UNITED PAN EUROPE COMMUNICATIONS
BUSINESS DESCRIPTION:
United Pan-Europe Communications N.V. owns and operates cable-based communications networks in ten countries in Europe and in Israel. It provides cable television services. Some of its systems also provide telephone and Internet access services. Currently, its systems constitute the largest pan-European group of broadband communications networks, based on numbers of subscribers in more than one European country. It has systems in Austria, The Netherlands, Belgium, Norway and France. These systems are strategically located in the capital cities of Vienna, Amsterdam, Brussels, Oslo and suburban Paris. It also has systems in Israel, Malta and Eastern Europe. It is a subsidiary of United International Holdings, Inc., a leading international provider of video, telephone and data services. Its systems had about 5.9 million homes in their license areas at September 30, 1998. Of these, about 4.9 million homes were passed by the cable in its network and thus capable of receiving its services. About 3.4 million of these (70%) subscribed to its basic video services. It has majority ownership of its Western European systems (other than the A2000 system in Amsterdam and surrounding areas) and most of its other systems. Measured by its ownership percentage of individual systems, it has an equity interest in about 3.0 million homes passed by, and 2.0 million subscribers served by, its cable systems. In its Western European markets, it is upgrading its existing network to two-way transmission capability. This enables it to provide digital video, telephone and Internet/data services. At September 30, 1998, its systems had about 13,850 cable telephone and about 12,725 Internet access subscribers.
USE OF PROCEEDS:
The company intends to use the net proceeds from this offering: to fund costs of about NLG500 million to NLG750 million to improve its cable network to provide telephone and Internet/data services, and to pay for new activities in its video distribution and programming businesses, pending such use, to repay debt of NLG620 million, which it intends to reborrow under the same credit agreement for such use, to pay about NLG445 million as part of the purchase price for the remaining 49% of United Telekabel Holding, its Dutch holding company, to repay other debt of about NLG270 million, and for general corporate purposes and future acquisitions.
COMPETITION:
If the company fails to compete effectively in its video, telephone or Internet/data services markets, its business, operating results and financial condition may deteriorate. The cable television industry in many of its markets is competitive and changing rapidly. It expects to have to compete more with new entrants who have other multi-channel television technologies. These may include: DTH (direct to home satellite services), SMATV (private cable systems), MMDS ("wireless" cable), and local multipoint distribution services. The company may also face competition from other communications and entertainment media companies. These could include incumbent telecommunications operators. In some franchise areas, its rights to provide video services are not exclusive. It may have to compete with other cable operators. The Internet services business in Europe is highly competitive. At the moment, the company competes with dial-up Internet service providers, including many incumbent telecommunications operators. These providers usually employ traditional low-speed telephone lines and higher speed connections. It expects chello broadband to face competition from other broadband cable modem service providers, such as @Home and Roadrunner as they move to the European market. In the future, the company expects to compete with other telecommunications service providers, including incumbent telecommunications operators, using other broadband technologies.
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