BROADCAST

In 2003, 9 per cent of Telenor’s external revenues were derived from Broadcast. The acquisition of Canal Digital and cost reductions through the Delta4 programme have created synergies and increased profitability. Our primary objective for Broadcast is to strengthen our position as the leading TV distributor in the Nordic region.

INTRODUCTION
Telenor is the largest Nordic distributor of TV services to the residential market in the Nordic region, both via cable and satellite. Broadcast also operates the Norwegian terrestrial network for radio and TV broadcasting. Through utilising three geostationary satellites, Broadcast is the leading provider of satellite transmission to the Nordic region. Broadcast’s position as the leading player within TV distribution in the Norwegian and Nordic markets was further developed in 2003.

In 2003, Broadcast consisted of the following areas of activity:

Distribution is the largest provider of TV services to the residential market in the Nordic region, offering basic TV services, Pay-TV and interactive services in the Nordic region to subscribers with satellite dishes and cable TV, as well as operators and households in small antenna TV networks. The cable TV activity also provides Internet connection via cable TV in certain areas. We provide TV distribution to more than 2.5 million households and businesses.

Transmission provides transmission services to broadcasters via Satellite Broadcasting and Norkring.

Other activities include Conax, which provides access control technology, business area functions in Broadcast and associated
services.

THE YEAR 2003
The EU Commission approved the agreement between Canal + and Telenor Broadcast for the purchase of Canal Digital. The year 2003 was the first full year of operation for Canal Digital in Broadcast. Cost reductions via the Delta4 programme and streamlining and synergies created in Canal Digital all contributed significantly to Telenor Broadcast’s positive financial results.

Broadcast can refer to an increase in the number of TV customers and in market shares in 2003. This, together with increased average revenue per user (ARPU) and cost reductions by means of manpower reductions and restructuring etc., is the main reason for Broadcast posting good results. Revenues and the operating profit margin have both increased compared to the previous year.

VALUE CREATION
In 2003, Telenor consolidated its position
as the largest supplier of TV services to the Nordic private market, both with regard to the number of paying subscribers and to the extent of coverage. The company is also the Nordic region’s largest provider of transmission services to broadcasters. At the end of 2003, Telenor distributed TV, directly or indirectly, to more than 3 million households in the Nordic region.

As at 31 December 2003, Telenor had a total of 2,465,000 TV subscribers in the Nordic region, which is an increase of 2.5% compared with 31 December 2002. As at 31 December 2003, the number of subscribers with satellite dishes was 763,000, which is an increase of 8.8% compared with 31 December 2002. The market share of Pay-TV in the satellite market in the Nordic region increased from 61% in 2002 to 63% in 2003. The number of cable TV subscribers increased by 33,000 to 604,000 at year-end 2003. The number of households in smaller closed cable TV networks was 1,098,000, which is a reduction of 3.1% compared to 31 December 2002. These figures reinforce Broadcast’s leading position in the Nordic market.
Increased revenues and positive results from cost reductions have contributed to improved margins, and customer churn dropped from 19% in 2002 to 16% in 2003.

Transmission also had a strong year, with improved margins in 2003 despite revenues being somewhat lower than the previous year as a result of the shutdown of analogue transmissions and overcapacity in the market.

In 2003, Broadcast acquired 44.8% of the shares in APR Media Holding AS in exchange of shares Telenor held in A-pressen ASA.

Key Figures Broadcast 2001–2003 In NOK millions 2003 2002 2001 Revenues 4,820 3,605 2,626 EBITDA 1,229 499 344 Operating profit (loss) 181 (475) (726) Associated companies (84) (264) (546) Investments 266 2,769 1,711 No. of man-years 809 972 943