 3 Play to grow and protect positions ! Investments, no TV experience, Qo. S, multicast BTC (incumbent) • biggest customer base in one hand • own IPTV project cancelled • financially strong ! x. DSL limitations, slow, decision making process, risk of starting own service Cable TV 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 & 3 Play Motivating GM for ISP (TP= CP/2) 50 -50 margin split of all VAS (e. g. Vo. D) Free STBs for the service testing & start (100) Free training for sales and technicians Marketing support through (co branding)

IPTV Hosting win - win solution 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 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 50 -50 split of Vo. D 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 Q 2/2009 Time-shifted TV – planned Q 3/2009 People metrics – planned E/2009 Targeted Advertising – planned 2010 NPVR – planned 2010

Thank you for the attention! Alexander Vaglarov +359 89 334 6600 avaglarov@vestitel. bg Illustration by Barton Stabler