Offering Memorandum

UPC Germany GmbH

To acquire Unitymedia GmbH 1,430,000,000 8 1 8% Senior Secured Notes due 2017 $845,000,000 8 1 8% Senior Secured Notes due 2017 665,000,000 9 5 8% Senior Notes due 2019
UPC Germany GmbH (formerly known as Balago Vermgensverwaltungsgesellschaft mbH) (UPC Germany GmbH or the Issuer) is offering 1,430,000,000 aggregate principal amount of its 8.125% Senior Secured Notes due 2017 (the Euro Senior Secured Notes), $845,000,000 aggregate principal amount of its 8.125% Senior Secured Notes due 2017 (the Dollar Senior Secured Notes and, together with the Euro Senior Secured Notes, the Senior Secured Notes), and 665,000,000 aggregate principal amount of its 9.625% Senior Notes due 2019 (the Senior Notes), as part of the financing for the proposed acquisition of Unitymedia GmbH by the Issuer, an indirect wholly-owned subsidiary of Liberty Global, Inc. (the Acquisition). The Senior Secured Notes and the Senior Notes are collectively referred to herein as the Notes, unless the context otherwise requires, and the Euro Senior Secured Notes and Senior Notes are collectively referred to herein as the Euro Notes. At the time of the Acquisition, the Issuer will acquire all of the outstanding capital stock of Unitymedia GmbH. Within 35 days following consummation of the Acquisition, the Issuer intends to effect the Debt Pushdown (as defined below) and, in connection therewith, Unitymedia GmbH will assume the Issuers obligations under the Senior Notes and related indenture and each of Unitymedia Hessen GmbH & Co. KG and Unitymedia NRW GmbH, as co-issuers, each indirect subsidiaries of Unitymedia GmbH, will assume the Issuers obligations under the Senior Secured Notes and related indenture. The Euro Senior Secured Notes will bear interest at a rate of 8.125% per annum and the Dollar Senior Secured Notes will bear interest at a rate of 8.125% per annum and will mature on December 1, 2017. The Senior Notes will bear interest at a rate of 9.625% per annum and will mature on December 1, 2019. Interest on the Notes will be payable semi-annually on each June 1 and December 1, beginning on June 1, 2010. Some or all of the Senior Secured Notes may be redeemed at any time prior to December 1, 2012, and some or all of the Senior Notes may be redeemed at any time prior to December 1, 2014, in each case, at a price equal to 100% of the principal amount of the Notes redeemed plus accrued and unpaid interest to the redemption date and a make-whole premium, as described in this offering memorandum. The Senior Secured Notes may be redeemed at any time on or after December 1, 2012, and the Senior Notes may be redeemed at any time on or after December 1, 2014, in each case, at the redemption prices set forth in this offering memorandum. In addition, at any time prior to December 1, 2012, we may redeem up to 35% of the Senior Secured Notes and at any time prior to December 1, 2012, we may redeem up to 35% of the Senior Notes, in each case, with the net proceeds of one or more specified equity offerings at the redemption prices set forth in this offering memorandum. Further, the Notes may be redeemed at a price equal to their principal amount plus accrued and unpaid interest upon the occurrence of certain changes in tax law and the Notes may be redeemed, subject to the receipt of certain consents of the noteholders, at the prices set forth in this offering memorandum in connection with a UPC Exchange Transaction (as defined in this offering memorandum). If the Issuer or certain of its subsidiaries sell certain of their assets or experience specific kinds of changes in control, the Issuer may be required to offer to repurchase the Notes. Pending the consummation of the Acquisition, the Initial Purchasers will deposit the net proceeds from the offering of the Senior Secured Notes into segregated Senior Secured Notes escrow accounts and the net proceeds from the offering of the Senior Notes into a segregated Senior Notes escrow account, in each case, for the benefit of the holders of the relevant Notes. The release of escrow proceeds will be subject to the satisfaction of certain conditions, including the closing, promptly upon the initial release of certain escrow proceeds, of the Acquisition and, with respect to amounts to be used to repay the Existing Unitymedia Indebtedness (as defined herein), the Debt Pushdown. Consummation of the Acquisition is subject only to regulatory approval. For so long as the net proceeds from the offering of the Notes are held in the escrow accounts described above, the Senior Secured Notes will be secured by a first-ranking share pledge over the shares of the Issuer and the Senior Notes will be secured by a first-ranking share pledge over the shares of the Issuer. If the Acquisition is not consummated prior to October 31, 2010, the Notes will be subject to a special mandatory redemption. The special mandatory redemption price will be a price equal to 101% of the aggregate issue price of the Notes plus accrued and unpaid interest from the Issue Date (as defined below). See Description of the Senior Secured Notes Escrow of Proceeds; Special Mandatory Redemption and Description of the Notes Escrow of Proceeds; Special Mandatory Redemption. Liberty Global, Inc. will guarantee the payment obligations of the Issuer in connection with interest payments that become due on the Notes prior to the Debt Pushdown and will guarantee the payment of amounts due in connection with a special mandatory redemption that exceed escrowed amounts. The Senior Secured Notes will be senior obligations of the Issuer and, upon consummation of the Acquisition and the Debt Pushdown, will become the senior secured obligations of Unitymedia Hessen GmbH & Co. KG and Unitymedia NRW GmbH, as co-issuers, and will be guaranteed on a senior basis by Unitymedia GmbH, Unitymedia Hessen Verwaltung GmbH and Unitymedia Management GmbH. The Senior Notes will be senior obligations of the Issuer and, upon consummation of the Acquisition and the Debt Pushdown, will become senior obligations of Unitymedia GmbH and will be guaranteed on a senior subordinated basis by Unitymedia Management GmbH and certain of its direct and indirect subsidiaries. Upon release of the proceeds of the offering of the Notes from the escrow accounts following consummation of the Acquisition and the Debt Pushdown, the Senior Secured Notes will be secured by a first priority security interest in the equity interests of Unitymedia Management GmbH, Unitymedia Hessen Verwaltung GmbH, Unitymedia Hessen GmbH & Co. KG and Unitymedia NRW GmbH and a pledge of substantially all of the assets of Unitymedia Hessen GmbH & Co. KG and Unitymedia NRW GmbH and the Senior Notes will be secured by a first priority security interest in the equity interests of Unitymedia GmbH and a junior priority security interest in the equity interests of certain of its subsidiaries. The Senior Secured Notes will be issued with original issue discount for U.S. federal income tax purposes. See Certain Tax Considerations U.S. Federal Income Taxation of the Notes. The Euro Notes will be in registered form in the denomination of 50,000 and integral multiples of 1,000 in excess thereof. The Dollar Senior Secured Notes will be in registered form in the denomination of $100,000 and integral multiples of $1,000 in excess thereof. The Notes will be represented on issue by one or more Global Notes, which will be delivered through Euroclear Bank S.A./N.V., as operator of the Euroclear System (Euroclear), Clearstream Banking, socit anonyme (Clearstream) and The Depository Trust Company (DTC) on or about November 20, 2009 (the Issue Date). See Risk Factors beginning on page 28 for a discussion of certain risks that you should consider in connection with an investment in any of the Notes. The Notes have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the U.S. Securities Act), or the securities laws of any other jurisdiction. The Issuer is offering the Notes only to qualified institutional buyers in accordance with Rule 144A under the U.S. Securities Act and to non-U.S. persons outside the United States in compliance with Regulation S under the U.S. Securities Act. For a description of certain restrictions on the transfer of the Notes see Plan of Distribution and Transfer Restrictions. Application has been made to the Luxembourg Stock Exchange for each of the Senior Secured Notes and the Senior Notes to be admitted to listing on the Official List of the Luxembourg Stock Exchange and trading on the Euro MTF Market, which is not a regulated market (as defined by Article 1(13) of Directive 93/22/EEC). This offering memorandum includes additional information on the terms of the Notes, including redemption and repurchase prices, covenants and transfer restrictions.

Senior Secured Notes price: 97.844% plus accrued interest from the issue date. Senior Notes price: 97.652% plus accrued interest from the issue date.

Joint Bookrunners

Credit Suisse

Deutsche Bank

Goldman Sachs International

November 17, 2009

J.P. Morgan

You should rely only on the information contained in this offering memorandum. Neither the Issuer nor any of the Initial Purchasers has authorized anyone to provide you with different information. Neither the Issuer nor any of the Initial Purchasers is making an offer of the Notes in any jurisdiction where this offer is not permitted. You should not assume that the information contained in this offering memorandum is accurate at any date other than the date on the front of this offering memorandum. TABLE OF CONTENTS
Page(s)

SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . THE ISSUER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . THE TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . INDUSTRY OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . REGULATORY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . OUR PRINCIPAL SHAREHOLDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . DESCRIPTION OF OTHER INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DESCRIPTION OF THE SENIOR SECURED NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DESCRIPTION OF THE SENIOR NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BOOK-ENTRY, DELIVERY AND FORM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TRANSFER RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CERTAIN TAX CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ENFORCEMENT OF JUDGMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . INDEPENDENT AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . LISTING AND GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . INDEX TO FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 28 58 59 61 62 63 69 105 112 141 152 154 155 156 170 240 309 314 318 328 331 332 333 334 G-1 F-1

We have not authorized any dealer, salesperson or other person to give any information or represent anything to you other than the information contained in this offering memorandum. You must not rely on unauthorized information or representations. This offering memorandum does not offer to sell or ask for offers to buy any of the securities in any jurisdiction where it is unlawful, where the person making the offer is not qualified to do so, or to any person who cannot legally be offered the securities. The information in this offering memorandum is current only as of the date on the cover page, and may change after that date. For any time after the cover date of this offering memorandum, we do not represent that our affairs are the same as described or that the information in this offering memorandum is correct nor do we imply those things by delivering this offering memorandum or selling securities to you. The Issuer and the Initial Purchasers are offering to sell the Notes only in places where offers and sales are permitted.

IN CONNECTION WITH THIS OFFERING OF NOTES, CREDIT SUISSE SECURITIES (EUROPE) LTD., ON BEHALF OF THE INITIAL PURCHASERS, MAY, TO THE EXTENT PERMITTED BY APPLICABLE LAW, OVER-ALLOT NOTES OR EFFECT TRANSACTIONS WITH A VIEW TO STABILIZING OR MAINTAINING THE MARKET PRICE OF THE NOTES AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL. HOWEVER, THERE IS NO ASSURANCE THAT CREDIT SUISSE SECURITIES (EUROPE) LTD. WILL UNDERTAKE ANY SUCH STABILIZATION ACTION. SUCH STABILIZATION ACTION, IF COMMENCED, MAY BEGIN ON OR AFTER THE DATE OF ADEQUATE PUBLIC DISCLOSURE OF THE FINAL TERMS OF THE OFFER OF THE NOTES AND MAY BE ENDED AT ANY TIME, BUT IT MUST END NO LATER THAN THE EARLIER OF 30 CALENDAR DAYS AFTER THE DATE ON WHICH THE ISSUER RECEIVED THE PROCEEDS OF THE ISSUE AND 60 CALENDAR DAYS AFTER THE DATE OF ALLOTMENT OF THE NOTES. The Issuer is offering the Notes in reliance on exemptions from the registration requirements of the U.S. Securities Act. These exemptions apply to offers and sales of securities that do not involve a public offering. The Notes have not been registered with, recommended by or approved by the U.S. Securities and Exchange Commission (the SEC) or any other securities commission or regulatory authority, nor has the SEC or any such securities commission or authority passed upon the accuracy or adequacy of this offering memorandum. Any representation to the contrary is a criminal offence in the United States. This offering memorandum is being provided for informational use solely in connection with consideration of a purchase of the Notes (i) to U.S. investors that we reasonably believe to be qualified institutional buyers as defined in Rule 144A under the U.S. Securities Act, and (ii) to certain persons in offshore transactions complying with Rule 903 or Rule 904 of Regulation S under the U.S. Securities Act. Its use for any other purpose is not authorized. This offering memorandum may not be copied or reproduced in whole or in part nor may it be distributed or any of its contents be disclosed to anyone other than the qualified institutional buyers described in (i) above or to persons considering a purchase of the Notes in offshore transactions described in (ii) above. This offering memorandum is for distribution only to persons who (i) are investment professionals, as such term is defined in Article 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the Financial Promotion Order), (ii) are persons falling within Article 49(2)(a) to (d) (high net worth companies, unincorporated associations etc) of the Financial Promotion Order, (iii) are outside the United Kingdom, or (iv) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000 (FSMA)) in connection with the issue or sale of any Notes may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as relevant persons). This offering memorandum is directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this offering memorandum relates is available only to relevant persons and will be engaged in only with relevant persons. This offering memorandum has been prepared on the basis that all offers of the Notes will be made pursuant to an exemption under Article 3 of Directive 2003/71/EC (the Prospectus Directive), as implemented in

ii

member states of the European Economic Area (the EEA), from the requirement to produce a prospectus for offers of the Notes. Accordingly, any person making or intending to make any offer within the EEA of the Notes should only do so in circumstances in which no obligation arises for the Issuer or any of the Initial Purchasers to produce a prospectus for such offer. Neither the Issuer nor the Initial Purchasers have authorized, nor do they authorize, the making of any offer of the Notes through any financial intermediary, other than offers made by the Initial Purchasers which constitute the final placement of the Notes contemplated in this offering memorandum. The Notes are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under the U.S. Securities Act and all other applicable securities laws. See Transfer Restrictions. You should be aware that you may be required to bear the financial risks of this investment for an indefinite period of time. We have prepared this offering memorandum solely for use in connection with this offering. In the United States, you may not distribute this offering memorandum or make copies of it without our prior written consent other than to people you have retained to advise you in connection with this offering. You are not to construe the contents of this offering memorandum as investment, legal or tax advice. You should consult your own counsel, accountant and other advisers as to legal, tax, business, financial and related aspects of a purchase of the Notes. You are responsible for making your own examination of us and your own assessment of the merits and risks of investing in the Notes. We are not, and the Initial Purchasers are not, making any representations to you regarding the legality of an investment in the Notes by you. The information contained in this offering memorandum has been furnished by us and other sources we believe to be reliable. No representation or warranty, express or implied, is made by the Initial Purchasers as to the accuracy or completeness of any of the information set out in this offering memorandum, and nothing contained in this offering memorandum is or shall be relied upon as a promise or representation by the Initial Purchasers, whether as to the past or the future. This offering memorandum contains summaries, believed to be accurate, of some of the terms of specified documents, but reference is made to the actual documents, copies of which will be made available by us upon request, for the complete information contained in those documents. Copies of such documents and other information relating to the issuance of the Notes will also be available for inspection at the specified offices of the Luxembourg Paying Agent. All summaries of the documents contained herein are qualified in their entirety by this reference. You agree to the foregoing by accepting this offering memorandum. The Issuer accepts responsibility for the accuracy of the information contained in this offering memorandum. To the best knowledge and belief of the Issuer, the information contained in this offering memorandum is in accordance with the facts and does not omit anything likely to affect the import of such information. No person is authorized in connection with any offering made pursuant to this offering memorandum to give any information or to make any representation not contained in this offering memorandum, and, if given or made, any other information or representation must not be relied upon as having been authorized by us or the Initial Purchasers. The information contained in this offering memorandum is current at the date hereof. Neither the delivery of this offering memorandum at any time nor any subsequent commitment to enter into any financing shall, under any circumstances, create any implication that there has been no change in the information set out in this offering memorandum or in our affairs since the date of this offering memorandum. We reserve the right to withdraw this offering of the Notes at any time, and we and the Initial Purchasers reserve the right to reject any commitment to subscribe for the Notes in whole or in part and to allot to you less than the full amount of Notes subscribed for by you. The distribution of this offering memorandum and the offer and sale of the Notes may be restricted by law in some jurisdictions. Persons into whose possession this offering memorandum or any of the Notes come must inform themselves about, and observe any restrictions on the transfer and exchange of the Notes. See Plan of Distribution and Transfer Restrictions. This offering memorandum does not constitute an offer to sell or an invitation to subscribe for or purchase any of the Notes in any jurisdiction in which such offer or invitation is not authorized or to any person to whom it is unlawful to make such an offer or invitation. You must comply with all laws that apply to you in any place in which you buy, offer or sell any Notes or possess this offering memorandum. You must also obtain any consents or approvals that you need in order to purchase any Notes. The Issuer and the Initial Purchasers are not responsible for your compliance with these legal requirements.

iii

The Notes are subject to restrictions on resale and transfer as described under Plan of Distribution and Transfer Restrictions. By purchasing any Notes, you will be deemed to have made certain acknowledgments, representations and agreements as described in those sections of this offering memorandum. You may be required to bear the financial risks of investing in the Notes for an indefinite period of time. Internal Revenue Service Circular 230 Disclosure PURSUANT TO INTERNAL REVENUE SERVICE CIRCULAR 230, WE HEREBY INFORM YOU THAT THE DESCRIPTION SET FORTH HEREIN WITH RESPECT TO U.S. FEDERAL TAX ISSUES WAS NOT INTENDED OR WRITTEN TO BE USED, AND SUCH DESCRIPTION CANNOT BE USED, BY ANY TAXPAYER FOR THE PURPOSE OF AVOIDING ANY PENALTIES THAT MAY BE IMPOSED ON THE TAXPAYER UNDER THE U.S. INTERNAL REVENUE CODE. SUCH DESCRIPTION WAS WRITTEN IN CONNECTION WITH THE MARKETING OF THE NOTES. TAXPAYERS SHOULD SEEK ADVICE BASED ON THE TAXPAYERS PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR. NOTICE TO NEW HAMPSHIRE RESIDENTS NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER RSA 421-B WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH. NOTICE TO U.S. INVESTORS Each purchaser of Notes will be deemed to have made the representations, warranties and acknowledgements that are described in this offering memorandum under Transfer Restrictions. The Notes have not been and will not be registered under the U.S. Securities Act or the securities laws of any state of the United States and are subject to certain restrictions on transfer. Prospective purchasers are hereby notified that the seller of any note may be relying on the exemption from the provisions of Section 5 of the U.S. Securities Act provided by Rule 144A. For a description of certain further restrictions on resale or transfer of the Notes, see Transfer Restrictions. The Notes may not be offered to the public within any jurisdiction. By accepting delivery of this offering memorandum, you agree not to offer, sell, resell, transfer or deliver, directly or indirectly, any note to the public. NOTICE TO EUROPEAN ECONOMIC AREA INVESTORS In relation to each member state of the EEA which has implemented the Prospectus Directive (each, a Relevant Member State), each initial purchaser has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the Relevant Implementation Date), it has not made and will not make an offer of Notes which are the subject of the offering contemplated by this offering memorandum to the public in that Relevant Member State other than: (a) to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities; to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than 43,000,000; and (3) an annual net turnover of more than 50,000,000, as shown in its last annual or consolidated accounts; or in any other circumstances that do not require the publication by the issuer or any initial purchaser of a prospectus pursuant to Article 3 of the Prospectus Directive other than in reliance of Article 3(2)(b).

(b)

(c)

iv

For the purposes of this provision, the expression an offer of notes to the public in relation to any Notes in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe the Notes, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State and the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State. Each subscriber for or purchaser of the Notes in the offering located within a member state of the EEA will be deemed to have represented, acknowledged and agreed that it is a qualified investor within the meaning of Article 2(1)(e) of the Prospectus Directive. The Issuer, the initial purchasers and their affiliates, and others will rely upon the trust and accuracy of the foregoing representation, acknowledgement and agreement. Notwithstanding the above, a person who is not a qualified investor and who has notified the initial purchasers of such fact in writing may, with the consent of the initial purchasers, be permitted to subscribe for or purchase the Notes in the offering. NOTICE TO CERTAIN EUROPEAN INVESTORS United Kingdom This offering memorandum is directed solely at persons who (i) are outside the United Kingdom or (ii) are investment professionals, as such term is defined in Article 19(1) of the Financial Promotion Order (iii) are persons falling within Article 49(2)(a) to (d) of The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (all such persons together being referred to as relevant persons). This offering memorandum must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this offering memorandum relates is available only to relevant persons and will be engaged in only with relevant persons. Any person who is not a relevant person should not act or rely on this offering memorandum or any of its contents. Italy No action has been or will be taken which could allow an offering of the Notes to the public in the Republic of Italy. Accordingly, the Notes may not be offered or sold directly or indirectly in the Republic of Italy, and neither this offering memorandum nor any other offering circular, prospectus, form of application, advertisement, other offering material or other information relating to the Issuer, the guarantors of the Notes or the Notes may be issued, distributed or published in the Republic of Italy, except under circumstances that will result in compliance with all applicable laws, orders, rules and regulations. The Notes cannot be offered or sold to any natural persons nor to entities other than qualified investors (according to the definition provided for by the Prospectus Directive) either on the primary or on the secondary market. Switzerland The Notes offered hereby are being offered in Switzerland on the basis of a private placement only. This offering memorandum does not constitute a prospectus within the meaning of Art. 652A of the Swiss Federal Code of Obligations. The Netherlands The Notes (including rights representing an interest in each global note that represents the Notes) may not be offered or sold to individuals or legal entities in The Netherlands unless a prospectus relating to the offer is available to the public which is approved by the Dutch Authority for the Financial Markets (Autoriteit Financile Markten) or by a supervisory authority of another member state of the European Union (the EU). Article 5:3 Financial Supervision Act (the FSA) and article 53 paragraph 2 and 3 Exemption Regulation FSA provide for several exceptions to the obligation to make a prospectus available such as an offer to qualified investors within the meaning of article 5:3 FSA. Grand Duchy of Luxembourg The terms and conditions relating to this offering memorandum have not been approved by and will not be submitted for approval to the Luxembourg Financial Services Authority (Commission de Surveillance du Secteur Financier) for purposes of public offering or sale in the Grand Duchy of Luxembourg (Luxembourg). Accordingly, the Notes may not be offered or sold to the public in Luxembourg, directly or indirectly, and neither this offering memorandum nor any other circular, prospectus, form of application, advertisement or other material may be distributed, or otherwise made available in or from, or published in, Luxembourg except for the sole purpose of the admission to trading and listing of the Notes on the Official List of the Luxembourg Stock Exchange and except in circumstances which do not constitute a public offer of securities to the public, subject to prospectus requirements, in accordance with the Luxembourg Act of July 10, 2005 on prospectuses for securities. Austria This Offering Memorandum has not been or will not be approved and/or published pursuant to the Austrian Capital Markets Act (Kapitalmarktgesetz) as amended. Neither this offering memorandum nor any other document connected therewith constitutes a prospectus according to the Austrian Capital Markets Act and neither

this offering memorandum nor any other document connected therewith may be distributed, passed on or disclosed to any other person in Austria. No steps may be taken that would constitute a public offering of the Notes in Austria and the offering of the Notes may not be advertised in Austria. Any offer of the Notes in Austria will only be made in compliance with the provisions of the Austrian Capital Markets Act and all other laws and regulations in Austria applicable to the offer and sale of the Notes in Austria. Germany The Notes may be offered and sold in Germany only in compliance with the German Securities Prospectus Act (Wertpapierprospektgesetz) as amended, the Commission Regulation (EC) No 809/2004 of April 29, 2004 as amended, or any other laws applicable in Germany governing the issue, offering and sale of securities. The Offering Memorandum has not been approved under the German Securities Prospectus Act (Wertpapierprospektgesetz) or the Directive 2003/71/EC and accordingly the Notes may not be offered publicly in Germany. France This Offering Memorandum has not been prepared in the context of a public offering in France within the meaning of Article L. 411-1 of the Code Montaire et Financier and Title I of Book II of the Rglement Gnral of the Autorit des marchs financiers (the AMF) and therefore has not been submitted for clearance to the AMF. Consequently, the Notes may not be, directly or indirectly, offered or sold to the public in France, and offers and sales of the Notes will only be made in France to providers of investment services relating to portfolio management for the account of third parties (personnes fournissant le service dinvestissement de gestion de portefeuille pour le compte de tiers) and/or to qualified investors (investisseurs qualifis) and/or to a closed circle of investors (cercle restreint dinvestisseurs) acting for their own accounts, as defined in and in accordance with Articles L. 411-2 and D. 411-1 of the Code of Montaire et Financier. Neither this Offering Memorandum nor any other offering material may be distributed to the public in France. Spain This offering has not been registered with the Comisin Nacional del Mercado de Valores and therefore the Notes may not be offered in Spain by any means, except in circumstances which do not qualify as a public offer of securities in Spain in accordance with article 30 bis of the Securities Market Act (Ley 24/1988, de 28 de julio del Mercado de Valores) as amended and restated, or pursuant to an exemption from registration in accordance with article 41 of the Royal Decree 1310/2005 (Real Decreto 1310/2005, de 4 de noviembre por el que se desarrolla parcialmente la Ley 24/1988, de 28 de julio, del Mercado de Valores, en materia de admisin a negociacin de valores en mercados secundarios oficiales, de ofertas pblicas de venta o suscripcin y del folleto exigible a tales efectos). THIS OFFERING MEMORANDUM CONTAINS IMPORTANT INFORMATION WHICH YOU SHOULD READ BEFORE YOU MAKE ANY DECISION WITH RESPECT TO AN INVESTMENT IN THE NOTES.

vi

PRESENTATION OF FINANCIAL AND OTHER INFORMATION Presentation of Financial Information Unless otherwise indicated, the financial information presented in this offering memorandum is the historical consolidated financial information of Unitymedia GmbH and its subsidiaries. The audited consolidated financial statements of Unitymedia GmbH for the financial years ended December 31, 2008 and 2007 have been prepared in accordance with International Financial Reporting Standards, as adopted by the European Union (EU-IFRS), and the audited consolidated financial statements of Unitymedia GmbH for the financial year ended December 31, 2006 have been prepared in accordance with International Financial Reporting Standards (IFRS). This offering memorandum contains:

the unaudited interim condensed consolidated financial statements of Unitymedia GmbH for the nine months and for the three months ended September 30, 2009 (with comparative data for the nine months and for the three months ended September 30, 2008); such interim financial statements prepared in accordance with EU-IFRS (IAS 34 Interim Financial Reporting); the audited consolidated financial statements of Unitymedia GmbH for the financial year ended December 31, 2008 (EU-IFRS), audited by PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprfungsgesellschaft and the auditors report thereon; the audited consolidated financial statements of Unity Media GmbH for the financial year ended December 31, 2007 (EU-IFRS), audited by PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprfungsgesellschaft and the auditors report thereon; and the audited consolidated financial statements of Unity Media GmbH for the financial year ended December 31, 2006 (IFRS), audited by PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprfungsgesellschaft and the auditors report thereon.

The auditors reports of PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprfungsgesellschaft for the consolidated financial statements for the financial years ended December 31, 2007 and December 31, 2008, which were prepared according to IFRS as adopted in the European Union and audited in accordance with German Generally Accepted Auditing Standards (German GAAS), refer to group management reports that have neither been included nor incorporated by reference in the offering memorandum. The examination of, and the auditors report upon, such group management reports are required under German GAAS. That examination was not made in accordance with U.S. Generally Accepted Auditing Standards (U.S. GAAS) or U.S. attestation standards. Therefore, PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprfungsgesellschaft does not provide any opinion on the aforementioned examination, on the group management reports or on the financial statements included in this offering memorandum in accordance with U.S. GAAS or U.S. attestation standards. Unitymedia GmbH already applied IFRS 8 Operating Segments in the preparation of its audited consolidated financial statements for the financial year ended December 31, 2006, when such standard had been issued by the International Accounting Standards Board but not yet endorsed by the European Union (the EU). There are no other material differences between EU-IFRS and IFRS with respect to the consolidated financial statements of Unitymedia GmbH for the financial year ended December 31, 2006. Under EU-IFRS and IFRS, financial information for the In-Region assets and In-Region liabilities of Tele Columbus, in each case as defined below, are included in the consolidated financial statements of Unitymedia GmbH for the financial years ended December 31, 2007 and 2006. Financial information for the Out-of-Region assets and Out-of-Region liabilities are presented as discontinued operations in the consolidated financial statements of Unitymedia GmbH for the financial year ended December 31, 2006. See Note D to the audited consolidated financial statements of Unitymedia GmbH for the financial year ended December 31, 2007 on page F-95 and Note B.2 to the audited consolidated financial statements for the financial year ended December 31, 2006 on page F-147. The presentation of the Out-of-Region assets and Out-of-Region liabilities had, among others, the following effects on the consolidated financial statements of Unitymedia GmbH:

the assets and liabilities related to discontinued operations are presented separately from continuing assets and liabilities in one line item in the balance sheet: Assets/liabilities of disposal groups held for sale;

vii

depreciation of non-current assets of discontinued operations ceased on the date of the Tele Columbus acquisition, which closed on December 9, 2005; and the post-tax profit and loss from discontinued operations is presented as a single amount in a separate line item in the income statement: Profit/(loss) from discontinued operations.

We use adjusted EBITDA as a supplementary figure for purposes of corporate controlling (Adjusted EBITDA). Adjusted EBITDA, as defined by us, is equal to earnings before interest and income taxes (EBIT) plus amortization and depreciation (EBITDA) excluding non-recurring income, restructuring and transformation costs and non-cash share-based expenses incurred in connection with the management equity participation programs (MEP). In the view of our management, Adjusted EBITDA provides a reliable view of our routine operating performance. Neither EBITDA nor Adjusted EBITDA is a recognized measure in accordance with EU-IFRS or IFRS and neither should be viewed as a substitute for earnings before taxes, operating expenses, loss, net cash flow from current business activity or other income statement or cash flow items computed in accordance with EU-IFRS or IFRS. Adjusted EBITDA does not necessarily indicate whether cash flow will be sufficient or available to meet our cash requirements, and our historical operating results cannot be derived from Adjusted EBITDA. Adjusted EBITDA is not a reliable indicator of future results. Since not all companies compute Adjusted EBITDA in the same way, the computation of Adjusted EBITDA chosen by our management is not necessarily comparable with similar terms used by other companies. In addition, the manner in which Unitymedia has computed EBITDA and Adjusted EBITDA differs from the manner in which such terms will be computed pursuant to the indentures governing the Notes. See Selected Consolidated Financial and Operating Data, Description of the Senior Secured Notes Certain Definitions and Description of the Senior Notes Certain Definitions. We present in this offering memorandum certain financial information on an as adjusted basis to give effect to the Transactions. See Summary Summary Financial and Operating Data and Capitalization. We have not included any unaudited pro forma financial information in this offering memorandum to give effect to the Transactions or other events. The historical results of Unitymedia GmbH and its subsidiaries may not be indicative of our future results following consummation of the Transactions. Certain amounts and percentages included in this offering memorandum have been rounded and accordingly may not add up exactly or correspond to aggregate amounts in certain tables in this offering memorandum or contained in our annual report. Definitions Definitions of certain financial and operating data can be found below. For explanations or definitions of certain technical terms relating to our business as used herein, see Glossary.

2005 Financing refers to our financing in February 2005 pursuant to which we, among other things, issued the February 2005 Senior Notes and incurred other senior indebtedness to finance our acquisition of Kabelnetz NRW HoldCo GmbH, now Unitymedia NRW; 2006 Refinancing refers to our financing in April 2006 pursuant to which, among other things, Unitymedia Hessen and Unitymedia NRW issued the NRW/Hesse Notes, the proceeds of which were used, among other things, to refinance the senior indebtedness incurred in the 2005 Financing; arena refers to Arena Sport Rechte und Marketing GmbH, Cologne; arenaSAT refers to the satellite operations of arena; ARPU refers to average monthly revenue per user for the referenced period. ARPU, as presented herein, includes discounts and credit notes; Bundesliga refers to the 1st and 2nd German Football League (Deutsche Fuball Liga) and Bundesliga Rights refers to the rights to broadcast matches of the Bundesliga, which expired on June 30, 2009; call termination refers to the termination of inbound calls to telephony customers;

viii

churn refers to the voluntary or involuntary discontinuance of services to a customer. The churn rate information presented herein is the percentage measure of the number of subscribers of our products that have been disconnected in the respective period divided by the average number of subscribers of each of basic cable, Digital TV Pay and broadband, consisting of Internet and telephony subscribers, during that period; Deutsche Telekom refers to Deutsche Telekom AG, Bonn; DFL refers to the DFL Deutsche Fuball Liga GmbH, Frankfurt am Main; dollar, dollars or $ refers to the lawful currency of the United States of America; euro, euros or refers to the single currency of the participating member states in the third stage of the European Economic Union pursuant to the Treaty Establishing the European Community; European Economic Area refers to the economic area encompassing all of the members of the European Union and the European Free Trade Association; February 2005 Senior Notes refers to the 215.0 million 8 3 4% senior notes of Unitymedia GmbH due 2015, which are expected to be redeemed in connection with the Debt Pushdown; Federal Network Agency refers to the German Regulatory Authority for Electricity, Gas, Telecommunications, Post and Railways (Bundesnetzagentur fr Elektrizitt, Gas, Telekommunikation, Post und Eisenbahnen); iesy refers to iesy Hessen GmbH & Co. KG, a company incorporated under the laws of Germany; In-Region assets and In-Region liabilities refer to assets and liabilities of the cable network business of Tele Columbus which were located in North Rhine-Westphalia and Hesse; ish refers to ish NRW GmbH & Co., a company incorporated under the laws of Germany; July 2005 Senior Notes refers to the 235.0 million 10 1 8% senior notes of Unitymedia GmbH due 2015 and the $151.0 million 10 3 8% senior notes of Unitymedia GmbH due 2015, each of which is expected to be redeemed in connection with the Debt Pushdown; LG Europe refers to Liberty Global Europe, Inc., with or without its consolidated subsidiaries, as the context requires. LGI refers to Liberty Global, Inc., with or without its consolidated subsidiaries, as the context requires. Liberty Global Europe refers to Liberty Global Europe N.V., with or without its consolidated subsidiaries, as the context requires. MSG refers to Kabel Deutschland Breitband Services GmbH (formerly MSG MediaServices GmbH), a subsidiary of Kabel Deutschland GmbH, Unterfhring; New Services refers to Digital TV Pay, Retail Broadband Internet, wholesale MMA Internet and telephony services; News Corporation refers to News Corporation, a company incorporated under the laws of Delaware; NRW/Hesse Notes refers to the 1,350.0 million senior secured floating rate notes due 2013 issued by Unitymedia Hessen and Unitymedia NRW, which are expected to be redeemed in connection with the Debt Pushdown; NRW/Hesse Revolving Credit Facility refers to the 130.0 million revolving credit facility entered into in connection with the 2006 Refinancing and which is expected to be repaid in connection with the Debt Pushdown;

ix

Out-of-Region assets and Out-of-Region liabilities refer to assets and liabilities of Tele Columbus which were located outside of North Rhine-Westphalia and Hesse; Premiere refers to Premiere Fernsehen GmbH & Co. KG, Unterfhring, which changed its name to Sky Deutschland GmbH & Co. KG (Sky Deutschland) in July 2009; Premiere AG refers to Premiere AG, Unterfhring, which changed its name to Sky Deutschland AG in July 2009; Premiere Agreements refers to the set of agreements dated July 19, 2007 among Unitymedia, arena and Premiere (now Sky Deutschland) relating to the Bundesliga Rights which include the carriage of certain Premiere content and technical services for a six-year term with effect as of January 1, 2008; RGU or revenue generating unit refers to each subscriber receiving analog or digital cable television, Digital TV Pay, Internet access or telephony services over our network. Thus, one subscriber who receives all four services would be counted as four RGUs; Tele Columbus or Tele Columbus Group refers to the cable network business of the group of companies controlled by Tele Columbus Kabel Holding GmbH, Hannover, our acquisition of which was completed on December 9, 2005; Term Loan refers to the 100.0 million Senior Secured Term Loan Facility maturing in October 2011 entered into by Unitymedia Hessen, Unitymedia NRW and arena on October 20, 2006, which is expected to be repaid in connection with the Debt Pushdown; Transactions refers to the acquisition of Unitymedia GmbH by the Issuer and related transactions, including the repayment of the Existing Unitymedia Indebtedness and the Debt Pushdown, as further described in The Transactions; Unitymedia, the Company, we, us or our refers to the Issuer, its subsidiaries and their predecessor after taking into account the Transactions, unless the context otherwise requires. The Company together with its subsidiaries is also referred to as the Unitymedia Group. Unitymedia also refers to the Unitymedia trademark where the context so requires; Unitymedia GmbH refers to Unitymedia GmbH, a company organized under the laws of Germany, on a standalone basis, unless the context otherwise requires. Unitymedia Group Notes refers to the February 2005 Senior Notes, the July 2005 Senior Notes and the NRW/Hesse Notes; Unitymedia Hessen refers to Unitymedia Hessen GmbH & Co. KG, formerly iesy Hessen GmbH & Co. KG; Unitymedia NRW refers to Unitymedia NRW GmbH, Cologne, formerly the group of companies controlled by Kabelnetz NRW HoldCo GmbH, which was renamed ish NRW GmbH & Co. KG on September 2, 2005 and which was acquired by Unitymedia Hessen on June 24, 2005; Unity Media S.A. refers to Unity Media S.A., Luxembourg; Unity Media S.C.A. refers to Unity Media S.C.A., Luxembourg; Unitymedia Services refers to Unitymedia Services GmbH, Bochum, formerly Tele Columbus West Beteiligungs GmbH, which was acquired as part of the Tele Columbus Group and includes assets of the former Unitymedia Services GmbH & Co. KG, which was merged into Unitymedia Services GmbH by way of accretion (Anwachsung), effective as of August 22, 2008; and UPC Holding refers to UPC Holding B.V. and its consolidated subsidiaries.

Third-Party Information The information provided in this offering memorandum on the market environment, market developments, growth rates, market trends and on the competitive situation in the markets and segments in which Unitymedia operates is based (to the extent not otherwise indicated) on third-party data, statistical information and reports as well as on estimates of the Company. The sources cited include:

Hessian Statistics Office (Hessisches Statistisches Landesamt), http://www.hsl.de/, viewed October 2009; Federal Statistical Office of Germany (Statistisches Bundesamt Deutschland), http://www.destatis.de, viewed October 2009; Annual Report 2008, German Federal http://www.bundesnetzagentur.de, February 2008; Network Agency (Bundesnetzagentur),

Statistical Yearbook 2009 For the Federal Republic of Germany (Statistisches Bundesamt Deutschland), September 2009; Deutscher Stdtetag, http://www.staedtetag.de, viewed October 2009; International Monetary Fund, World Economic Outlook Database, October 2009; Gebuehreneinzugszentrale, http://www.gez.de, viewed October 2009; European Cable Survey 2009, Solon, 2009; Global Market Information Database, Euromonitor International, October 2009; H1/2009 conference call presentation, Deutsche Telekom AG, http://www.dtag.de, viewed October 2009; Deutsche Telekom press release dated August 4, 2009: Deutsche Telekom supports network expansion by competitors; ASTRA Reichweiten Jahresende 2008: Deutschland, sterreich, Schweiz, SES Astra SA, 2008 Germany Telecommunications Report Q3 2009, Business Monitor International Germany, June 2009; Progress Report On The Single European Electronic Communications Market 2008 (14th Report), Commission Of The European Communities, March 2009; Broadband Intelligence, Screen Digest Ltd., October 2009; Television Intelligence, Screen Digest Ltd., October 2009; European Broadband Cable 2009, Screen Digest Ltd., July 2009; Germany: Key Statistics, Telecom market & regulatory overview, Paul Budde Communication Pty Ltd, May 2008; Germany Convergence Triple Play & Digital TV, Paul Budde Communication Pty Ltd, May 2009; Digitisation 2009, The State Media Authority of Germany Regulatory Affairs Commission, 2009; European Telecom Services Database 2Q 2009, IDC, July 2009; and Gross domestic product 2008, World Development Indicators database, viewed October 7, 2009.

The Company has accurately reproduced such third-party information and, as far as the Company is aware and is able to ascertain from information published by these third parties, no facts have been omitted, which would render the reproduced information inaccurate or misleading. Market studies are frequently based on

xi

information and assumptions that may not be exact or appropriate, and their methodology is by nature forward looking and speculative. The offering memorandum also contains estimates made by the Company based on third-party market data, which in turn is based on published market data or figures from publicly available sources. The Company and the Initial Purchasers have not verified the figures, market data or other information on which third parties have based their studies nor have they verified the external sources on which the Companys own estimates are based. The Company and the Initial Purchasers therefore do not guarantee nor assume responsibility for the accuracy of the information from third-party studies presented in this offering memorandum or for the accuracy of the information on which their estimates are based. This offering memorandum also contains estimates of market data and information derived therefrom which cannot be gathered from publications by market research institutions or any other independent sources. Such information is based on the Companys own internal estimates. In many cases there is no publicly available information on such market data, for example from industry associations, public authorities or other organizations and institutions. The Company believes that its estimates of market data and information derived therefrom are helpful in order to give investors a better understanding of the industry in which it operates as well as the Companys position within this industry. Although the Company believes that its internal market observations are reliable, the Companys own estimates are not reviewed or verified by any external sources. The Company assumes no responsibility for the accuracy of its own estimates and the information derived therefrom. These may deviate from estimates made by competitors of Unitymedia or future statistics by market research institutes or other independent sources.

xii

EXCHANGE RATE INFORMATION The following table sets forth, for the periods and dates indicated, the high, low, average and period end noon buying rates in the City of New York for wire transfers between the euro and U.S. dollar as certified for customs purposes by the Federal Reserve Bank of New York expressed as U.S. dollars per 1.00. These rates may differ from actual rates used in the preparation of the consolidated financial statements of Unitymedia GmbH and other financial information appearing in this offering memorandum. We make no representation that the euro or U.S. dollar amounts referred to in this offering memorandum have been, could have been or could, in the future, be converted into U.S. dollars or euros, as the case may be, at any particular rate, if at all. On November 6, 2009, the noon buying rate in the City of New York for wire transfers between the euro and U.S. dollar as certified for customers purposes by the Federal Reserve Bank of New York was $1.4835 to 1.00.
Euro per one U.S. dollar Period End (1) Average Rate (2) High Low

Year 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2009 (through to November 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Month May 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . June 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . July 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . August 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . October 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . November 2009 (through November 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.3538 1.1842 1.3197 1.4603 1.3919 1.4835 1.4126 1.4020 1.4279 1.4354 1.4630 1.4755 1.4835

1.2438 1.2449 1.2563 1.3705 1.4695 1.3805 1.3646 1.4014 1.4092 1.4266 1.4575 1.4821 1.4803

1.3625 1.3476 1.3327 1.4862 1.6010 1.5029 1.4126 1.4270 1.4279 1.4416 1.4795 1.5029 1.4857

1.1801 1.1667 1.1860 1.2904 1.2446 1.2547 1.3267 1.3784 1.3852 1.4075 1.4235 1.4532 1.4658

(1) Represents the exchange rate on the last business day of the applicable period. (2) With respect to each year, the average represents the average of the noon buying rates on the last business day of each month during such year. With respect to each month, the average represents the average of the noon buying rates for each business day during the relevant month. With respect to the periods from January 1 through November 6, 2009 and from November 1 through November 6, 2009, respectively, the average represents the average of the daily noon buying rates for each business day during such period. Noon buying rates can be found at http://www.ny.frb.org and http://www.federalreserve.gov.

xiii

FORWARD-LOOKING STATEMENTS This offering memorandum contains various forward-looking statements that reflect managements current views with respect to future events and anticipated financial and operational performance. The words believe, expect, anticipate, intend, may, plan, estimate, will, should, could, aim or might, or, in each case, their negative, or similar expressions, identify certain of these forward-looking statements. Other forward-looking statements can be identified in the context in which the statements are made. Forward-looking statements appear in a number of places in this offering memorandum, including, without limitation, in the sections entitled Risk Factors, The Transactions, Capitalization, Managements Discussion and Analysis of Financial Condition and Results of Operations, Industry Overview and Business, and include, among other things, statements relating to:

the synergies that we expect from our affiliation with UPC Holding following the Acquisition and the costs associated with achieving such synergies; our strategy, outlook and growth prospects; our operational and financial targets and dividend policy; our liquidity, capital resources and capital expenditure; our planned investments; the expectations as to future growth in demand for our products and services; general economic trends and trends in the cable television and telecommunications industries; the impact of regulations on us and our operations; the competitive environment in which we operate; and the outcome of legal proceedings.

Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, the Company can give no assurances that they will materialize or prove to be correct. Because these statements involve risks and uncertainties, the actual results or outcome could differ materially from those set out in the forward-looking statements as a result of, among others:

digital and broadband penetration and other market developments; changes in consumer television viewing preferences and habits; competition from local or international cable, telecommunications, media or alternative technology companies, including satellite and DVB-T companies; competitor responses to our products and services; changes in international and local economic, political, business, industry and tax conditions; changes in underlying consumer behavior; changes in technology; consolidation in the cable or telecommunications industry; our ability to successfully develop and expand the range of products and services offered; consumer disposable income and spending levels, including the availability and amount of individual consumer credit; the ability of the Company to retain or replace key personnel; and changes in our business strategy, development and investment plans.

Additional factors that could cause our actual results, performance or achievements to differ materially include, but are not limited to, those discussed under Risk Factors. These forward-looking statements speak only as of the date of this offering memorandum. The Company expressly undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by law or regulation. Accordingly, prospective investors are cautioned not to place undue reliance on any of the forward-looking statements herein.

xiv

AVAILABLE INFORMATION For so long as any of the Notes are restricted securities within the meaning of Rule 144A(a)(3) under the U.S. Securities Act, the Issuer will, during any period in which it is neither subject to the reporting requirements of Section 13 or 15(d) of the U.S. Exchange Act nor exempt from the reporting requirements of the U.S. Exchange Act under Rule 12g3-2(b) thereunder, provide to the holder or beneficial owner of such restricted securities or to any prospective purchaser of such restricted securities designated by such holder or beneficial owner, in each case upon the written request of such holder, beneficial owner or prospective purchaser, the information required to be provided by Rule 144A(d)(4) under the U.S. Securities Act. We are not currently subject to the periodic reporting and other information requirements of the U.S. Exchange Act. However, pursuant to the indentures and so long as the Notes are outstanding, we will furnish periodic information to holders of the Notes. See Description of the Senior Secured Notes Certain Covenants Reports and Description of the Senior Notes Certain Covenants Reports.

xv

SUMMARY The following summary is an introduction to the offering memorandum. Before making an investment decision, you should read the entire offering memorandum, including the sections entitled Risk Factors, Managements Discussion and Analysis of Financial Condition and Results of Operations, Industry Overview and Business, as well as the financial statements included herein. In this offering memorandum, references to we, us, our, the Company, Unitymedia or the Unitymedia Group refer to the Issuer, its subsidiaries and their predecessors after taking into account the Transactions, unless the context otherwise requires. Unitymedia GmbH refers to Unitymedia GmbH, on a standalone basis, unless the context otherwise requires. Unless we indicate otherwise or the context otherwise requires, information identified in this offering memorandum as on an as adjusted basis gives effect to the consummation of the Transactions, as described under The Transactions. Overview Unitymedia is the largest cable television operator in the German federal states of North Rhine-Westphalia and Hesse (Source: Paul Budde Communication Pty. Ltd. May 2009) and is, we believe, the third largest cable operator in Europe, as measured by the number of television subscribers. We provide basic cable television services and digital cable television, Internet and telephony services to customers who reside in our upgraded network area. We believe our cable network, which passes approximately 8.8 million homes, is one of the most technically advanced in Europe. As a result, we believe that Unitymedia is ideally positioned to meet the needs of its customers by providing immediate access to information, entertainment and a range of individual communication options in a simple, secure and cost effective manner. Our total revenue for the financial year ended December 31, 2008 was 1,221.3 million and for the nine months ended September 30, 2009 was 862.6 million. Our Adjusted EBITDA (as defined herein) for the financial year ended December 31, 2008 was 436.2 million and for the nine months ended September 30, 2009 was 347.6 million. Our cable business (Unitymedia Cable) is our core business and generated 90.5 percent and 95.3 percent of our total Adjusted EBITDA in the financial year ended December 31, 2008 and the nine months ended September 30, 2009, respectively. We also operate a digital pay TV satellite platform, arenaSAT, which is part of our arena segment. Following the Acquisition, we will be indirectly owned by Liberty Global Europe, an affiliate of UPC Holding. Unitymedia Cable We operate our cable business Unitymedia Cable in North Rhine-Westphalia and Hesse, which together had a population of 24.1 million and 11.5 million households as of December 31, 2008 (Source: Hessian Statistics Office, North Rhine-Westphalia Statistics Office and Federal Statistical Office of Germany). Our cable footprint covers ten of the 20 largest cities by inhabitants in Germany, including Cologne, Dortmund, Dusseldorf, Essen and Frankfurt. Both North Rhine-Westphalia and Hesse are among the most prosperous and densely populated regions in Germany and Europe. Combined, these federal states would constitute the 6th largest economy in the European Union as measured by GDP (Source: World Bank). Our cable business is characterized by recurring revenues and cash flows. The foundation of our business is the provision of basic cable and digital pay cable television (Digital TV Pay) services. In our upgraded network coverage area we provide an integrated triple play service under the brand Unity3play, offering our customers access to Internet, telephony and digital cable television services in addition to our basic cable television services, which gives us the opportunity to generate attractive operating and financial growth. We have upgraded approximately 90 percent of our network to the bi-directional hybrid fiber-coaxial (HFC) standard with a capacity of 862 MHz (equal to approximately 7.8 million residential units that can be connected to the Companys network and to whom the Company can offer cable television and other services (homes passed)). As a result, we expect that we will have largely completed the upgrade of the Unitymedia Cable network by the end of 2009. Further, we are currently able to market our triple play service to over 95 percent of our cable television subscribers who reside in the upgraded portion of our network coverage area. Going forward, based on our current competitive position and return on investment estimates, we expect that

only a limited amount of network-related investment will be required to provide our current triple play service to homes in our upgraded network area. Most of our capital expenditure is success-based for subscriber growth or usage and/or related to new product development. We provide the following products and services to our customers:

Basic Cable Services (BCS): as of September 30, 2009, we provided our basic cable services to 4.5 million subscribers, or 51.9 percent of homes passed by our network. 28.6 percent of these basic cable subscribers had switched to digital access as of September 30, 2009. Our basic cable analog access consists of up to 36 television channels and up to 34 radio channels, depending on the geographic area. Our basic cable digital access comprises up to 72 digital channels, including the simulcast analog channels, and 67 radio channels. We provide basic cable services via individual contracts with single dwelling units or bulk contracts with landlords or housing associations. For the nine months ended September 30, 2009, our basic cable services generated an average revenue per user (ARPU) of 10.12 per month. We recently announced a rate increase effective as of January 1, 2010 for certain multi-user contracts. In addition, in the nine months ended September 30, 2009, we generated 62.5 million in revenue in carriage fees from both public and commercial broadcasters (including Premiere, now Sky Deutschland). Digital TV Pay Services: as of September 30, 2009, we provided our Digital TV Pay services to approximately 470,000 revenue generating units (RGUs). Our Digital TV Pay services consist of programming that we assemble into packages as well as pay TV content sourced from other providers, including international and domestic German broadcasters. For the nine months ended September 30, 2009, our Digital TV Pay services generated an ARPU of 9.08 per month. Internet Access Services: we provide Internet access services both on a retail and wholesale basis.

Retail Broadband: as of September 30, 2009, we provided our Retail Broadband Internet access services to approximately 537,000 RGUs. Our current Retail Broadband Internet access service portfolio consists of services with download speeds ranging from 2 Mb/s to 32 Mb/s with no time or data volume restrictions, with a 120 Mb/s service available for subscription in selected cities beginning in November 2009. Our customers can choose between different attractive and competitively-priced packages, including our core triple play product, Unity3play. For the nine months ended September 30, 2009, our Retail Broadband Internet access services generated an ARPU of 15.37 per month. Wholesale Multimedia Anschluss (MMA): as of September 30, 2009, we provided our wholesale MMA Internet access services to approximately 340,000 RGUs (excluding those customers who had upgraded to our Retail Broadband Internet access services). Our MMA offer is a service tailored for housing associations to purchase Internet access at 128 Kb/s on a bulk basis and enable their properties with plug-and-play Internet access. Tenants in MMA-equipped apartments have the opportunity to upgrade to any of our digital television, broadband and flat rate telephony services. As such, in addition to incremental revenue, the MMA business segment offers us an additional sales channel and serves as a catalyst for the implementation of our triple play strategy. As a result, we typically benefit from significantly higher Retail Broadband penetration in the MMA business segment. For the nine months ended September 30, 2009, our wholesale MMA Internet access services generated an ARPU (excluding those customers who had upgraded to our Retail Broadband Internet access services) of 1.55 per month.

Telephony Services: as of September 30, 2009, we provided our telephony services to approximately 535,000 RGUs. We market our telephony services principally as a component of our Unity3play product bundle. For the nine months ended September 30, 2009, our telephony services generated an ARPU of 12.89 per month.

The German broadband and digital pay TV markets have historically been underdeveloped compared to other European markets. Unitymedia has been at the forefront of removing the structural impediments to growth in the German broadband and digital pay TV markets, when, for example, it received regulatory approval in 2005 to integrate operators of distribution (level 3) and in-building (level 4) networks. This has allowed us to upgrade

our networks and roll-out the internationally proven triple play cable model using established technology, which in turn permits us to significantly mitigate risks related to competitive and technological developments and unit pricing of network and customer equipment. We believe we are able to quickly and efficiently implement innovations in triple play services and increasingly take a leading position in innovative product development. This is evidenced by our deployment of DOCSIS 3.0 in selected cities in November 2009. Our cable business is supported by a dense, high quality network that, as of September 30, 2009, covered approximately 77 percent of all households, or 8.8 million homes passed, in North Rhine-Westphalia and Hesse. The network was built by Deutsche Bundespost, the predecessor of Deutsche Telekom AG (Deutsche Telekom), in the 1980s to high specifications and is characterized by homogenous design, high reliability and low maintenance requirements. Our network is one of only two networks with extensive local loop infrastructure across our markets and combined with our regional backbone positions us, we believe, as the only alternative high bandwidth, end-to-end, infrastructure-based competitor to Deutsche Telekom. Total revenue generated by the Unitymedia Cable segment was 856.6 million for the financial year ended December 31, 2008 and 689.7 million for the nine months ended September 30, 2009. Adjusted EBITDA for the Unitymedia Cable segment for the financial year ended December 31, 2008 was 394.9 million and for the nine months ended September 30, 2009 was 331.3 million. For the nine months ended September 30, 2009, our cable business generated an ARPU of 14.11 per month. arena Through our national satellite digital pay TV platform arenaSAT, as of September 30, 2009 we provided pay TV services to approximately 68,000 RGUs across Germany. Our satellite platform offers subscribers a range of digital pay TV channels within various packages. Until June 30, 2009, arenaSAT also offered Bundesliga programming via a wholesale agreement with Premiere (now Sky Deutschland) that expired at such time. We regularly evaluate a range of strategic options for arenaSAT. Total revenue generated by the arena segment for the financial year ended December 31, 2008 was 365.8 million and for the nine months ended September 30, 2009 was 173.4 million. Adjusted EBITDA for the arena segment in the financial year ended December 31, 2008 was 41.3 million and for the nine months ended September 30, 2009 was 16.3 million. Excluding the legacy broadcast business, our arenaSAT platform generated Adjusted EBITDA of 7.8 million and 2.4 million for the financial year ended December 31, 2008 and the nine months ended September 30, 2009, respectively. For the nine months ended September 30, 2009, our arenaSAT platform generated an ARPU of 18.77 per month. Our Strengths We believe the following strengths will allow us to execute our growth strategy described below: We operate in a highly attractive cable footprint. We are the largest cable television service provider in terms of revenues, homes passed and subscribers in North Rhine-Westphalia and Hesse (Source: Paul Budde Communication Pty. Ltd, May 2009). We serve the industrial and technological heartland of Western Germany including the Rhine-Ruhr and Rhine-Main regions. In 2008, North Rhine-Westphalia and Hesse generated approximately 31 percent of Germanys gross domestic product (GDP) and, together, constituted the 6th largest economy in the European Union as measured by GDP. With a combined population of 24.1 million and combined average GDP per capita of approximately 32,000 in 2008 (Source: Hessian Statistics Office and North Rhine-Westphalia Statistics Office), North Rhine-Westphalia and Hesse are among the most densely populated and economically prosperous regions in Europe, and we believe they therefore provide us with attractive growth opportunities. We believe that higher disposable income translates into relatively higher spending on media and communications services, while high population density allows for more efficient cable network operations and marketing. The German market offers significant growth opportunities for our sector. The market for broadband Internet access services in Germany has grown rapidly over the last five years with a compound annual growth rate from 2004-2008 of 35.9 percent (Source: Screen Digest Ltd.). Despite the rapid growth, broadband penetration in Germany of 57.5 percent is still relatively low compared to the broadband Internet access penetration in Western Europe, which averaged 63.2 percent, and in neighboring markets such as Belgium and the Netherlands, which were 65.0 percent and 81.9 percent, respectively, in each case as of December 31, 2008 (Source: Screen Digest Ltd.). We also see significant upside in migrating customers from free-to-air TV to pay

TV, as investment in and development of pay TV broadcast channels and content continue to accelerate. As of December 31, 2008, German digital pay TV subscribers represented only 15.8 percent of total television households, compared to a Western European average that is significantly higher (Source: Screen Digest Ltd.). We are well positioned to participate in the growth in our sector as a result of our advanced products and services and our reputation in our markets as a leading triple play provider. The Transactions are expected to result in various synergies as a result of our affiliation with UPC Holding. As a result of the Transactions, we expect to take advantage of various synergies that we believe will be available to us as a result of our affiliation with UPC Holding. We believe that our increased scale and advanced infrastructure will enable us to reduce costs, limit capital expenditures, decrease reliance on suppliers, and open up new strategic opportunities. By increasing our reach, and with the advent of new interactive technologies, we believe that we can offer traditional broadcasters more opportunities. Our current intention is to close our existing network operation centers and migrate these functions to the UPC Holding network operation center, and we believe that the combined entity will benefit from this and other cost synergies as well as the harmonization of best practices and products across both UPC Holding and the Company. The integration of these businesses in Europe is expected to be facilitated by their similar network strategies. Our basic cable services provide us with strong, stable cash flows. A significant portion of our residential customers pay via direct debit, and many of our housing association customers pay annually or semi-annually in advance pursuant to multi-year contracts. These characteristics, together with the high value proposition of our basic cable services, have historically been responsible for low gross churn rates and a relatively stable basic cable service subscriber base. As a result, our business enjoys reliable revenues, which, when combined with our predictable cost base and capital expenditures, have led to strong and stable cash flows. Historically, we have experienced limited churn even while implementing price increases. Our established brand, local presence and triple play service offering are key drivers of growth. Since rebranding our cable operations as Unitymedia in 2007, we have significantly increased brand recognition and loyalty, establishing ourselves, we believe, as the leading provider of triple play services in our regions. We are able to leverage our local presence by rolling out integrated marketing plans by city, including, for example, coordinated waves of traditional and ambient advertising tailored to the cultural nuances of target cities combined with targeted marketing, sponsoring and sales channel distribution. Our cable network allows us to provide customers with a triple play service quality experience that we believe is superior to the experience of customers served by competitive infrastructures. We are able to lead pricing for our triple play service offerings based on our comparatively lean cost structure, high customer density and end-to-end control of our network. As a result, we increased our RGUs from New Services (consisting of Digital TV Pay, Retail Broadband Internet access, wholesale MMA Internet access and telephony) to 1.9 million in the nine months ended September 30, 2009 from 1.4 million in the nine months ended September 30, 2008. Further, in the nine months ended September 30, 2009, we believe that we captured more than 50 percent of Internet subscriber growth in our upgraded footprint, with approximately 80 percent of our new Retail Broadband Internet access RGUs opting for triple play services and, in addition, over 10 percent of our new Retail Broadband Internet access RGUs subscribing to a double play package, consisting of Retail Broadband Internet access and telephony. We have a large customer base to which we can up- and cross-sell our triple play services. Our basic cable services subscriber base represents a unique asset to which we can up- and cross-sell digital products and services using our extensive sales and distribution network. Due to the delayed roll-out of digital products in Germany, our total ratio of RGUs per basic cable subscriber was relatively low at 1.4:1 as of September 30, 2009. Our single and combined offering of digital television, broadband Internet access and telephony services, in connection with our established brand and the current general trend towards digitalization, provides us with the opportunity to sell additional services to our existing customers. During the past year, we have significantly enhanced the service capabilities at our call centers by implementing new systems and reorganizing our call center operations to focus even more on customer retention and upselling opportunities. In addition, we believe that our triple play product offerings, which can be marketed to over 95 percent of our cable television subscribers within our upgraded footprint, will further increase our ability to attract new customers and open additional customer segments that we could not previously access. Our network provides us with a superior platform. Our cable network is, for the majority of our footprint, one of only two networks with extensive local loop infrastructure across North Rhine-Westphalia and Hesse. It is

highly engineered and benefited from a publicly funded homogenous roll-out, resulting in high network reliability and low maintenance requirements. Our regional backbone and local loop network position us, we believe, as the only alternative end-to-end, infrastructure-based competitor to Deutsche Telekom across our market. We believe that control over the local loop last mile, allowing us to connect our network directly to the end-user premises, provides us with increased flexibility in product design and delivery, time-to-market advantages and certain cost advantages relative to operators without their own local loop. As of September 30, 2009, approximately 90 percent of our network had been upgraded to a bi-directional HFC standard with 862 MHz capacity. We benefit from an advantageous cost structure with inherent operating leverage and success-based capital expenditures. We benefit from an advantageous cost structure as a result of our secure, long-term access to the cable ducts of Deutsche Telekom and our stringent focus on cost control. Despite significant upfront investments into our sales and marketing capabilities, network upgrades as well as our customer premises equipment we have been able to deliver strong financial results. Certain of our cost elements, such as a portion of our network operations, customer care, billing and administration costs, are relatively fixed, which allows us to generate high incremental returns as we grow our business. In addition, as we have upgraded a substantial part of our network, we expect the majority of our future capital expenditures to be success-based and thus directly linked to incremental revenue generating unit growth, including investments related to providing new products and services to existing subscribers. We have a highly experienced management team with a successful track record at Unitymedia. Our management team has significant experience in the German and international cable television industries and mixes international and local expertise. We have a stable and long-serving management team whose members have held senior management positions at various domestic and international cable operators prior to joining Unitymedia and who have developed strong relationships with our market partners, including housing associations and broadcasters. Strategy The key components of our growth strategy are as follows: Drive growth from an integrated triple play product strategy. We believe that our upgraded network provides us with a superior technological infrastructure for delivering triple play services as a high value consumer proposition. We plan to continue to provide comprehensive, innovative multimedia and entertainment service bundles to existing and new customers, which bundles will offer customers both higher speed and more product breadth at competitive prices. We believe that the competitive price and quality of our bundled services allow us to differentiate ourselves from our competitors and gain new customers, increase customer retention, maximize revenues generated from existing customers through cross- and up-selling and enhance our profitability. Since the beginning of 2006, we have achieved significant growth in our Digital TV Pay, Internet access and telephony services, in particular in the period since we rebranded and started offering Unity3play. The relatively low penetration in the New Services offers us significant potential for further growth. Increase our broadband Internet access and telephony penetration. We plan to grow our Retail Broadband Internet access customer base by emphasizing our bandwidth capabilities and high value-for-money service proposition, and by converting our growing wholesale MMA Internet access service customers into Retail Broadband Internet access customers. We intend to acquire a substantial share of new broadband Internet access customers on our footprint and win customers away from our competitors based on our competitive pricing and service quality as well as the superior speed of our offerings. In November 2009, we deployed DOCSIS 3.0 in selected cities (initially Aachen and Cologne), which will allow customers in the upgraded areas to download data from the Internet at speeds of up to 120 Mb/s. We plan to market our Internet and telephony products aggressively in our footprint either in a service bundle or as standalone products. We see our telephony product, which is used as a first line service, as a potent way to disconnect customers from our competitors for current and future media and telecommunications products using alternative access technologies. Further develop our Digital TV Pay and other product offerings. We plan to continue the digitalization of our basic cable services subscriber base, which is a prerequisite for Digital TV Pay growth. Our Jetzt Digital digitalization initiative has received significant support of state media authorities in North Rhine-Westphalia and Hesse. Full simulcast of analog channels in digital format and increasing brand awareness further support the

demand for Digital TV Pay. We intend to market additional attractive content, which is becoming increasingly available in Digital TV Pay, to our customers. In addition, in December 2008 we increased the functionality of our services by introducing digital video recorders (DVRs). Maintain and expand strong competitive position in our market. We believe that Unitymedia currently has a very competitive product offering, enabled by our upgraded network which we believe is much better suited to data transmission than our competitors networks. We market all of our products and services using the single Unitymedia brand, which according to independent research commissioned by the Company, is one of the most strongly associated with triple play services in North Rhine-Westphalia and Hesse. Moreover, the pricing of our product is below most of our competitors as we continue to benefit from an advantageous cost structure and have implemented stringent cost controls. This allowed us, for example, to capture what we believe to be more than 50 percent of Internet subscriber growth in our upgraded footprint in the nine months ended September 30, 2009. We also believe that our competitive position will be strengthened as a result of the Transactions as we take advantage of cost synergies and our affiliation with UPC Holding. Expand our network coverage area through acquisitions. We regularly evaluate potential value accretive acquisition targets and, subject to market conditions and the availability of suitable investment opportunities, intend to expand our network coverage area through acquisitions of related businesses in our existing regions or natural extension through contiguous operations. In selecting potential targets, we intend to focus on gaining access to new markets and product segments, minimizing overlap with our existing network and creating operational synergies. We believe that due to our experience with, and track record of, integrating past acquisitions, such as ish, Tele Columbus and PrimaCom Aachen and Wiesbaden, we will be able to successfully integrate companies and realize synergies. Maintain focus on operational excellence. We have streamlined our operations, automated and integrated various customer care and billing platforms, established closer relationships with our sales agents and implemented earnings-based incentives. We closely monitor key performance indicators to assess our operational processes, sales and marketing efficiency and the reliability of our infrastructure. Call answer rates have exceeded 90 percent for all but one month since January 2008, and we have created specialized inbound and outbound departments in customer care to address billing and collections, customer retention and sales. We are focused on the continued training and development of our sales force and call center agents, so that we can efficiently provide high quality service to our customers. Focusing on cash flow growth. We are committed to exploiting the growth opportunities that we believe are available to our business and generating high incremental returns on our investments. We intend to leverage the scalability of our operations and our significant historical network investments to translate revenue growth into Adjusted EBITDA. We also expect to improve our cash flow conversion as we benefit from operating and capital expenditure leverage as our business grows. The Transactions On November 13, 2009, the Issuer, an indirect wholly-owned subsidiary of LGI, and LGI entered into a share purchase agreement with Unity Media S.C.A. to acquire all of the issued and outstanding capital stock of Unitymedia GmbH. The consummation of the Acquisition of Unitymedia GmbH pursuant to the share purchase agreement is subject only to regulatory approval. The purchase price for the Acquisition is expected to be approximately 3.5 billion, excluding transaction fees and expenses. In order to finance the Acquisition, the Issuer will issue the Notes and is expected to receive an equity contribution or investment from its parent company of approximately 1.0 billion (the Equity Contribution). In addition, in connection with the Acquisition, the Issuer will enter into the New Revolving Credit Facility providing for borrowings of up to 80 million, none of which is expected to be drawn as of the closing of the Acquisition. If the Acquisition does not close prior to September 30, 2010, the share purchase agreement will terminate unless otherwise extended by the parties thereto. Pending the consummation of the Acquisition, the Initial Purchasers will deposit the net proceeds from the offering of the Senior Secured Notes into segregated Senior Secured Notes escrow accounts and will deposit the net proceeds from the offering of the Senior Notes into a segregated Senior Notes escrow account, in each case for the benefit of the holders of the relevant Notes. The release of escrow proceeds is subject to the satisfaction of

certain conditions, including the closing, promptly upon the initial release of certain escrow proceeds, of the Acquisition. If the Debt Pushdown does not occur on the date of the closing of the Acquisition, the escrow proceeds in respect of the Senior Secured Notes shall only be released after all proceeds in respect of the Senior Notes have been released and than only in an amount to be used to fund a portion of the purchase price of the Acquisition and related fees and expenses. An amount equal to the amount necessary to repay or redeem or retire all indebtedness (including any premium, prepayment fees, expenses and accrued and unpaid interest) under the Unitymedia Group Notes, the Term Loan and the NRW/Hesse Notes (collectively, the Existing Unitymedia Indebtedness) will remain subject to the Escrow Agreement and the conditions contained therein until completion of the Debt Pushdown at which time the remaining escrow proceeds will be released provided that all required documentary and other conditions have been satisfied. Promptly following the closing of the Acquisition, we expect that the Issuer and Unitymedia GmbH will enter into a domination agreement and Unitymedia Management GmbH and Unitymedia Hessen Verwaltung GmbH will enter into a domination agreement in order to enable the assumption by Unitymedia GmbH of the Senior Notes and the assumption by Unitymedia Hessen GmbH & Co. KG and Unitymedia NRW GmbH, as co-issuers, of the Senior Secured Notes in excess of the amounts required by each of the aforementioned to repay its share of the Existing Unitymedia Indebtedness. Unitymedia Hessen GmbH & Co. KG and Unitymedia NRW GmbH will make upstream intercompany loans to the Issuer in an amount equal to the difference between the principal amount of the Senior Secured Notes assumed by them and the amount of their Existing Unitymedia Indebtedness (the foregoing transfer of the Senior Notes and related obligations to Unitymedia GmbH and the Senior Secured Notes and related obligations to Unitymedia Hessen GmbH & Co. KG and Unitymedia NRW GmbH, as co-issuers, is collectively referred to as the Debt Pushdown). However, the Issuer may determine to effect the Debt Pushdown through alternative means, including a merger of the Issuer into Unitymedia GmbH and/or a liquidation or merger of Unitymedia Hessen Verwaltung GmbH into Unitymedia Management GmbH (which alternative means, if any, is also referred to herein as the Debt Pushdown). Following receipt of the proceeds from the Issuer and in connection with the Debt Pushdown, Unitymedia GmbH, Unitymedia Hessen GmbH & Co. KG and Unitymedia NRW GmbH will use the proceeds of the intercompany loans from the Issuer to redeem and retire the Existing Unitymedia Indebtedness. As part of the Debt Pushdown, Unitymedia GmbH will assume all of the Issuers obligations under the Senior Notes and Unitymedia Hessen GmbH & Co. KG and Unitymedia NRW GmbH, as co-issuers, will assume all of the Issuers obligations under the Senior Secured Notes and the New Revolving Credit Facility and the Issuer will be released from all obligations under the Senior Secured Notes, the Senior Notes and the New Revolving Credit Facility. In connection therewith, the share pledge given by the UPC Germany Holding BV of the outstanding capital stock of the Issuer will be released, and the Issuer will pledge all of the capital stock of Unitymedia GmbH to secure the Senior Notes. In connection with the Debt Pushdown and the redemption of the Existing Unitymedia Indebtedness, Unitymedia GmbH, Unitymedia Hessen GmbH & Co. KG and Unitymedia NRW GmbH, together with certain of their subsidiaries, will provide additional security for the Notes as further described herein. See Description of the Senior Secured Notes and Description of the Senior Notes. Sources and Uses for the Transactions The expected estimated sources and uses of the funds necessary to consummate the Transactions are shown in the table below. Actual amounts will vary from estimated amounts depending on several factors, including the date of consummation of the Debt Pushdown and related differences from our estimate of the outstanding amount of Existing Unitymedia Indebtedness at closing and our estimated fees and expenses.
Sources Uses (in millions)

New Revolving Credit Facility (1) . . . . . . . . . . . . . . . . . . . Notes offered hereby (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Equity Contribution (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,601 1,043 3,644

Cash purchase of equity of Unitymedia GmbH . . . . Repayment of Existing Unitymedia Indebtedness (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transaction fees and expenses (5) . . . . . . . . . . . . . . . . . Total uses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,000 1,566 78 3,644

(1) See Description of Other Indebtedness The New Revolving Credit Facility. The New Revolving Credit Facility is expected to be undrawn at closing.

(2) Represents (i) the issuance of the Euro Senior Secured Notes offered hereby at an original issue discount of 2.16% of the 1,430 million aggregate principal amount, (ii) the issuance of the Dollar Senior Secured Notes offered hereby at an original issue discount of 2.16% of the $845 million aggregate principal amount and as restated in euro based on a November 16, 2009 convenience translation of $1.4975 per 1.00 and (iii) the issuance of the 665 million aggregate principal amount the Senior Notes. (3) Includes cash proceeds to be contributed to or invested in the Issuer prior to the consummation of the Acquisition from LGI or one of its direct or indirect its subsidiaries. (4) Represents the repayment of the Existing Unitymedia Indebtedness, net of cash and cash equivalents of Unitymedia GmbH as of September 30, 2009, and includes estimated accrued interest and call premiums payable in connection with the repayment of such indebtedness. The call premiums were estimated on the basis of the earliest available call premiums from the date of this offering memorandum in accordance with the agreements governing the Existing Unitymedia Indebtedness. See Description of Other Indebtedness. The repayment of the July 2005 Senior Notes assumes the $151 million principal amount of such notes is translated using the euro per one U.S. Dollar period end rate for September 2009 as disclosed elsewhere herein. (5) This amount reflects our estimate of fees and expenses we will pay in connection with the Transactions, including commitment, placement, financial advisory and other transaction costs and professional fees.

Summary Corporate and Financing Structure The following chart sets forth certain aspects of our corporate and financing structure after giving effect to the Transactions, including the issuance and sale of the Notes offered hereby, the Acquisition of Unitymedia, the repayment of the Existing Unitymedia Indebtedness with certain of the proceeds from the sale of the Notes, and the Debt Pushdown. Please refer to Description of Other Indebtedness, Description of the Senior Secured Notes and Description of the Senior Notes for more information.
LGI LGI

Intermediate Intermediate Holdcos Holdcos

LG LG Europe Europe

Liberty Global Liberty Europe Global Europe Subsidiaries Other Other Subsidiaries UPC Germany Holding BV

UPC Germany GmbH Bidco 93.75%

6.25% (4)

Unitymedia Unitymedia GmbH GmbH (1)

(1 )

665,000,000 Senior Notes (3)

100 % 100% Unitymedia Unitymedia Mangement Mangement GmbH GmbH 80,000,000 Revolving Revolving Credit Facility Credit Facility (2) Tax Group (1) (3 ) 0.02% 99.98% 99.2% 0.8% (1 )

Unitymedia Hessen Unitymedia Hessen GmbH& & Co. GmbH Co KG . KG

0%

Unitymedia Hessen Unitymedia Hessen Verwaltung Verwaltung GmbHGmbH

100% 100 % 1,430,000,000 and $ 845,000,000 $ ____ Senior euro equivalent Senior Secured Secured Notes Notes ( 3 ) Unitymedia Unitymedia NRW GmbH NRW GmbH Tax Group Tax Group 100% iesy iesy Hessen Hessen Verwaltungs Verwaltungs GmbH GmbH 100% Arena Sport Rechte Arena Sport und Rechte und Marketing GmbH Marketing GmbH Operating Operating Subsidiaries Subsidiaries

Operating Operating Subsidiaries Subsidiaries

(1) Following the closing of the Acquisition, in order to complete the Debt Pushdown, we expect that the Issuer will enter into a domination agreement with Unitymedia GmbH and that Unitymedia Management GmbH will enter into a domination agreement with Unitymedia Hessen Verwaltung GmbH. (2) Within 35 days following the closing of the Acquisition, the Issuer will onloan the proceeds of the Senior Secured Notes (to the extent not used to pay the purchase price for the Acquisition) to Unitymedia Hessen GmbH & Co. KG and Unitymedia NRW GmbH for the purpose of redeeming the NRW/Hesse Notes. Partially in discharge of their repayment obligations under the aforementioned shareholder loans from the Issuer, and partially by way of intercompany loans to the Issuer, Unitymedia Hessen GmbH & Co. KG and Unitymedia NRW GmbH, as co-issuers, will assume all of the Issuers obligations under the Senior Secured Notes and the Issuer will be released from all obligations under the Senior Secured Notes. In connection therewith, the share pledge given by UPC Germany Holding BV over the outstanding capital stock of the Issuer will be released, and the Senior Secured Notes will receive the benefit of a first priority security interest in the equity interests of Unitymedia Management GmbH, Unitymedia Hessen GmbH & Co. KG, Unitymedia Hessen Verwaltung GmbH and Unitymedia NRW GmbH as well as a security interest in substantially all of the assets of Unitymedia Hessen GmbH & Co. KG and Unitymedia NRW GmbH and security assignment over claims under certain domination and/or profit and loss absorption agreements as described under Description of the Senior Secured Notes Ranking of the Notes, Note Guarantees and Security Upon Completion of the Debt Pushdown. In addition, Unitymedia Hessen GmbH & Co. KG and Unitymedia NRW GmbH will replace the Issuer as borrowers under the New Revolving Credit Facility, which is expected to be undrawn at closing.

(3) Upon closing of the Acquisition, proceeds of the offering of the Senior Notes issued on the Issue Date will be released from escrow in order to fund a portion of the purchase price of the Acquisition. Upon completion of the Debt Pushdown, Unitymedia GmbH, as issuer, will assume all of the Issuers obligations under the Senior Notes and the Issuer will be released from all obligations under the Senior Notes. In connection therewith, the share pledge given by UPC Germany Holding BV of the outstanding capital stock of the Issuer will be released, and the Senior Notes will receive the benefit of a first priority security interest in the equity interests of Unitymedia GmbH and a junior priority security interest in the equity interests of Unitymedia Management GmbH, Unitymedia Hessen GmbH & Co. KG and Unitymedia Hessen Verwaltung GmbH. (4) Represents a 6.25 percent interest in Unitymedia GmbH owned by Unitymedia Hessen GmbH & Co. KG.

UPC Germany Holding BV, the Issuer and the Unitymedia Co-Issuers UPC Germany Holding BV is a private company with limited liability (besloten vennootschap met beperkte aarsprakelijkheid) incorporated on October 23, 2009 under the laws of the Netherlands. UPC Germany Holding BV has conducted no operations or other material activities. UPC Germany Holding BV is registered with the Dutch Commercial Register under number 34362415. UPC Germany Holding BVs principal business address is Boeing Avenue 53, NL 1119 PE Schiphol Rijk. The Issuer is a limited liability company (Gesellschaft mit beschrnkter Haftung) incorporated on October 15, 2009 under the laws of Germany. The Issuer has conducted no operations or other material activities. The Issuer is registered with the commercial registry of the local court (Amtsgericht) of Hamburg under number HRB 111352. The Issuers principal business address will be Alsterarkaden 27, 20354 Hamburg following registration of its name change. Unitymedia GmbH is a limited liability company (Gesellschaft mit beschrnkter Haftung) incorporated on September 20, 2002 under the laws of Germany. Unitymedia GmbH is registered with the commercial registry of the local court (Amtsgericht) of Cologne under number HRB 57237. Unitymedia GmbHs principal business address is Aachener Strae 746-750, 50933 Cologne, Germany. Unitymedia Hessen GmbH & Co. KG is a limited partnership with a limited liability company as general partner founded on April 18, 2000 under the laws of Germany. Unitymedia Hessen GmbH & Co. KG is registered with the commercial registry of the local court (Amtsgericht) of Cologne under number HRA 24116. Unitymedia Hessen GmbH & Co. KGs principal business address is Aachener Strae 746-750, 50933 Cologne, Germany. Unitymedia NRW GmbH is a limited liability company (Gesellschaft mit beschrnkter Haftung) incorporated on November 2, 2000 under the laws of Germany. Unitymedia NRW GmbH is registered with the commercial registry of the local court (Amtsgericht) of Cologne under number HRB 55984. Unitymedia NRW GmbHs principal business address is Aachener Strae 746-750, 50933 Cologne, Germany.

10

Summary Financial and Operating Data The summary financial and operating data set forth below as of and for the financial years ended December 31, 2008 and 2007 have been derived from the consolidated financial statements of Unitymedia GmbH prepared in accordance with EU-IFRS and the summary historical consolidated financial and operating data set forth below as of and for the financial year ended December 31, 2006 have been derived from the consolidated financial statements of Unity Media GmbH prepared in accordance with IFRS. The consolidated financial statements as of and for the financial years ended December 31, 2008, 2007 and 2006 have been audited by PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprfungsgesellschaft, as set forth in their auditors report included elsewhere in this offering memorandum. The summary historical interim consolidated financial and operating data set forth below as of and for the nine months ended September 30, 2009 and 2008 have been derived from the unaudited condensed consolidated interim financial statements of Unitymedia GmbH, prepared in accordance with EU-IFRS. The Selected As-Adjusted Financial Data table below provides certain financial data on an as-adjusted basis after giving effect to the Transactions, including the issuance of the Notes offered hereby and the application of the net proceeds thereof as described in Use of Proceeds. The following information should be read in conjunction with Managements Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements of Unitymedia GmbH included elsewhere in this offering memorandum. Consolidated Income Statement Data
For the nine months ended September 30 2009 2008 For the financial year ended December 31 2008 (in thousands) (unaudited) (audited) 2007 2006

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Own work capitalized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost of materials and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . Personnel expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization expenses . . . . . . . . . . . . . . . . . . . Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Profit/(loss) for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Attributable to: Equity holders of the parent (1) . . . . . . . . . . . . . . . . . . . . . . . Minority interests (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Profit/(loss) for the period (1) . . . . . . . . . . . . . . . . . . . . . . . . . . .

819,723 15,497 27,420 862,640 (118,584) (80,025) (213,917) (323,921) 126,193 19,946 (98,139) 23,695 71,695

845,798 13,146 24,274 883,218 (107,657) (75,633) (184,259) (374,499) 141,170 67,290 (113,524) (22,189) 72,747

1,161,925 998,964 18,082 14,858 41,249 44,129 1,221,256 1,057,951 (145,633) (140,139) (104,701) (104,074) (255,645) (230,660) (527,803) (522,378) 187,474 60,700 71,267 16,260 (153,381) (163,159) (19,279) 37,432 86,081 (48,767) 86,081 86,081

665,586 10,776 24,149 700,511 (135,290) (91,131) (227,921) (365,296) (119,127) 10,562 (175,438) 119,411 (2,058) (166,650)

(48,767) (172,195) 5,545 (48,767) (166,650)

(1) The consolidated income statement for the nine months ended September 30, 2009 does not show the line items Equity holders of the parent, Minority interests and Profit/(loss) for the Period because no minority interests existed during the nine months ended September 30, 2009 and September 30, 2008, respectively.

11

Unitymedia Cable Segment: Income Statement Data

For the nine months ended September 30 2009 2008 For the financial year ended December 31 2008 (in thousands) (unaudited) (audited) 2007 2006

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Own work capitalized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other income (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost of materials and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Personnel expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization expenses . . . . . . . . . . . . . . . . . . . . . Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Profit/(loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Attributable to: Equity holders of the parent (2) . . . . . . . . . . . . . . . . . . . . . . . . . Minority interests (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Segment profit/(loss) (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

649,003 15,497 25,172 689,672 (111,584) (79,079) (212,091) (163,895) 123,023 18,961 (98,139) 28,359 72,204

597,887 13,146 17,567 628,600 (99,076) (74,701) (179,877) (160,163) 114,783 67,320 (113,520) (13,990) 54,593

809,516 18,082 28,965 856,563 (134,614) (103,393) (250,505) (222,816) 145,235 70,005 (153,369) (7,983) 53,888 53,888 53,888

706,395 14,858 38,303 759,556 (127,595) (97,311) (223,241) (195,853) 115,556 10,515 (162,463) 29,208 (7,184) (7,184) (7,184)

596,343 9,299 30,147 635,788 (119,461) (88,726) (225,307) (141,914) 60,380 8,698 (174,876) 119,411 (2,058) 11,556 6,010 5,545 11,556

(1) Includes 9.4 million of non-recurring releases of certain prior period accruals in the nine months ended September 30, 2009 and 16.1 million of non-recurring settlement revenue and purchase price adjustment accrual releases in the second quarter of 2007. (2) The income statement for the Unitymedia Cable segment for the nine months ended September 30, 2009 does not show the line items Equity holders of the parent, Minority interests and Segment profit/(loss) because no minority interests existed during the nine months ended September 30, 2009 and September 30, 2008, respectively.

arena Segment: Income Statement Data

For the nine months ended September 30 2009 2008 For the financial year ended December 31 2008 (in thousands) (unaudited) (audited) 2007 2006

Revenue (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Own work capitalized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost of materials and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Personnel expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization expenses . . . . . . . . . . . . . . . . . . . . . Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Profit/(loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Attributable to: Equity holders of the parent (2) . . . . . . . . . . . . . . . . . . . . . . . . . Minority interests (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Segment profit/(loss) (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

170,720 2,714 173,434 (7,000) (946) (1,826) (160,492) 3,170 985 (4,664) (509)

247,911 7,560 255,471 (8,581) (932) (4,382) (215,189) 26,387 4,562 (4) (8,199) 22,746

352,409 308,623 78,351 13,343 8,335 1,703 365,752 316,958 80,054 (11,019) (12,544) (15,829) (1,308) (6,763) (2,405) (5,140) (7,419) (2,614) (306,046) (345,088) (238,713) 42,239 (54,856) (179,507) 5,854 6,906 3,515 (12) (1,857) (2,213) (11,296) 8,224 36,785 (41,583) (178,205) 36,785 36,785 (41,583) (178,205) (41,583) (178,205)

(1) Including inter-segment revenues in the amount of 16.1 million in the financial year ended December 31, 2007 and 9.1 million in the financial year ended December 31, 2006.

12

(2) The consolidated income statement for the arena segment for the nine months ended September 30, 2009 does not show the line items Equity holders of the parent, Minority interests and Segment profit/(loss) because no minority interests existed during the nine months ended September 30, 2009 and September 30, 2008, respectively.

Consolidated Balance Sheet Data

As of September 30 2009 (unaudited) 2008 As of December 31 2007 2006 (in thousands) (audited)

Assets Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Available for sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trade accounts receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Goodwill and other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other non current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total non current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shareholders equity and liabilities Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bonds and bank liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bonds and bank liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other non current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total non current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total shareholders equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

159,615 66,730 30,691 50,240 307,276 932,952 1,208,577 112,241 2,253,770 2,561,046

214,936 77,819 51,241 343,996 905,461 1,264,429 47,336 2,217,226 2,561,222

227,058 211,560 69,599 59,057 567,274 862,488 1,269,527 74,965 2,206,980 2,774,254

444,365 49,553 49,446 543,364 844,307 1,346,033 74,832 2,265,172 2,808,536

161,427 77,562 21,256 131,238 391,483 1,649,324 119,413 1,768,737 400,826 2,561,046

179,125 127,836 72,644 119,323 498,928 1,649,756 90,097 1,739,853 322,441 2,561,222

151,981 184,998 45,067 154,338 536,384 1,887,444 51,333 84,578 2,023,355 214,515 2,774,254

115,378 86,250 110,822 115,790 428,240 1,966,612 127,153 2,093,765 286,531 2,808,536

Consolidated Statement of Cash Flow Data

For the nine months ended September 30 2009 2008 For the financial year ended December 31 2008 (in thousands) (unaudited) (audited) 2007 2006

Cash flow from operating activities . . . . . . . . . . . . . . . . . . . . . . . . Cash flow from/(used in) investing activities . . . . . . . . . . . . . . . Cash flow from/(used in) financing activities . . . . . . . . . . . . . . . Change in cash and cash equivalents from cash relevant transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash and cash equivalents at the beginning of the period . . . . . . . Cash and cash equivalents at the end of the period . . . . . . . . .

205,018 (229,715) (30,624) (55,321) 214,936 159,615

375,988 (157,523) (218,185) 280 227,058 227,338

423,635 81,020 37,542 (233,403) (166,945) 29,172 (202,354) (131,381) 332,736 (12,122) (217,306) 399,450 227,058 444,364 44,914 214,936 227,058 444,364

13

Summary Consolidated and Segment Operating Data

As of and for the nine months ended September 30 2009 2008 As of and for the financial year ended December 31 2008 2007 2006

(in thousands, except percentages, ARPU and as otherwise indicated) (unaudited)

Unitymedia Cable Segment Footprint Homes Passed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Upgraded Homes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subscribers Analog Basic Cable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital Basic Cable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Basic Cable Subscribers . . . . . . . . . . . . . . . . . . RGUs (1) Basic Cable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . New Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total RGUs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . New Services RGUs Digital TV Pay (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Retail Broadband Internet . . . . . . . . . . . . . . . . . . . . . . . . Wholesale MMA Internet (3) . . . . . . . . . . . . . . . . . . . . . . Telephony . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total New Services RGUs . . . . . . . . . . . . . . . . . . . . . . Penetration BCS in % of Homes Passed . . . . . . . . . . . . . . . . . . . . . . Digital in % of BCS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital (with Premiere (now Sky Deutschland)) in % of BCS (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ARPU (in ) (5) Basic Cable Services ARPU (6) . . . . . . . . . . . . . . . . . . . Incremental New Services ARPU (7) . . . . . . . . . . . . . . . Blended ARPU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital TV Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Retail Broadband Internet (8) . . . . . . . . . . . . . . . . . . . . . Wholesale MMA Internet . . . . . . . . . . . . . . . . . . . . . . . . Telephony (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Broadband (Retail Broadband Internet and Telephony) (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unity3play (Broadband including BCS) (10) . . . . . . . . arena Segment arenaSAT RGUs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . arenaSAT ARPU (in ) (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,757 90% 3,247 1,301 4,547 4,547 1,883 6,430 470 537 340 535 1,883 52% 29% 33% 10.12 3.99 14.11 9.08 15.37 1.55 12.89 28.26 38.38 68 18.77
(unaudited)

8,671 75% 3,539 1,116 4,655 4,655 1,357 6,013 531 326 193 308 1,357 54% 24% 29% 9.70 2.81 12.51 9.98 14.19 2.57 17.45 31.64 41.34 221 18.89

8,685 83% 3,391 1,228 4,619 4,619 1,561 6,180 568 377 253 363 1,561 53% 27% 31% 9.81 2.95 12.77 9.82 14.67 2.43 16.13 30.80 40.61 191 18.67

8,643 66% 3,973 789 4,762 4,762 942 5,704 456 199 112 175 942 55% 17% 9.19 1.84 11.03 11.01 15.23 2.35 20.69 35.92 45.11 334 17.13
(audited)

8,584 43% 4,487 443 4,930 4,930 568 5,498 385 80 45 58 568 57% 9% 8.21 0.77 8.98 9.02 18.74 2.07 23.39 42.13 n/a 323 17.59

(in thousands)

Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

862,640

883,218

1,221,256

1,057,951

700,511

(in millions, except percentages) (unaudited)

Adjusted EBITDA (12) Unitymedia Cable Segment . . . . . . . . . . . . . . . . . . . . . . arena Segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjusted EBITDA Margin (13) Unitymedia Cable Segment . . . . . . . . . . . . . . . . . . . . . . arena Segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

331.3 16.3 347.6 48.7% 9.4% 40.3%

294.3 26.3 320.6 46.8% 10.3% 36.3%

394.9 41.3 436.2 46.1% 11.3% 35.7%

332.8 (24.2) 308.6

291.3 (135.0) 156.3

44.8% 45.8% (7.6)% (168.7)% 29.6% 22.3%

14

As of and for the nine months ended September 30 2009 2008

As of and for the financial year ended December 31 2008 2007 2006

(in millions, except percentages) (unaudited) (audited)

Capital Expenditure (14) Unitymedia Cable Segment . . . . . . . . . . . . . . . . . . . . . . . . arena Segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

187.4 0.5 187.9

150.3 0.8 151.1

231.5 1.6 233.0

(unaudited)

171.7 1.8 173.6

103.9 14.7 118.6

Capital Expenditure Ratio (15) Unitymedia Cable Segment . . . . . . . . . . . . . . . . . . . . . . . . arena Segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net Debt (16) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

27.2% 0.3% 1,511.0

23.9% 0.3% 1,461.7

27.0% 0.4% 1,507.5

23.1% 0.6% 1,705.5

16.3% 18.4% 1,633.1

(1)

RGUs relate to sources of revenue, which may not always be the same as the number of subscribers. For example, one person may subscribe to two different services, thereby accounting for only one subscriber but for two RGUs. (2) Number of smartcards with one or more Digital TV Pay package and/or a DVR, including until March 31, 2009, other second smartcards. (3) MMA wholesale Internet product for landlords, excluding units that upgrade to Retail Broadband Internet. (4) Includes cable-based Premiere (now Sky Deutschland) pay TV customers in NRW/Hesse not subscribing to a separate Unitymedia Digital TV Pay package. (5) ARPU calculated by dividing the relevant subscription revenues (excluding installation and carriage fees) for a period by the average number of relevant subscribers for that period and the number of months in that period. (6) Calculated as the average ARPU of all analog and digital BCS subscribers (excluding Digital TV Pay RGUs and revenues). (7) Sum of Retail Broadband Internet, wholesale MMA Internet, Telephony and Digital TV Pay revenue divided by the number of BCS RGUs in the same period. (8) In the second quarter of 2008 the Company changed the manner in which it allocates ARPU generated from its 2Play and Unity3play products. Prior to the second quarter of 2008, a fixed amount of ARPU was allocated to BCS digital (in Unity3play) and Telephony (together with telephone usage charges), with the remaining ARPU allocated to Retail Broadband Internet. Beginning in the second quarter of 2008, a fixed amount of ARPU was allocated to BCS digital (in Unity3play) and Retail Broadband Internet customers acquired from the second quarter of 2008, with the remaining ARPU (together with telephone usage charges) allocated to Telephony. (9) Sum of Retail Broadband Internet ARPU and Telephony ARPU. (10) Sum of average Basic Cable ARPU and Broadband ARPU (excluding additional Digital TV Pay ARPU). (11) Calculated by dividing arenaSAT satellite subscription sales excluding public viewing revenues for a period by the average number of total arenaSAT RGUs for that period and the number of months in that period; includes installation revenues, set-top box sales and other revenues.

15

(12) We refer to EBITDA as earnings before interest and income taxes (EBIT) plus amortization and depreciation. We define Adjusted EBITDA as EBITDA before non-recurring income, restructuring and transformation costs and non-cash share-based expense for the management equity participation (MEP) program. Adjusted EBITDA is not a measure of liquidity or performance calculated in accordance with EU-IFRS or IFRS and should be viewed as a supplement to, not a substitute for, our results of operations presented in accordance with EU-IFRS or IFRS. Furthermore, neither EBITDA nor Adjusted EBITDA are necessarily comparable to similarly-titled measures reported by other companies. A reconciliation of Adjusted EBITDA to EBITDA for each of the periods indicated is as follows: For the nine months ended September 30 2009 2008

For the financial year ended December 31 2008 2007 2006

(in millions) (unaudited)

Unitymedia Cable Segment EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reversal of: Non-recurring income, restructuring and transformation costs (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-cash share-based expense for the MEP program (b) . . . . . . Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . arena Segment EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reversal of: Non-recurring income, restructuring and transformation costs (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-cash share-based expense for the MEP program (b) . . . . . . Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

335.1

294.7

395.7

338.8

285.8

(4.0) 0.2 331.3 5.0

(1.7) 1.3 294.3 30.8

(2.7) 1.8 394.9 47.4

(7.9) 1.9 332.8 (47.4)

4.4 1.1 291.3 (176.9)

11.3 16.3

(4.4) 26.3

(6.1) 41.3

23.2 (24.2)

41.9 (135.0)

The non-recurring income, restructuring and transformation costs are isolated in the respective income and cost categories in the notes to our financial statements. (b) Share expenses for shares at Unity Media S.C.A. as part of the MEP, which are isolated as a sub-component of the line item Personnel expenses in the notes to our financial statements. (13) Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of total segment or consolidated revenue, as appropriate. In the financial year ended December 31, 2007, Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of adjusted total revenue, as 16.1 million of non-recurring settlement revenue and purchase price accrual releases were deducted from total revenue in the second quarter of 2007 at Unitymedia Cable. In the nine months ended September 30, 2009, Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of adjusted total revenue, as 9.4 million of non-recurring releases of certain prior period accruals were deducted from total revenue in the nine months ended September 30, 2009 at Unitymedia Cable. Neither EBITDA nor Adjusted EBITDA is a recognized measure in accordance with EU-IFRS or IFRS and neither should be viewed as a substitute for earnings before taxes, operating expenses, loss, net cash flow from current business activity or other income statement or cash flow items computed in accordance with EU-IFRS or IFRS. Adjusted EBITDA does not necessarily indicate whether cash flow will be sufficient or available to meet our cash requirements, and our historical operating results cannot be derived from Adjusted EBITDA. Adjusted EBITDA is not a reliable indicator of future results. Since not all companies compute Adjusted EBITDA in the same way, the computation of Adjusted EBITDA chosen by our management is not necessarily comparable with similar terms used by other companies. (14) Capital expenditure consists of expenditures for property and equipment and intangibles (except for customer lists) and does not include financial assets. For the nine months ended September 30, 2008 excludes 48.5 million, and for the financial year ended December 31, 2008 excludes 49.1 million, for the share acquisition of the PrimaCom networks in Aachen and Wiesbaden and, for the nine months ended September 30, 2009, includes 8.0 million related to the acquisition of the network of KfGW GmbH and approximately 100,000 of other third party network acquisitions. (15) Capital Expenditure Ratio represents Capital Expenditure as a percentage of total revenue, on a segment basis. In the nine months ended September 30, 2009, the Capital Expenditure Ratio for the Unitymedia Cable segment includes 8.0 million related to the acquisition of the network of KfGW GmbH and approximately 100,000 of other third party network acquisitions. Excluding the network acquisitions in the amount of 8.1 million, the Capital Expenditure Ratio for the Unitymedia Cable segment in the nine months ended September 30, 2009 would have been 26.0 percent. In the financial year ended December 31, 2007, Capital Expenditure Ratio is presented as a percentage of adjusted total revenue, deducting 16.1 million of non-recurring settlement revenue and purchase price accrual releases in the second quarter of 2007 from total revenue at Unitymedia Cable. (16) Net debt is the value of bonds and bank liabilities as shown in the EU-IFRS and IFRS financial statements less cash on hand. Bonds and bank liabilities exclude repurchased but not retired debt securities, foreign exchange valuation of USD bond and capitalized transaction costs and include accrued interest. Net debt is not a defined term under IFRS and may not therefore be comparable with other similarly titled measures reported by other companies.

(a)

16

Selected As-Adjusted Financial Data

Unaudited as of and for the nine months ended September 30, 2009 (in millions, excluding ratios)

As-adjusted debt (1) . . . . Cable Segment last two quarters annualised Adjusted EBITDA (2) . . . As-adjusted debt/Cable Segment last two quarters annualised Adjusted EBITDA (3). . . . .

2,659.3 449.4 5.9x

(1) Represents (a) the issuance of 1,430 million aggregate principal amount of the Euro Senior Secured Notes offered hereby, (b) the issuance of $845 million aggregate principal amount of the Dollar Senior Secured Notes offered hereby (as restated in euro based on a November 16, 2009 convenience translation of $1.4975 per 1.00) and (c) the issuance of the 665 million aggregate principal amount the Senior Notes, and (d) the repayment of all of the Existing Unitymedia Indebtedness. This exchange rate differs from the exchange rate in effect as of November 17, 2009 and may differ from the exchange rate in effect as of the date the Dollar Senior Secured Notes are issued. (2) Cable Segment last two quarters annualised Adjusted EBITDA excludes arena Segment. We regularly evaluate a range of strategic options for arena SAT. Cable Segment last two quarters annualised Adjusted EBITDA is calculated by multiplying Cable Segment Adjusted EBITDA (as defined in the indentures governing the Notes) for the six months ended September 30, 2009 (224.7 million) by two. (3) Giving effect to certain synergies expected to result from the Acquisition, including relating to the consolidation of our network operations center into the existing UPC Holding network operations center, associated cost-reduction and the migration of the Companys information technology and billing functions to UPC Holding information technology and billing platform, which we expect to result in approximately 20 million of cost savings in the first twelve months following consummation of the Acquisition, our as-adjusted debt/Cable Segment last two quarters annualised Adjusted EBITDA at September 30, 2009 would have been 5.67x. While the anticipated synergies are based on our estimates and expectations, there is no assurance that we will realise any or all of these cost savings. See Risks factors Anticipated synergies from our affiliation with UPC Holding may not materialize.

17

Summary of the Offering The summary below describes the principal terms of the Notes. Certain of the terms and conditions described below are subject to important limitations and exceptions. The Description of the Senior Secured Notes and the Description of the Senior Notes sections of this offering memorandum contains a more detailed description of the terms and conditions of the Notes, including the definitions of certain terms used in this summary. Issuer Senior Secured Notes Prior to the Debt Pushdown: UPC Germany GmbH (the Issuer). Following the Debt Pushdown: Unitymedia Hessen GmbH & Co. KG and Unitymedia NRW GmbH (the Senior Secured Notes Co-Issuers) as co-issuers. Senior Notes Prior to the Debt Pushdown: the Issuer. Following the Debt Pushdown: Unitymedia GmbH (the Senior Notes Issuer). Notes offered Senior Secured Notes 1,430,000,000 aggregate principal amount of 8 1 8% Senior Secured Notes due 2017 (the Euro Senior Secured Notes) and $845,000,000 aggregate principal amount of 8 1 8% Senior Secured Notes due 2017 (the Dollar Senior Secured Notes and, together with the Euro Senior Secured Notes, the Senior Secured Notes). 665,000,000 aggregate principal amount of 9 5 8% Senior Notes due 2019 (the Senior Notes and, together with the Senior Secured Notes, the Notes).

Senior Notes

Maturity date Senior Secured Notes Senior Notes Interest payment dates Senior Secured Notes Semi annually in arrears on each June 1 and December 1, commencing June 1, 2010. Interest will accrue from the issue date of the Senior Secured Notes. Semi annually in arrears on each June 1 and December 1, commencing June 1, 2010. Interest will accrue from the issue date of the Senior Secured Notes. December 1, 2017. December 1, 2019.

Senior Notes

Denomination Senior Secured Notes Each Euro Note will have a minimum denomination of 50,000 and integral multiples of 1,000 in excess thereof. Each Dollar Note will have a minimum denomination of $100,000 and integral multiples of $1,000 in excess thereof. Each Senior Note will have a minimum denomination of 50,000 and integral multiples of 1,000 in excess thereof.

Senior Notes Issue price Senior Secured Notes

97.844% plus accrued interest, if any, from the Issue Date.

18

Senior Notes Escrow of Proceeds; Special Mandatory Redemption

97.652% plus accrued interest, if any, from the Issue Date. The Initial Purchasers will deposit the net proceeds of the offering of the Senior Secured Notes and the Senior Notes into segregated escrow accounts pending satisfaction of the conditions to release of such proceeds. The escrow accounts will be in the name of the trustee on behalf of the holders of the Senior Secured Notes and Senior Notes, respectively. Upon delivery to the applicable escrow agent of an officers certificate stating that the conditions to the release of the proceeds from escrow are satisfied, the escrowed funds will be released to us and utilized as described in The Transactions, and Use of Proceeds, Description of the Senior Secured Notes Escrow of Proceeds; Special Mandatory Redemption and Description of the Senior Notes Escrow of Proceeds; Special Mandatory Redemption. Upon the earlier of (1) the date on which UnitedGlobalCom, Inc., the indirect parent of the issuer, ceases to beneficially own and control 100% of the issued and outstanding shares of the Issuer, (2) the date on which there first occurs a repudiation by the Issuer of any of its obligations under the applicable Senior Secured Escrow Agreement or Senior Notes Escrow Agreement or the unenforceability of the applicable Senior Secured Escrow Agreement or Senior Notes Escrow Agreement against the Issuer or any of its other creditors for any reason, (3) the date on which any conditions to the release of the escrow proceeds could not reasonably be deemed to be capable of being satisfied, (4) the date the Share Purchase Agreement with Unity Media S.C.A. terminates and (5) if the Acquisition has not been completed, October 31, 2010, the Notes will be subject to a special mandatory redemption. The special mandatory redemption price of the Senior Secured Notes will be equal to 101% of the initial offering price of the Senior Secured Notes (expressed as a percentage), plus accrued interest on the Senior Secured Notes at such redemption date. The special mandatory redemption price of the Senior Notes will be equal to 101% of the initial offering price of the Senior Notes (expressed as a percentage), plus accrued interest on the Senior Notes at such redemption date. The applicable escrow funds would be applied to pay for any such mandatory redemption. LGI is required to fund the difference between the special mandatory redemption price and the escrow proceeds pursuant to a guarantee provided by LGI. See Description of the Senior Secured Notes Escrow of Proceeds; Special Mandatory Redemption and Description of the Senior Notes Escrow of Proceeds; Special Mandatory Redemption.

Debt Pushdown Ranking Senior Secured Notes

See Description of the Senior Secured Notes and Description of the Senior Notes.

Prior to the Debt Pushdown, the Senior Secured Notes will:

be general senior obligations of the Issuer, secured by a pledge of the shares of the Issuer and a security interest over the rights of the Issuer under the Senior Secured Escrow Agreement;

Immediately after giving effect to the Debt Pushdown, the Senior Secured Notes will:

be general, senior obligations of the Senior Secured Notes Co-Issuers, secured as set forth below under Security;

19

rank pari passu in right of payment with any existing and future indebtedness of the Senior Secured Notes Co-Issuers that is not subordinated to the Senior Secured Notes; rank senior in right of payment to any existing and future subordinated obligations of the Senior Secured Notes Co-Issuers (including the senior subordinated guarantee given by that Issuer in favor of the Senior Notes); be guaranteed on a senior basis by Unitymedia GmbH, Unitymedia Management GmbH and Unitymedia Hessen Verwaltung GmbH; and have the benefit of security in the form of:

a first-priority pledge of all of the shares in Unitymedia Management GmbH, Unitymedia Hessen Verwaltung GmbH, and the Senior Secured Notes Co-Issuers; security assignments over claims under certain domination and/or profit and loss absorption agreements; first-priority account pledges covering certain cash accounts of the Senior Secured Notes Co-Issuers and, to the extent applicable, Unitymedia Management GmbH and Unitymedia Hessen Verwaltung GmbH; a security assignment of the receivables and insurance claims of the Senior Secured Notes Co-Issuers and, to the extent applicable, Unitymedia Management GmbH and Unitymedia Hessen Verwaltung GmbH; and a security transfer of substantially all of the other material assets (other than our SLA Agreements) of the Senior Secured Notes Co-Issuers and, to the extent applicable, Unitymedia Management GmbH and Unitymedia Hessen Verwaltung GmbH;

the benefit of which security will be subject in an enforcement to the priority liens (the Priority Liens) securing our obligations under the Revolving Credit Facility and certain hedging obligations; and

be effectively subordinated to any existing and future secured indebtedness of the Senior Secured Co-Issuers that is secured by liens senior to the liens securing the Senior Secured Notes or secured by property and assets that do not secure the Senior Secured Notes, to the extent of the value of the property and assets securing such indebtedness.

Senior Notes

Prior to the Debt Pushdown, the Senior Notes will:

be general senior obligations of the Issuer, secured by a pledge of the shares of the Issuer and a security interest over the rights of the Issuer under the Senior Notes Escrow Agreement;

Immediately after giving effect to the Debt Pushdown, the Senior Notes will:

be general, senior obligations of the Senior Notes Issuer, secured by a first-priority pledge of the shares of the Senior Notes Issuer

20

and a junior-priority pledge of the shares of Unitymedia Management GmbH, Unitymedia Hessen Verwaltung GmbH and Unitymedia Hessen and security assignment over claims under certain domination and/or profit and loss absorption agreements;

be guaranteed on a senior subordinated basis by certain subsidiaries of the Senior Notes Issuer; be senior in right of payment to any existing and future subordinated obligations of the Senior Notes Issuer; rank equally in right of payment with any existing and future indebtedness of the Senior Notes Issuer that is not subordinated to the Senior Notes; be effectively subordinated to any existing and future secured Indebtedness of the Senior Notes Issuer and its subsidiaries to the extent of the value of the assets securing such indebtedness (unless such assets also secure the Senior Notes on an equal and ratable or prior basis); and be effectively subordinated to any existing and future indebtedness of subsidiaries of the Senior Notes Issuer that do not guarantee the Senior Notes.

Guarantees Senior Secured Notes Prior to the Debt Pushdown, the Senior Secured Notes will not be guaranteed. Immediately after giving effect to the Debt Pushdown, the full payment of the Senior Secured Notes will be unconditionally guaranteed on a senior basis by Unitymedia GmbH, Unitymedia Hessen Verwaltung GmbH and Unitymedia Management GmbH. The guarantees may be released in certain circumstances, including upon the sale of a guarantor, if certain conditions are met. The obligations of each guarantor will be limited as described under the heading Description of the Senior Secured Notes Ranking of the Notes, Note Guarantees and Security upon Completion of the Debt Pushdown. Prior to the Debt Pushdown, the Senior Notes will not be guaranteed. Immediately after giving effect to the Debt Pushdown, the full payment of the Senior Notes will be unconditionally guaranteed on a senior subordinated basis by Unitymedia Hessen, Unitymedia Hessen Verwaltung GmbH, Unitymedia NRW and Unitymedia Management. The guarantees may be released in certain circumstances, including upon the sale of a guarantor, if certain conditions are met. The obligations of each guarantor will be limited as described under the heading Description of the Senior Notes Ranking of the Notes, Subsidiary Guarantees and Security upon Completion of the Debt Pushdown.

Senior Notes

Ranking of the Guarantees Senior Secured Notes The Senior Secured Note Guarantee of each Guarantor will be a general obligation of that Guarantor and will:

rank pari passu in right of payment with any existing and future indebtedness of that Guarantor that is not subordinated to such Guarantors Senior Secured Note Guarantee; rank senior in right of payment to any existing and future subordinated obligations of that Guarantor (and if such Senior Secured Note Guarantee is given by a subsidiary of Unitymedia

21

GmbH, senior to the senior subordinated guarantee given by that Guarantor in favor of the Senior Notes and, if such Senior Secured Note Guarantee is given by Unitymedia GmbH, pari passu to the obligations of Unitymedia GmbH under the Senior Notes);

have the benefit of security in the form of:

a first-priority pledge of all the shares of Unitymedia Management GmbH, Unitymedia Hessen Verwaltung GmbH and the Senior Secured Notes Co-Issuers; security assignments over claims under certain domination and/or profit and loss absorption agreements; first-priority account pledges covering certain cash accounts of the Senior Secured Notes Co-Issuers and, to the extent applicable, Unitymedia Management GmbH and Unitymedia Hessen Verwaltung GmbH; a security assignment of the receivables and insurance claims of the Senior Secured Notes Co-Issuers and, to the extent applicable, Unitymedia Management GmbH and Unitymedia Hessen Verwaltung GmbH; and a security assignment of substantially all of the other material assets (other than our SLA Agreements) of the Senior Secured Notes Co-Issuers and, to the extent applicable, Unitymedia Management GmbH and Unitymedia Hessen Verwaltung GmbH;

the benefit of which security will be subject in an enforcement to the Priority Liens securing our obligations under the Revolving Credit Facility and certain hedging obligations; and

be effectively subordinated to any existing and future indebtedness of that Guarantor that is secured by liens senior to the liens securing that Guarantors guarantee or secured with property or assets that do not secure that Guarantors guarantee, to the extent of the value of the assets securing such indebtedness.

The guarantees will be subject to the terms of the Intercreditor Agreement. See Description of Other Indebtedness The Intercreditor Agreement. The guarantees will be subject to release under certain circumstances. See Description of the Senior Secured Notes Ranking of the Notes, Note Guarantees and Security upon Completion of the Debt Pushdown Guarantees. Senior Notes The Subsidiary Guarantees will:

be general senior subordinated obligations of each Guarantor; have the benefit of security in the form of (a) a first-priority pledge of the shares in Unitymedia GmbH (b) a junior-priority pledge of the shares in each of Unitymedia Management GmbH, Unitymedia Hessen and Unitymedia Hessen Verwaltung GmbH (which will be junior-priority pursuant to the Intercreditor Agreement and as described below under Security) and (c)

22

security assignment over claims under certain domination and/or profit and loss absorption agreements;

be subordinated in right of payment to all existing and future senior indebtedness of each Guarantor (including indebtedness incurred by the Guarantors under the Revolving Credit Facility, the Senior Secured Notes and certain hedging obligations); rank pari passu in right of payment with all existing and future senior subordinated indebtedness of each Guarantor; be effectively subordinated to all existing and future secured indebtedness of the Guarantors to the extent of the value of the assets securing such indebtedness (unless such assets also secure the Subsidiary Guarantees on an equal and ratable or prior basis); and be senior in right of payment to all future obligations of the Guarantors expressly subordinated to the guarantee of the Secured Notes.

The guarantees will be subject to the terms of the Intercreditor Agreement. See Description of Other Indebtedness The Intercreditor Agreement. The guarantees will be subject to release under certain circumstances. See Description of the Senior Notes Ranking of the Notes, Subsidiary Guarantees and Security upon Completion of the Debt Pushdown Subsidiary Guarantees. As of September 30, 2009, on an as-adjusted basis after giving effect to the offering and the consummation of the Transactions, the guarantors of the Senior Notes would have had a total of approximately 1,430 million and $845 million of indebtedness to which each guarantee would be contractually subordinated. Security Senior Secured Notes Prior to the Debt Pushdown, the Senior Secured Notes will be secured by a first-priority share pledge over the shares of the Issuer and a security interest over the rights of the Issuer under the Senior Secured Notes Escrow Agreement, which security interest will be partially released in connection with the use of certain proceeds to fund a portion of the purchase price for the Acquisition. Immediately after giving effect to the Debt Pushdown, the Senior Secured Notes will be secured by (i) first-priority share pledges over the shares of Unitymedia Management GmbH, Unitymedia Hessen Verwaltung GmbH and the Senior Secured Notes Co-Issuers, (ii) security assignment over claims under certain domination and/or profit and loss absorption agreements; and (iii) with respect to each of the Senior Secured Notes Co-Issuers and, to the extent applicable, Unitymedia Management GmbH and Unitymedia Hessen Verwaltung GmbH, (a) a first-ranking account pledge covering certain cash accounts, (b) security assignments of receivables and insurance claims and (c) security transfers of substantially all of the other material assets of the Senior Secured Notes Co-Issuers and the Guarantors (other than the SLAs). See Description of the Senior Secured Notes Ranking of the Notes, Note Guarantees and Security upon Completion of the Debt Pushdown. Under the terms of the Intercreditor Agreement, the proceeds of any enforcement of the Security will be applied to repayment of the New

23

Revolving Credit Facility and certain hedging obligations prior to being applied to repayment of the Senior Secured Notes. The Security is subject to contractual limitations due to German capital maintenance laws and may be released in certain circumstances. See Risk Factors Risks Relating to the Notes and Description of the Senior Secured Notes Ranking of the Notes, Note Guarantees and Security upon Completion of the Debt Pushdown. Senior Notes Prior to the Debt Pushdown, the Senior Notes will also be secured by a first priority share pledge over the shares of the Issuer and, until release upon completion of the Acquisition, a security interest over the rights of the Issuer under the Senior Notes Escrow Agreement. Immediately after giving effect to the Debt Pushdown, the Senior Notes will be secured by a first priority share pledge over Unitymedia GmbH, junior priority share pledges over the shares of Unitymedia Management GmbH, Unitymedia Hessen and Unitymedia Hessen Verwaltung GmbH and security assignment over claims under certain domination and/or profit and loss absorption agreements. See Description of the Senior Notes Ranking of the Notes, Subsidiary Guarantees and Security upon Completion of the Debt Pushdown.

Optional redemption Senior Secured Notes The Senior Secured Notes Co-Issuers may redeem all or part of the Euro Senior Secured Notes and/or Dollar Senior Secured Notes on or after December 1, 2012 at the redemption prices as described under Description of the Senior Secured Notes Optional Redemption Optional Redemption on or after December 1, 2012. Prior to December 1, 2012, the Senior Secured Notes Co-Issuers may redeem all or part of the Euro Senior Secured Notes and/or Dollar Senior Secured Notes by paying a make whole premium as described under Description of the Senior Secured Notes Optional Redemption Optional Redemption prior to December 1, 2012. Prior to December 1, 2012, the Senior Secured Notes Co-Issuers may on one or more occasions use the net proceeds of specified equity offerings to redeem up to 35 percent of the principal amount of the Senior Secured Notes (including the principal amount of any Additional Notes) at a redemption price equal to 108.125% of the principal amount of the Euro Senior Secured Notes and 108.125% of the principal amount of the Dollar Senior Secured Notes, plus accrued and unpaid interest and additional amounts, if any, up to the redemption date, provided that at least 65% of the original principal amount of the Euro Senior Secured Notes and/or the Dollar Senior Secured Notes as the case may be, remains outstanding after the redemption. Senior Notes The Senior Notes Issuer may redeem all or part of the Senior Notes on or after December 1, 2014 at the redemption prices as described under Description of the Senior Notes Optional Redemption Optional Redemption on or after December 1, 2014. Prior to December 1, 2014, the Issuer or the Senior Notes Manager may redeem all or part of the Senior Notes by paying a make whole premium as described under Description of the Senior Notes Optional Redemption Optional Redemption prior to December 1, 2014. Prior to December 1, 2012, the Issuer or the Senior Notes Issuer may on one or more occasions use the net proceeds of specified equity offerings

24

to redeem up to 35 percent of the principal amount of the Senior Notes (including the principal amount of any Additional Notes) at a redemption price equal to 109.625% of the principal amount of the Senior Notes, plus accrued and unpaid interest and additional amounts, if any, up to the redemption date, provided that at least 65% of the original principal amount of the Senior Notes remains outstanding after the redemption. Special Optional Redemption; UPC Exchange Transaction At any time on or after the 12-month anniversary of the Issue Date but on or prior to the 36-month anniversary of the Issue Date, the Senior Secured Notes Co-Issuers and the Senior Issuer may, at their option, following completion of a UPC Exchange Transaction, redeem all, but not less than all, of the relevant Notes issued under the relevant Indenture upon not less than 30 nor more than 60 days notice (which notice of redemption shall be given no later than 10 business days following the completion of such UPC Exchange Transaction), at a redemption price (expressed as a percentage of the principal amount thereof) of: (1) 101% (if such redemption is on or before the 24-month anniversary of the Issue Date); or 102% (if such redemption is after the 24-month anniversary of the Issue Date),

(2)

in each case, plus accrued and unpaid interest and Additional Amounts, if any, to the date of redemption (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date). A UPC Exchange Transaction means an exchange offer by UPC Holding or UPC Broadband, as applicable, pursuant to which one or more series of UPC Qualified Notes are offered in exchange for all outstanding Notes issued under the Indenture; provided, that (i) no Default or Event of Default has occurred and is continuing at the time any such exchange offer is made or would result therefrom, (ii) holders of a majority in aggregate principal amount of the outstanding Notes have elected to participate in such offer, (iii) for each 1,000 in principal amount of Euro Notes tendered and accepted, each holder tendering such Euro Notes will receive 1,000 in principal amount of UPC Qualified Notes, (iv) for each $1,000 in principal amount of Dollar Notes tendered and accepted, each holder tendering such Dollar Notes will receive $1,000 in principal amount of UPC Qualified Notes, (v) the exchange offer complies with Rule 14e-1 under the Exchange Act and any other applicable securities law or regulation, (vi) UPC Holding or UPC Broadband, as applicable, accepts for exchange all Notes tendered in such exchange offer and issues the relevant UPC Qualified Notes in exchange therefor, (vii) the exchange offer is open to all holders of the notes on substantially similar terms, (viii) the exchange offer is not conditioned upon holders of the Notes consenting to any amendments to the terms of the notes or the Indenture and (ix) in connection therewith, the Issuer and its Restricted Subsidiaries will become direct or indirect Subsidiaries of UPC Broadband. Additional Amounts; Tax Redemption All payments in respect of the Notes will be made without withholding or deduction for any taxes or other governmental charges, except to the

25

extent required by law. If withholding or deduction is required by law, subject to certain exceptions, the Issuer, the Senior Notes Co-Issuers or the Senior Notes Issuer, as applicable, will pay additional amounts so that the net amount you receive is no less than that which you would have received in the absence of such withholding or deduction. See Description of the Senior Secured Notes Withholding Taxes and Description of the Senior Notes Withholding Taxes. The Issuer, the Senior Notes Co-Issuers or the Senior Notes Issuer, as applicable, may redeem the Notes in whole, but not in part, at any time, upon giving prior notice, if certain changes in tax law impose certain withholding taxes on amounts payable on the Notes, and, as a result, the Issuer, the Senior Notes Co-Issuers or Senior Notes Issuer, as applicable, is required to pay additional amounts with respect to such withholding taxes. If the Issuer, the Senior Notes Co-Issuers or the Senior Notes Issuer, as applicable, decides to exercise such redemption right, it must pay you a price equal to the principal amount of the Notes plus interest and additional amounts, if any, to the date of redemption. See Description of the Senior Secured Notes Redemption for Taxation Reasons and Description of the Senior Notes Redemption for Taxation Reasons. Certain Tax Considerations The Senior Secured Notes will be issued at a discount and as a result will be treated as issued with original issue discount for U.S. federal income tax purposes. U.S. investors in such Notes will be subject to tax on original issue discount as it accrues, in advance of the cash attributable to that income (and in addition to qualified stated interest). For a discussion of the U.S. federal income tax consequences of the acquisition, ownership and disposition of the Notes, see Certain Tax Considerations U.S. Federal Income Taxation of the Notes. If the Senior Notes Co-Issuers or the Senior Notes Issuer experiences a change of control (as defined in the indenture) at any time after giving effect to the Debt Pushdown, they or it will be required to offer to repurchase the Senior Secured Notes and the Senior Notes, as applicable, at 101% of their principal amount plus accrued interest to the date of such repurchase. See Description of the Senior Secured Notes Certain Covenants Change of Control and Description of the Senior Notes Certain Covenants Change of Control. The indentures will limit the ability of the Issuer, prior to the Debt Pushdown, to engage in certain business and other activities, including ability to incur additional indebtedness. The indentures will, after the Debt Pushdown, partially limit, among other things, the ability of the Senior Secured Notes Co-Issuers and their respective restricted subsidiaries and the Senior Notes Issuer and its restricted subsidiaries to:

Change of control

Certain covenants

incur or guarantee additional indebtedness and issue certain preferred stock; pay dividends, redeem capital stock and make certain investments; make certain other restricted payments; create or permit to exist certain liens; impose restrictions on the ability of our subsidiaries to pay dividends or make other payments to us; transfer, lease or sell certain assets including subsidiary stock; merge or consolidate with other entities;

26

enter into certain transactions with affiliates; enter into unrelated businesses; and impair the security interests for the benefit of the holders of the Notes.

Each of these covenants is subject to a number of significant exceptions and qualifications. See Description of the Senior Secured Notes Certain Covenants and the related definitions and Description of the Senior Notes Certain Covenants and the related definitions. Transfer restrictions The Notes have not been, and will not be, registered under the U.S. Securities Act or the securities laws of any other jurisdiction. The Notes are subject to restrictions on transfer and may only be offered or sold in transactions that are exempt from or not subject to the registration requirements of the U.S. Securities Act. See Transfer Restrictions and Plan of Distribution. The Notes will be new securities for which there is currently no market. Although the Initial Purchasers have informed us that they intend to make a market in the Notes, they are not obligated to do so and they may discontinue market making at any time without notice. Accordingly, we cannot assure you that a liquid market for the Notes will develop or be maintained. Application has been made for the Senior Secured Notes and the Senior Notes to be admitted to listing and to trading on the Euro MTF Market of the Luxembourg Stock Exchange. See Description of the Senior Secured Notes Listing and Description of the Senior Notes Listing. The Bank of New York Mellon, acting through its London Branch. The Bank of New York Mellon, acting through its London Branch. The Bank of New York Mellon, acting through its London Branch. The Bank of New York Mellon (Luxembourg) S.A. The Bank of New York Mellon, acting through its London Branch. Credit Suisse, London Branch. The net proceeds from the sale of the Notes will be deposited in segregated escrow accounts in the name of the trustee on behalf of the holders of the Notes under the indentures governing the Notes pending satisfaction of the conditions to release of such proceeds. Upon release from escrow, the net proceeds from the sale of the Notes will be used (i) to fund a portion of the purchase price payable to the sellers in the Acquisition, (ii) to repay all amounts due under the Existing Unitymedia Indebtedness, including all accrued interest and applicable call premiums, and (iii) to pay fees and expenses related to the Transactions. See The Transactions and Use of Proceeds. The indentures, the Senior Secured Notes and the Senior Notes are governed by the laws of the State of New York. The Share Pledges are governed by the laws of Germany. Please see the Risk Factors section for a description of certain of the risks you should carefully consider before investing in the Notes.

Absence of a public market for the Senior Secured Notes

Listing

Trustee Paying agent Transfer agent Registrar Escrow agent Security Trustee/Security Agent Use of proceeds

Governing law

Risk factors

27

RISK FACTORS An investment in the Notes involves risks. Before purchasing the Notes, you should consider carefully the specific risk factors set forth below, as well as the other information contained in this offering memorandum. Any of the risks described below could have a material adverse impact on our business, prospects, results of operations and financial condition and could therefore have a negative effect on the trading price of the Notes and our ability to pay all or part of the interest or principal on the Notes. Additional risks not currently known to us or that we now deem immaterial may also harm us and affect your investment. This offering memorandum also contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including the risks described below and elsewhere in this offering memorandum. Risks Relating to Our Financial Profile Our high leverage and debt service obligations could have a material adverse effect on our business, financial condition and results of operations. We are highly leveraged and have significant debt service obligations. As of September 30, 2009, we had 1,699.1 million nominal value of long-term indebtedness outstanding (net of 251 million of the NRW/Hesse Notes that have been repurchased but not retired), all of which we expect to retire in connection with the Transactions. After giving effect to the Transactions, we would have had approximately 2.7 billion euro equivalent nominal value of long-term indebtedness outstanding as of September 30, 2009, of which 1,430 million and $845 million would have been indebtedness under the Senior Secured Notes and 665 million would have been indebtedness under the Senior Notes. In addition, following completion of the Transactions we expect to have access to a 80 million revolving credit facility pursuant to the New Revolving Credit Facility. We anticipate that our high leverage will continue for the foreseeable future. Our high leverage could have significant consequences on our business, financial condition and results of operations, such as:

limiting our ability to obtain additional financing to fund future operations, capital expenditure, acquisitions and other business opportunities or other corporate requirements; requiring the dedication of a substantial portion of our cash flows from operations to the payment of principal of, and interest on, our indebtedness, which means that these cash flows will not be available to fund our operations, capital expenditure or other corporate purposes; increasing our vulnerability to a downturn in our business or in economic and industry conditions; and limiting our flexibility in planning for, or reacting to, changes in our business, the competitive environment and the industries in which we operate.

The occurrence of consequences or events resulting from our high leverage could have a material adverse effect on our ability to satisfy our debt obligations. Although the terms of the New Revolving Credit Facility Agreement and the indentures for the Senior Secured Notes and Senior Notes may restrict us from incurring additional indebtedness, we could incur additional indebtedness in the future, which would increase the leverage-related risks described herein. We require a significant amount of cash to service our debt, and our ability to generate sufficient cash or otherwise fund our liquidity needs depends on many factors beyond our control. Our ability to make payments on, and to refinance, our debt, and to fund future operations and capital expenditures, will depend on our future operating performance and ability to generate sufficient cash. This depends, to some extent, on general economic, financial, competitive, market, legislative, regulatory and other factors, as well as the other factors discussed herein, many of which are beyond our control. We can provide no assurances that our business will generate sufficient cash flows from operations or that future debt and equity financing will be available to us in an amount sufficient to enable us to pay our debts as they become due or to fund our other liquidity needs. If our future cash flows from operations and other capital resources are insufficient to pay our obligations as they mature or to fund our liquidity needs, we may be forced to:

reduce or delay our business activities and capital expenditures; sell assets to the extent contractually permitted;

28

obtain additional debt or equity capital; and/or restructure or refinance all or a portion of our debt on or before maturity.

We provide no assurances that we would be able to accomplish any of these alternatives on a timely basis or on satisfactory terms, if at all. In addition, the terms of our debt, including the Senior Secured Notes, the Senior Notes and the New Revolving Credit Facility, will limit, and any future debt may limit, our ability to pursue any of these alternatives. We are subject to significant restrictive debt covenants, which limit our financial and operating flexibility. The indentures and other agreements governing our indebtedness contain covenants that significantly restrict our ability to, among other things:

incur or guarantee additional indebtedness and issue certain preferred stock; pay dividends, redeem capital stock and make certain investments; make certain other restricted payments; create or permit to exist certain liens; impose restrictions on the ability of our subsidiaries to pay dividends or make other payments to us; transfer, lease or sell certain assets including subsidiary stock; merge or consolidate with other entities; enter into certain transactions with affiliates; enter into unrelated businesses; and impair the security interests for the benefit of the holders of the Notes.

These covenants could limit our ability to finance our future operations and capital needs and pursue acquisitions and other business activities that may be in our interest. In the event of a default under any of our debt agreements, the lenders may terminate their commitments thereunder and declare all amounts owed to them to be due and payable. Borrowings under other debt agreements that contain cross-default or cross-acceleration provisions may, as a result, also be accelerated and become due and payable. We may be unable to pay these debts in such circumstances. We have incurred negative cash flow after interest and taxes and have a history of losses and may report losses in the future. We have a history of losses, including substantial negative cash flows after deducting interest and taxes. On a consolidated basis, we reported losses of 166.7 million for the financial year ended December 31, 2006 and 48.8 million for the financial year ended December 31, 2007. Although we reported, on a consolidated basis, a profit of 86.1 million for the financial year ended December 31, 2008 and 71.7 million for the nine months ended September 30, 2009, we may incur losses or be unable to generate positive cash flows in the future due to, among other things, our high leverage, interest expenses and depreciation. While a portion of any future losses may consist of depreciation and amortization expenses, which do not directly impact our cash flow, future losses may adversely affect our business and limit our ability to engage in equity or debt financings. We have unfunded liabilities with respect to our pension plans and other post-retirement benefits. Unitymedia Hessen and Unitymedia NRW maintain a number of pension plans to cover persons employed by Deutsche Telekom prior to January 1, 2001 and July 14, 2000, respectively, and who are not still civil servants provided for under a defined contribution plan. These plans provide for the payment of retirement benefits and certain disability and survivor benefits. After meeting certain qualifications, an employee gets a vested right to future benefits. In most cases, the benefits payable are determined on the basis of an employees length of

29

service, earnings and position. While we have made provisions for pensions, such provisions do not reflect future salary increases and are based on certain assumptions imposed by law and therefore it is likely that the actual amount of future pension obligations will be higher than provided for in the provisions. All of Unitymedia Hessens and Unitymedia NRWs pension plans are unfunded and we may not have sufficient assets to satisfy the liabilities related to those plans when they become due. We may be unable to fully deduct interest on our financial liabilities. The German Company Tax Reform Act 2008 (Federal Law Gazette Part I 2007, 1912) substituted the previously applicable German thin capitalization rules (described below) by the interest barrier regime (Zinsschranke), generally with effect as of January 1, 2008. A key element in the new legislation is a limitation on the deduction of a business net interest expenses equal to 30 percent of its tax-adjusted EBITDA. For purposes of the interest barrier rules, all businesses belonging to the same German fiscal unity for corporate income and trade tax purposes (Organschaft) are treated as one single business. Any non-deductible amount exceeding this threshold can be carried forward and, subject to various restrictions, might be deductible in future years. The effect of the interest barrier regime on our business is uncertain and may lead to the non-deductibility of parts of our interest expenses, as it depends in particular on our ability to generate future tax EBITDA to allow for maximum interest deductibility, the application of a so-called escape clause and there is little formal interpretative guidance to date from the tax authorities, case law or other authorities. The German thin capitalization rules, which are generally applicable in the financial years from 2004 until and including 2007, may adversely affect the ability to fully deduct interest owed under our financial liabilities for these periods. These rules provided for restrictions on the deductibility of interest expenses made on shareholder debt as well as third-party debt with recourse to the shareholder or its affiliates as parties providing guarantees or other security. Non-deductible interest expenses would be classified as constructive dividends, which may be subject to dividend taxation at the level of the shareholder (including withholding tax on respective payments, for which we could also be held liable as joint obligor). Irrespective of the interest barrier regime and the thin capitalization rules, interest may not be deductible for tax purposes if and to the extent (i) proceeds from the underlying financial liabilities would be deemed by tax authorities to be used for the cash funding of profit withdrawals or capital withdrawals made by Unitymedia Hessen to its partners or (ii) there are or have been withdrawals or deemed withdrawals exceeding the amount of the profits of Unitymedia Hessen in the respective business year plus any contributions (so-called excessive withdrawals or berentnahmen), as calculated in accordance with specific provisions in the German Income Tax Act (Einkommensteuergesetz). We do not intend to use the proceeds for the cash funding of profit or capital withdrawals. However, tax authorities may tend to deem any profit or capital withdrawals as being funded by such proceeds. Moreover, we cannot rule out that tax authorities may try to assume excessive withdrawals at some point in time. Any limitation of the deductibility of interest expenses may result in a higher tax burden for future periods as well as past periods which could have a material adverse effect on our financial condition and results of operations. In addition, we may incur corporate income tax and trade tax on different levels of the Unitymedia Group, notwithstanding the fact that we may suffer losses on a consolidated basis. Under current German tax law, Unitymedia Hessen will only be able to shelter 60 percent of its positive current income against trade tax by the use of its own trade tax loss carryforwards (to the extent that such positive income exceeds the amount of 1 million). As Unitymedia Hessen is transparent for corporate income tax purposes and as Unitymedia Management has entered into a tax group with Unitymedia for corporate income tax purposes, Unitymedia has to pay any corporate income tax payable on the income of Unitymedia Hessen. Only 60 percent of such income (to the extent that it exceeds the amount of 1 million) can be sheltered by Unitymedias own corporate income tax loss carryforward if and to the extent available. If the interest on Unitymedias debt instruments would not be deductible for corporate income tax purposes, the amount of cash needed by Unitymedia for paying the corporate income tax on the income of Unitymedia Hessen would be increased. Tax loss carryforwards, current losses and interest carryforwards may be cancelled due to share transfers. Under the previously applicable rules on tax loss carryforwards, such carryforwards may no longer be usable in case of a transfer of more than 50 percent of the shares in the corporation and the infusion of predominantly new assets within a certain period. As there is no reliable guidance by case law in respect of the infusion of predominantly new business assets, tax loss carryforwards existing at Unitymedia or its subsidiaries may have

30

been partly or completely lost due to share transfers, in particular in connection with certain financing and refinancing transactions in the past. These rules have been substituted by new rules (described below) by the German Company Tax Reform Act 2008 for future periods, generally with effect as of January 1, 2008; however, they continue to apply if more than 50 percent of the shares have been or will be transferred within a time period of five years starting before January 1, 2008 and predominantly new business assets have been or will be infused prior to January 2013. The German Company Tax Reform Act 2008 has introduced significant restrictions on the utilization of tax loss carryforwards, current losses and interest carryforwards. To the extent an acquirer, a person affiliated to such acquirer or a group of acquirers with similar interests acquires directly or indirectly more than 25 percent of our shares within five years, the tax loss carryforwards, current losses and interest carryforwards, if any, existing at Unitymedia and its subsidiaries will be lost on a pro rata basis unless there is an acquisition of more than 50 percent, in which case the tax loss carryforwards will completely be lost. Under applicable German law as currently in effect, the Transactions will therefore result in the cancellation of all tax loss carryforwards, current losses and interest carryforwards as of closing. The cancellation of our tax loss carryforwards or parts thereof might result in a corresponding write-down of our deferred tax assets. The cancellation may result in a higher tax burden in the future which could have a material adverse effect on our financial condition and results of operations. In addition, the German Company Tax Reform Act 2008 extended the trade tax rules for added back expenses for moveable and non-moveable leases as well as license and royalty fees with effect from January 1, 2008. The classification of such leases and royalty fees under this rule could impact our tax burden and future tax audits. Our tax liabilities may change due to tax audits. Unitymedia GmbH and its subsidiaries have been subject to tax audits on a regular basis. The Unitymedia Group was recently subject to tax audits involving corporate income tax, trade tax and value-added-tax (VAT) for the financial years 2000-2004 with respect to Unitymedia GmbH, Unitymedia Management, Unitymedia Hessen and Unitymedia NRW and for the financial years 2001-2004 with respect to Unitymedia Services. As a result of the tax audits with respect to Unitymedia Services, additional accruals for taxes and penalty interest for the financial years 2001-2004 in the amount of 1.3 million and for the financial years 2005-2006 in the amount of 1.2 million have been established. We have appealed these findings in part. Tax audits involving income tax, trade tax, wage tax and VAT for the financial years 2005-2007 are expected to commence in mid 2010. There is a risk that the ongoing tax audits, or tax audits for subsequent years, will result in a reduction of our loss carryforwards and/or in additional taxes to be paid by us or any of our subsidiaries, in particular due to the history of several reorganizations and financings as well as the multi-tier holding structure of the Unitymedia. This would have a material adverse effect on our financial condition and results of operations. The NRW/Hesse Notes, the Term Loan and the borrowings under the NRW/Hesse Revolving Credit Facility bear interest at floating rates that could rise significantly, increasing our costs and reducing our cash flow. A portion of the current debt of Unitymedia GmbH and its subsidiaries, including the NRW/Hesse Notes, the Term Loan and any borrowings under the NRW/Hesse Revolving Credit Facility, which is undrawn as of the date hereof, bear interest at floating rate of interest per annum equal to EURIBOR, as adjusted periodically, plus a spread. In addition, the New Revolving Credit Facility will bear interest at a floating rate. These interest rates could rise significantly in the future. Although we intend to refinance the NRW/Hesse Notes, the Term Loan and the NRW/Hesse Revolving Credit Facility in connection with the Transactions, any increase in the interest rate prior to the completion of the Transactions would increase the cost of the Transactions. Following the Transactions, we will remain subject to the risk that the interest rate on the New Revolving Credit Facility will increase. Risks Relating to Our Industry We operate in competitive industries, and competitive pressures could have a material adverse effect on our business. We face significant competition from established and new competitors. In some instances, we compete against companies with greater scale, easier access to financing, more comprehensive product offerings, greater personnel resources, greater brand name recognition and experience or longer-established relationships with regulatory authorities and customers. These companies may in some cases have fewer regulatory burdens with

31

which they are required to comply, because, among other reasons, they use different technologies to provide their services, do not own their direct access network or are not subject to obligations applicable to operators with significant market power. Such obligations may include pricing restrictions or the obligation to provide access to the network. The nature and level of the competition we face vary for each of the products and services we offer and our competitors include, but are not limited to, Deutsche Telekom, Vodafone, digital subscriber line (DSL) unbundlers and resellers as well as satellite, digital terrestrial video broadcast (DVB-T), city-based networks such as NetCologne and/or providers of emerging digital entertainment technologies. Cable television. We face competition for housing association contracts within North Rhine-Westphalia and Hesse from operators that distribute broadcast signals from the network backbone hand-over point to the wall socket inside a customers home (Level 4 operators). Level 4 operators in our footprint typically receive the television and radio broadcast signals they distribute either from us or from satellite providers. In addition, certain housing associations own and operate Level 4 networks on behalf of others and, accordingly, may display certain characteristics similar to Level 4 operators. Level 4 operators typically enter into long-term contracts with housing associations and may have greater flexibility than we do in terms of pricing, which may limit our ability to secure new contracts with housing associations and may hinder our efforts to market our services effectively to housing associations. Certain Level 4 operators may also seek opportunities to build their own network backbones (Level 3) or to install their own cable headend for receiving satellite signals, especially in the event that we increase the prices we charge to access to our network. Satellite. Satellite is a significant and increasing competitor in the German television market. The continued increase in market share of satellite distribution may have a negative impact on our cable television subscribers in the future. Satellite distribution has a number of competitive advantages over cable television, including the ability to offer a wider range of programs to a wider geographic area, especially in rural areas. In particular, we face competition from satellite distribution of free-to-air television programming. To receive free-to-air programming, viewers need only to purchase a satellite dish and an STB. Free-to-air satellite providers currently do not have any relationship with the end-user and, consequently, do not receive any subscription or other fees from them. Moreover, we see an increasing trend to digitalization and the delivery of premium pay TV content via satellite, including potentially high definition content. Our satellite platform, arenaSAT, competes with satellite providers, such as Premiere (now Sky Deutschland). As a general matter, satellite penetration may be accelerated by changes in, or less strict interpretation of, zoning laws that currently restrict the installation of satellite dishes in certain areas and changes in the respective provisions of housing association contracts with residents of multi-dwelling units that frequently prohibit tenants from attaching satellite dishes to their apartments if cable is installed. Based on a communication published by the European Commission in 2001 expressing its intention to reduce restrictions on individual reception of satellite television signals, German courts have developed certain rules for the balance of the respective rights of the landlord on the one hand and the tenant on the other hand. Further, the German state media authorities are promoting the switchover from analog to digital television in the regions in which we operate, which could further increase competition from digital free-to-air satellite distribution. In addition, German law may change in the future, which may ultimately further intensify competition with satellite providers. Furthermore, price increases for our services, such as those we implemented in 2008 and have announced for January 2010 and that we may implement in the future, may cause individuals to favor satellite over our technologies, and may encourage Level 4 operators and housing associations to disconnect from our network. Digital terrestrial television and emerging technologies. Our market share may also be adversely affected by the terrestrial transmission of digital television, other means of television signal delivery and emerging technologies such as television via Internet platforms (Internet Protocol Television, IPTV) and wireless broadband. Demand for digital terrestrial television and IPTV, which is available from network providers in many of Germanys urban centers, may increase in the future as they become more widely available, the price of the receiving equipment decreases and the receiving equipment is built into television sets. Improvements are also being made to alternative means of transmission, such as IPTV. Marketing and competition from providers of video over the Internet, such as Deutsche Telekom, may increase in the future. According to Screen Digest, as of June 30, 2009, Deutsche Telekom had approximately 561,000 active subscribers to its IPTV product, which is available in more than 1,000 cities across Germany using asymmetric digital subscriber line 2+ (ADSL2+) technology. Moreover, Deutsche Telecom is marketing end-user products with an even higher bandwidth via the Very High Digital Subscriber Line (VDSL), further increasing its competitiveness for triple play products. In addition, regionally-focused telecommunications network providers also offer IPTV and video on demand

32

(VoD) services in selected cities. Other emerging technologies include IPTV services that are delivered over the top of an existing broadband network (OTT-TV). The full extent to which these alternative technologies will compete effectively with our cable television system may not be known for several years. Our services also compete to varying degrees with other entertainment media, including home entertainment systems and cinema. Program providers. As we seek further subscribers to our cable television products, we will be competing with the providers of digital pay TV products that currently utilize our network to reach their own subscribers. These providers may decide to develop or use alternative distribution platforms, such as satellite or IPTV, adversely affecting our ability to generate carriage fees and subscriber revenues and potentially reducing the appeal of cable television. Certain digital pay TV providers, such as Premiere (now Sky Deutschland), have made use of its satellite platform and introduced DVRs to provide additional functionality for those subscribers who receive their digital pay programming through satellite, as well as seeking exclusive programming rights, including content that is available in high definition, thereby making satellite more attractive to potential customers. Broadband Internet services. We compete with companies that provide low-speed and low-cost (or potentially even free) Internet services over traditional telecommunications lines. For broadband Internet access, DSL is currently the dominant access type in Germany and Deutsche Telekom, is the major DSL provider in Germany, followed by United Internet, Vodafone and Hansenet (recently sold to Telefnica). We also compete with service providers that use other alternative technologies for Internet access, such as satellite technologies or mobile standards such as universal mobile telecommunications system (UMTS). In the future, additional access technologies may be launched that will further increase the competition or force us to increase capital expenditure for additional upgrades. For example, there are plans to launch wireless Internet access via the worldwide interoperability for microwave access (WiMax) standard, particularly in rural areas with low DSL and cable penetration. We expect competition, including price competition, from these providers to increase in the future. In response to the macroeconomic uncertainty and capital markets volatility in 2008 and the first half of 2009, the German government announced plans in February 2009 to support the German economy by, among other things, making public investments in broadband infrastructure. Deutsche Telekom and Vodafone, as well as other telecommunications operators, have announced plans to jointly expand networks in rural areas, which is expected to expand DSL providers access to customers in such areas. While the cable companies intend to participate in the effort to build further infrastructure, there can be no assurances that the investment by the German government in broadband infrastructure will not change the competitive landscape, thereby affecting our ability to develop our business as currently planned. Moreover, the German Federal Network Agency (Bundesnetzagentur) (the Federal Network Agency) will auction additional frequencies in 2010 which shall be used primarily for broadband products. The additional frequencies might enable our competitors to offer additional competing products or to offer their current products at lower costs. Residential telephony market. The market for residential telephony is highly competitive. The fixed-line telephony market is increasingly under pressure from resellers, alternative carriers, declining mobile phone charges and interconnection rates and alternative access technologies like VoIP and Internet telephony offered via DSL and other broadband connections. The German market for residential telephony services is relatively price sensitive and already on a low price level on an international scale. We expect increasing competition, including price competition, from traditional and non-traditional telephony providers in the future. Despite these pressures, Deutsche Telekom continues to be the dominant provider of fixed-line communications in Germany. Besides Deutsche Telekom, the most important providers in the fixed network sector include Vodafone, United Internet and Versatel. The success of alternative carriers and resellers varies regionally, including for example the regional DSL operator NetCologne, which has gained market share for Internet and telephony services in Cologne and expanded to Bonn and Aachen. The most important providers of services or network operators in the mobile telephony sector are T-Mobile, Vodafone, E-Plus, O2 and Freenet/Debitel. Competition can make it difficult to attract new customers and retain existing customers, thereby increasing churn levels, and may lead to increased price pressure. There can be no assurance that we will be able to compete successfully against our current or future competitors in any of our businesses. Our failure to do so could have a material adverse effect on our business, financial condition and results of operations.

33

The cable and telecommunications markets in Germany are exposed to considerable price and margin pressure. Prices for products and services offered to customers in the telecommunications and broadband services markets in Germany have decreased sharply in recent years, especially in the voice telephony segment, and may continue to decrease in the future. Increasing competitive pressure in this market and technological progress may cause prices for telecommunications and broadband services to continue to decline sharply and we may be unable to compensate for the resulting decrease in ARPU by selling additional higher-priced products, which may lead to a decline in revenue and profitability. The cable markets in Germany are also exposed to considerable price and margin pressure, particularly in the residential segment, as short contract terms and low barriers to changing providers require that we adapt our prices and services in order to preserve the attractiveness of our offerings. This may lead to a reduction in prices for the products and services we offer and an increase in investment we have to undertake as a result. In addition, we expect to incur additional marketing and other expenses in order to attract new and retain existing customers, which may adversely affect our margins. If we do not succeed in attracting new customers and retaining existing customers by expanding our product and service range, this may have a material adverse effect on our business, financial condition and results of operations. Our growth prospects depend on a continued increase in demand for cable and telecommunications products and services as well as economic developments in Germany. The use of Internet, telecommunications and other services in Germany has increased sharply in recent years and market forecasts predict a continued increase in demand (Source: Screen Digest Ltd., IDC). We have benefited from this growth in recent years and our growth and profitability depend, in part, on a continued increase in demand for these services in Germany in the coming years. If demand for triple play products in general does not increase as expected, this could have a material adverse effect on our business, financial condition and results of operations. Moreover, we operate exclusively in the German market and our success is therefore closely tied to general economic developments in Germany and cannot be offset by developments in other markets. Negative developments in, or the general weakness of, the German economy, in particular increasing levels of unemployment, may have a direct negative impact on the spending patterns of retail consumers, both in terms of the products they subscribe for and usage levels. Because a substantial portion of our revenue is derived from residential subscribers who may be impacted by these conditions, it may be (i) more difficult to attract new subscribers, (ii) more likely that certain of our subscribers will downgrade or disconnect their services and (iii) more difficult to maintain ARPUs at existing levels. In addition, we can provide no assurances that a further deterioration of the economy will not lead to a higher number of non-paying customers or generally result in service disconnections. Therefore, a weak economy and negative economic development may jeopardize our growth targets and may have a material adverse effect on our business, financial condition and results of operations. Risks Relating to Our Business While demand for many of our New Services increased in 2009, demand is difficult to predict for future periods, and we may not realize the expected benefits of providing the New Services or be able to keep up with demand. Bundling digital cable television, broadband Internet access and telephony is an important part of our strategy. In addition, the broadband Internet access and telephony markets are very competitive and any of the new or enhanced products or services we have introduced may fail to achieve market acceptance and the new or enhanced products or services introduced by our competitors may be more appealing to customers. Moreover, if one of our bundled offerings no longer appeals to our customers, they may discontinue using our bundled or stand-alone basic cable services altogether. Furthermore, in connection with the roll out of broadband Internet access and telephony, we rely on third-party subcontractors to install hardware in end-customer premises and in some cases upgrade in-house wiring. Demand for new products and services might exceed the capacities of these third parties, thereby creating a backlog of new customers to be connected and increasing lead times, which could in turn increase customer churn. In addition, high levels of growth in our New Services could impose limitations on the quality of our customer care operations. Although we continue to proactively adopt and implement a number of measures to

34

increase customer process scalability, especially in customer care, such as additions to our headcount, improving shift scheduling flexibility and overflow outsourcing with external partners, sustained and increasing growth levels could result in increasing customer complaints and customer churn, as well as associated increased costs, reduced revenues and reputational harm. Reduced demand as a result of any of these factors could have a material adverse effect on our business, financial condition and results of operations. We may not be able to successfully introduce new or modified services or respond to technological developments. To remain competitive, we must continue to increase and improve the functionality, availability and features of our network, in particular, to upgrade our bandwidth capacity to keep up with increasing demand for bandwidth intensive services and to launch new services. In general, the cable television and bandwidth-intensive services industries face challenges including the following:

rapid and significant technological change; changes in usage patterns and customer needs and priorities; frequent introduction of new products and services or upgrading of existing products and services in connection with new technologies; and introduction of new industry standards and practices that render current company technologies and systems obsolete.

It is difficult to predict the effect of technical innovations on our business. We may be unable to successfully integrate new technologies or adapt to new or existing technologies to meet customer needs within an appropriate timeframe. Any such inability could have a material adverse effect on our business, financial condition and results of operations. Customer churn, or the threat of customer churn, may adversely affect our business. Customer churn is a measure of the number of customers who stop subscribing for one or more of our products or services. Churn arises mainly as a result of competitive influences, relocation of subscribers and price increases. In addition, our customer churn rate may also increase if we are unable to deliver satisfactory services over our network. For example, any interruption of our services, the removal or unavailability of programming, which may not be under our control, or other customer service problems could contribute to increased customer churn or cause us to fail in our goal of reducing the level of churn of our basic cable and New Services subscribers. Any increase in customer churn may lead to increased costs and reduced revenues. The threat of churn of our signal delivery and housing associations customers may reduce our ability to renew contracts with these customers on terms commercially favorable to us. When existing contracts expire, signal delivery and housing associations customers may attempt to negotiate renewal contracts subject to certain discounts. Our subscription fees are based on our standard rate card, which links rates to the number of subscribers per signal handover point, which is generally at the building. In some instances, the commercial conditions and co-operation models we offer may not prevent some signal delivery and housing associations customers from terminating their contracts and disconnecting subscribers. Signal delivery and housing associations customers with large numbers of subscribers may have a better bargaining position, allowing them to negotiate for more favorable conditions because their threat of disconnection is more plausible. Further consolidation in the German cable industry among signal delivery and housing associations customers could lead to increased disconnection and lower revenues, as previously disparate groupings of customers become clusters with sufficient critical mass for disconnecting. The number of our basic cable subscribers decreased from approximately 4.9 million as of December 31, 2006 to approximately 4.5 million as of September 30, 2009, primarily as a result of price increases which came into effect on January 1, 2007, January 1, 2008 and July 1, 2008, respectively. We may lose further customers as a result of these and potential future price increases, competition or other factors. In addition, we experienced an increase in churn in arenaSAT RGUs in the second half of 2008, as the two-year contracts offered in connection with the launch of arena in mid-2006 expired, and in 2009, when the Bundesliga Rights expired. If our customers do not view the Acquisition favorably, we may encounter significant churn. In addition, if actual or perceived service levels decline following the Acquisition, we may lose additional customers.

35

A key strategy of our residential price increases has been to actively promote the conversion to basic digital access, and then up-sell to Digital TV Pay or other triple play services as part of a plan to increase revenue and reduce bundled churn. In addition to the increased risk of churn from price increases, the complexity of the services offered, the requirement for end-customer premises equipment and additional service or billing complexity could lead to increased churn and have a material adverse effect on our business, financial condition and results of operations. We rely on Deutsche Telekom and certain of its affiliates for access to and the operation of a significant part of our network. We have entered into various long-term agreements with Deutsche Telekom and certain of its affiliates. These agreements are significant to our business and include agreements for the lease of cable duct space and hubs as well as the use of fiber optic transmission systems, tower and facility space. In addition, we purchase through Deutsche Telekom the electrical power required for the operation of certain elements of our network. Our ability to offer our services to our customers depends on the performance of Deutsche Telekom and its affiliates of their respective obligations under these arrangements. In particular, we rely on Deutsche Telekom to provide us with timely access to co-located facilities, especially for the purposes of maintaining and repairing our network and avoiding and rectifying network outages. While our existing agreements with Deutsche Telekom generally do not permit termination in ordinary circumstances, Deutsche Telekom may terminate such arrangements in certain circumstances and under certain conditions (for example, in the event of location shut-down). Deutsche Telekom also has the right under the master service agreements (MSAs) to increase the prices for the services rendered to Unitymedia under certain circumstances. In addition, Deutsche Telekom is in the process of transforming its fixed-line infrastructure into a next generation network (NGN), which could involve the closure of certain smaller existing network locations where we have placed network equipment. Certain of our lease contracts with Deutsche Telekom relating to elements of our network architecture have been agreed in short form only, or are not subject to formal contracts, and could be terminated on short notice. Moving elements of our technical equipment increases operational, technical and financial risks, including exposure to potentially material relocation costs and higher rental costs, which could lead to the disruption of our ability to deliver products and services to customers. Such disruption could cause, among other things, reputational harm. Unitymedia Hessen and Unitymedia NRW each entered into the broadband regional network (BRN) agreements with Deutsche Telekom, under which Deutsche Telekom is to install, make available and operate fixedline broadband and broadcasting distribution networks. These networks, which are made up of optical leased lines, replaced the Amplitude Modulated Television (AMTV) technology and analog lines, as well as, in the case of Unitymedia Hessen, the fiber optical transmission system developed by the predecessor to Deutsche Telekom in the 1990s (the Diamant system). We have the right to terminate lines subject to the BRN agreements and have done so in most of our upgraded areas where we have either built our own fiber or leased dark fiber from third parties. Currently only five percent of our upgraded networks are subject to the BRN agreements. In the event we fail to fulfill our payment obligations or are otherwise in breach of contract under the MSAs or the BRN agreements, Deutsche Telekom would be entitled to terminate the MSAs or the BRN agreements, as the case may be. The termination of any material portion, or all, of the MSAs or the BRN agreements by Deutsche Telekom could materially affect the value of our network or business. Upon such termination, continuing our business, if possible at all, would require a sizeable payment to purchase the relevant facility from Deutsche Telekom or a sizeable investment to replicate the lost facilities or services. In many cases we would not be able to find suitable alternative service providers at a comparable cost or within a reasonable timeframe. Any disruption or termination of our arrangements with Deutsche Telekom could a material adverse effect on our business, financial condition or results of operations. We do not have guaranteed access to programs and are dependent on our relationships and cooperation with program providers and broadcasters. The success of our business depends on, among other things, the quality and variety of the programming delivered to our subscribers. We do not produce our own content and are dependent upon broadcasters for programming. For the provision of programs distributed via our cable television network, we have entered into carriage agreements with public and commercial broadcasters for the analog and digital non-pay and pay carriage of their signals. As we depend upon such broadcasters for the provision of programs to attract subscribers, program providers may have considerable power to renegotiate the fees we charge for the carriage of their products and the license fees we pay them. Since most of these distribution contracts need to be renewed on a yearly basis, we may be unable to re-negotiate these distribution agreements on terms that are as attractive as those of the current

36

contracts, which could result in a decline in our carriage-fee revenue or an increase in our programming costs. In addition, program providers and broadcasters may elect to distribute their programming through other distribution platforms, such as satellite, digital terrestrial broadcasting or IPTV, or may enter into exclusive arrangements with other distributors, which Premiere (now Sky Deutschland) has historically sought to do. We currently license certain digital programs for our own pay TV offering. We intend to negotiate additional access to programming to expand our cable television offering beyond our current cable television packages and to enhance existing programming. Rights with respect to a significant amount of premium and/or high definition content are, however, already held by competing distributors and, to the extent such competitors obtain content on an exclusive basis, the availability of programs to us could be limited. Further, as we continue to develop our VoD and other interactive services, our ability to source content for our free VoD, subscription VoD and transaction VoD offerings will be increasingly important and will depend on our ability to maintain relationships and cooperation with program providers and broadcasters for both standard and high definition content. Our rights to Bundesliga programming expired in June 2009, prior to which a significant number of the customers on our cable network and satellite platform received and paid for Bundesliga programming. The inability to offer Bundesliga programming directly to our customers could materially affect our pricing strategy, churn, revenue and subscriber base. As a consequence, we may be unable to obtain or retain attractive content on favorable terms, if at all, in the future. Our inability to obtain or retain attractively priced competitive programs on our networks could reduce demand for our existing and future television services, thereby limiting our ability to maintain or increase revenues from these services. The loss of programs could have a material adverse effect on our business, financial condition and results of operations. Consumer protection associations and other entities monitor the conditions we impose on, and our interactions with, our customers. German consumer protection associations (Verbraucherzentrale) seek to represent the interests of consumers and monitor the conditions we impose on, and certain interactions we have with, our customers. On June 2, 2008, we entered into a settlement agreement with one of the consumer protection associations, relating to our end-customer basic cable price increase as of January 1, 2008 and disputes regarding price transparency and the use of certain marketing techniques. Pursuant to this agreement, we undertook to stop using the price increase clause in the general terms and conditions that apply to our services and this consumer protection association undertook not to file a complaint against us relating to previous price increases implemented prior to the date of the settlement agreement. As a result, effective February 1, 2009, we have changed our general terms and conditions for both new and existing customers. In addition, we cannot exclude that a court would hold that customers could claim partial reimbursement of amounts previously paid on the grounds that our former price increase clause was invalid, thereby adversely affecting our cash flow and profitability. One consumer protection association has published a notice to consumers encouraging them to make such claims. On October 28, 2009, we entered into a settlement agreement with the consumer protection association in North Rhine-Westphalia relating to the use of certain marketing techniques. Pursuant to this agreement, we undertook to stop our agents and representatives from placing marketing calls to consumers without obtaining the consumers prior consent to receive such marketing calls and from sending contract confirmations or delivering digital receivers or services to consumers without the consumers prior request. The required changes to certain of our marketing techniques and/or amendments to our general terms and conditions of service could have a negative impact on our growth prospects and/or require us to use more expensive sales channels, each of which could have a material adverse effect on our business, financial condition and results of operations. There can be no assurances that other consumer protection associations or entities monitoring the conditions we impose on, and our interactions with, our customers will not file claims against us seeking, among other things, the disgorgement of profits allegedly made through the breach of unfair competition law. We have no direct billing relationship for basic cable television services with approximately 64 percent of our subscribers and may not be able to maintain or renew existing or procure new concession agreements with housing associations. The German authorities do not grant cable network operators geographic franchise territories. Instead, we typically serve our basic cable television customers through concession agreements with housing associations in charge of large apartment blocks. We have framework agreements with some of the largest housing associations

37

in the regions in which we operate. For these subscribers, our contractual relationship is with a landlord or local housing association, many of which own or represent multiple buildings that house a large number of subscribers. Accordingly, we have no direct billing relationship for basic cable television services with approximately 64 percent of our subscribers. The lack of a direct billing relationship with the subscribers for our cable services causes us to depend on the landlords and housing associations for access to our subscribers to the extent we have not already established a direct billing relationship with such subscribers for any of our New Services. For example, should a landlord of a multi-dwelling unit decide to terminate its relationship with us, we would lose each subscriber in the unit unless we established direct contact with and renewed service to each subscriber, which may be difficult and costly. Additionally, entering into a direct billing relationship with each subscriber would likely increase our bad debt, billing, payment and collection expenses as well as churn, and could have a material adverse effect on our business strategy, liquidity and results of operations. Certain competitors have targeted large landlords who currently receive our services, and we could experience significant increases in churn if such landlords terminate their relationship with us. In addition, housing associations may terminate such agreements prematurely if, for example, the agreements are deemed to violate antitrust laws or laws governing general terms and conditions. The German Federal Supreme Court (Bundesgerichtshof) has emphasized that the validity of a contract term is dependent on the individual circumstances of the case, including in particular, the investments into the infrastructure made by the cable network operator, concession fees to be paid, if any, and the necessity to adjust the infrastructure to current technical standards in order to maintain the rented property as attractive for the tenants. There can be no assurance that we will be able to retain any of these customers or renew the contracts on commercially favorable terms, if at all. Our inability to maintain or renew our existing housing association concession agreements or enter into new contracts on commercially favorable terms would lead to reduced sales, lower margins and a decrease in our customer base, any of which could have a material adverse effect on our business, financial condition and results of operations. The operation of our conditional access systems is dependent on licensed technology and subject to illegal piracy risks. We operate conditional access systems to transmit all encrypted digital programs currently distributed by us, including our digital cable television packages and arenaSAT platform. We have entered into an agreement with Nagravision S.A. (Nagra), under which Nagra has agreed to sell and install parts of our conditional access system for our cable distribution, including hardware equipment, to grant licenses for the respective intellectual property rights for the conditional access system and to provide maintenance, support and security services. We also have an agreement assigned by Philips Digital Networks B.V. to Irdeto Access B.V. (the CryptoWorks Agreement) for the provision of separate conditional access systems (CryptoWorks) for our arenaSAT platform. Billing and revenue generation for our services rely on the proper functioning of our conditional access systems. In order to secure all rights for the use of our Nagra conditional access system, we entered into several Betacrypt and smartcard agreements with Premiere (now Sky Deutschland), SCAS, Nagra and BetaResearch (as amended, the Betacrypt Agreements) in April 2005 regarding the various software licenses required to operate our conditional access system using combined Nagra and Betacrypt technologies in North RhineWestphalia and Hesse, subject to certain restrictions. The licenses granted to us under the Betacrypt Agreements allow us to access existing Premiere certified STBs and to distribute our digital offering in North RhineWestphalia and Hesse using our own smartcards, even to subscribers who already have Premiere smartcards. Some of the restrictions imposed were terminated by the Premiere Agreements. Further, under the new distribution agreement with Premiere (now Sky Deutschland) effective January 1, 2008, we agreed to provide technical platform services to Premiere customers on our network. An exchange of the smartcards formerly provided to Premiere customers was implemented in February 2008. Our business operations and revenues could be adversely affected if (i) any of Nagra, Philips Digital Networks B.V. or the parties to the Betacrypt Agreements cease to license, supply or maintain our conditional access system and we are unable to replace the existing conditional access system by another conditional access system; (ii) any of the Nagra, Nagra/Betacrypt or CryptoWorks conditional access systems are compromised by illegal piracy and access of non-subscribers to the system; or (iii) any of the Nagra, Nagra/Betacrypt or CryptoWorks conditional access systems are incompatible with future broadband cable technologies or products we intend to use.

38

Due to piracy concerns regarding certain older Nagra conditional access systems, we replaced approximately 23,000 smartcards and have been supplying to new cable subscribers a new generation of smartcards since November 2008. While we continuously review our conditional access system security, there is no guarantee that our conditional access system will not be circumvented and the failure of any future countermeasure or smartcard exchange to secure the conditional access system could increase the risk of illegal piracy. Delivery, performance and encryption failures could result in lower revenue, higher costs and increased basic cable subscriber churn or otherwise have a material adverse effect on our business, financial condition and results of operations. We are subject to increasing operating costs and inflation risks which may adversely affect our earnings. While our operations attempt to increase our subscription rates to offset increases in operating costs, there is no assurance that we will be able to do so. Therefore, operating costs may rise faster than associated revenue, resulting in a material negative impact on our cash flow and net earnings (loss). We are also impacted by inflationary increases in salaries, wages, benefits and other administrative costs in certain of our markets. Our capital expenditures may not generate a positive return. The video, broadband internet and telephony businesses in which we operate are capital intensive. Significant capital expenditures are required to add customers to our networks, including expenditures for equipment and labor costs. No assurance can be given that our future upgrades will generate a positive return or that we will have adequate capital available to finance such future upgrades. If we are unable to, or elect not to, pay for costs associated with adding new customers, expanding or upgrading our networks or making our other planned or unplanned capital expenditures, our growth could be limited and our competitive position could be harmed. We depend on hardware, software and service suppliers, which may discontinue their products or services, seek to charge us prices that are not competitive or choose not to renew contracts with us. We have important relationships with several suppliers of hardware, software and services that we use to operate our cable television network, systems and satellite platform. In many cases, we have made substantial investments in the equipment or software of a particular supplier, making it difficult for us to quickly change supply and maintenance relationships in the event that our initial supplier refuses to offer us favorable prices or ceases to produce equipment or provide the support that we require. In the event that hardware or software products or related services are defective, it may be difficult or impossible to enforce recourse claims against suppliers, especially if warranties included in contracts with suppliers are exceeded by those in our contracts with customers, in individual cases, or if the suppliers are insolvent, in whole or in part. In addition, there can be no assurances that we will be able to obtain the hardware, software and services we need for the operation of our business, in a timely manner, at competitive terms and in adequate amounts. The occurrence of any of these risks may create technical problems, damage our reputation, result in the loss of customers and have a material adverse effect on our business, financial condition and results of operations. The occurrence of events beyond our control could result in damage to our network. If any part of our network is subject to a flood, fire or other natural disaster, terrorism, a power loss or other catastrophe, our operations and customer relations could be materially adversely affected. Disaster recovery, security and service continuity protection measures that we have or may in the future undertake, and our monitoring of network performance, may be insufficient to prevent losses. While we have insurance coverage for our network operation center (NOC), our office locations, hubs and headends as well as our technical and office equipment and stock, this insurance covers property damage within an insured location. The broadband cable network in the ducts is not insured. Any catastrophe or other damage that affects our network could result in substantial uninsured losses. Our network may be susceptible to increased network disturbances and technological problems, and such difficulties may increase over time. In addition, our business is dependent on certain sophisticated critical systems, including our NOC and billing and customer service systems. Despite the presence of back-up systems, including regional mobile units that can be used to restore regional portions of our network, we can provide no assurances that our servers and network may not be damaged by physical or electronic break-downs, computer viruses or similar disruptions. In addition, unforeseen problems may create disruptions in our IT systems. There can be no assurances that our existing security system, IT security policy, back-up systems, physical access security and access protection, user administration and IT emergency plans will be sufficient to prevent data loss or minimize network downtime. Sustained or repeated disruptions or damage to the network and technical systems which prevent, interrupt,

39

delay or make it more difficult for us to provide products and services to our customers in accordance with the agreements with our customers may trigger claims for payment of damages or contractual remedies and would cause considerable damage to our reputation, lead to the loss of customers, a decrease in revenue and require repairs, which would have a material adverse effect on our business, financial condition and results of operations. The loss of any of our key executives or the inability to attract highly skilled and qualified personnel could adversely affect our ability to manage our business. Our continued success is substantially dependent upon the retention and the continued performance of our key executives. Following the Acquisition, we may be unable to retain some or all of our these key executives. In addition, our future success will also depend on our continued ability to attract and retain highly skilled and qualified personnel. The inability to attract or retain such personnel, or the loss of the services of any of our key executives, could have a material adverse effect on our business, financial condition and results of operations. Parm Sandhu, the Chief Executive Officer of Unitymedia, is party to an employment agreement that provides, in part, that following a change of control the agreement automatically terminates. We expect that the Acquisition will constitute a change of control under the employment agreement. Whether or not we are able to retain the services of Mr. Sandhu on terms acceptable to us remains uncertain. In addition, in connection with the Acquisition, Mr. Sandhu has agreed to cancel his equity interests in Unitymedia GmbH in exchange for a cash payment, the cost of which will be borne by the sellers in the Acquisition. Strikes and other industrial actions, as well as the negotiation of a new collective bargaining agreement, could disrupt our operations or make it more costly to operate our facilities. We are exposed to the risk of strikes and other industrial actions. We estimate that approximately one-third of our employees are members of a labor union, and in the future we may experience lengthy consultations with labor unions and works councils or strikes, work stoppages or other industrial actions. We entered into a framework collective bargaining agreement (Manteltarifvertrag) with the labor unions in 2002, which applies to a large part of our employees and provides for annual salary increases. The collective bargaining agreement is scheduled to expire in April 2010, which will include negotiations for a new collective bargaining agreement. Further, strikes called by employees of Deutsche Telekom and certain of our other key suppliers could result in delays in the maintenance of ducts, in our ability to access ducts to perform network upgrades and in the delivery of necessary hardware. Strikes and other industrial actions, as well as the negotiation of new collective bargaining agreements or salary increases in the future, could disrupt our operations and make it more costly to operate our facilities, which in turn could have a material adverse effect on our business, financial condition and results of operations. Any negative impact on the reputation of and value associated with our brand, including as a result of the Acquisition or potential infringement of trademarks or similar rights of prior holders, could adversely affect our business. The Unitymedia, arena and arenaSAT names are important assets of our business. Maintaining the reputation of and value associated with these names is central to the success of our business, but there can be no assurance that our business strategy and its execution will accomplish this objective. Our reputation may be harmed if we encounter difficulties in the provision of new or existing services, including our Unity3play offering, whether due to technical faults, lack of necessary equipment, changes to our traditional product offerings or otherwise. Following the Acquisition, the perception of our brand may be influenced by our affiliation with LGI and UPC Holding. We cannot assure you that our customers and potential customers will view this affiliation favorably, and our brand may suffer as a result. The use of the names Unitymedia, arenaSAT or arena live for our platform and any merchandising articles, as well as the company names for arena or Unitymedia, might infringe on the trademarks or similar rights of prior right holders. There are prior right holders with trademarks or similar rights that operate in Europe and in Germany. In addition, there are various other trademarks or similar rights consisting of the names arena or Unitymedia that are registered for similar products and services. In March 2006, arena acquired the German word/device mark arena from arena media GmbH. However, the acquisition of that trademark does not guarantee that arena may lawfully use the name arena, as there may be superior rights to the arena name held by prior right holders. The prior right holders could assert certain claims regarding the use of arena as a trademark and company name. Certain oppositions against the registration of the trademarks arena, arena live and Unitymedia have been filed. In some cases we have been able to settle the claims or agree on a contract of demarcation. In all other procedures we will continue to defend our trademarks arena, arena live and Unitymedia.

40

A substantial erosion in the reputation of, or value associated with the Unitymedia, arena or arenaSAT names could have a material adverse effect on our business, financial condition and results of operations. In addition to the Acquisition, we may make acquisitions or enter into transactions that could result in operating difficulties, dilution and other adverse consequences. We have evaluated, and expect to continue to evaluate, potential strategic or other acquisitions and transactions and acquired in 2008 the shares of the subsidiaries of PrimaCom AG (PrimaCom) that operate PrimaComs networks in Aachen and Wiesbaden. Any of these transactions could be material to our financial condition or results of operations. The process of integrating an acquired company, network, business or technology or information technology system may create unforeseen operating difficulties and expenditures and is risky, and we may not realize any or all of the benefits we anticipated. Further, our management could be distracted by such acquisitions and the integration of the acquired business and our management may change as a result of contributions, mergers, acquisitions or divestitures. Future acquisitions or divestitures could result in additional debt incurrence, contingent liabilities or amortization expenses, write-offs of goodwill or integration expenses, any of which could have a material adverse effect on business, financial condition and results of operations. We are subject to risks from legal and arbitration proceedings. Unitymedia Group companies are involved in a number of legal and arbitration proceedings, and could become involved in additional legal and arbitration disputes in the future which may involve substantial claims for damages or other payments. The outcome of the currently pending or potential future proceedings is difficult to predict with certainty. In the event of a negative outcome of any material legal or arbitration proceeding, whether based on a judgment or a settlement agreement, we could be obligated to make substantial payments. In addition, the costs related to litigation and arbitration proceedings may be significant. The realization of any of these risks could have a material adverse effect on our business, financial condition and results of operations. Risks Relating to Regulatory and Legislative Matters We are subject to significant government regulation, which may increase our costs and otherwise adversely affect our business, and further changes could also adversely affect our business. Our existing and planned activities in the cable television, broadband Internet and telephony industries in Germany are subject to significant regulation and supervision by various regulatory bodies, including state, federal and EU authorities. Such governmental regulation and supervision, as well as future changes in laws or regulations or in their interpretation or enforcement that affect us, our competitors or our industry, strongly influence how we operate our business. Complying with existing and future laws and regulations may increase our operational and administrative expenses, restrict our ability or make it more difficult to implement price increases and/or otherwise limit our revenues. Also, any acquisition, merger or corporate restructuring may increase the level of regulation and supervision by regulatory bodies. In particular, we are or may be subject to:

regulation of contractual terms and fees for certain services that we provide, in particular with respect to subscriber, signal delivery, carriage and termination fees; rules regarding the fair, reasonable and non-discriminatory treatment of broadcasters, Level 4 operators, subscribers and other customers; restrictions on the ability of cable operators to use channels (must carry), to package channels into premium cable television offerings and to further digitize the cable network; rules relating to data protection and sales activities; rules regarding the allocation of frequencies; restrictions in the operation of digital platforms or obligations regarding certain platform standards, the imposition of rules regarding the interconnection of our telecommunications network with those of other telecommunications network operators and of access obligations vis--vis other providers; and requirements covering a variety of operational areas, such as environmental protection, technical standards (i.e., standards relating to the cable and the subscriber equipment), conditional access obligations, rights of way, digital platforms, subscriber service, billing requirements, compliance with statutory requirements regarding the German Electromagnetic Interference Act (Gesetz ber die elektromagnetische Vertrglichkeit von Betriebsmitteln) and youth protection issues.

41

Changes in laws and regulations may significantly increase costs or lead to other disadvantages. We may be subject to adverse changes in relevant laws or regulations (or in their interpretation or enforcement) regarding, for example, the imposition of regulations regarding fees, access, re-sale, must carry, data protection, marketing activities, frequency allocation, interconnection, or any change in policy allowing more favorable conditions for other operators, broadcasters and subscribers. Our costs of doing business may be particularly affected by the introduction and extension of consumer protection provisions, the duty to provide interfaces for security agencies, various data protection requirements and the obligation to retain communication data for public security purposes such as criminal prosecution. For example, the German government recently passed a number of amendments and new legislation designed to protect consumers from, in particular, certain telephone marketing practices and use of certain address data for marketing purposes. In addition to imposing significant fines for each violation, these new laws substantially limit the availability of certain historically important sales channels which could limit our ability, and the ability of the cable and telecommunications industries generally, to maintain our subscriber acquisition levels and related costs. Changes in the laws and regulations may also require changes to the network or conditional access technology, including stricter compliance standards, which may also cause us to incur significant costs. In addition, amendments to the relevant laws and regulations, in particular provisions and decisions of the Federal Network Agency, other government agencies or courts (all or any of which may have a retroactive effect), such as the Federal Network Agencys setting of contractual conditions and fees for IP bitstream access provided by Deutsche Telekom to competitors, may benefit our competitors that do not have their own network infrastructure. The impact of any new laws or regulations affecting our services, as well as any amendments to, or new interpretations of, the existing laws and regulations covering related activities is difficult to predict. Such changes could increase our costs of regulatory compliance, affect our ability to introduce new services and/or force us to change our marketing and other business practices, which in turn could have a material adverse effect on our business, financial condition and results of operations. According to a Federal Network Agency decision, we are deemed to possess significant market power in the regional cable network markets in which we operate, which subjects us to more extensive regulation. In a Federal Network Agency decision of April 17, 2007, we were held to have significant market power in the markets for broadcasting transmission services, i.e. the feeding-in of broadcasting signals into our networks, and delivering broadcasting signals to downstream network operators (Level 4 operators) with regard to clusters of not more than 500 housing units. As a result, the Federal Network Agency imposed certain additional obligations on us. With regard to our service to broadcasters to carry their programs through our cable network, we are required to publish information on technical specifications, network characteristics, contractual terms for access and usage conditions and fees. The fees we charge broadcasters for this service and related collocation services are subject to ex post regulation in accordance with the German Telecommunications Act (Telekommunikationsgesetz) (the German Telecommunications Act). In the signal delivery market to certain Level 4 operators, we are required to, among other things, grant signal delivery access and provide collocation services to such operators. Our agreements on signal delivery must be based on objective criteria, be transparent, non-discriminatory and fair. We must also submit to the Federal Network Agency information on sales volumes and revenues upon request and publish a standard contract, which must be approved by the Federal Network Agency. On March 11, 2009, the Federal Network Agency imposed certain changes to our proposed standard contract, the terms of which we are now bound by in providing signal delivery services to Level 4 operators. Imposition by the Federal Network Agency to grant signal delivery access and/or interconnection to third parties would limit the bandwidth available for our services, which could limit our ability to maximize our revenues and profitability, create a capacity shortage on our networks and strengthen our competitors positions. The German Federal Cartel Office has initiated regulatory proceedings against us and other German cable network operators and pay TV providers, which may adversely affect our revenues or lead to other disadvantages. Together with several other German cable network operators and pay TV providers, we received a request for certain information from the German Federal Cartel Office (Bundeskartellamt) (the Federal Cartel Office). The Federal Cartel Office investigates market dominance effects resulting from our set-top box procurement strategy and the encryption technology used therein. We have provided the requested information to the Federal Cartel Office, which has not yet completed its investigations. If the Federal Cartel Office concludes that we have infringed applicable regulations it may impose certain restrictions on how we operate our network

42

infrastructure and market some of our services. In particular, we may be required to offer certain of our service components separately to customers or to grant competitors and suppliers of equipment access to certain technical information related to our network. In addition, the Federal Cartel Office may impose fines upon us and order disgorgement of profits, and we may be subject to damage claims by third parties. Any of these events could have a material adverse effect on our business, financial condition and results of operations. We do not have complete control over the contractual terms and fees that we charge to broadcasters, Level 4 operators, subscribers and other customers. Fees paid to us by broadcasters (carriage fees), Level 4 operators (signal delivery fees) and the fees we charge for the termination of inbound calls to our telephony customers, are currently subject to regulation by the Federal Network Agency. Additional fees, including subscription fees and other customer fees, can be subject to regulation if certain conditions are met, in particular if we are found to have significant market power over the respective market. The Federal Network Agency may initiate an ex-post regulation procedure and may declare (potentially with retroactive effect) our fees void if it finds that they are abusive and may either direct us to adjust our fees or provide for fees that are not abusive, thus reducing our revenues. A decision of the Federal Network Agency subjects us to ex post fee control with regard to the carriage of broadcasting signals, as well as the delivery of broadcasting signals to certain Level 4 operators. See According to a Federal Network Agency decision, we are deemed to possess significant market power in the regional cable network markets in which we operate, which subjects us to more extensive regulation. Another decision of the Federal Network Agency, dated September 7, 2009, subjects, among others, our termination fees to an ex post fee control. To the extent that our fees are or will be subject to an ex post regulation, we may be restricted by laws and regulations from imposing or enforcing certain pricing mechanisms, including volume-based discounts. In the event that some broadcasters were to use their market power to reduce the feed-in fees to a level that cannot be justified as being non-discriminatory, we may be exposed to claims from other broadcasters for equal treatment. If these contractual conditions and fee structures were successfully challenged, we could, under certain circumstances, be found liable for fines or damages. Further, under the applicable state laws implementing the State Broadcasting Treaty (Rundfunkstaatsvertrag), our carriage fees could also be subject to regulatory review by the state media authorities to determine whether our fees are restrictive or discriminatory with respect to certain broadcasters and other content providers which could restrict our flexibility to agree on pricing models with broadcasters. In addition, we are prohibited from charging carriage fees to certain radio and television channels operated by non-professionals (so called open channels). As a result, we may not be able to enforce current or future changes to such fees, which may have a material adverse impact on our revenues, profitability of New Services and ability to respond to market changes. In addition, it cannot be excluded that measures taken on the basis of the German Telecommunications Act or the laws implementing the State Broadcasting Treaty could oblige us to offer the transmissions of channels in HDTV quality (High Definition Television) to all broadcasters we must carry in the network on the basis of media law or even to all broadcasters we transmit. We are required to carry certain programs on our network (must carry). We are required to carry certain programs on our cable network that we would not necessarily volunteer to carry. In the digital range, we must supply the bandwidth for the distribution of certain digital channels (up to a maximum of one third of our digital bandwidth dedicated to broadcasting services). Currently, this obligation includes the capacity of ARD and ZDF, the German public broadcasters, as well as certain commercial broadcasters carrying regional and local programs. In the analog range, the specific allocation of channels varies in North Rhine-Westphalia and Hesse and the rules relating to the allocation of radio channels are usually less strict than those relating to television channels. Under the media law of both states, we may not digitize analog capacity used for must carry channels and are even with regard to additional analog capacity obliged to obtain the consent of the competent media authority. We may be required to carry additional programs in the future. Increasing the number of programs that we must carry on our network would use valuable network capacity that we would otherwise devote to alternative

43

programs or services that may be more attractive or profitable. In addition, we may be at a competitive disadvantage compared to certain of our competitors that are not subject to such extensive must carry obligations, as they may be able to provide programs that are more appealing to end-users. To the extent that we are required to distribute additional must carry channels, this will limit our ability to make more efficient use of our capacity. We are obliged to cease the use of certain cable frequencies under laws and regulations governing the prevention of electromagnetic interference and we could be obliged to apply for frequency assignments in the future. As part of the German Electromagnetic Interference Act (Gesetz ber die elektromagnetische Vertrglichkeit von Betriebsmitteln), which protects the frequencies used by German aircraft security, police and intelligence services, the German government has prohibited the use of certain cable channels in analog mode. We are obliged to digitize two analog channels by December 31, 2010. Moreover, we are required to cease using certain cable frequencies in the event of electromagnetic interference, which may have an adverse effect on the functionality and profitability of our network. On the basis of the Ordinance on the Protection of SecurityRelated Radio Communication (Sicherheitsfunk-Schutzverordnung) of May 13, 2009, the Federal Network Agency may order further measures to remedy electromagnetic interferences caused by cable networks with security related radio communication. The Agency can, among others, oblige us to further digitize certain channels in order to minimize interferences or to further cease using certain cable frequencies. Due to a recent change of the German frequency allocation framework, the usage of frequencies within cable networks would, according to the wording of the German Telecommunications Act, now require a frequency allocation decision by the Federal Network Agency either by way of a general assignment or by an individual frequency assignment upon application. The Federal Network Agency, however, stated orally that they do not intend to require individual frequency assignments for cable networks and that the unclear legal situation shall be clarified in the future. Analog television and radio distribution may be phased out, which may adversely affect our competitive position and could result in increased costs or the loss of revenues. The German federal government and state governments aim to have a general switchover from analog to digital distribution for all television distribution platforms. In accordance with the German Telecommunications Act, the Federal Network Agency is entitled to revoke all allocations of frequencies for terrestrial analog television transmission by the end of 2010, and for analog frequency-modulated transmission of radio channels by the end of 2015. Even though it is questionable whether the relevant provisions of the German Telecommunications Act are directly applicable to us, as the operation of cable television networks, in principle, did not require frequency allocations (see We are obliged to cease the use of certain cable frequencies under laws and regulations governing the prevention of electromagnetic interference and we could be obliged to apply for frequency assignments in the future), we may at least be required to further invest in the exchange of some of our headend equipment, as some broadcasters have announced their intention to cease delivery of their signals in analog format by April 2012. In addition, future legislation or orders of the Federal Network Agency, the state media authorities or the needs of the market may require us to digitize our entire cable network. The phase-out of analog distribution could have a material adverse effect on our business, financial condition and results of operations. We are required to grant access to our conditional access systems, on fair, reasonable and non-discriminatory terms and might be required to make cost intensive technical modifications in the future. Our conditional access systems are subject to regulation under the German Telecommunications Act and state laws implementing the State Broadcasting Act (Rundfunkstaatsvertrag), as well as bylaws and orders of the relevant state media authority and the Federal Network Agency. For example, the technologies we use must generally grant a diverse program offering and may not unfairly obstruct or discriminate against television providers. The technical design of such systems must allow their cost-effective use and complete control of the services distributed via these systems on a local or regional level. If the owner of intellectual property rights in a conditional access system decides to grant licenses, any third party with a legitimate interest has the right to also receive such license on the basis of fair, reasonable and non-discriminatory terms. Suppliers and users of conditional access systems must allow all program providers to use the conditional access systems as is necessary on the basis of fair, reasonable and non-discriminatory terms, provide the necessary information for such use and notify to the Federal Network Agency of any start-up or change of their offerings (including the fees requested for such services) and might be required to make cost intensive technical modifications.

44

The aforementioned obligations could require that we (i) use certain technologies for our conditional access systems, interfaces or navigators, which we would not otherwise use; (ii) design our conditional access systems, interfaces or navigators in a way we would not otherwise design; and (iii) grant access to our playout facilities to program providers in a way and to the extent we would not otherwise grant. In addition, these obligations could result in the use of more expensive conditional access systems, interfaces or navigators and could therefore have a material adverse effect on our business, financial condition and results of operations. Risk Related to the Transactions The Acquisition is subject to significant uncertainties and risks. On November 13, 2009, the Issuer, an indirect wholly-owned subsidiary of LGI, and LGI entered into a share purchase agreement with Unity Media S.C.A. to acquire all of the issued and outstanding capital stock of Unitymedia GmbH. The Acquisition is subject to regulatory and other approvals. In particular the Acquisition is subject to regulatory clearance from either the European Commission (the EC) or the Federal Cartel Office. The Acquisition must be reported to the EC since it meets the turnover thresholds under European law. However, it is possible that the Federal Cartel Office successfully requests a referral. We may not consummate the Acquisition until the clearance process is complete, which may take in excess of six months and in very exceptional circumstances even longer. In addition, the EC or the Federal Cartel Office, as applicable, may choose to prevent the Acquisition from taking place. Alternatively, the EC or the Federal Cartel Office, as applicable may permit the Acquisition but demand that we implement remedies. Although we will argue that we should be allowed to consummate the Acquisition without the imposition of remedies, we cannot assure you that we will be permitted to undertake this transaction in a timely fashion, without remedies, or at all. Any such remedies may make the Acquisition less attractive. Completion of the Acquisition is one of the conditions to release of the proceeds from the offering of the Notes from escrow. If the Acquisition is not consummated for any reason prior to October 31, 2010 and as a result, the proceeds from the sale of the Notes to be held in escrow are not released, the Issuer will be required to redeem the Notes pursuant to the terms of the special mandatory redemption, and you may not obtain the investment return you expect on the Notes. See Risks Relating to the Notes If the conditions to the escrow are not satisfied, the Issuer will be required to redeem the Notes, which means that you may not obtain the return you expect on the Notes. If we complete the UPC Exchange Transaction, the integration of Unitymedia GmbH and its subsidiaries with UPC Holding could result in operating difficulties and other adverse consequences. If we complete the UPC Exchange Transaction, the process of integrating Unitymedia GmbH and its subsidiaries with UPC Holding may create unforeseen operating difficulties and expenditures and poses significant management, administrative and financial challenges. These challenges include:

integration of Unitymedia GmbH and its subsidiaries into the Liberty Global group in a cost-effective manner, including network infrastructure, management information and financial control systems, marketing, customer service and product offerings; outstanding or unforeseen legal, regulatory, contractual, labor or other issues arising from the Acquisition; additional capital expenditure requirements; retention of customers; integration of different company and management cultures; and retention, hiring and training of key personnel.

In such circumstances, a failure to effectively integrate Unitymedia GmbH and its subsidiaries with UPC Holding could have a material adverse effect on our financial condition and results of operations. If we do not enter into the New Revolving Credit Facility, we may be required to seek alternative sources of working capital financing. While we have entered into a commitment letter regarding the New Revolving Credit Facility and reached an agreement with respect to certain terms thereof, there can be no assurance that we and our potential lenders will

45

agree upon the final form of the New Revolving Credit Facility Agreement. If we do not enter into the New Revolving Credit Facility, we may seek alternative sources of working capital financing. Such alternative sources of financing may not be available. Anticipated synergies from our affiliation with UPC Holding may not materialize. The Acquisition is risky, and we may not realize any or all of the benefits of the Acquisition that we currently anticipate. Among the synergies that we currently expect are increased scale, decreased reliance on suppliers, more efficient employment of capital, and harmonization of best practices across UPC Holding and Unitymedia. Some or all of the expected synergies may not materialize. In particular, there is a risk that overlapping product offerings relating to on-demand programming may continue to be separately maintained and supported, resulting in duplicative costs. We may be unable to complete the Debt Pushdown within the anticipated timeframe. We expect to complete the Debt Pushdown within 35 days of consummation of the Acquisition. If we do not complete the Debt Pushdown within such timeframe, we will be in default under the terms of the indentures. In order to complete the Debt Pushdown, there are various steps that we must take, including execution of a domination agreement between the Issuer and Unitymedia GmbH and registration thereof with the commercial register of Unitymedia GmbH, execution of a domination and/or profit and loss absorption agreement between Unitymedia Management and Unitymedia Hessen and registration thereof with the commercial register of Unitymedia Hessen. Further, Unitymedia management must agree to effect the Debt Pushdown in order for us to proceed therewith. It is possible that the registration process may take longer than the 35 days that we currently expect or that we are delayed in completing the Debt Pushdown. Affiliates of the Initial Purchasers are advising us in connection with the Acquisition and have other relationships with us and Unitymedia GmbH. Certain affiliates of the Initial Purchasers are current lenders to Unitymedia GmbH. In addition, Goldman Sachs International and its affiliates are acting as advisors to us in connection with the Acquisition. The interests of these affiliates to the Initial Purchasers may conflict with your and our interests. The interests of LGI, our indirect parent company, may conflict with our interests. LGI is our indirect parent, indirectly owning 100 percent of the voting interests in the Issuer. When business opportunities, or risks and risk allocation arise, the interests of LGI (or other LGI controlled entities) may be different, or in conflict with our interests on a stand-alone basis. Because we are indirectly controlled by LGI, LGI may allocate certain or all of its risks to us and we cannot assure you that LGI will permit us to pursue certain business opportunities that may be attractive to us. The Issuer does not currently control Unitymedia GmbH and its subsidiaries and will not control Unitymedia GmbH and its subsidiaries until completion of the Acquisition. Unitymedia GmbH and its subsidiaries are currently controlled by the sellers in the Acquisition. The Issuer will not obtain control until completion of the Acquisition. The Issuer cannot assure you that the sellers will operate the business during the interim period in the same way that the Issuer would. The information contained in this offering memorandum has been derived from public sources and, in the case of historical information relating to Unitymedia GmbH and its subsidiaries, material provided to us by Unitymedia GmbH and its subsidiaries and we have relied on such information supplied to us in its preparation. The tax consequences of the Debt Pushdown (including the assumption (or other transfer) of our obligations under the Notes to a Unitymedia entity) are not entirely clear and depend, in part, on the facts and circumstances existing at the time of the Debt Pushdown and assumption. It is not entirely clear how the consummation of the Debt Pushdown (including the assumption (or other transfer) of our obligations under the Notes by a Unitymedia entity) as generally described in this offering memorandum will be treated for U.S. federal income tax purposes, as it depends, in part, on the facts and circumstances existing at the time of the Debt Pushdown. It is possible that the Debt Pushdown may be treated as a taxable exchange for U.S. federal income tax purposes, which could negatively affect the value of your investment in the Notes. See Certain Tax Considerations U.S. Federal Income Taxation of the Notes.

46

Further, we cannot assure you that the Debt Pushdown (including such assumption) will not result in a taxable event in any other applicable taxing jurisdiction. Risks Relating to the Notes If the conditions to the escrow are not satisfied, the Issuer will be required to redeem the notes, which means that you may not obtain the return you expect on the Notes. The net proceeds from the offering will be held in escrow pending the satisfaction of certain conditions, some of which are outside of our control. If any of these conditions is not satisfied, the escrow will not be released. Accordingly, there can be no assurance that the escrow will be released. Upon delivery to the escrow agent of an officers certificate stating that the conditions to the escrow are satisfied, the escrowed funds will be released to the Issuer and utilized as described in Use of Proceeds. See Description of the Senior Secured Notes Escrow of Proceeds; Special Mandatory Redemption and Description of the Senior Notes Escrow of Proceeds; Special Mandatory Redemption. Prior to the satisfaction of the conditions to release of the escrow proceeds, the net proceeds of the offering of the Notes will be held in escrow accounts on behalf of the holders of the Notes. If the Acquisition does not occur by October 31, 2010 or in the event of certain other events that trigger escrow termination, the Notes will be subject to a special mandatory redemption. If this occurs, the Notes will be subject to a special mandatory redemption as described in Description of the Senior Secured Notes Escrow of Proceeds; Special Mandatory Redemption and Description of the Senior Notes Escrow of Proceeds; Special Mandatory Redemption and you may not obtain the return you expect to receive on the notes. Further, if the Debt Pushdown is not completed within 35 days of the closing of the Acquisition, we will be in default under the indentures governing the Notes. The escrow funds will be initially limited to the net proceeds of the offering of the Notes and will not be sufficient to pay the Special Mandatory Redemption Price, which is equal to 101% of the aggregate issue price of the Notes plus accrued and unpaid interest from the Issue Date. LGI is required to fund the difference between the Special Mandatory Redemption Price and the escrow proceeds pursuant to a guarantee provided by LGI. Further, in the event an interest payment date occurs prior to the Debt Pushdown, the Issuer will not have funds to make such interest payment and the escrow proceeds will not be available for release. Under the LGI guarantee, LGI is also required to fund such interest payment. There can be no assurances that LGI will have sufficient funds to make these payments. Your decision to invest in the Notes is made at the time of purchase. Changes in our business or financial conditions, or the terms of the Acquisition or the financing thereof, between the closing of this offering and the closing of the Acquisition, will have no effect on your rights as a purchaser of the Notes. The Issuer is a holding company and conducts no business operations of its own and will depend on payments from its subsidiaries to make payments on the Notes; the Issuers subsidiaries will be subject to restrictions on making any such payments. The Issuer is a holding company that conducts no business operations of its own. The Issuer has no significant assets other than the shares it holds in its direct subsidiaries and its claims under certain intercompany loans. You will not have any direct claim on the cash flows or assets of any of the Issuers direct or indirect subsidiaries. Such subsidiaries have no obligation, contingent or otherwise, to pay amounts due under the Notes or to make funds available to us for these payments. The payment of dividends and the making, or repayment, of loans and advances to us by the Issuers direct subsidiaries and such payments by its indirect subsidiaries to their respective parent entity are subject to various restrictions. Existing and future debt of certain of these subsidiaries may prohibit the payment of dividends or the making, or repayment, of loans or advances to the Issuer or their respective parent entities. In addition, the ability of any of the Issuers direct or indirect subsidiaries to make certain distributions may be limited by the laws of the relevant jurisdiction in which the subsidiaries are organized or located, including financial assistance rules, corporate benefit laws and other legal restrictions which, if violated, might require the recipient to refund unlawful payments. In particular, under applicable German law, subsidiaries that are German limited liability companies or, in certain circumstances, limited partnerships, are prohibited from making payments (or granting other financial advantages) to their direct and indirect shareholders unless such payments are made out of the

47

companys free net assets, i.e. such payments must not cause the companys net assets (assets minus liabilities) to fall short of an amount equal to the companys registered share capital. If applicable, this would mean that the Issuer or a subsidiary guarantor, as applicable, would be unable to use the earnings of these subsidiaries to the extent they face restrictions in such jurisdictions on distributing funds to the Issuer or such subsidiary guarantor. In addition, existing and future debt of certain of these subsidiaries may prohibit the payment of dividends or the making of loans or advances to the Issuer or a subsidiary guarantor, as applicable. According to case law of the German Federal Supreme Court, the ability of a limited liability company to make payments to its direct or indirect shareholders is also limited where the granting of benefits to shareholders would deprive the company of the liquidity necessary to properly meet its obligations towards third parties (socalled destructive interference). If any of the Issuers direct or indirect subsidiaries are unable to make distributions or other payments to it or their respective parent entities, the Issuer does not expect to have any other sources of funds that would allow the Issuer to make payments to you. Certain of the German subsidiaries of the Issuer have entered or will enter into profit and loss pooling agreements pursuant to which the dominated company must transfer to the dominating company its annual profits to the extent not otherwise retained as voluntary reserves. In the event the dominated company incurs a net loss, the dominating company must compensate it for such net loss. Instead of a cash payment by the dominating company to the dominated company for the compensation of any such loss, a set-off of such compensation claims of the dominated company against the dominating company against any loans, notes or other instruments or agreements (whether or not in writing) arising under the profit and loss pooling agreement may be permitted. The compensation claim of direct subsidiaries of the Issuer as dominated companies against the Issuer as dominating company in the event of a loss of the dominated company will rank pari passu with the rights of holders of the Notes. To the extent that German direct subsidiaries of German direct or indirect subsidiaries of the Issuer have not entered into profit and loss pooling agreements with their respective German parent company, any dividend distributions to their respective parent company as well as capital gains from the disposal of shares of any such German direct subsidiary may be subject to tax at the level of the respective parent company. The same applies to German direct subsidiaries of the Issuer that have not entered into a profit and loss pooling agreement with the Issuer. Although the Indenture will limit the ability of the Issuers subsidiaries to enter into future consensual restrictions on their ability to pay dividends and make other payments to the Issuer, there are significant qualifications and exceptions to these limitations. We cannot assure you that arrangements with the Issuers subsidiaries and the funding permitted by the agreements governing existing and future indebtedness of the Issuers subsidiaries will provide the Issuer with sufficient dividends, distributions or loans to fund payments on the Notes when due. The Subsidiary Guarantees may be significantly limited by applicable German law or subject to certain limitations or defenses. The obligations of each subsidiary guarantor under its subsidiary guarantee will be contractually limited under German law to the extent that the granting of such guarantees results in the breach of capital maintenance rules or any other general statutory laws or would cause the directors of such subsidiary guarantor to contravene their fiduciary duties to incur civil or criminal liability or to contravene any legal prohibition. Our subsidiary guarantors are organized in the form of German limited liability companies (GmbH) or limited partnerships with a limited liability company as general partner (GmbH & Co KG). The enforcement of such subsidiary guarantees is limited under German corporate law if and to the extent payments under any such guarantees would cause the relevant subsidiary guarantors (or, in the case of a limited partnership, its general partners) net assets to fall below the amount of its registered share capital (Stammkapital). Accordingly, the terms of each of the subsidiary guarantees limits enforcement of the subsidiary guarantee if and to the extent payment under such subsidiary guarantee would cause its (or, in the case of a limited partnership, its general partners) net assets to fall below its registered share capital (Stammkapital). To the extent that agreed limitations on the subsidiary guarantee obligation apply, the Notes would be effectively subordinated to all liabilities of the applicable subsidiary guarantor including trade payables of such subsidiary guarantor, as a result of the structural subordination principle discussed above. Future subsidiary guarantees in Germany or other jurisdictions may be subject to similar limitations.

48

Your right to receive payments under the Notes will be structurally or effectively subordinated to claims of certain existing and future creditors of the Issuer and its subsidiaries. The Notes will be structurally subordinated to the obligations of the Issuers subsidiaries that are not guarantors. Generally, claims of creditors of the Issuers subsidiaries that are not guarantors, including trade creditors and claims of preference shareholders (if any) of each such subsidiary, will have priority with respect to the assets and earnings of such subsidiary over claims of creditors of its parent entity. In the event of an insolvency, liquidation or other reorganization of any of the Issuers subsidiaries that are not guarantors, holders of their debt and their trade creditors will typically be entitled to payment of their claims from the assets of those subsidiaries before any assets are made available for distribution to the Issuer and its holding company subsidiaries as equity holders. United States securities laws restrict the circumstances under which you can transfer the Notes. The Issuer is offering the Notes in reliance upon exemptions from registration under the U.S. Securities Act and applicable state securities laws. Therefore, the Notes may be transferred or resold only in transactions registered under, exempt from or not subject to the registration requirements of the U.S. Securities Act and all applicable state securities laws. You should read the discussions under Plan of Distribution and Transfer Restrictions for further information about these and other transfer restrictions. It is your obligation to ensure that your offers and sales of Notes comply with applicable law. There may not be an active trading market for the Notes in which case your ability to sell the Notes will be limited. We cannot assure you as to:

the liquidity of any market in the Notes; your ability to sell your Notes; or the prices at which you would be able to sell your Notes.

Future trading prices of the Notes will depend on many factors, including, among other things, prevailing interest rates, our operating results and the market for similar securities. Historically, the market for non-investment grade securities has been subject to disruptions that have caused substantial volatility in the prices of securities similar to the Notes. The liquidity of a trading market for the Notes may be adversely affected by a general decline in the market for similar securities and is subject to disruptions that may cause volatility in prices. It is possible that the market for the Notes will be subject to disruptions. Any such disruption may have a negative effect on you, as a holder of Notes, regardless of our prospects and financial performance. As a result, there may not be an active trading market for the Notes. If no active trading market develops, you may not be able to resell your Notes at a fair value, if at all. Although the Issuer will, in the indentures, agree to use its reasonable best efforts to have the Notes listed on the Official List of the Luxembourg Stock Exchange and admitted to trading on the Euro MTF within a reasonable period after the issue date of the Notes and to maintain such listing as long as the Notes are outstanding, the Issuer cannot assure you that the Notes will become or remain listed. If the Issuer can no longer maintain the listing on the Official List of the Luxembourg Stock Exchange and the admission to trading on the Euro MTF or it becomes unduly burdensome to make or maintain such listing, the Issuer may cease to make or maintain such listing on the Official List of the Luxembourg Stock Exchange, provided that it will use reasonable best efforts to obtain and maintain the listing of the Notes on another stock exchange although there can be no assurance that the Issuer will be able to do so. Although no assurance is made as to the liquidity of the Notes as a result of listing on the Official List of the Luxembourg Stock Exchange or another recognized listing exchange for high yield issuers in accordance with the Indenture, failure to be approved for listing or the delisting of the Notes from the Official List of the Luxembourg Stock Exchange or another listing exchange in accordance with the indentures may have a material adverse effect on a holders ability to resell Notes in the secondary market. The insolvency laws of Germany and other local insolvency laws may not be as favorable to you as the U.S. bankruptcy laws and may preclude holders of the Notes from recovering payments due on the Notes. We and our subsidiaries, including the subsidiary guarantors, are organized under the laws of Germany. Consequently, in the event of an insolvency of the Issuer or any of these subsidiaries, insolvency proceedings

49

may be initiated in Germany. German law would generally govern most aspects of such proceedings. The insolvency laws of Germany may not be as favorable to your interests as creditors as the bankruptcy laws of the United States, including in respect of priority of creditors, the ability to obtain post-petition interest and the duration of the insolvency proceedings. Thus, your ability to recover payments due on the Notes may be more limited than would be the case under U.S. bankruptcy laws. The following is a brief description of certain aspects of the insolvency laws of Germany. Under German insolvency law, insolvency proceedings typically must be initiated by the debtor, but may be initiated by a creditor in the event of over-indebtedness (berschuldung) of the debtor (for example, where its liabilities exceed the value of its assets, even if the debtor has sufficient liquidity to meet its current obligations) or in the event of illiquidity (Zahlungsunfhigkeit) of the debtor (for example, where it is unable to pay its debts as and when they fall due). However, in the case of over-indebtedness (berschuldung) even if a debtors liabilities exceed the value of its assets, such debtor is not deemed over-indebted if, given the circumstances, there is a high likelihood that the debtor will be strong enough financially to stay in business not only for the short term. In addition, the debtor can file for insolvency proceedings if its illiquidity is impending, i.e., it is imminently at risk of being unable to pay its debts as and when they fall due (drohende Zahlungsunfhigkeit). Under applicable German insolvency law, directors of a company must file a petition for the opening of an insolvency proceeding without undue delay but no later than three weeks after such company has become illiquid or over-indebted. The management of a debtor can be the subject of criminal proceedings in the event that filings for insolvency are delayed. The insolvency proceedings are court-controlled, and upon receipt of the insolvency petition, the insolvency court may take preliminary measures to secure the property of the debtor. The court may prohibit or suspend any measures taken to enforce individual claims against the debtors assets during these preliminary proceedings. The court orders the opening of insolvency proceedings (Erffnungsbeschluss) if certain formal requirements are met (e.g., the debtor is (imminently) illiquid ((drohend) zahlungsunfhig) or unless there is a sufficient going concern perspective (applicable until December 31, 2013) - over-indebted (berschuldet)), and if there are sufficient assets to cover at least the cost of the insolvency proceedings. Also, the court appoints an insolvency administrator (Insolvenzverwalter) who has full administrative and disposal authority over the debtors assets. For holders of the Notes, the most important consequences of such opening of formal insolvency proceedings against the Issuer or any such subsidiary, including the subsidiary guarantors, subject to the German insolvency regime would be the following:

the right to administer and dispose of assets of the Issuer or such subsidiary, including the subsidiary guarantors, would generally pass to the insolvency administrator (Insolvenzverwalter) as sole representative of the insolvency estate; assuming that the insolvent is not granted debtor-in-possession status (Eigenverwaltung), disposals effected by management of the Issuer or such subsidiary, including the subsidiary guarantors, after the opening of formal insolvency proceedings are null and void by operation of law; if, during the final month preceding the date of filing for insolvency proceedings, a creditor in the insolvency proceedings acquires through execution (e.g., attachment) a security interest in part of the debtors property that would normally form part of the insolvency estate, such security becomes null and void by operation of law upon opening of formal insolvency proceedings; and claims against the Issuer or such subsidiary, including the subsidiary guarantors, may generally only be pursued in accordance with the rules set forth in the German Insolvency Code (Insolvenzordnung).

All creditors, whether secured or unsecured, wishing to assert claims against the debtor need to participate in the insolvency proceedings. With exceptions for certain secured creditors, an individual enforcement action brought against the debtor by any of its creditors is subject to an automatic stay once the insolvency proceedings have been opened. Secured creditors have certain preferential rights regarding the enforcement of their security interests. However, German insolvency law imposes certain restrictions on their ability to enforce security interests once proceedings have been commenced. In many cases, the insolvency administrator will have the sole right to enforce the security. The insolvency administrator generally has the sole right (i) to realize any moveable assets which are subject to preferential rights (Absonderungsrechte) (e.g., pledges over movable assets and rights (Mobiliarpfandrechte), transfer by way of security (Sicherungsbereignung)) as well as (ii) to collect any claims that are subject to security assignment agreements (Sicherungsabtretungen). The enforcement proceeds minus certain contributory charges of generally nine percent of the enforcement proceeds (plus VAT, if any) for (i) assessing the value of the secured assets and (ii) realizing the secured assets are paid to the creditor holding a

50

security interest in the relevant collateral up to an amount equal to its secured claims. Contributory charges deducted from the enforcement proceeds and any realization surplus that remains after satisfaction of any party holding a preferential right will be allocated to the insolvencys estate and would, after deduction of the costs of the insolvency proceedings (e.g., comprising fees for and expenses of the insolvency administrator and the insolvency court as well as the members of the creditors committee), finally be distributed among the unsecured creditors, including, to the extent not secured by the realized assets, the holders of the Notes. An alternative distribution of enforcement proceeds can be proposed in an insolvency plan (Insolvenzplan) that can be submitted by the debtor or the insolvency administrator and which requires, in principle, the consent of the debtor and the consent of each class of creditors in accordance with specific majority rules. Under German insolvency law, there is no consolidation of the assets and liabilities of a group of companies in the event of insolvency. As a general principle, the claims arising from a subsidiary guarantee may be enforced against a subsidiary guarantor outside of the insolvency proceedings over the assets of the Issuer. Any insolvency proceeding over the assets of the Issuer would, however, be a rather strong indication that the overall financial situation of the entire group of affiliated companies has significantly deteriorated, which may cause a subsidiary guarantor to subsequently file for insolvency. In an insolvency proceeding over the assets of a subsidiary guarantor, the claims arising from a subsidiary guarantee may be treated as a subordinated insolvency claim (nachrangige Insolvenzforderungen). Subordinated insolvency claims are not eligible to participate in the insolvency proceedings over the assets of a subsidiary guarantor unless the insolvency court handling the case has granted special permission allowing these subordinated insolvency claims to be filed, which is not granted in the vast majority of insolvency cases governed by German law. The position of secured creditors depends on the type of collateral granted to them (see also above). Creditors secured by pledges over shares in subsidiaries of the debtor are entitled to preferential satisfaction with regard to the proceeds realized in an enforcement process which has to be effected by means of a public auction outside the insolvency process. However, in the absence of authoritative case law, it is uncertain whether the secured creditors are entitled to initiate the enforcement process in respect of the pledged shares on their own or, as far as the pledged assets are part of any insolvency estate, whether the insolvency administrator has standing to realize the pledges on behalf of and for the benefit of the secured creditors. In the latter case, the administrator would be entitled to a handling fee of generally nine percent of the enforcement proceeds (plus VAT, if any) for the benefit of the insolvent estate which would be deducted from the enforcement proceeds. The insolvency administrator may also challenge transactions that are deemed detrimental to insolvency creditors and which were effected prior to the commencement of the insolvency proceedings. It is possible that payment of any amounts to the holders of the New Notes could be considered to constitute such transactions. The insolvency administrators rights to challenge transactions can, depending on the specific circumstances, extend to transactions occurring during the last ten years prior to the commencement of insolvency proceedings. In particular, an act (Rechtshandlung) or a transaction (Rechtsgeschft) (which terms also include the provision of security or the payment of indebtedness) may be voided in the following cases:

any act granting an insolvency creditor, or enabling an insolvency creditor to obtain, security or satisfaction if such act was taken (i) during the last three months prior to the filing of the petition for the commencement of the insolvency proceedings, provided that the insolvent was illiquid at the time when such act was taken and the creditor knew of such illiquidity at such time, or (ii) after the filing of the petition for the commencement of the insolvency proceedings, provided that the creditor knew of the illiquidity of the insolvent or the filing of such petition; any act granting an insolvency creditor, or enabling an insolvency creditor, to obtain security or satisfaction to which such creditor was not entitled, or which was granted or obtained in a form or at a time to which or at which such creditor was not entitled to such security or satisfaction, provided that (i) such act was taken during the last month prior to the filing of the petition for the commencement of the insolvency proceedings or after such filing, (ii) such act was taken during the second or third month prior to the filing of the petition and the insolvent was illiquid at such time, or (iii) such act was taken during the second or third month prior to the filing of the petition for the commencement of the insolvency proceedings and the creditor knew at the time such act was taken that such act was detrimental to the other insolvency creditors; a transaction by the insolvent that is directly detrimental to the insolvency creditors, provided it was entered into (i) during the three months prior to the filing of the petition for the commencement of the

51

insolvency proceedings and the insolvent was illiquid at the time of such transaction and the counter party to such transaction knew of the illiquidity at such time, or (ii) after the filing of the petition for the commencement of insolvency proceedings and the counterparty to such transaction knew of either the insolvents illiquidity or such filing at the time of the transaction;

any act by the insolvent during the ten years prior to the filing of the petition for the commencement of insolvency proceedings, provided that the insolvent acted with the intent to prejudice its insolvency creditors and the other party knew of such intention at the time of such act; and any act that provides security or satisfaction for a shareholder loan of the insolvent or a similar claim if (i) in the case of security, the act took place during the ten years prior to the filing of the petition for the commencement of the insolvency proceedings or after the filing of such petition, or (ii) in the case of satisfaction, the act took place during the last year prior to the filing of the petition for the commencement of the insolvency proceedings or after the filing of such petition.

In this context, knowledge is generally deemed to exist if the other party is aware of the facts from which the conclusion must be drawn that the insolvent (e.g., the Issuer or a subsidiary, including the subsidiary guarantors, subject to the German insolvency laws) was unable to pay its debts generally as they fell due, that a petition for the commencement of insolvency proceedings had been filed, or that the act was detrimental to, or intended to prejudice, the insolvency creditors, as the case may be. A person is deemed to have knowledge of the insolvents intention to prejudice the insolvency creditors if it knew of the insolvents impending illiquidity and that the transaction prejudiced the insolvents creditors. With respect to a related party, there is a general statutory presumption that such party had knowledge. The term related party includes, subject to certain limitations, in the case of insolvents that are corporate persons, members of the management or supervisory board, shareholders owning more than 25 percent of the insolvents share capital, persons or companies holding comparable positions that give them access to information about the economic situation of the insolvent, and persons that are spouses, relatives or members of the household of any of the foregoing persons. If the Notes, the subsidiary guarantees or the security were voided, holders of the Notes would only have a general unsecured claim in insolvency proceedings in the amount of their original investment. Any amounts received from a transaction that has been avoided would have to be repaid to the insolvent estate. Future subsidiaries of the Issuer may be incorporated in jurisdictions other than Germany and are or may be subject to the insolvency laws of such jurisdictions. The insolvency laws of these jurisdictions may not be as favorable to your interests as creditors as the bankruptcy laws of Germany, the United States or certain other jurisdictions. In addition, there can be no assurance as to how the insolvency laws of these jurisdictions will be applied in relation to one another. The claims of the holders of the Senior Notes will be effectively subordinated to the rights of our existing and future secured creditors to the extent of the value of the assets constituting collateral. While the Senior Notes will be secured by a first priority share pledge over Unitymedia GmbH and junior priority share pledges over the shares of Unitymedia Management GmbH, Unitymedia Hessen and Unitymedia Hessen Verwaltung GmbH upon release of the proceeds of the offering of the Notes from the escrow account following consummation of the Acquisition and the Debt Pushdown, the Senior Notes will not be secured by any other assets of the Issuer or the Issuers subsidiaries. The Revolving Credit Facility and the Senior Secured Notes will be secured by first priority share pledges over the shares of Unitymedia Management GmbH, Unitymedia Hessen, Unitymedia Hessen Verwaltung GmbH and Unitymedia NRW and by substantially all of the assets of each of Unitymedia Hessen and Unitymedia NRW. The indentures governing the Notes will provide for a negative pledge and will allow us and our restricted subsidiaries to incur a limited amount of secured indebtedness which will be effectively senior to the Notes. In the event of any distribution or payment of our assets in any foreclosure, dissolution, winding-up, liquidation, administration, reorganization, or other insolvency or bankruptcy proceeding, holders of such secured indebtedness will have prior claim to those of our assets that constitute their collateral. In these circumstances, we cannot assure you that there will be sufficient assets to pay amounts due on the Notes. As a result, holders of Notes may receive less, ratably, than holders of other secured indebtedness.

52

The value of the collateral securing the Notes may not be sufficient to satisfy our obligations under the Notes and such collateral may be reduced or diluted under certain circumstances. Before any amounts are available to repay the Senior Secured Notes, lenders under our New Revolving Credit Facility and certain hedgecounterparties will have a right to be repaid with the proceeds from enforcement of the collateral, from the proceeds received from any sale of assets pursuant to an insolvency event of the Issuer or a Guarantor, or with respect to any proceeds received from any judicial supervised or sanctioned reorganization or administrative work-out or restructuring. The obligations of the Issuer with respect to the Senior Notes will be secured by pledges securing the Senior Notes, as more fully described in this offering memorandum under Description of the Senior Secured Notes Ranking of the Notes, Note Guarantees and Security upon Completion of the Debt Pushdown and Description of the Senior Notes Ranking of the Notes, Subsidiary Guarantees and Security upon Completion of the Debt Pushdown. The obligations of the Issuers with respect to the Senior Secured Notes will be secured by, inter alia, share pledges, pledges of bank accounts and substantially all of the assets of the Senior Secured Notes Co-Issuers, which will also secure the obligations under the new RCF and certain hedging obligations on a priority basis. Upon release of the proceeds of the offering of the Senior Notes from the escrow account following consummation of the Acquisition and the Debt Pushdown, the obligations of the Issuer and the Guarantors with respect to the Senior Notes and related guarantees will be secured by a first priority share pledge over the shares of Unitymedia GmbH and junior-priority share pledges over the shares of Unitymedia Management GmbH, Unitymedia Hessen and Unitymedia Hessen Verwaltung GmbH. The Revolving Credit Facility and the Senior Secured Notes will be secured by first-ranking share pledges over the shares of the same companies (other than Unitymedia GmbH) and a first-ranking share pledge over the shares of Unitymedia GmbH. Such assets may also be pledged to secure other senior debt under certain circumstances. In the event of an enforcement of the pledges in respect of the Notes, the proceeds from the sale of the assets underlying the pledges may not be sufficient to satisfy the Issuers obligations with respect to the Notes. The value of the assets underlying the pledges will depend on many factors including, among other things, whether or not the business is sold as a going concern, the ability to sell the assets in an orderly sale, the availability of buyers and whether approvals required to purchase the business would be available to a buyer of the assets. In addition, the Intercreditor Agreement will provide that, in the event of any distribution of the proceeds from the sale of any shared collateral in effect securing the Senior Notes, the lenders under the Revolving Credit Facility and holders of the Senior Secured Notes will be entitled to receive from such distribution payment in full in cash before the holders of the pledges securing the Senior Notes will be entitled to receive any payment from such distribution with respect to the Notes. In order to secure the obligations under our New Revolving Credit Facility and hedging obligations, Unitymedia Hessen and Unitymedia NRW and the Guarantors have granted security interests over the share capital of certain of our subsidiaries. The shares and other collateral that are pledged or assigned for the benefit of the holders of the Senior Secured Notes may provide for only limited repayment of the Senior Secured Notes, in part because most of these shares or other assets may not be liquid and their value to other parties may be less than their value to us. Likewise, we cannot assure you that the collateral will be saleable or, if saleable, that there will not be substantial delays in the liquidation thereof. Not all of our assets will secure the Senior Secured Notes and it is possible that the value of collateral will not be sufficient to cover the amount of indebtedness secured by such collateral. With respect to any shares of our subsidiaries pledged to secure the Senior Secured Notes and the Guarantees, such shares may also have limited value in the event of a bankruptcy, insolvency or other similar proceedings in relation to the entitys shares that have been pledged because all of the obligations of the entity whose shares have been pledged must first be satisfied, leaving little or no remaining assets in the pledged entity. As a result, the creditors secured by a pledge of the shares of these entities may not recover anything of value in the case of an enforcement sale. In addition, the value of this collateral may decline over time. The obligations under the Senior Secured Notes and the Guarantees are secured by security interests over collateral granted to secure obligations under our New Revolving Credit Facility or our hedging obligations. Pursuant to the Intercreditor Agreement, the lenders under our New Revolving Credit Facility and certain hedgecounterparties will have priority over the holders of Senior Secured Notes with respect to the proceeds from this collateral. In addition, the creditors under our New Revolving Credit Facility will have priority over any amounts received from the sale of any assets of the Issuer or Guarantors pursuant to an insolvency event or from any judicial supervised or sanctioned reorganization or administrative work-out or restructuring. As such, you may not be able to recover on the collateral if the claims of the lenders under our New Revolving Credit Facility and our hedging obligations are greater than the proceeds realized from any enforcement of the share pledges. Any proceeds from an enforcement sale of the collateral by any creditor will, after all obligations under our New Revolving Credit Facility and hedging obligations in relation thereto have been paid from such recoveries, be applied pro rata in repayment of the Senior Secured Notes, our hedging obligations, certain hedging relationships

53

and any other such secured obligations. Subject to certain conditions, any security interest in the collateral will be automatically released at the time of an enforcement sale of the pledged entity or of the assets or shares of any direct or indirect parent entity of such subsidiary. Following such a sale, the trustee and the holders of the Senior Secured Notes will have no claims in relation to such entity and its direct and indirect subsidiaries under the Senior Secured Notes or any note guarantee. The indentures will permit the granting of certain liens other than those in favor of the holders of the Notes on the collateral securing the Notes. To the extent that holders of other secured indebtedness or third parties enjoy liens, including statutory liens, whether or not permitted by the indentures or the Share Pledges, such holders or third parties may have rights and remedies with respect to the Issuers shares that, if exercised, could reduce the proceeds available to satisfy our obligations under the Notes. Moreover, if we issue additional Notes under the indentures, holders of such additional Notes would benefit from the same collateral as the holders of the Notes being offered hereby, thereby diluting your ability to benefit from the Share Pledges or other collateral. The rights of the Senior Secured Notes to enforce remedies with respect to the collateral are subject to collateral sharing arrangements. The security interest in our assets serving as collateral for repayment of the Notes and the guarantee thereof will also be granted as collateral in favor of the lenders under our New Revolving Credit Facility, hedging counterparties for hedging of the Senior Notes and the Senior Secured Notes. The Intercreditor Agreement and the indentures governing the Notes also permit a security interest in such collateral to be granted to lenders of additional indebtedness and to hedging counterparties under certain of our hedging obligations. The Intercreditor Agreement provides that a common security agent, who will also serve as the security agent for the lenders under our New Revolving Credit Facility, our hedging obligations and any additional secured debt, will act only as provided for in the Intercreditor Agreement. In general, the lenders and the agent under our New Revolving Credit Facility and the representatives of our hedging counterparties and any agent with respect to any future secured debt will have, subject to prior notification of and consultation with the trustee, the right to enforce the shared collateral. In addition, the holders of the Senior Secured Notes will not be able to force a sale of the collateral securing the Senior Secured Notes or otherwise independently pursue the remedies of a secured creditor under the security documents without consulting with the lenders under our New Revolving Credit Facility, our hedge-counterparties and any such other secured debt for so long as any amounts under our New Revolving Credit Facility, hedging obligation or such other secured debt remain outstanding. The Intercreditor Agreement provides that the enforcement sale of any collateral will be subject to, as a condition to the release of any claims of any other indebtedness secured by such collateral under the Intercreditor Agreement, certain protections intended to maximize the cash recovery from an enforcement sale. Prior to enforcement of the collateral by another class of creditors, the Senior Secured Notes trustee will be provided with notice and the right to consult. Neither the Senior Secured Notes trustee nor the holders of the Senior Secured Notes will have the ability to prevent or delay enforcement after the consultation period. The lenders under our New Revolving Credit Facility, our hedge-counterparties or any other future class of debt secured by the collateral may have interests that are different from the interests of holders of the Senior Secured Notes and they may elect to pursue their remedies under the security documents at a time when it would be advantageous for the holders of the Senior Secured Notes to do so. In addition, if the lenders or the agent under our New Revolving Credit Facility or our hedging obligations sell either some or all of our subsidiaries or any direct or indirect parent entity of such subsidiary or other assets through an enforcement of their security interests in accordance with the terms of the Intercreditor Agreement, the guarantees of the Senior Secured Notes from any such guarantor that is sold and any guarantee of the Senior Secured Note issued by any of its subsidiaries and the security over any such assets securing the Senior Secured Notes and any guarantee thereof will be automatically released. See Description of Other Indebtedness Intercreditor Agreement. You may not be able to enforce the Share Pledges due to procedural requirements and to restrictions on enforcement contained in German corporate law. The enforcement of the share pledges will be limited by the prerequisites of the formalized statutory enforcement proceedings of mandatory German law which, in principle, provide for a sale of the pledged shares in public auction rather than in a private sale. To the extent the pledgors are subsidiary guarantors, the enforcement of the Share Pledges will be subject to contractual restrictions relating to German corporate law requirements, in particular capital maintenance rules. If, at the time of the enforcement of the Share Pledges, the reimbursement claim of the pledgor against the

54

beneficiary of the relevant security (i.e., the direct or indirect shareholder) is not fully realizable and, as a consequence, the net assets of the pledgor fall short of an amount equal to the pledgors registered share capital, the granting of upstream collateral violates German capital maintenance rules. Accordingly, the terms of each of the share pledges granted by a subsidiary guarantor in the form of a German limited liability company (GmbH) limit enforcement of the share pledges, if and to the extent enforcement of the share pledges would cause such subsidiary guarantors net assets to fall below its registered share capital (Stammkapital). Also, it cannot be excluded that the case law of the German Federal Supreme Court regarding so-called destructive interference (i.e., the situation where a shareholder deprives a limited liability company of the liquidity necessary for it to meet its own payment obligations) may be applied by courts with respect to the enforcement of the Share Pledges granted by subsidiary guarantors to the extent such enforcement would deprive the relevant pledgor of the liquidity necessary to meet their respective payment obligations. In such case, the amount of proceeds to be realized in an enforcement process may be reduced. According to a decision of the Federal Supreme Court, a security agreement may be void due to tortious inducement of breach of contract if a creditor knows about the stressed financial situation of the debtor and anticipates that the debtor will only be able to grant collateral by disregarding the vital interests of its other business partners. It cannot be ruled out that courts may apply this case law with respect to the granting of the Share Pledges. Any pledge of collateral might be avoidable in bankruptcy. Any pledge of collateral in favor of the trustee or security agent, including pursuant to security documents delivered after the date of the indentures, might be avoidable by the pledgor (as debtor in possession) or by its trustee in bankruptcy if certain events or circumstances exist or occur, including, among others, if (i) the pledgor is unable to pay its debts due at the time of the pledge, (ii) the pledge permits the holders of the notes to receive a greater recovery than if the pledge had not been given, and (iii) a bankruptcy proceeding in respect of the pledgor is commenced within three months following the pledge, or, in certain circumstances, a longer period. The Issuer and its subsidiaries are organized under the laws of Germany. Consequently, in the event of an insolvency of the Issuer or any of these subsidiaries, insolvency proceedings may be initiated in Germany. German law would generally govern most aspects of such proceedings. For a description of German insolvency laws and its risks see the respective risk factor - The insolvency laws of Germany and other local insolvency laws may not be as favorable to you as the U.S. bankruptcy laws and may preclude holders of the Notes from recovering payments due on the Notes. The ability of the Security Agent to enforce the collateral is subject to uncertainties under German law. There is uncertainty under German law as to whether obligations to beneficial owners of the Notes that are not identified as registered holders in a security document will be validly secured by accessory security such as pledges over shares, partnership interests or receivables, including bank accounts. Therefore, there are risks regarding the enforceability of such pledges. In this connection, the Intercreditor Agreement contains a provision pursuant to which the Issuer and the guarantors will be obliged to pay to the Security Agent as joint and several creditors any amount owed by them under the Notes and the indentures (so-called parallel debt). However, German courts have not yet ruled in respect of such a parallel debt structure. As a result, we cannot assure holders of the Notes that such structure will eliminate or mitigate the risk of unenforceability of such pledges posed by German law. If any challenge to the validity of such pledges or the parallel debt structure was successful, holders of the Notes may not be able to recover any amounts under such pledges. We may not be able to obtain enough funds necessary to finance an offer to repurchase your Notes upon the occurrence of certain events constituting a change of control (as defined in the indentures) as required by the indentures. Upon the occurrence of certain events constituting a change of control, the Issuer is required to offer to repurchase all outstanding Notes at a purchase price in cash equal to 101 percent of the principal amount thereof on the date of purchase plus accrued and unpaid interest to the date of purchase. If a change of control were to occur, we cannot assure you that the Issuer would have sufficient funds available at such time to pay the purchase price of the outstanding Notes or that the restrictions in the Revolving Credit Facility and the indenture governing the Senior Secured Notes or other then existing contractual obligations of the Issuer would allow the Issuer to make such required repurchases. A change of control may result in an event of default under, or acceleration of, the Revolving Credit Facility, the Senior Secured Notes and other indebtedness or trigger a similar obligation to offer to repurchase loans or notes thereunder. The repurchase of the Notes pursuant to such an offer could cause a default under such indebtedness, even if the change of control itself does not. The Issuers

55

ability to pay cash to the holders of the Notes following the occurrence of a change of control may be limited by our then existing financial resources. Sufficient funds may not be available when necessary to make any required repurchases. If an event constituting a change of control (as defined in the indenture) occurs at a time when the Issuer is prohibited from repurchasing Notes, we may seek the consent of the lenders under such indebtedness to the purchase of Notes or may attempt to refinancing the borrowings that contain such prohibition. If we do not obtain such a consent or repay such borrowings, the Issuer will remain prohibited from repurchasing any tendered Notes. In addition, we expect that we would require third-party financing to make an offer to repurchase the Notes upon a change of control. We cannot assure you that we would be able to obtain such financing. Any failure by the Issuer to offer to purchase Notes would constitute a default under the indenture, which would, in turn, constitute a default under the Revolving Credit Facility, the Senior Secured Notes. See Description of the Senior Secured Notes Certain Covenants Change of Control and Description of the Senior Notes Certain Covenants Change of Control. The change of control provision contained in the indentures may not necessarily afford you protection in the event of certain important corporate events, including reorganization, restructuring, merger or other similar transaction involving us that may adversely affect you, because such corporate events may not involve a shift in voting power or beneficial ownership or, even if they do, may not constitute a change of control as defined in the indentures. Except as described under Description of the Senior Secured Notes Certain Covenants Change of Control and Description of the Senior Notes Certain Covenants Change of Control, the indentures do not contain provisions that require us to offer to repurchase or redeem the Notes in the event of a reorganization, restructuring, merger, recapitalization or similar transaction. The definition of change of control contained in the indentures includes a disposition of all or substantially all of the assets of the Issuer and its restricted subsidiaries taken as whole to any person. Although there is a limited body of case law interpreting the phrase all or substantially all, there is no precise established definition of the phrase under applicable law. Accordingly, in certain circumstances there may be a degree of uncertainty as to whether a particular transaction would involve a disposition of all or substantially all of the assets of the Issuer and its restricted subsidiaries taken as a whole. As a result, it may be unclear as to whether a change of control has occurred and whether the Issuer is required to make an offer to repurchase the Notes. You may be unable to recover in civil proceedings for U.S. securities laws violations The Issuer is organized under the laws of Germany and does not have any assets in the United States. It is anticipated that some or all of the directors and executive officers of the Issuer will be non-residents of the United States and that all or a majority of their assets will be located outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon the Issuer or its respective directors and executive officers, or to enforce any judgments obtained in U.S. courts predicated upon civil liability provisions of the U.S. securities laws. In addition, the Issuer cannot assure you that civil liabilities predicated upon the federal securities laws of the United States will be enforceable in Germany. See Enforcements of Judgments. The Senior Secured Notes will be treated as issued with original issue discount for U.S. federal income tax purposes The Senior Secured Notes will be treated as having been issued with original issue discount for U.S. federal income tax purposes. An obligation generally is treated as having been issued with original issue discount if its stated redemption price at maturity exceeds its issue price by more than a de minimis amount. As a result, U.S. investors will be subject to tax on that original issue discount as it accrues, in advance of the cash attributable to that income (and in addition to qualified stated interest). See Certain Tax Considerations U.S. Federal Income Taxation of the Notes. Employee Benefit Plan Considerations Each acquirer or transferee of a Note or any interest therein will be deemed to have represented, warranted and agreed that either (a) it is not, and is not acting on behalf of (and for so long as such acquirer or transferee holds such Notes or any interest therein will not be, and will not be acting on behalf of), an employee benefit plan, as defined in Section 3(3) of ERISA (as defined below), that is subject to the provisions of Part 4 of Subtitle B of Title I of ERISA, a plan to which Section 4975 of the Code (as defined below) applies, or an entity whose underlying assets include Plan Assets by reason of such employee benefit plans or plans investment in such entity (each, a Benefit Plan Investor) or a governmental, church or non-U.S. plan which is subject to any federal, state, local, non-U.S. or other laws or regulations that are substantially similar to the fiduciary responsibility or the prohibited transaction provisions of ERISA and/or section 4975 of the Code (Similar

56

Laws), and no part of the assets used by it to acquire or hold the Note or any interest herein constitutes the assets of any Benefit Plan Investor or such a governmental, church, or non-U.S. plan, or (b) its acquisition, holding and disposition of such Notes does not and will not constitute or otherwise result in a non-exempt prohibited transaction under the U.S. Employee Retirement Income Security Act of 1974, as amended (ERISA), and/or Section 4975 of the U.S. Internal Revenue Code of 1986, as amended (the Code) (or, in the case of a governmental, church or non-U.S. plan a non-exempt violation of any Similar Laws) and (2) neither Issuer nor any of its affiliates is a fiduciary (within the meaning of Section 3(21) of ERISA or, with respect to a governmental, church or non-U.S. plan, any definition of fiduciary under Similar Laws) (a Fiduciary) with respect to the purchaser or holder in connection with any purchase or holding of the Notes, or as a result of any exercise by the Issuer or any of its affiliates of any rights in connection with the Notes, and no advice provided by the Issuer or any of its affiliates has formed a primary basis for any investment decision by or on behalf of the purchaser and holder in connection with the Notes and the transactions contemplated with respect to the Notes; and (3) it will not sell or otherwise transfer the Note or any interest herein otherwise than to a purchaser or transferee that is deemed to make these same representations, warranties and agreements with respect to its acquisition, holding and disposition of the Note. See Certain Employee Benefit Plan Considerations herein for a more detailed discussion of certain ERISA and related considerations with respect to an investment in the Notes.

57

THE ISSUER The Issuer The Issuer was formed under the laws of Germany on October 15, 2009 as a company with limited liability (Gesellschaft mit beschrnkter Haftung) under the German Act regarding Companies with Limited Liability (Gesetz betreffend die Gesellschaften mit beschrnkter Haftung) for the purpose of facilitating the Transactions. The Issuer is registered in the commercial register of the local court (Amtsgericht) in Hamburg under register number HRB 111352. Prior to the date hereof, the Issuer has not engaged in any business other than in preparation for the Transactions. UPC Holding owns directly 100% of the Issuers equity interests. The Issuers share capital is 25,000, which has been fully paid in. Upon completion of this offering of Notes, the Issuers only significant assets will be the net proceeds of the Notes offered hereby, which will be pledged to secure the obligations under the Notes. See The Transactions. The Issuers material liabilities will be under the Notes, the New Revolving Credit Facility and certain hedging obligations. See Financial Information. The Issuer has no independent operations and no subsidiaries. The Issuer has no employees. See Summary Summary Corporate and Financing Structure.

58

THE TRANSACTIONS On November 13, 2009, the Issuer, an indirect wholly-owned subsidiary of LGI, and LGI entered into a share purchase agreement with Unity Media S.C.A. to acquire all of the issued and outstanding capital stock of Unitymedia GmbH (the Acquisition). The consummation of the Acquisition of Unitymedia GmbH pursuant to the share purchase agreement is subject only to regulatory approval. The purchase price for the Acquisition is expected to be approximately 3.5 billion, excluding transaction fees and expenses. In order to finance the Acquisition, the Issuer will issue the Notes and is expected to receive the Equity Contribution. In addition, in connection with the Acquisition, the Issuer will enter into the New Revolving Credit Facility providing for borrowings of 80 million, none of which is expected to be drawn as of the closing of the Acquisition. If the Acquisition does not close prior to September 30, 2010, the share purchase agreement will terminate unless otherwise extended by the parties thereto. Pending the consummation of the Acquisition, the Initial Purchasers will deposit the net proceeds from the offering of the Senior Secured Notes into Senior Secured Notes escrow accounts and will deposit the net proceeds from the offering of the Senior Notes into a segregated Senior Notes escrow account, in each case for the benefit of the holders of the Notes. The holders of the Notes also benefit from a security interest over the rights of the Issuer under the escrow and security agreements. The release of escrow proceeds is subject to the satisfaction of certain conditions, including the closing, promptly upon the initial release of certain escrow proceeds, of the Acquisition. If the Debt Pushdown does not occur on the date of the closing of the Acquisition, the escrow proceeds in respect of the Senior Secured Notes shall only be released after all proceeds in respect of the Senior Notes have been released and then only in an amount to be used to fund a portion of the purchase price of the Acquisition and related fees and expenses provided that an amount equal to the amount necessary to repay or redeem or retire all Indebtedness (including any premium, prepayment fees, expenses and accrued and unpaid interest) under the Unitymedia Group Notes, the Term Loan and the NRW/Hesse Notes (collectively, the Existing Unitymedia Indebtedness) will remain subject to the escrow agreement and the conditions contained therein until completion of the Debt Pushdown at which time the remaining escrow proceeds in respect of the Senior Secured Notes will be released upon receipt by the Escrow Agent from the issuer within 35 days of the closing of the Acquisition of an officers certificate that all required documentary and other conditions have been satisfied. Promptly following the closing of the Acquisition, we expect that the Issuer and Unitymedia GmbH will enter into a domination agreement and Unitymedia Management GmbH and Unitymedia Hessen Verwaltung GmbH will enter into a domination agreement in order to enable the assumption by Unitymedia GmbH of the Senior Notes and the assumption by Unitymedia Hessen GmbH & Co. KG and Unitymedia NRW GmbH, as co-issuers, of the Senior Secured Notes in excess of the amounts required by each of the aforementioned to repay its share of the Existing Unitymedia Indebtedness. Unitymedia Hessen GmbH & Co. KG and Unitymedia NRW GmbH will make upstream intercompany loans to the Issuer in an amount equal to the difference between the principal amount of the Senior Secured Notes assumed by them and the amount of their Existing Unitymedia Indebtedness (the foregoing transfer of the Senior Notes and related obligations to Unitymedia GmbH and the Senior Secured Notes and related obligations to Unitymedia Hessen GmbH & Co. KG and Unitymedia NRW GmbH, as co-issuers, is collectively referred to as the Debt Pushdown). However, the Issuer may determine to effect the Debt Pushdown through alternative means, including a merger of the Issuer into Unitymedia GmbH and/or a liquidation or merger of Unitymedia Hessen Verwaltung GmbH into Unitymedia Management GmbH (which alternative means, if any, is also referred to herein as the Debt Pushdown). Following receipt of the proceeds from the Issuer and in connection with the Debt Pushdown, Unitymedia GmbH, Unitymedia Hessen GmbH & Co. KG and Unitymedia NRW GmbH will use the proceeds of the intercompany loans from the Issuer to redeem and retire the Existing Unitymedia Indebtedness. As part of the Debt Pushdown, Unitymedia GmbH will assume all of the Issuers obligations under the Senior Notes and Unitymedia Hessen GmbH & Co. KG and Unitymedia NRW GmbH, as co-issuers, will assume all of the Issuers obligations under the Senior Secured Notes and the New Revolving Credit Facility and the Issuer will be released from all obligations under the Senior Secured Notes, the Senior Notes and the New Revolving Credit Facility. In connection therewith, the share pledge given by UPC Germany Holding BV of the outstanding capital stock of the Issuer will be released, and the Issuer will pledge all of the capital stock of Unitymedia GmbH to secure the Senior Notes. In connection with the Debt Pushdown and the redemption of the Existing Unitymedia Indebtedness, Unitymedia GmbH, Unitymedia Hessen GmbH & Co. KG and Unitymedia NRW GmbH, together with certain of their subsidiaries, will provide additional security for the Notes as further described herein. See Description of the Senior Secured Notes and Description of the Senior Notes.

59

Sources and Uses for the Transaction The expected estimated sources and uses of the funds necessary to consummate the Transactions are shown in the table below. Actual amounts will vary from estimated amounts depending on several factors, including the date of consummation of the Debt Pushdown and related differences from our estimate of the outstanding amount of Existing Unitymedia Indebtedness at closing and our estimated fees and expenses.
Sources (in millions) Uses

New Revolving Credit Facility (1) . . . . . . . . . . . . . . . . . . . Notes offered hereby (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Equity Contribution (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,601 1,043 3,644

Cash purchase of equity of Unitymedia GmbH . . . . Repayment of Existing Unitymedia Indebtedness (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transaction fees and expenses (5) . . . . . . . . . . . . . . . . . Total uses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,000 1,566 78 3,644

(1) See Description of Other Indebtedness The New Revolving Credit Facility. The New Revolving Credit Facility is expected to be undrawn at closing. (2) Represents (i) the issuance of the Euro Senior Secured Notes offered hereby at an original issue discount of 2.16% of the 1,430 million aggregate principal amount, (ii) the issuance of the Dollar Senior Secured Notes offered hereby at an original issue discount of 2.16% of the $845 million aggregate principal amount and as restated in euro based on a November 16, 2009 convenience translation of $1.4975 per 1.00 and (iii) the issuance of the 665 million aggregate principal amount the Senior Notes. (3) Includes cash proceeds to be contributed to or invested in the Issuer prior to the consummation of the Acquisition from LGI or one of its direct or indirect its subsidiaries. (4) Represents the repayment of the Existing Unitymedia Indebtedness, net of cash and cash equivalents of Unitymedia GmbH as of September 30, 2009, and includes estimated accrued interest and call premiums payable in connection with the repayment of such indebtedness. The call premiums were estimated on the basis of the earliest available call premiums from the date of this offering memorandum in accordance with the agreements governing the Existing Unitymedia Indebtedness. See Description of Other Indebtedness. The repayment of the July 2005 Senior Notes assumes the $151 million principal amount of such notes is translated using the euro per one U.S. Dollar period end rate for September 2009 as disclosed elsewhere herein. (5) This amount reflects our estimate of fees and expenses we will pay in connection with the Transactions, including commitment, placement, financial advisory and other transaction costs and professional fees.

60

USE OF PROCEEDS We estimate that the net proceeds from the sale of the Notes offered hereby will be approximately 2,523 million (based on a November 16, 2009 convenience translation of $1.4975 per 1.00 and after deducting the Initial Purchasers commissions and certain estimated expenses to be incurred in connection with this offering including legal, accounting and other professional fees incurred in connection therewith). The Initial Purchasers will deposit into segregated escrow accounts the net proceeds from the sale of the Senior Secured Notes and the Senior Notes with the relevant escrow agent for the benefit of holders of the relevant Notes pending satisfaction of the conditions to release of such proceeds. Upon release from escrow, the net proceeds from the sale of the Notes will be used (i) to fund a portion of the purchase price payable to the sellers in the Acquisition, (ii) to repay all amounts due under the Existing Unitymedia Indebtedness, including all accrued interest and applicable call premiums, and (iii) to pay fees and expenses related to the Transactions. See The Transactions.

61

CAPITALIZATION The following table sets forth, in each case, as of September 30, 2009 (i) the actual unaudited consolidated capitalization of Unitymedia GmbH and its subsidiaries and (ii) our consolidated capitalization adjusted to give effect to the sale of the Notes and the application of the net proceeds therefrom to consummate the Acquisition and Debt Pushdown and the related repayment of Existing Unitymedia Indebtedness, as described in Use of Proceeds, and the Debt Pushdown. You should read this table in conjunction with Summary Summary Financial and Operating Data, Use of Proceeds, Managements Discussion and Analysis of Financial Condition and Results of Operations, Description of the Senior Secured Notes, Description of the Senior Notes and the consolidated financial statements of Unitymedia GmbH included elsewhere in this offering memorandum. For purposes of this table, the term parent refers to Unitymedia GmbH on a stand-alone basis, while the term subsidiaries refers to all other entities within the Unitymedia group.
As of September 30, 2009 (in thousands) (unaudited) Actual As Adjusted(4)

Cash and cash equivalents(1): Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Debt(2): Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Capital Lease Obligations: Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total debt and capital lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shareholders equity(3): Subscribed capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Capital and other reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total shareholders equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,047 158,568 159,615 555,362 1,115,218 11,728 1,682,308 12,682 427,313 (39,169) 400,826 2,083,134

629,760 1,892,421 11,728 2,533,909 12,682 449,932 (135,136) 327,478 2,861,387

(1) The as-adjusted cash and cash equivalent amount assumes that all of Unitymedias cash and cash equivalents will be used to repay a portion of the Existing Unitymedia Indebtedness. (2) The debt amount reflects the total outstanding bonds and bank liabilities (current and noncurrent), including accrued and unpaid interest, per the unaudited consolidated financial statements of Unitymedia GmbH at September 30, 2009. The asadjusted amounts reflect (a) the impact of the Debt Pushdown, whereby Unitymedia GmbH will succeed the Issuer as the issuer of the Senior Notes and certain of the subsidiaries of Unitymedia GmbH will succeed the Issuer as the issuers of the Senior Secured Notes, and (b) the repayment of all of the Existing Unitymedia Indebtedness. The repayment of the Existing Unitymedia Indebtedness is assumed to be funded with Unitymedias cash and cash equivalents and a portion of the net proceeds from the original issuance of the Senior Notes and the Senior Secured Notes offered hereby, which net proceeds will be released from segregated escrow accounts if and when the Acquisition closes. The Senior Notes and Senior Secured Notes have been reflected in the table at face value less estimated deferred financing fees of 78.5 million. The as-adjusted amount reflects (i) the issuance of the Euro Senior Secured Notes offered hereby at an original issue discount of 2.16% of the 1,430 million aggregate principal amount, (ii) the issuance of the Dollar Senior Secured Notes offered hereby at an original discount of 2.16% of the $845 million aggregate principal amount and as restated in euro based on a November 16, 2009 convenience translation of $1.4975 per 1.00 and (iii) the issuance of the 665 million aggregate principal amount the Senior Notes. As the Senior Secured Notes are being issued with an original issue discount, the discount will be amortized over the life of the Notes as additional interest expense. (3) The as-adjusted amount reflects the aggregate reduction to retained earnings in connection with the repayment of the Existing Unitymedia Indebtedness associated with (a) the write-off of deferred financing fees of 27.9 million (b) the write-off of the associated cash-flow hedge reserves and embedded prepayment option derivative of 41.4 million and (c) the payment of estimated call premiums of 26.7 million. The call premiums were estimated on the basis of the earliest available call premiums from the date of this offering memorandum in accordance with the agreements governing the Existing Unitymedia Indebtedness. (4) The as-adjusted amounts do not reflect any adjustments that might occur as a result of the Acquisition or the associated application of acquisition accounting.

62

SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA Historical Data The selected historical consolidated financial and operating data set forth below as of and for the financial years ended December 31, 2008 and 2007 have been derived from the consolidated financial statements of Unitymedia GmbH, prepared in accordance with EU-IFRS, and the selected historical consolidated financial and operating data set forth below as of and for the financial year ended December 31, 2006 has been derived from the consolidated financial statements of Unity Media GmbH, prepared in accordance with IFRS. The consolidated financial statements as of and for the financial years ended December 31, 2008, 2007 and 2006 have been audited by PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprfungsgesellschaft, as set forth in their auditors report included elsewhere herein. See Presentation of Financial Information. The selected historical interim consolidated financial and operating data set forth below as of and for the nine months ended September 30, 2009 and 2008 have been derived from the Companys unaudited condensed consolidated interim financial statements, prepared in accordance with EU-IFRS. See Financial Information on page F-1. The following information should be read in conjunction with Managements Discussion and Analysis of Financial Condition and Results of Operations and the Companys consolidated financial statements included elsewhere in this offering memorandum. Consolidated Income Statement Data
For the nine months ended September 30 2009 2008 For the financial year ended December 31 2008 (in thousands) (unaudited) (audited) 2007 2006

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Own work capitalized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost of materials and services . . . . . . . . . . . . . . . . . . . . . . . Personnel expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization expenses . . . . . . . . . . . . . . Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . Profit/(loss) for the period . . . . . . . . . . . . . . . . . . . . . . . . . Attributable to: Equity holders of the parent (1) . . . . . . . . . . . . . . . . . . Minority interests (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . Profit/(loss) for the period (1) . . . . . . . . . . . . . . . . . . . . . . .

819,723 15,497 27,420 862,640 (118,584) (80,025) (213,917) (323,921) 126,193 19,946 (98,139) 23,695 71,695

845,798 13,146 24,274 883,218 (107,657) (75,633) (184,259) (374,499) 141,170 67,290 (113,524) (22,189) 72,747

1,161,925 18,082 41,249 1,221,256 (145,633) (104,701) (255,645) (527,803) 187,474 71,267 (153,381) (19,279) 86,081 86,081 86,081

998,964 14,858 44,129 1,057,951 (140,139) (104,074) (230,660) (522,378) 60,700 16,260 (163,159) 37,432 (48,767) (48,767) (48,767)

665,586 10,776 24,149 700,511 (135,290) (91,131) (227,921) (365,296) (119,127) 10,562 (175,438) 119,411 (2,058) (166,650) (172,195) 5,545 (166,650)

(1) The consolidated income statement for the nine months ended September 30, 2009 does not show the line items Equity holders of the parent, Minority interests and Profit/(loss) for the Period because no minority interests existed during the nine months ended September 30, 2009 and September 30, 2008, respectively.

63

Unitymedia Cable Segment: Income Statement Data

For the nine months ended September 30 2009 2008 For the financial year ended December 31 2008 (in thousands) (unaudited) (audited) 2007 2006

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Own work capitalized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other income (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost of materials and services . . . . . . . . . . . . . . . . . . . . . . . Personnel expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization expenses . . . . . . . . . . . . . . Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . Profit/(loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Attributable to: Equity holders of the parent (2) . . . . . . . . . . . . . . . . . . Minority interests (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . Segment profit/(loss) (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . .

649,003 15,497 25,172 689,672 (111,584) (79,079) (212,091) (163,895) 123,023 18,961 (98,139) 28,359 72,204

597,887 13,146 17,567 628,600 (99,076) (74,701) (179,877) (160,163) 114,783 67,320 (113,520) (13,990) 54,593

809,516 18,082 28,965 856,563 (134,614) (103,393) (250,505) (222,816) 145,235 70,005 (153,369) (7,983) 53,888 53,888 53,888

706,395 14,858 38,303 759,556 (127,595) (97,311) (223,241) (195,853) 115,556 10,515 (162,463) 29,208 (7,184) (7,184) (7,184)

596,343 9,299 30,147 635,788 (119,461) (88,726) (225,307) (141,914) 60,380 8,698 (174,876) 119,411 (2,058) 11,556 6,010 5,545 11,556

(1) Includes 9.4 million of non-recurring releases of certain prior period accruals in the nine months ended September 30, 2009 and 16.1 million of non-recurring settlement revenue and purchase price adjustment accrual releases in the second quarter of 2007. (2) The income statement for the Unitymedia Cable segment for the nine months ended September 30, 2009 does not show the line items Equity holders of the parent, Minority interests and Segment profit/(loss) because no minority interests existed during the nine months ended September 30, 2009 and September 30, 2008, respectively.

arena Segment: Income Statement Data

For the nine months ended September 30 2009 2008 For the financial year ended December 31 2008 (in thousands) (unaudited) (audited) 2007 2006

Revenue (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Own work capitalized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost of materials and services . . . . . . . . . . . . . . . . . . . . . . . Personnel expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization expenses . . . . . . . . . . . . . . Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . Profit/(loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Attributable to: Equity holders of the parent (2) . . . . . . . . . . . . . . . . . . Minority interests (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . Segment profit/(loss) (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . .

170,720 2,714 173,434 (7,000) (946) (1,826) (160,492) 3,170 985 (4,664) (509)

247,911 7,560 255,471 (8,581) (932) (4,382) (215,189) 26,387 4,562 (4) (8,199) 22,746

352,409 13,343 365,752 (11,019) (1,308) (5,140) (306,046) 42,239 5,854 (12) (11,296) 36,785 36,785 36,785

308,623 8,335 316,958 (12,544) (6,763) (7,419) (345,088) (54,856) 6,906 (1,857) 8,224 (41,583) (41,583) (41,583)

78,351 1,703 80,054 (15,829) (2,405) (2,614) (238,713) (179,507) 3,515 (2,213) (178,205) (178,205) (178,205)

(1) Including inter-segment revenues in the amount of 16.1 million in the financial year ended December 31, 2007 and 9.1 million in the financial year ended December 31, 2006. (2) The consolidated income statement for the arena segment for the nine months ended September 30, 2009 does not show the line items Equity holders of the parent, Minority interests and Segment profit/(loss) because no minority interests existed during the nine months ended September 30, 2009 and September 30, 2008, respectively.

64

Consolidated Balance Sheet Data

As of September 30 2009 (unaudited) 2008 As of December 31 2007 2006 (in thousands) (audited)

Assets Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Available for sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trade accounts receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Goodwill and other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other non current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total non current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shareholders equity and liabilities Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bonds and bank liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bonds and bank liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other non current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total non current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total shareholders equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

159,615 66,730 30,691 50,240 307,276 932,952 1,208,577 112,241 2,253,770 2,561,046

214,936 77,819 51,241 343,996 905,461 1,264,429 47,336 2,217,226 2,561,222

227,058 211,560 69,599 59,057 567,274 862,488 1,269,527 74,965 2,206,980 2,774,254

444,365 49,553 49,446 543,364 844,307 1,346,033 74,832 2,265,172 2,808,536

161,427 77,562 21,256 131,238 391,483 1,649,324 119,413 1,768,737 400,826 2,561,046

179,125 127,836 72,644 119,323 498,928 1,649,756 90,097 1,739,853 322,441 2,561,222

151,981 184,998 45,067 154,338 536,384 1,887,444 51,333 84,578 2,023,355 214,515 2,774,254

115,378 86,250 110,822 115,790 428,240 1,966,612 127,153 2,093,765 286,531 2,808,536

Consolidated Statement of Cash Flow Data

For the nine months ended September 30 2009 2008 For the financial year ended December 31 2008 (in thousands) (unaudited) (audited) 2007 2006

Cash flow from operating activities . . . . . . . . . . . . . . . . Cash flow from/(used in) investing activities . . . . . . . . Cash flow from/(used in) financing activities . . . . . . . Change in cash and cash equivalents from cash relevant transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash and cash equivalents at the beginning of the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash and cash equivalents at the end of the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

205,018 (229,715) (30,624) (55,321) 214,936 159,615

375,988 (157,523) (218,185) 280 227,058 227,338

423,635 (233,403) (202,354) (12,122) 227,058 214,936

81,020 (166,945) (131,381) (217,306) 444,364 227,058

37,542 29,172 332,736 399,450 44,914 444,364

65

Selected Consolidated and Segment Operating Data

As of and for the nine months ended September 30 2009 2008 As of and for the financial year ended December 31 2008 2007 2006

(in thousands, except percentages, ARPU and as otherwise indicated) (unaudited)

Unitymedia Cable Segment Footprint Homes Passed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Upgraded Homes . . . . . . . . . . . . . . . . . . . . . . . . . . . Subscribers Analog Basic Cable . . . . . . . . . . . . . . . . . . . . . . . . . Digital Basic Cable . . . . . . . . . . . . . . . . . . . . . . . . . Total Basic Cable Subscribers . . . . . . . . . . . . . . RGUs (1) Basic Cable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . New Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total RGUs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . New Services RGUs Digital TV Pay (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . Retail Broadband Internet . . . . . . . . . . . . . . . . . . . . Wholesale MMA Internet (3) . . . . . . . . . . . . . . . . . . Telephony . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total New Services RGUs . . . . . . . . . . . . . . . . . . Penetration BCS in % of Homes Passed . . . . . . . . . . . . . . . . . . Digital in % of BCS . . . . . . . . . . . . . . . . . . . . . . . . . Digital (with Premiere (now Sky Deutschland)) in % of BCS (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . ARPU (in ) (5) Basic Cable Services ARPU (6) . . . . . . . . . . . . . . . Incremental New Services ARPU (7) . . . . . . . . . . . Blended ARPU . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital TV Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Retail Broadband Internet (8) . . . . . . . . . . . . . . . . . . Wholesale MMA Internet . . . . . . . . . . . . . . . . . . . . Telephony (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Broadband (Retail Broadband Internet and Telephony) (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unity3play (Broadband including BCS) (10) . . . . arena Segment arenaSAT RGUs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . arenaSAT ARPU (in ) (11) . . . . . . . . . . . . . . . . . . . . . . . 68 18.77 221 18.89 191 18.67 334 17.13 323 17.59 8,757 90% 3,247 1,301 4,547 4,547 1,883 6,430 470 537 340 535 1,883 52% 29% 33% 10.12 3.99 14.11 9.08 15.37 1.55 12.89 28.26 38.38 8,671 75% 3,539 1,116 4,655 4,655 1,357 6,013 531 326 193 308 1,357 54% 24% 29% 9.70 2.81 12.51 9.98 14.19 2.57 17.45 31.64 41.34 8,685 83% 3,391 1,228 4,619 4,619 1,561 6,180 568 377 253 363 1,561 53% 27% 31% 9.81 2.95 12.77 9.82 14.67 2.43 16.13 30.80 40.61 8,643 66% 3,973 789 4,762 4,762 942 5,704 456 199 112 175 942 55% 17% 9.19 1.84 11.03 11.01 15.23 2.35 20.69 35.92 45.11 8,584 43% 4,487 443 4,930 4,930 568 5,498 385 80 45 58 568 57% 9% 8.21 0.77 8.98 9.02 18.74 2.07 23.39 42.13 n/a

(in thousands, except percentages) (unaudited) (audited)

Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjusted EBITDA (12) Unitymedia Cable Segment . . . . . . . . . . . . . . . . . . arena Segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjusted EBITDA Margin (13) Unitymedia Cable Segment . . . . . . . . . . . . . . . . . . arena Segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

862,640

883,218

1,221,256
(unaudited)

1,057,951

700,511

331.3 16.3 347.6 48.7% 9.4% 40.3%

294.3 26.3 320.6 46.8% 10.3% 36.3%

394.9 41.3 436.2 46.1% 11.3% 35.7%

332.8 (24.2) 308.6 44.8% (7.6)% 29.6%

291.3 (135.0) 156.3 45.8% (168.7)% 22.3%

66

As of and for the nine months ended September 30 2009 2008

As of and for the financial year ended December 31 2008 2007 2006

(in millions, except percentages) (unaudited) (audited)

Capital Expenditure (14) Unitymedia Cable Segment . . . . . . . . . . . . . . . . . . . arena Segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

187.4 0.5 187.9

150.3 0.8 151.1

231.5 1.6 233.0

(unaudited)

171.7 1.8 173.6

103.9 14.7 118.6

Capital Expenditure Ratio (15) Unitymedia Cable Segment . . . . . . . . . . . . . . . . . . . arena Segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net Debt (16) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

27.2% 0.3% 1,511.0

23.9% 0.3% 1,461.7

27.0% 0.4% 1,507.5

23.1% 0.6% 1,705.5

16.3% 18.4% 1,633.1

Revenue generating units (RGUs) relate to sources of revenue, which may not always be the same as the number of subscribers. For example, one person may subscribe to two different services, thereby accounting for only one subscriber but for two RGUs. (2) Number of smartcards with one or more Digital TV Pay package and/or a digital video recorder (DVR), including until March 31, 2009, other second smartcards. (3) Multimedia Anschluss (MMA) wholesale Internet product for landlords, excluding units that upgrade to Retail Broadband Internet. (4) Includes cable-based Premiere (now Sky Deutschland) pay TV customers in NRW/Hesse not subscribing to a separate Unitymedia Digital TV Pay package. (5) Average revenue per user (ARPU) calculated by dividing the relevant subscription revenues (excluding installation and carriage fees) for a period by the average number of relevant subscribers for that period and the number of months in that period. (6) Calculated as the average ARPU of all analog and digital BCS subscribers (excluding Digital TV Pay RGUs and revenues). (7) Sum of Retail Broadband Internet, wholesale MMA Internet, Telephony and Digital TV Pay revenue divided by the number of BCS RGUs in the same period. (8) In the second quarter of 2008 the Company changed the manner in which it allocates ARPU generated from its 2Play and Unity3play products. Prior to the second quarter of 2008, a fixed amount of ARPU was allocated to BCS digital (in Unity3play) and Telephony (together with telephone usage charges), with the remaining ARPU allocated to Retail Broadband Internet. Beginning in the second quarter of 2008, a fixed amount of ARPU was allocated to BCS digital (in Unity3play) and Retail Broadband Internet customers acquired from the second quarter of 2008, with the remaining ARPU (together with telephone usage charges) allocated to Telephony. (9) Sum of Retail Broadband Internet ARPU and Telephony ARPU. (10) Sum of average Basic Cable ARPU and Broadband ARPU (excluding additional Digital TV Pay ARPU). (11) Calculated by dividing arenaSAT satellite subscription sales excluding public viewing revenues for a period by the average number of total arenaSAT RGUs for that period and the number of months in that period; includes installation revenues, set-top box sales and other revenues.

(1)

67

(12) We refer to EBITDA as earnings before interest and income taxes (EBIT) plus amortization and depreciation. We define Adjusted EBITDA as EBITDA before non-recurring income, restructuring and transformation costs and non-cash share-based expense for the management equity participation (MEP) program. Adjusted EBITDA is not a measure of liquidity or performance calculated in accordance with EU-IFRS or IFRS and should be viewed as a supplement to, not a substitute for, our results of operations presented in accordance with EU-IFRS or IFRS. Furthermore, neither EBITDA nor Adjusted EBITDA are necessarily comparable to similarly-titled measures reported by other companies. A reconciliation of Adjusted EBITDA to EBITDA for each of the periods indicated is as follows: For the nine months ended September 30 2009 2008 2008 (in millions) (unaudited) Unitymedia Cable Segment EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reversal of: Non-recurring income, restructuring and transformation costs (a) . . . . . . . . . . . . . . . . . . . . . Non-cash share-based expense for the MEP program (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . arena Segment EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reversal of: Non-recurring income, restructuring and transformation costs (a) . . . . . . . . . . . . . . . . . . . . . Non-cash share-based expense for the MEP program (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (a) 335.1 294.7 395.7 338.8 285.8 For the financial year ended December 31 2007 2006

(4.0) 0.2 331.3

(1.7) 1.3 294.3

(2.7) 1.8 394.9

(7.9) 1.9 332.8

4.4 1.1 291.3

5.0

30.8

47.4

(47.4)

(176.9)

11.3 16.3

(4.4) 26.3

(6.1) 41.3

23.2 (24.2)

41.9 (135.0)

(13)

(14)

(15)

(16)

The non-recurring income, restructuring and transformation costs are isolated in the respective income and cost categories in the notes to our financial statements. (b) Share expenses for shares at Unity Media S.C.A. as part of the MEP, which are isolated as a sub-component of the line item Personnel expenses in the notes to our financial statements. Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of total segment or consolidated revenue, as appropriate. In the financial year ended December 31, 2007, Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of adjusted total revenue, as 16.1 million of non-recurring settlement revenue and purchase price accrual releases were deducted from total revenue in the second quarter of 2007 at Unitymedia Cable. In the nine months ended September 30, 2009, Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of adjusted total revenue, as 9.4 million of non-recurring releases of certain prior period accruals were deducted from total revenue in the nine months ended September 30, 2009 at Unitymedia Cable. Neither EBITDA nor Adjusted EBITDA is a recognized measure in accordance with EU-IFRS or IFRS and neither should be viewed as a substitute for earnings before taxes, operating expenses, loss, net cash flow from current business activity or other income statement or cash flow items computed in accordance with EU-IFRS or IFRS. Adjusted EBITDA does not necessarily indicate whether cash flow will be sufficient or available to meet our cash requirements, and our historical operating results cannot be derived from Adjusted EBITDA. Adjusted EBITDA is not a reliable indicator of future results. Since not all companies compute Adjusted EBITDA in the same way, the computation of Adjusted EBITDA chosen by our management is not necessarily comparable with similar terms used by other companies. Capital expenditure consists of expenditures for property and equipment and intangibles (except for customer lists) and does not include financial assets. For the nine months ended September 30, 2008 excludes 48.5 million, and for the financial year ended December 31, 2008 excludes 49.1 million, for the share acquisition of the PrimaCom networks in Aachen and Wiesbaden and, for the nine months ended September 30, 2009, includes 8.0 million for the acquisition of the network of KfGW GmbH and approximately 100,000 for other smaller networks. Capital Expenditure Ratio represents Capital Expenditure as a percentage of total revenue, on a segment basis. In the nine months ended September 30, 2009, the Capital Expenditure Ratio for the Unitymedia Cable segment includes 8.0 million related to the acquisition of the network of KfGW GmbH and approximately 100,000 of other third party network acquisitions. Excluding the network acquisitions in the amount of 8.1 million, the Capital Expenditure Ratio for the Unitymedia Cable segment in the nine months ended September 30, 2009 would have been 26.0 percent. In the financial year ended December 31, 2007, Capital Expenditure Ratio is presented as a percentage of adjusted total revenue, deducting 16.1 million of non-recurring settlement revenue and purchase price accrual releases in the second quarter of 2007 from total revenue at Unitymedia Cable. Net debt is the value of bonds and bank liabilities as shown in the EU-IFRS and IFRS financial statements less cash on hand. Bonds and bank liabilities exclude repurchased but not retired debt securities, foreign exchange valuation of USD bond and capitalized transaction costs and include accrued interest. Net debt is not a defined term under IFRS and may not therefore be comparable with other similarly titled measures reported by other companies.

68

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following commentary together with the Selected Consolidated Financial and Operating Data and the consolidated financial statements of Unitymedia GmbH included elsewhere in this offering memorandum. Unitymedia GmbH currently prepares its consolidated financial statements in accordance with EU-IFRS. Accordingly, the summary consolidated interim financial data as of and for the nine months ended September 30, 2009 and 2008, as well as the audited financial data as of and for the financial years ended December 31, 2008 and 2007, were prepared in accordance with EU-IFRS. The audited financial data as of and for the financial year ended December 31, 2006 were prepared in accordance with IFRS. See Presentation of Financial and Other Information Presentation of Financial Information. See Financial Information on page F-1. The following discussion contains forward-looking statements that are subject to various risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those described under Forward-Looking Statements and elsewhere in this offering memorandum, including under Risk Factors. Overview Unitymedia is the largest cable television operator in the German federal states of North Rhine-Westphalia and Hesse (Source: Paul Budde Communication Pty Ltd, May 2009) and is, we believe, the third largest cable operator in Europe, as measured by the number of television subscribers. We believe our cable network is one of the most technically advanced in Europe. We organize our business in two segments based on the method of transmission we employ to deliver products and services to our customers. Our cable operations in North Rhine-Westphalia and Hesse are reported as Unitymedia Cable and our national satellite platform for the distribution of digital pay TV programs (arenaSAT) as well as sublicensing, wholesale and the previous broadcasting business is reported as arena. Our cable business is characterized by recurring revenues and cash flows. The foundation of our business is the provision of basic cable and Digital TV Pay services. In our upgraded network coverage area we provide an integrated triple play service under the brand Unity3play, offering our customers access to Internet, telephony and digital cable television services in addition to our basic cable television services, which gives us the opportunity to generate attractive operating and financial growth. See Business Overview. We are currently able to market our triple play service to over 95 percent of our cable television subscribers who reside in the upgraded portion of our network coverage area. We have upgraded approximately 90 percent of our network (equal to approximately 7.8 million homes passed) to a bi-directional HFC standard with a capacity of 862 MHz. Going forward, based on our current competitive position and return on investment estimates, we expect that only a limited amount of investment will be required to provide our current triple play to homes in our upgraded network coverage area. Most of our capital expenditure is success-based for subscriber growth or usage and/or related to new product development. In addition, through our national satellite digital pay TV platform, arenaSAT, we provide digital pay TV services across Germany. Our satellite platform offers subscribers a range of standalone packages of digital channels, which customers can subscribe to either individually or as bundled products. Until June 30, 2009, arenaSAT also offered Bundesliga programming via the Bundesliga Rights that expired at such time. This had in the third quarter of 2009, and is expected to continue to have, a material impact on our consolidated revenues. We regularly evaluate a range of strategic options for arenaSAT. Our consolidated total revenue was 1,221.3 million in the financial year ended December 31, 2008 and 862.6 million for the nine months ended September 30, 2009. On a segment basis, Unitymedia Cable generated total revenue of 856.6 million in the financial year ended December 31, 2008 and 689.7million in the nine months ended September 30, 2009, and arena generated total revenue of 365.8 million in the financial year ended December 31, 2008 and 173.4 million in the nine months ended September 30, 2009. Our consolidated Adjusted EBITDA (as defined herein) was 436.2 million in the financial year ended December 31, 2008 and 347.6 million for the nine months ended September 30, 2009. On a segment basis, Unitymedia Cable generated Adjusted EBITDA of 394.9 million in the financial year ended December 31, 2008

69

and 331.3 million for the nine months ended September 30, 2009 and arena generated Adjusted EBITDA of 41.3 million in the financial year ended December 31, 2008 and 16.3 million in the nine months ended September 30, 2009. Key Factors Affecting Our Results of Operations Our operations, the operating metrics discussed below, and our results of operations have been, and may continue to be, affected by certain key factors as well as certain historical events and actions. The key factors affecting the ordinary course of our business and our results of operations include, in particular, the introduction of new products and services, our digital initiative, changes in our pricing, network upgrades and other capital expenditure, our cost structure, as well as customer churn and seasonal fluctuations. In addition, investors should consider key historical events and actions when analyzing our results of operations, including, in particular, the acquisition of Tele Columbus and the subsequent disposal of the Out-of-Region assets, the acquisition of the Bundesliga Rights by arena, our subsequent arrangement with Premiere (now Sky Deutschland) regarding the sublicensing of the distribution rights for Bundesliga programming and the subsequent expiration of the Bundesliga Rights as well as the Acquisition and related Transactions. Each of these factors is discussed in more detail below. New products and services In May 2007, we announced a comprehensive re-branding of the previously separate brands ish, iesy and Tele Columbus and introduced Unitymedia as a single and unified name for our operations in North RhineWestphalia and Hesse. In June 2007, we began offering our new Digital TV Pay packages Digital TV Plus and Digital TV Extra, which replaced our tividi premium cable packages introduced in 2005, and launched our new triple play product, Unity3play, which includes broadband Internet, flat rate telephony and Digital TV Basic. Our Internet product portfolio includes Internet access services either on a stand-alone basis (1Play), in conjunction with flat rate telephony (2Play), or in conjunction with telephony and Digital TV Basic (Unity3play). In November 2007, we launched a premium 32 Mb/s broadband Internet product and in November 2009, we deployed DOCSIS 3.0 in selected cities (initially Aachen and Cologne), which will allow customers in the upgraded areas to download data from the Internet at speeds of up to 120 Mb/s. In December 2008, we started offering a digital video recorder (DVR). We believe that our products and services are priced very attractively, historically approximately 30 percent less than comparable products and services offered by Deutsche Telecom. We expanded our telephony portfolio in February 2008 by introducing Spar International, an international call savings plan that can be added to existing telephony contracts for one euro. In February 2008, we also launched an international flat rate providing subscribers flat rate wireline calls without any time restrictions to 27 international countries. Finally, in April 2008, for the first time we began to offer customers the ability to subscribe for telephony on a stand-alone basis, without subscribing for basic cable services, when we introduced a 1Play flat-rate telephony product. During periods of significant RGU growth, we incur additional costs as we hire additional employees (for example, in customer operations and technical service) and expand our outsourcing budget to service the larger subscriber base. Our sales, marketing and other subscriber acquisition costs also increase during such periods. Accordingly, during times of significant growth we have experienced temporary periods of lower EBITDA and EBITDA margins. Furthermore, we may introduce new products and services that initially contribute to a low or negative EBITDA. We expect to continue to offer such products and services as long as they support our product range and thus have a net positive benefit on our operations. See Risk Factors Risks Relating to Our Business While demand for many of our New Services increased in 2009, demand is difficult to predict for future periods, and we may not realize the expected benefits of providing the New Services or be able to keep up with demand. The growth of these product offerings may also increase the amount of our capital expenditure. The Transactions On November 13, 2009, the Issuer, an indirect wholly-owned subsidiary of LGI, and LGI entered into a share purchase agreement with Unity Media S.C.A. to acquire all of the issued and outstanding capital stock of Unitymedia GmbH. The total consideration for the Acquisition is expected to be approximately 3.5 billion, excluding related fees and expenses. In order to finance the Acquisition, the Issuer will issue the Notes and is expected to receive the Equity Contribution. As a result of the Debt Pushdown, all of the Existing Unitymedia Indebtedness is expected to be repaid, Unitymedia GmbH is expected to assume all of the Issuers

70

obligations under the Senior Notes, and Unitymedia Hessen GmbH & Co. KG and Unitymedia NRW GmbH, as co-issuers, are expected to assume all of the Issuers obligations under the Senior Secured Notes and the New Revolving Credit Facility. The Issuer is expected be released from all obligations under the Notes and the New Revolving Credit Facility at the time of the Debt Pushdown. Accordingly, our results following consummation of the Transactions may differ significantly from the previously reported results of Unitymedia GmbH. We believe that our increased scale and advanced infrastructure will enable us to reduce costs, limit capital expenditures, decrease reliance on suppliers, and open up new strategic opportunities. Our current intention is to close our existing network operations centers and merge these functions to the UPC Holding network operations center, and we believe that the combined entity will benefit from these and other cost synergies as well as the harmonization of best practices and products across both UPC Holding and the Company. The integration of these businesses in Europe is expected to be facilitated by their similar network strategies. However, there can be no assurance that we will realize all or any of these benefits, operating improvements or other synergies following consummation of the Acquisition. In particular, there is a risk that overlapping products offerings related to on-demand programming may continue to be separately maintained and supported, resulting in duplicate costs. See Risk Factors Risks Relating to the Transactions. Digital initiative Jetzt Digital In September 2007, we launched our comprehensive Jetzt Digital (Digital Now) campaign, which was endorsed by state media authorities. Jetzt Digital is designed to promote the benefits of converting to digital television and includes investment in additional city-based sales and marketing, such as integrated advertising, public relations and a direct mail campaign to directly reach cable subscribers across our network coverage area. The campaign coincided with the launch of a new single user pricing model under which we increased analog pricing, with digital television reception remaining the same, at 1 per month below the new analog cable price as of January 1, 2008. See Pricing. Since implementing the campaign, we have experienced an increase in conversion from analog to digital television, with approximately 28.6 percent of RGUs subscribing to digital television products as of September 30, 2009. We believe that the digitization of our basic cable services customer base is an important step to successfully selling Digital TV Pay to our customers. Pricing We regularly review our pricing policy. In 2006, we introduced an additional basic cable access product, Digitaler Kabelanschluss (or DKA), an entry level digital cable product, for an additional 1.41 (including VAT), bringing the total cost for digital cable reception for single dwelling units to 16.90 as of January 1, 2007. As of January 1, 2007, we harmonized our basic cable service rate cards into a single rate card for all customers in North Rhine-Westphalia and Hesse. For example, single dwelling unit prices including VAT increased to 15.49, a 6.8 percent increase in North Rhine-Westphalia and a 4.9 percent price increase in Hesse. In January 2008, we introduced a new price scheme for basic cable services for single dwelling units. Since January 1, 2008, we began charging single dwelling unit subscribers to Digital TV Basic, our entry level digital cable product (effectively replacing the DKA), 16.90 per month (including VAT), while single dwelling unit subscribers to our analog access product are charged 17.90, with the price differential intended to encourage customers to switch from analog to digital reception. In January 2008, as a result of increased non-Bundesliga content, we increased the pricing of our arenaSAT Komplett package, which from July 1, 2009 we no longer offer, from 19.90 to 24.90. On July 1, 2008, we increased the pricing for certain multi-user contracts and single users on multi-user framework agreements in the cable segment. Certain multi-user contracts were increased via a rate increase and/or the discounts applied to certain lump sum contracts were reduced. For single users on multi-user framework agreements, we increased prices charged to a minimum of 16.90 per month, which is the same price we charge single dwelling unit subscribers for basic digital. In October 2009, we announced a rate increase effective as of January 1, 2010, for certain multi-user contracts ranging from 4.9 percent to 9.8 percent, depending on the number of customers under contract, and at the same time, announced a reduction in the cost of digital access for this segment. We experienced churn and increased customer services expenses following the 2007 and 2008 price increases, in particular among customers of our analog basic cable service. We experienced further customer churn following our 2008 price increases and expect additional churn following future price increases, such as the announced price increase for certain multi-dwelling unit segments effective as of January 1, 2010. This customer churn could result in lower revenue. We have historically offered discounts to subscribers who prepay their monthly subscription fees on an annual basis and volume discounts for housing associations and Level 4 operators, as well as promotions, such as free months and special bundled rates, and may continue to do so in the

71

future. See Business Products and Services Unitymedia Cable Basic Cable Television Our Basic Cable Services Fees. We believe that these discounts and promotions help to reduce churn and, in some cases, encourage our customers to subscribe to multiple product offerings. We expect that the unchanged pricing of Digital TV Basic, which since 2008 has been lower than analog pricing, will support our customer retention efforts as these customers sign two-year contracts. Unitymedias pricing and discount policies for certain offerings are subject to regulatory review by the Federal Network Agency, which could compel us to reduce our prices to prior or lower levels or eliminate discounts. A decrease in prices could affect our profitability, while the elimination of discounts could increase customer churn. Further, in order to settle litigation initiated by one of the German consumer protection associations (Verbraucherzentrale), we entered into a settlement agreement, pursuant to which we undertook to stop using the price increase clause included in our General Terms and Conditions, thereby foregoing possible increases in our profitability under our current General Terms and Conditions. See Risk Factors Risks Relating to Our Business Consumer protection associations and other entities monitor the conditions we impose on, and our interactions with, our customers. Network upgrades Our ability to provide new broadband Internet access and telephony services to additional subscribers depends in part on the speed at which we complete the bi-directional upgrade of our network to 862 MHz. We have largely been able to make these upgrades with minimal digging by utilizing existing fiber in the ground and by exchanging amplifiers. In addition, the investments we make are modular so they can be planned and completed based on customer demand. In highly penetrated areas we have started to split network clusters by increasing port capacity and by adding fiber links. As of September 30, 2009, our upgraded network passed a total of approximately 7.8 million homes in North Rhine-Westphalia and Hesse, which represented approximately 90 percent of our network. When we upgrade our network we expand capital expenditures and incur additional staff and labor costs, as indicated by the increase in own-work capitalized during the periods under review. We carefully monitor capital expenditure by applying strict investment return and payback criteria. For the period ended September 30, 2009, approximately 80 percent of our capital expenditure was driven by regional network upgrades (applying the 862 MHz bi-directional standard to permit the delivery of triple play products and services) or customer demand linked to secured revenues, such as the purchase of digital receivers, cable modems, in-home wiring upgrades, third-party commissions for contracts or broadband installations for customers. The remaining approximately 20 percent of our capital expenditure has historically been employed to improve our network and information systems as well as to implement new products and services in the future. See Liquidity and Capital Resources Capital expenditure and investments. Cost structure in the cable segment Certain of our cost elements, such as a portion of our network operations, customer care, billing and administration costs are relatively fixed, while our marketing costs, in particular, are largely variable. Our most significant costs include payroll costs and payments under agreements with Deutsche Telekom for assets and services provided by Deutsche Telekom including cable duct space, fiber optic transmission systems, tower and facility space, electrical power required for the operation of our network and voice interconnection. Our costs for assets and services provided by Deutsche Telekom have historically been relatively fixed, and we expect this to continue to be the case in the future, subject to periodic energy and consumer price index increases and interconnection volume. We do not produce our own content and are mostly dependent upon broadcasters for programming. For the provision of programs distributed via our cable television network, we entered into carriage agreements with public and commercial broadcasters for the analog and/or digital non-pay for which we receive carriage fees and pay carriage of their signals where we pay fees. For our digital cable television service and the arenaSAT platform, we currently pay license fees for certain digital programs. Most of our content agreements are on a cost-per-subscriber basis, with low if any minimum guaranteed payments. As more premium content becomes available in our markets, however, we may be increasingly required to make certain minimum subscriber guarantees in order to secure rights to such content. In connection with the introduction of our triple play offer, in 2007 we experienced a significant step-up in our marketing costs relating to the introduction of the Unity3play brand and Jetzt Digital.

72

Churn Despite the challenging financial environment and rising levels of unemployment in Germany, we have continued to benefit from a resilient subscriber base and the financial crisis has we believe to date had limited effect on our operations and subscriber levels. In the ordinary course of our business, we have experienced a loss of basic cable subscribers, in particular due to price related churn stemming from competitive alternatives, such as free-to-air satellite and free-to-air digital terrestrial transmission of television signals. In addition to churn resulting from price increases and competitive influences, we may experience churn as a result of low customer satisfaction, disconnection of non-paying subscribers, and relocation or death of subscribers. Increases in churn may lead to increased costs and reduced revenues. Adjusted for subscribers who move within our network coverage area and service changes, we estimate annualized churn as of September 30, 2009 was approximately 8 percent for basic cable services, 18 percent for Digital TV Pay, and 15 percent for Retail Broadband Internet and telephony. The churn data is extracted from management systems and is adjusted to eliminate intra-company service changes. While our management believes that this churn data provides an accurate indication of churn for the period indicated, there can be no assurances that the churn rate adjustments extrapolated from such information is accurate. See Forward-Looking Statements. For a definition of churn as used by the Company, see Presentation of Financial and Other Information Definitions. Furthermore, the threat of churn related to our housing association and Level 4 operator customers may reduce our ability to renew contracts with these customers on terms commercially favorable to us. Further consolidation in the German cable industry among Level 4 operators could lead to increased disconnection and higher discounts, as previously dispersed customers become more densely clustered and it becomes more economically efficient for our competitors to attempt to disconnect such customers from our network. See Risk Factors Risks Relating to Our Business Customer churn, or the threat of customer churn, may adversely affect our business. Seasonality Certain aspects of our business are subject to seasonal factors. In particular we have a disproportionately high level of annual prepayments in the months between November and February, which results in higher levels of accounts receivable, deferred income and cash flow from operations in these months each year, partially offset by associated VAT payments. We also generally have a higher relative level of capital expenditure in the second half of each calendar year, which often results in higher capital expenditure payments in the fourth and first quarters of each calendar year. The broadband industry generally has a lower relative level of new broadband subscriptions in the second and/or third quarter and has a higher rate of acquisition of new subscribers in the fourth quarter, and we often increase our sales and marketing campaigns in this period, which results in relatively lower EBITDA in that quarter. arena and our arrangement with Premiere In December 2005, DFL awarded arena the exclusive, nationwide pay television rights for cable, satellite and terrestrial transmission in Germany of Bundesliga matches for three seasons starting with the 2006/2007 season. On February 8, 2007, we announced a comprehensive set of distribution and customer administration agreements among Premiere (now Sky Deutschland), arena, Unitymedia NRW and Unitymedia Hessen for respective content and customer administration over satellite and cable. However, these raised concerns at the Federal Cartel Office and were subsequently revised and executed as the Premiere Agreements in order to sublicense to Premiere the non-exclusive distribution rights for Bundesliga programming and responsibility for the production of Bundesliga programming. Pursuant to the Premiere Agreements, arena received the economic interest in 16.4 million ordinary shares in Premiere (now Sky Deutschland), becoming the single largest shareholder in Premiere AG with a 16.7 percent holding, which it immediately sold to Unitymedia NRW. We did not participate in a subsequent Premiere AG rights offering in September 2007 and sold our subscription rights thereby diluting our ownership stake to 14.58 percent. We sold our shares in Premiere AG to an affiliate of News Corporation in a transaction announced on January 7, 2008 for a price of 17.50 per share, resulting in gross proceeds of 287.0 million, and recorded a capital gain of 42.1 million. Pursuant to the Premiere Agreements, until June 2009, arena was obligated to pay certain fees to the DFL, including the fees necessary to obtain the broadcasting license, basic signal feed, sports bar and certain marketing rights as well as other fees. arena also received a monthly sublicensing fee payment from Premiere, with the revenue recognition of such fee payment based on the number of Bundesliga matches taking place during the relevant month, similar to the Premiere share revenue recognition and expense recognition of the rights costs.

73

Based on the economics achieved under the Premiere Agreements, arena turned EBITDA positive in the second half of 2007. In June 2009, the Bundesliga Rights expired, which in the third quarter of 2009 had, and is expected to continue to have, a material impact on our consolidated revenues due to the reduction of the Premiere sublicensing revenues and deferred Premiere share revenue recognition. The DFL agreement also expired at the same time, resulting in a material reduction of our expenses. We have experienced in the third quarter of 2009, and expect to continue to experience going forward, additional Bundesliga-related churn and a further reduction of arenaSAT revenue, which would also have a negative effect on our segment consolidated revenues. arenaSAT offers customers a range of digital pay TV programming. Currently, we offer arenaSAT customers up to 22 premium digital channels. We continue to evaluate our options regarding the further development of the arenaSAT platform. We expect that our arenaSAT subscriber base will decline, and the extent of the reduction will depend, among other things, on the availability of attractive content at economically reasonable prices. Acquisitions and divestitures Tele Columbus was originally acquired on December 9, 2005. In a series of transactions in 2006 we sold the Out-of-Region assets, retaining only the In-Region assets. These transactions included the sale of certain assets and subscriber agreements of Tele Columbus Sd-West GmbH to Unitymedia Hessen, the sale by Tele Columbus GmbH & Co. KG of certain subsidiaries and equity interests in other entities to an affiliate of Kabel Baden-Wrttemberg GmbH & Co. KG, and the acquisition by Unitymedia NRW of Unitymedia Services, comprising over 500,000 subscribers, from Tele Columbus. Finally, Orion Cable GmbH, the parent company of the ewt cable group, acquired from Unitymedia NRW all shares in Tele Columbus Kabel Holding GmbH, comprising over 1.5 million of the original 2.6 million Tele Columbus subscribers. During 2007, we adopted various reorganization and restructuring measures in all major business areas to integrate the operations of Unitymedia Services, a subsidiary of Tele Columbus, into Unitymedia NRW, including sales, repair and maintenance, finance and customer care. Customer service operations were largely integrated into the customer service center of Unitymedia NRW in Bochum. As a result of our acquisition of the PrimaCom networks in Aachen and Wiesbaden on August 31, 2008, we reduced the number of reported subscribers by approximately 19,000 due to the process of converting basic television contracts from bulk signal delivery to direct billing. The reduction of subscribers upon consolidation is due to the lump-sum signal purchasing practice by Level 4 operators whereby they can achieve lower per subscriber rates across a larger fixed base of subscribers, with the flexibility to service a higher or lower base of end-user customers. Consolidated and Unitymedia Cable segment revenues and profits were not affected by the consolidation effects of the subscriber numbers. The purchase price of the PrimaCom networks was 49.1 million and we incurred an additional 6.1 million of upgrade expenditure for the cities of Aachen and Wiesbaden, with limited integration cost and additional success-based in-home wiring and customer premise equipment spending. We quickly integrated the PrimaCom networks, upgraded the network to the bi-directional HFC standard with a capacity of 862 MHz, rolled-out Unity3play and have as of the date hereof completed, based on past experience, the operational integration of PrimaCom. In addition, in the first quarter of 2009 we acquired the basic cable subscribers of KfGW GmbH (KfGW), which were previously served through a signal delivery agreement, for 8.0 million. We continue to evaluate further acquisition opportunities. Key Operating Measures We use several key operating measures, including RGUs, ARPU and subscriber acquisition costs, to track the financial performance of our business. None of these terms are measures of financial performance under either EU-IFRS or IFRS, nor have these measures been reviewed by an outside auditor, consultant or expert. All of these measures, except where specifically indicated to the contrary, are derived from management estimates. As defined by our management, these terms may not be comparable to similar terms used by other companies. See Glossary.

74

RGUs We classify our customers based on our main subscription-based business activities. The following table sets forth our RGU numbers for our cable business and arenaSAT activities as of September 30, 2009 and 2008 and each of December 31, 2008, 2007 and 2006.
As of September 30 2009 2008 As of December 31 2008 2007 2006

(in thousands, except percentages and as otherwise indicated) (unaudited)

Unitymedia Cable Segment Footprint Homes Passed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Upgraded Homes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subscribers Analog Basic Cable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital Basic Cable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Basic Cable Subscribers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RGUs (1) Basic Cable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . New Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total RGUs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . New Services RGUs Digital TV Pay (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Retail Broadband Internet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wholesale MMA Internet (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Telephony . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total New Services RGUs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Penetration BCS in % of Homes Passed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital in % of BCS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital (with Premiere (now Sky Deutschland) in % of BCS (4) . . . arena Segment arenaSAT RGUs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8,757 90% 3,247 1,301 4,547 4,547 1,883 6,430 470 537 340 535 1,883 52% 29% 33% 68

8,671 75% 3,539 1,116 4,655 4,655 1,357 6,013 531 326 193 308 1,357 54% 24% 29% 221

8,685 83% 3,391 1,228 4,619 4,619 1,561 6,180 568 377 253 363 1,561 53% 27% 31% 191

8,643 8,584 66% 43% 3,973 789 4,762 4,762 942 5,704 456 199 112 175 942 55% 17% 334 4,487 443 4,930 4,930 568 5,498 385 80 45 58 568 57% 9% 323

(1) Revenue generating units (RGUs) relate to sources of revenue, which may not always be the same as the number of subscribers. For example, one person may subscribe to two different services, thereby accounting for only one subscriber but for two RGUs. (2) Number of smartcards with one or more Digital TV Pay package and/or a digital video recorder (DVR), including until March 31, 2009, other second smartcards. (3) Multimedia Anschluss (MMA) wholesale Internet product for landlords, excluding units that upgrade to Retail Broadband Internet. (4) Includes cable-based Premiere (now Sky Deutschland) pay TV customers in NRW/Hesse not subscribing to a separate Unitymedia Digital TV Pay package.

Our basic cable services RGUs decreased by 1.6 percent, from 4.6 million as of December 31, 2008 to 4.5 million as of September 30, 2009, primarily due to delayed churn from price increases on January 1, 2008 and July 1, 2008. See Key Factors Affecting Our Results of Operations Pricing. New Services RGUs (consisting of Digital TV Pay, Retail Broadband Internet, wholesale MMA Internet and Telephony RGUs) increased by 20.6 percent, from 1.6 million as of December 31, 2008 to 1.9 million as of September 30, 2009. Our Digital TV Pay RGUs decreased by 17.3 percent, from 568,000 as of December 31, 2008 to 470,000 as of September 30, 2009. Despite the underlying growth trend and in line with expectations, the Digital TV Pay business experienced a one-off reduction in its RGU base, primarily relating to Unitymedia ceasing to retail Bundesliga programming from July 1, 2009. The number of our Internet access RGUs (taking into account both Retail Broadband Internet and wholesale MMA, as a whole) increased by 39.2 percent, from 630,000 as of December 31, 2008 to 877,000 as of September 30, 2009. Internet take-up accelerated under the unified Unitymedia brand with the roll-out of our Unity3play retail offer in mid-2007, with Retail Broadband Internet access RGUs increasing by 42.4 percent, from 377,000 as of December 31, 2008 to 537,000 as of September 30, 2009, and with the demand for our wholesale MMA product for landlords and housing associations increasing by

75

34.4 percent, from 253,000 RGUs as of December 31, 2008 to 340,000 RGUs as of September 30, 2009. Telephony RGUs increased by 47.4 percent, from 363,000 as of December 31, 2008 to 535,000 as of September 30, 2009. More than 90 percent of our Retail Broadband Internet subscriber base also subscribed to our telephony services as of September 30, 2009. New Services RGUs represented 29.3 percent of total RGUs as of September 30, 2009, compared to 25.3 percent as of December 31, 2008. At arenaSAT, the RGU base decreased by 64.4 percent, from 191,000 RGUs as of December 31, 2008 to 68,000 RGUs as of September 30, 2009, primarily related to Bundesliga churn. Our basic cable services RGUs decreased by 6.3 percent, from 4.9 million as of December 31, 2006 to 4.6 million as of December 31, 2008, due primarily to the price increases discussed above. See Key Factors Affecting Our Results of Operations Pricing. During the same time, digital basic cable subscribers increased from 9.0 percent to 26.6 percent of total basic cable subscribers. Our New Services RGUs nearly tripled, from 568,000 as of December 31, 2006 to 1.6 million as of December 31, 2008. Our Digital TV Pay RGUs increased by 47.5 percent, from 385,000 as of December 31, 2006 to 568,000 as of December 31, 2008, supported by the introduction of our new Digital TV Pay packages. See Business Products and Services Unitymedia Cable Digital TV Pay. The number of our Internet access RGUs (taking into account both Retail Broadband Internet and wholesale MMA, as a whole) increased by approximately five times, from 125,000 as of December 31, 2006 to 630,000 as of December 31, 2008. As discussed above, Internet take-up accelerated in the second half of 2007 following the introduction of the unified Unitymedia brand and the roll-out of our Unity3play retail offer. Telephony RGUs increased from 58,000 as of December 31, 2006 to 363,000 as of December 31, 2008, due primarily to increased take-up of 2Play and Unity3play. New Services RGUs represented 25.3 percent of total RGUs as of December 31, 2008, compared to 10.3 percent as of December 31, 2006. At arenaSAT, the RGU base decreased significantly to 191,000 RGUs as of December 31, 2008, down from 323,000 RGUs as of December 31, 2006. ARPU Average revenue per user, or ARPU, is a measure we use to evaluate how effectively we are realizing potential revenues from customers. ARPU is generally calculated on a yearly, quarterly or monthly basis by dividing total subscription related sales excluding installation and carriage fees by the average number of subscribers served in that period and by the number of months in the period. The following table sets forth the ARPU generated by the products and services we offer for each business segment.
For the nine months ended September 30 2009 2008 For the financial year ended December 31 2008 2007 2006

(in ) (unaudited)

Unitymedia Cable Segment Digital TV Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Retail Broadband Internet (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wholesale MMA Internet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Telephony (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Broadband (Retail Broadband Internet and telephony) (2) . . . . . . . . . . . . . Unity3play including BCS (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Basic Cable Services ARPU (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Incremental New Services ARPU (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Blended ARPU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . arena Segment arenaSAT ARPU (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9.08 15.37 1.55 12.89 28.26 38.38 10.12 3.99 14.11

9.98 14.19 2.57 17.45 31.64 41.34 9.70 2.81 12.51

9.82 14.67 2.43 16.13 30.80 40.61 9.81 2.95 12.77

11.01 15.23 2.35 20.69 35.92 45.11 9.19 1.84 11.03

9.02 18.74 2.07 23.39 42.13 n/a 8.21 0.77 8.98

18.77

18.89

18.67

17.13

17.59

(1) In the second quarter of 2008 the Company changed the manner in which it allocates ARPU generated from 2Play and Unity3play products. Prior to the second quarter of 2008, a fixed amount of ARPU was allocated to BCS digital (in Unity3play) and Telephony (together with telephone usage charges), with the remaining ARPU allocated to Retail Broadband Internet. Beginning in the second quarter of 2008, a fixed amount of ARPU was allocated to BCS digital (in Unity3play) and Retail Broadband Internet customers acquired from the second quarter of 2008, with the remaining ARPU (together with telephone usage charges) allocated to Telephony.

76

(2) Sum of Retail Broadband Internet ARPU and Telephony ARPU. (3) Sum of average Basic Cable ARPU and Broadband ARPU (excluding additional Digital TV Pay ARPU). (4) Calculated as the average ARPU of all analog and digital BCS subscribers (excluding Digital TV Pay RGUs and revenues). For the nine months ended September 30, 2008 and the financial year ended December 31, 2008, Basic Cable Services ARPU includes incremental PrimaCom Aachen and Wiesbaden revenue from September 1, 2008. (5) Calculated as the sum of Retail Broadband Internet, wholesale MMA Internet, telephony and Digital TV Pay revenue divided by the number of BCS RGUs in the same period. (6) Calculated by dividing arenaSAT satellite subscription sales excluding public viewing revenues for a period by the average number of total arenaSAT RGUs for that period and the number of months in that period; includes installation revenues, set-top box sales and other revenues.

Blended ARPU across all cable products was 14.11 per basic cable subscriber for the nine months ended September 30, 2009, up 1.60 from 12.51 for the nine months ended September 30, 2008. Blended ARPU across all cable products was 12.77 for the financial year ended December 31, 2008, compared to 11.03 for the financial year ended December 31, 2007 and 8.98 for the financial year ended December 31, 2006. The increase in blended ARPU reflects an increase in both Basic Cable ARPU and the contribution of incremental New Services ARPU, which increased from 8.21 and 0.77, respectively, for the financial year ended December 31, 2006 to 10.12 and 3.99, respectively, for the nine months ended September 30, 2009. Bundled broadband and telephony ARPU was 28.26 for the nine months ended September 30, 2009, down 10.6 percent from 31.64 for the nine months ended September 30, 2008. Bundled broadband and telephony ARPU was 30.80 for the financial year ended December 31, 2008, compared to 35.92 for the financial year ended December 31, 2007 and 42.13 for the financial year ended December 31, 2006. Unity3play ARPU was 38.38 for the nine months ended September 30, 2009, down 7.2 percent from 41.34 for the nine months ended September 30, 2008. Unity3play ARPU was 40.61 for the financial year ended December 31, 2008, compared to 45.11 for the financial year ended December 31, 2007. The decrease in ARPU generated by both bundled broadband and telephony and Unity3play is indicative of the price pressure in the Internet access and telephony markets, although this has begun to stabilize in recent quarters. We believe that, for purposes of tracking the development of Internet access and telephony services across the periods under review, the most appropriate ARPU metrics are our bundled broadband and telephony ARPU and Unity3play ARPU. Monthly basic cable ARPU for the nine months ended September 30, 2009 was 10.12, up from 9.70 for the nine months ended September 30, 2008, primarily reflecting the July 1, 2008, price increase in the analog single user base. Monthly basic cable ARPU for the financial year ended December 31, 2008 was 9.81, compared to 9.19 in the financial year ended December 31, 2007 and 8.21 for the financial year ended December 31, 2006, as a result of the price increases and rate card harmonization in 2007 and 2008. arenaSAT ARPU was 18.77 for the nine months ended September 30, 2009 compared to 18.67 for the financial year ended December 31, 2008, 18.89 for the nine months ended September 30, 2008, 17.13 for the financial year ended December 31, 2007 and 17.59 for the financial year ended December 31, 2006. The relative increase in arenaSAT ARPU across the periods was due primarily to the phasing out of promotional and price discount campaigns run in connection with the launch of the service in the second half of 2006 and the price increase implemented in January 2008. Subscriber Acquisition Costs We are focused on growing our business profitably as we increasingly penetrate our customer base with our new digital products. Our ability to profitably market our multi-play service offerings at competitive prices is predicated on our end-to-end control of our cable network, our large customer base into which we can sell additional services, and the cost structure of our business, all of which are key determinants of the payback profile of our incremental multi-play service customers. Our subscriber acquisition costs for our Unity3play product comprise of costs for customer premise equipment, in-house wiring and installation and our costs per order including marketing, sales, general and administrative and other costs. Due to our own extensive local loop network, we are not required to make payments to Deutsche Telekom to gain access to their last mile network unlike many of our other competitors, providing us with a significant ongoing cost advantage. While we have capitalized third party commissions for new subscriber contracts with a duration of 12 months or more in the past in accordance with IFRS, there may be changes in the IFRS guidelines in future periods which no longer require such capitalization.

77

As a result, we estimate that our Unity3play services currently have a payback period on incremental operation and capital costs of less than three years. Similarly, we estimate our 2Play services currently have a payback period of less than two years. Segment Reporting We organize our business in two business segments based on the method of transmission employed to deliver our products and services to subscribers. Our cable operations in North Rhine-Westphalia and Hesse are reported as Unitymedia Cable and our national satellite platform for the distribution of digital pay TV programs (arenaSAT) as well as the previous sublicensing, wholesale and broadcasting business is reported as arena. See Note D.4 to the unaudited consolidated financial statements as of and for the nine months ended September 30, 2009, Note 26 to the audited consolidated financial statements as of and for the financial years ended December 31, 2008 and 2007, and Note 24 to the audited consolidated financial statements as of and for the financial year December 31, 2006. Unitymedia Cable Segment The following table sets forth selected financial data derived from the segment reporting of Unitymedia Cable.
For the nine months ended September 30 2009 2008 For the financial year ended December 31 2008 2007 2006

(in millions) (unaudited)

Unitymedia Cable Segment Revenue Basic cable services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital TV Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Internet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Telephony . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Installation fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Carriage fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Own work capitalized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other income (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost of materials and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Personnel expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Profit/(loss) for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Attributable to: Equity holders of the parent (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Minority interests (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Segment profit/(loss) (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

416.5 43.3 68.1 52.8 5.8 62.5 649.0 15.5 25.2 689.7 (111.6) (79.1) (212.1) (163.9) 123.0 19.0 (98.1) 28.4 72.2

411.7 44.5 37.0 38.0 6.0 60.7 597.9 13.1 17.6 628.6 (99.1) (74.7) (179.9) (160.2) 114.8 67.3 (113.5) (14.0) 54.6

553.6 60.0 55.1 51.4 8.2 81.2 809.5 18.1 29.0 856.6 (134.6) (103.4) (250.5) (222.8) 145.2 70.0 (153.4) (8.0) 53.9 53.9 53.9

535.8 54.5 25.9 26.8 9.0 54.4

(audited)

486.4 25.3 11.6 8.5 11.5 53.0 596.3 9.3 30.1 635.8 (119.5) (88.7) (225.3) (141.9) 60.4 8.7 (174.9) 119.4 (2.1) 11.6 6.0 5.5 11.6

(unaudited)

706.4 14.9 38.3 759.6 (127.6) (97.3) (223.2) (195.9) 115.6 10.5 (162.4) 29.2 (7.2) (7.2) (7.2)

(1) Includes 9.4 million of non-recurring releases of certain prior period accruals in the nine months ended September 30, 2009 and 16.1 million of non-recurring settlement revenue and purchase price adjustment accrual releases in the second quarter of 2007. (2) The income statement for the Unitymedia Cable segment for the nine months ended September 30, 2009 does not show the line items Equity holders of the parent, Minority interests and Segment profit/(loss) because no minority interests existed during the nine months ended September 30, 2009 and September 30, 2008, respectively.

78

Total revenue Total cable revenue in the nine months ended September 30, 2009 increased by 9.7 percent, from 628.6 million in the nine months ended September 30, 2008 to 689.7 million in the nine months ended September 30, 2009. The increase was primarily due to increased revenues from New Services, which in the nine months ended September 30, 2009 increased by 37.4 percent, from 119.5 million in the nine months ended September 30, 2008 to 164.2 million in the nine months ended September 30, 2009, increased carriage fees as well as price increases in basic cable subscription fees. The increase in total revenue was also impacted by non-recurring releases of certain prior period accruals in the amount of 9.4 million in the nine months ended September 30, 2009. In the financial year ended December 31, 2008, total cable revenue increased by 12.8 percent, from 759.6 million in the financial year ended December 31, 2007 to 856.6 million in the financial year ended December 31, 2008. The increase was primarily due to increased revenues from New Services, which in the financial year ended December 31, 2008 increased by 55.3 percent, from 107.2 million in the financial year ended December 31, 2007 to 166.5 million in the financial year ended December 31, 2008. The increase in total revenue was also due to the 49.3 percent increase in carriage fees, which was a result largely of the increase in carriage fees under the six year Premiere carriage agreement and a revised content feed-in agreement with all public broadcasters. In addition, revenue from basic cable services increased by 3.3 percent, due to the increase in basic cable subscription fees. In the financial year ended December 31, 2007, total cable revenue increased by 19.5 percent, from 635.8 million in the financial year ended December 31, 2006 to 759.6 million in the financial year ended December 31, 2007. The increase was primarily due to increased revenues from New Services, which in the financial year ended December 31, 2007 increased by 136.1 percent, from 45.4 million in the financial year ended December 31, 2006 to 107.2 million in the financial year ended December 31, 2007, as well as to increased revenue from rate card harmonization in our basic cable business. Adjusted EBITDA Our Adjusted EBITDA (as defined herein) in the Unitymedia Cable segment in the nine months ended September 30, 2009 increased by 12.6 percent, from 294.3 million in the nine months ended September 30, 2008 to 331.3 million in the nine months ended September 30, 2009. The Adjusted EBITDA Margin in the Unitymedia Cable segment was 48.7 percent in the nine months ended September 30, 2009, compared to 46.8 percent in the nine months ended September 30, 2008. As expected, and in line with our growth strategy, Unitymedia Cable incurred an increase in certain operating expenditures to accommodate the strong growth in New Services, such as increased investment in marketing and customer facing related personnel expenses. Other costs to service the higher number of customers, from programming to interconnection and ongoing customer care, have also increased as the customer base has grown. Our Adjusted EBITDA in the Unitymedia Cable segment in the financial year ended December 31, 2008 increased by 18.7 percent, from 332.8 million in the financial year ended December 31, 2007 (excluding non-recurring settlement revenue and purchase price adjustment accrual releases in the amount of 16.1 million in the second quarter of 2007) to 394.9 million in the financial year ended December 31, 2008. The Adjusted EBITDA Margin in the Unitymedia Cable segment was 46.1 percent in the financial year ended December 31, 2008, compared to 44.8 percent in the financial year ended December 31, 2007. As expected, and in line with its growth strategy, Unitymedia Cable incurred a step-increase in certain operating expenditures to accommodate the strong growth in New Services, such as increased investment in marketing and sales and customer facing related personnel expenses. Other costs to service the higher number of customers, from programming to interconnection and ongoing customer care, have also increased with the larger customer base. The higher New Services subscription revenues, the January 1, 2008 and July 1, 2008 basic cable price increases, and increased carriage fees more than offset this step-increase in growth related expenses. Our Adjusted EBITDA in the Unitymedia Cable segment in the financial year ended December 31, 2007 increased by 14.2 percent, from 291.3 million in the financial year ended December 31, 2006 to 332.8 million in the financial year ended December 31, 2007 (excluding non-recurring settlement revenue and purchase price adjustment accrual releases in the amount of 16.1 million in the second quarter of 2007). The Adjusted EBITDA Margin in the Unitymedia Cable segment was 44.8 percent in the financial year ended December 31, 2007, compared to 45.8 percent in the financial year ended December 31, 2006. As noted above, Unitymedia Cable incurred an increase in certain operating expenditures to accommodate the strong growth in New Services,

79

including higher marketing spend in connection with the rebranding of Unitymedia, the introduction of Unity3play, and the Jetzt Digital campaign. The higher New Services subscription revenue and 2007 basic cable price increases have contributed to offset this step-increase in growth related expenses. arena Segment
For the nine months ended September 30 2009 2008 For the financial year ended December 31 2008 2007 2006

(in million) (unaudited)

arena Segment Revenue (1) which satellite revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . which wholesale revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . which Premiere share revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . which sublicense revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . which other revenue (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Revenue (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Own work capitalized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost of materials and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Personnel expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Profit/(loss) for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Attributable to: Equity holders of the parent (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Minority interests (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Segment profit/(loss) (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

24.5 4.2 51.3 90.4 0.3 170.7 2.7 173.4 (7.0) (0.9) (1.8) (160.5) 3.2 1.0 (4.7) (0.5)

54.3 6.6 69.4 114.8 2.8 247.9 7.6 255.5 (8.6) (0.9) (4.4) (215.2) 26.4 4.6 (8.2) 22.7

65.4 8.7 102.6 172.8 2.9

78.6 44.5 94.1 82.4 9.1

(audited)

19.6 32.3 26.4

(unaudited)

352.4 308.6 78.4 13.3 8.3 1.7 365.8 317.0 80.1 (11.0) (12.5) (15.8) (1.3) (6.8) (2.4) (5.1) (7.4) (2.6) (306.0) (345.1) (238.7) 42.2 (54.9) (179.5) 5.9 6.9 3.5 (1.9) (2.2) (11.3) 8.2 36.8 (41.6) (178.2) 36.8 36.8 (41.6) (178.2) (41.6) (178.2)

(1) Including inter-segment revenues in the amount of 16.1 million in the financial year ended December 31, 2007 and 9.1 million in the financial year ended December 31, 2006. (2) Includes installation revenues, set-top box sales and other revenue. (3) The consolidated income statement for the arena segment for the nine months ended September 30, 2009 does not show the line items Equity holders of the parent, Minority interests and Segment profit/(loss) because no minority interests existed during the nine months ended September 30, 2009 and September 30, 2008, respectively.

Total revenue Total revenue in the arena segment decreased by 32.1 percent from 255.5 million in the nine months ended September 30, 2008 to 173.4 million in the nine months ended September 30, 2009, including 51.3 million of Premiere share revenue recognition and 90.4 million in sublicense fees from the former arena broadcast operations. The decrease was primarily due to subscriber churn on the arenaSAT platform and the discontinuation of the previous sublicense and wholesale business as of June 30, 2009. In the financial year ended December 31, 2008, total revenue in the arena segment increased by 15.4 percent, from 317.0 million in the financial year ended December 31, 2007 to 365.8 million in the financial year ended December 31, 2008. The increase was due to an increase in sublicense revenue of 90.4 million, from 82.4 million in the financial year ended December 31, 2007 to 172.8 million in the financial year ended December 31, 2008, reflecting the full-year effect of the Premiere sublicense agreement, which was signed in mid-2007. The increase was also due to revenue generated from the pro rata release of deferred income relating to the shares of Premiere AG in the amount of 102.6 million. The increase in total revenue was partially offset

80

by a 39.8 percent decrease in subscription revenue, from 123.1 million in the financial year ended December 31, 2007 to 74.1 million in the financial year ended December 31, 2008, reflecting the decline in the number of arenaSAT customers following the expiration of the two-year contracts entered into when we obtained the Bundesliga Rights. In the financial year ended December 31, 2007, total revenue in the arena segment increased by 295.9 percent, from 80.1 million in the financial year ended December 31, 2006 to 317.0 million in the financial year ended December 31, 2007. The sharp increase was primarily due to revenue generated from the pro rata release of the deferred income relating to the shares of Premiere AG in the amount of 94.1 million and 82.4 million in sublicensing revenue as well as an increase in satellite revenue of 59.0 million, from 19.6 million in the financial year ended December 31, 2006 to 78.6 million in the financial year ended December 31, 2007. This increase in total revenue was offset slightly by a decrease in other revenue (consisting of installation revenues, revenues from air time sales, STB sales and other revenues) of 17.3 million, from 26.4 million in the financial year ended December 31, 2006 to 9.1 million in the financial year ended December 31, 2007. After consolidation with Unitymedia Cable, revenue from arena was 170.7 million (or 98.4 percent of our total arena segment revenue) in the nine months ended September 30, 2009, 247.9 million (or 97.0 percent of total arena segment revenue) in the nine months ended September 30, 2008, 352.4 million (or 96.3 percent of our total arena segment revenue) in the financial year ended December 31, 2008, 292.6 million (or 92.3 percent of our total arena segment revenue) in the financial year ended December 31, 2007 and 69.3 million (or 86.5 percent of total arena segment revenue) in the financial year ended December 31, 2006. Adjusted EBITDA Our Adjusted EBITDA (as defined herein) in the arena segment in the nine months ended September 30, 2009 decreased from 26.3 million in the nine months ended September 30, 2008 to 16.3 million in the nine months ended September 30, 2009. Our Adjusted EBITDA in the arena segment in the financial year ended December 31, 2008 increased by 65.5 million, from (24.2) million in the financial year ended December 31, 2007 to 41.3 million in the financial year ended December 31, 2008. arena began to generate positive Adjusted EBITDA in the second half of 2007 following the entry into force of the Premiere Agreements and the payment of the sublicensing fees. During the second half of 2007 and 2008, capital expenditures in arena were generally limited to STBs for new arenaSAT subscribers. Our Adjusted EBITDA in the arena segment in the financial year ended December 31, 2007 improved by 110.8 million, from (135.0) million in the financial year ended December 31, 2006 to (24.2) million in the financial year ended December 31, 2007. We incurred significant start-up costs in 2006 connection with our agreement with DFL to broadcast the Bundesliga Rights. Consolidated Results of Operations We derive revenues from six main business activities: our analog and digital basic cable television, Digital TV Pay, Internet access, telephony (including subscription and usage fees), carriage fees and the arenaSAT business. We refer to the revenues generated by these activities as sales. In addition, we recognize other revenues, including own work capitalized and other income. Other income includes prior period income, such as the release of accruals and allowances.

81

The following table sets forth selected financial data from our income statement for the periods indicated. The information has been extracted from the unaudited consolidated financial statements as of and for the nine months ended September 30, 2009 and 2008 and the audited consolidated financial statements as of and for the financial years ended December 31, 2008, 2007 and 2006.
For the nine months ended September 30 2009 2008 For the financial year ended December 31 2008 2007 2006 (in thousands) (audited)

(unaudited)

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Own work capitalized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost of materials and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Personnel expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization expenses . . . . . . . . . . . . . . . . . . . . . . . Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Profit/(loss) for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Attributable to: Equity holders of the parent (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . Minority interests (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated profit/(loss) (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

819,723 15,497 27,420 862,640 (118,584) (80,025) (213,917) (323,921) 126,193 19,946 (98,139) 23,695 71,695

845,798 1,161,925 998,964 13,146 18,082 14,858 24,274 41,249 44,129 883,218 1,221,256 1,057,951 (107,657) (145,633) (140,139) (75,633) (104,701) (104,074) (184,259) (255,645) (230,660) (374,499) (527,803) (522,378) 141,170 187,474 60,700 67,290 71,267 16,260 (113,524) (153,381) (163,159) (22,189) (19,279) 37,432 72,747 86,081 (48,767) 86,081 86,081

665,586 10,776 24,149 700,511 (135,290) (91,131) (227,921) (365,296) (119,127) 10,562 (175,438) 119,411 (2,058) (166,650)

(48,767) (172,195) 5,545 (48,767) (166,650)

(1) The consolidated income statement for the nine months ended September 30, 2009 does not show the line items Equity holders of the parent, Minority interests and Consolidated profit/(loss) because no minority interests existed during the nine months ended September 30, 2009 and September 30, 2008, respectively.

Nine months ended September 30, 2009 compared to the nine months ended September 30, 2008 Total Revenue Revenue Revenue decreased by 3.1 percent, from 845.8 million in the nine months ended September 30, 2008 to 819.7 million in the nine months ended September 30, 2009. Revenue represented 95.0 percent of total revenue in the nine months ended September 30, 2009 and 95.8 percent of total revenue in the nine months ended September 30, 2008. The decrease in revenue was primarily due to the reduction in Premiere sublicense revenues and Premiere share revenue recognition following the expiry of our right to retail Bundesliga programming as of July 1, 2009, as well as lower revenue from the arenaSAT subscriber base. This decrease was partially offset by increased revenue from New Services subscriptions, the full effect of the basic cable price increase in the multiuser segment in July 2008 as well as increased digital carriage fees in the cable segment. Basic cable subscription revenue primarily consists of monthly basic cable subscription fees from the delivery of analogue and digital television access signals and increased by 1.2 percent, from 411.7 million for the nine months ended September 30, 2008 to 416.5 million for the nine months ended September 30, 2009. This increase was primarily due to the full effect of the July 2008 price increase in the multi-user basic cable subscriber base, increased digital access take-up in multi dwelling units as well as incremental revenue resulting from the conversion of bulk signal delivery to single and multi-user contracts in the former PrimaCom networks in Aachen and Wiesbaden. The revenue increase was partially offset by churn from the 2008 price increases in the single user as well as the multi-user segment as of January 1 and July 1, 2008, respectively. In total, the contribution of the basic cable television business as a percentage of total revenue increased from 46.6 percent in the nine months ended September 30, 2008 to 48.3 percent of total revenue in the nine months ended September 30, 2009.

82

Revenue from our Digital TV Pay business includes monthly subscription fees for pay TV programming and, from December 2008, for DVRs. Revenue from our Digital TV Pay business decreased from 44.5 million, or 5.0 percent of total revenue, in the nine months ended September 30, 2008 to 43.3 million, or 5.0 percent of total revenue, in the nine months ended September 30, 2009. The decrease was primarily due to the loss of customers subscribing to Bundesliga content or bundled products following the expiry of the Bundesliga Rights, partially offset by continued organic pay TV growth through take-up from an increasing number of Unity3play subscribers as well as the basic digital access customers. Accordingly, the decrease in revenue has had a limited impact on our consolidated EBITDA. Revenue from our Internet business includes the monthly subscription fees for Retail Broadband and Wholesale MMA Internet services. Revenue from our Internet business increased from 37.0 million, or 4.2 percent of total revenue in the nine months ended September 30, 2008 to 68.1 million, or 7.9 percent of total revenue in the nine months ended September 30, 2009. The 84.1 percent increase represents an accelerated take-up of our triple play product portfolio in our increasingly upgraded regions in Hesse and North RhineWestphalia. In addition, bundling discounts under our integrated 2play and 3play offerings have been fully allocated to telephony since the second quarter of 2008, whereas prior to and including the first quarter of 2008 the full effect of bundling discounts was reflected in Internet. Revenue from our Telephony business includes monthly line subscription fees and usage. Revenue from our telephony business increased from 38.0 million or 4.3 percent of total revenue in the nine months ended September 30, 2008 to 52.8 million, or 6.1 percent of total revenue in the nine months ended September 30, 2009. As in prior quarters, over 90 percent of Retail Broadband Internet additions also take Telephony. As expected, strong bundled broadband subscriber growth was partially offset by lower mobile and rate based international voice calls per subscriber, lower interconnection revenue from incoming calls as well as general bundled pricing and promotional campaigns. Carriage fees increased by 3.1 percent, from 60.7 million in the nine months ended September 30, 2008 to 62.5 million in the nine months ended September 30, 2009, primarily due to increased revenue from shopping channels and other digital cable television content. Installation fees were 5.8 million for the nine months ended September 30, 2009 compared to 6.0 million in the nine months ended September 30, 2008. Revenue from arena was 170.7 million in the nine months ended September 30, 2009, or 19.8 percent of our total revenue. Included in arena revenue are both installation and subscription fees relating to arenaSAT packages, sales generated from set-top boxes sold as well as wholesale revenue, the Premiere share revenue recognition and sublicense fee payments by Premiere until June 30, 2009. The Premiere share and sublicense revenue (as well as the expenses for the Bundesliga Rights to the DFL) for the respective seasons were realized on a proportional basis depending on the number of Bundesliga games in the respective period. Both revenue from the Premiere share revenue recognition and Bundesliga sublicense fees will not be recognized going forward, as the underlying sublicense agreement with Premiere expired as of June 30, 2009. The shares of Premiere AG were sold to News Corp in January 2008 for 287 million before transaction costs and the original book value was the basis for deferred revenue recognition for the life-time of the underlying contract until the end of the 2008/2009 season. Own work capitalized Own work capitalized increased by 17.9 percent, from 13.1 million in the nine months ended September 30, 2008 to 15.5 million in the nine months ended September 30, 2009. This increase was due primarily to an increase in the level of network projects staffed by in-house employees resulting from higher upgrade activity in increasingly rural areas. A corresponding amount of expenditure is reflected in personnel expenses. Other income Other income increased by 13.0 percent, from 24.3 million in the nine months ended September 30, 2008 to 27.4 million in the nine months ended September 30, 2009. Other income included non-recurring releases of certain prior period accruals in the amount of 9.4 million in the nine months ended September 30, 2009 and non-recurring releases of restructuring and transformation cost accruals for the arena segment in the amount of 4.4 million in the nine months ended September 30, 2008. Net of these non-recurring effects, other income decreased by 1.9 million primarily due to a change in the accounting treatment of third-party collections income, which is netted with related other expenses starting January 1, 2009.

83

Cost of materials and services Cost of materials and services consists of raw materials and consumables and purchased services. Raw materials and consumables primarily include WLAN routers, refurbishment of customer premise equipment (CPE) and set-top boxes which we sell. Purchased services primarily consists of network infrastructure services, which include costs under long term agreements with Deutsche Telekom, costs for arenas satellite platform, cost of repair and maintenance as well as other agreements. Our most significant costs include payments under long term agreements with Deutsche Telekom or the use of assets which are shared between our network and that of Deutsche Telekom and for services provided by Deutsche Telekom. Cost of materials and services increased by 10.1 percent in the nine months ended September 30, 2009, from 107.7 million in the nine months ended September 30, 2008 to 118.6 million in the nine months ended September 30, 2009. Cost of materials and services is comprised of the following two key components:

Raw materials and consumables: Cost of raw materials and consumables decreased from 8.0 million in the nine months ended September 30, 2008 to 7.5 million in the nine months ended September 30, 2009. Our cost of raw materials and consumables as a percentage of total revenue was 0.9 percent both in the nine months ended September 30, 2009 and in the nine months ended September 30, 2008. Purchased services. Cost of purchased services increased by 11.5 percent, from 99.6 million in the nine months ended September 30, 2008 to 111.1 million in the nine months ended September 30, 2009. The increase primarily relates to higher interconnection and connectivity costs and technical service visits on a higher base of Internet and telephony customers as well as higher energy costs. Our cost of purchased services as a percentage of total revenue increased from 11.3 percent in the nine months ended September 30, 2008 to 12.9 percent in the nine months ended September 30, 2009.

Personnel expenses Personnel expenses include salaries and wages, social security, pension, share-based payments and other benefits of our permanent staff. They also include other forms of compensation such as overtime and stand-by pay, but do not include outsourced or temporary staff expenses, which are included in other expenses. Personnel expenses also include non-cash charges for share-based payments to certain management members and the Board of Directors of Unitymedia Management S.A. Share based payments amounted to 0.2 million in the nine months ended September 30, 2009 compared to 1.3 million in the same period 2008. Total personnel expenses increased by 5.8 percent from 75.6 million in the nine months ended September 30, 2008 to 80.0 million in the nine months ended September 30, 2009 due to a higher headcount in customer facing departments such as customer service and our technical hotline as well as salary increases. Our personnel expenses as a percentage of total revenue increased to 9.3 percent in the nine months ended September 30, 2009 compared to 8.6 percent in the nine months ended September 30, 2008. As of September 30, 2009, Unitymedia had 1,672 employees, of which 11 were at arena. Depreciation and amortization expenses Depreciation and amortization expenses relate to property, plant and equipment and intangible assets and are depreciated over the useful asset life or the contract period, respectively. This includes the costs of set-top boxes and cable modems rented to the customer as well as certain third party customer acquisition costs. Depreciation and amortization increased by 16.1 percent, from 184.3 million in the nine months ended September 30, 2008 to 213.9 million in the nine months ended September 30, 2009. The increase relates to a higher fixed and intangible asset base primarily resulting from upgrade projects as well as a higher amount of short-term depreciable CPE and capitalized customer acquisition costs from the larger triple play base. Our depreciation expenses as a percentage of revenue increased to 24.8 percent in the nine months ended September 30, 2009 compared to 20.9 percent in the nine months ended September 30, 2008. Other expenses Other expenses include copyright license fees, rental and leasing fees, sales and marketing expenses, legal, consulting, bad debt allowance and miscellaneous other operating expenses including costs for our customer care, billing and network systems, management fees and payments for the Bundesliga Rights to the DFL. As the Bundesliga Rights period expired on June 30, 2009, arena will not incur DFL license payments as of the third quarter 2009. We also pay license fees for our digital television programming.

84

Other expenses decreased by 13.5 percent, from 374.5 million in the nine months ended September 30, 2008 to 323.9 million in the nine months ended September 30, 2009. This decrease was primarily due to lower programming costs following the expiry of our rights to retail Bundesliga programming as of July 1, 2009, and lower operating costs at arena following a lower arenaSAT subscriber base. This decrease was partially offset by higher sales and marketing expenses in the cable segment. Financial income Financial income decreased from 67.3 million in the nine months ended September 30, 2008 to 19.9 million in the nine months ended September 30, 2009. The decrease was primarily due to capital gains recorded in the nine months ended September 30, 2008 in connection with the sale of the Premiere shares in the amount of 42.1 million as well as a 11.4 million gain from the nominal 236.0 million repurchased NRW/ Hesse Notes below par value and 6.0 million interest income from cash deposits. The financial income of 19.9 million in the nine months ended September 30, 2009 is primarily a result of a 17.8 million non-cash gain on the valuation of prepayment options of the Unitymedia Group Notes under IFRS as well as 1.3 million interest income from cash deposits. The decrease in interest income is due to the lower cash and interest rate level in 2009. Financial expenses Financial expenses decreased from 113.5 million in the nine months ended September 30, 2008 to 98.1 million in the nine months ended September 30, 2009. Financial expenses in the nine months ended September 30, 2008 included a 1.8 million non-cash writedown on the value of prepayment options for the fixed-rate Existing Senior Notes. Net of this effect, the decrease in interest expenses year on year was primarily due to a positive netting effect of interest payments from the nominal 251 million NRW/Hesse Notes repurchased in the course of 2008 as well as lower EURIBOR rates on the unhedged portion of the NRW/Hesse Notes and Term Loan in the first nine months of 2009. Income taxes Income tax income of 23.7 million in the nine months ended September 30, 2009 primarily included the positive revaluation effect of loss carry forwards in the amount of 48.5 million as a result of a tax audit as further described in Note 6 to the unaudited consolidated financial statements as of and for the nine months ended September 30, 2009, partially offset by current trade tax and corporate income tax expenses as well as deferred taxes primarily related to the valuation of the prepayment options. In the nine months ended September 30, 2008, we incurred income tax expenses of 22.2 million, primarily reflecting accrued trade tax and corporate income tax expenses as well as deferred taxes primarily related to the 236 million repurchased NRW/Hesse Notes below par value in the respective period. Net profit/loss Net profit in the nine months ended September 30, 2009 was 71.7 million compared to a net profit of 72.7 million in the nine months ended September 30, 2008. Net profit in the nine months ended September 30, 2009 reflected a positive 48.5 million deferred income tax effect as described above. Net profit in the nine months ended September 30, 2008 reflected the 42.1 million capital gain upon disposal of the Premiere shares in January 2008 and the one-time 11.4 million gain from repurchased NRW/Hesse Notes. Net of these effects, net profit increased by 4.0 million primarily related to improved operating performance in the cable segment, partially offset by lower EBITDA contribution from the arena segment. Financial year ended December 31, 2008 compared to the financial year ended December 31, 2007 Total Revenue Revenue Revenue increased by 16.3 percent, from 999.0 million in the financial year ended December 31, 2007 to 1,161.9 million in the financial year ended December 31, 2008. Revenue represented 95.1 percent of total revenues in the financial year ended December 31, 2008 and 94.4 percent of total revenues in the financial year ended December 31, 2007. The increase in revenue was primarily due to increased revenues from arena, our New Services and price increases in the basic cable single user and multi user subscriber base, as well as increased digital carriage fees under the Premiere Agreement and the revised content feed-in agreement with German public broadcasters.

85

Basic cable subscription revenue increased by 3.3 percent, from 535.8 million for the financial year ended December 31, 2007 to 553.6 million for the financial year ended December 31, 2008. This increase was primarily due to price increases in the analog single and multi user basic cable subscriber base and increased digital access take-up in multi dwelling units. The revenue increase was partially offset by churn from both the 2007 and 2008 price increases. In total, the contribution of the basic cable television business as a percentage of total revenues decreased from 50.6 percent, or 535.8 million, in the financial year ended December 31, 2007 to 45.3 percent, or 553.6 million, of total revenues in the financial year ended December 31, 2008. Revenue from our Digital TV Pay business increased from 54.5 million, or 5.1 percent of total revenues in the financial year ended December 31, 2007 to 60.0 million, or 4.9 percent of total revenues for the financial year ended December 31, 2008. The increase was primarily due to an increase in RGUs of our Digital TV Pay offerings reflecting the increased conversion to pay TV from the growing basic digital access customer base which was partially offset by Bundesliga subscriber churn. Revenue from our Internet business increased from 25.9 million, or 2.5 percent of total revenues in the financial year ended December 31, 2007 to 55.1 million, or 4.5 percent of total revenues in the financial year ended December 31, 2008. The 113 percent increase represents an accelerated take-up of our triple play product portfolio in our increasingly upgraded regions in Hesse and North Rhine-Westphalia. In the second quarter of 2008 the Company changed the manner in which it allocates ARPU generated from its 2Play and Unity3play products. Prior to the second quarter of 2008, a fixed amount of ARPU was allocated to BCS digital (in Unity3play) and Telephony (together with telephone usage charges), with the remaining ARPU allocated to Retail Broadband Internet. Beginning in the second quarter of 2008, a fixed amount of ARPU was allocated to BCS digital (in Unity3play) and Retail Broadband Internet customers acquired from the second quarter of 2008, with the remaining ARPU (together with telephone usage charges) allocated to Telephony. Revenue from our telephony business increased from 26.8 million or 2.5 percent of total revenues in the financial year ended December 31, 2007 to 51.4 million, or 4.2 percent of total revenues in the financial year ended December 31, 2008. This increase represents an accelerated take-up of our telephony products in our upgraded regions, which tracked accelerated Internet growth, as over 90 percent of Retail Broadband Internet additions also take Telephony. This increase was partially offset by lower ARPU from promotional campaigns for the Unity3play lead product. Such discounts have been allocated to telephony since the beginning of the second quarter of 2008. Carriage fees increased by 49.3 percent, from 54.4 million in the financial year ended December 31, 2007 to 81.2 million in the financial year ended December 31, 2008 primarily due to increased revenues from Premiere content feed-in fees following the six year Premiere carriage agreement and increased revenues from a revised feed-in agreement from public broadcasters, which both commenced January 1, 2008, as well as revenues from other digital cable television content on Unitymedias cable network. Installation fees decreased from 9.0 million in the financial year ended December 31, 2007 to 8.2 million for the financial year ended December 31, 2008 due to lower one-time charge volume from analog basic cable and digital subscribers being connected. Revenue from arena was 352.4 million in the financial year ended December 31, 2008, or 28.9 percent of our total revenues. The Premiere share and sublicense revenues (as well as the expenses for the Bundesliga Rights to the DFL) for the respective seasons are realized on a proportional basis depending on the number of games in the respective period. The shares of Premiere AG were sold to News Corp in January 2008 for 287 million before transaction costs and the original book value is the basis for deferred revenue recognition. The 42.1 million capital gain resulting from the difference between higher sale price and book value is shown within financial income. Own work capitalized Own work capitalized increased by 21.5 percent from 14.9 million in the financial year ended December 31, 2007 to 18.1 million in the financial year ended December 31, 2008. This increase largely reflects an increase in the level of network projects staffed by in-house employees resulting from higher upgrade activity in our regions. A corresponding amount of expenditure is reflected in personnel expenses. Other income Other income decreased by 6.5 percent, from 44.1 million in the financial year ended December 31, 2007 to 41.2 million in the financial year ended December 31, 2008. Other income of 44.1 million in the financial year

86

ended December 31, 2007 included 16.1 million non-recurring settlement and purchase price adjustment accrual releases. Net of this effect, other income increased by 13.2 million. This increase was primarily due to release of prior period accruals, one-time revenues from sublicensing certain Bundesliga games as well as a consolidation gain resulting from share acquisitions of the PrimaCom networks in the amount of 1.7 million. The two latter effects are reflected in Adjusted EBITDA. Cost of materials and services Cost of materials and services increased by 3.9 percent, from 140.1 million for the financial year ended December 31, 2007 to 145.6 million for the financial year ended December 31, 2008. Our cost of materials and services is comprised of the following two key components:

Raw materials and consumables: Cost of raw materials and consumables decreased from 10.1 million in the financial year ended December 31, 2007 to 9.8 million in the financial year ended December 31, 2008. The decrease primarily relates to a lower amount of set-top boxes sold in 2008 at arena. Our cost of raw materials and consumables as a percentage of total revenues decreased to 0.8 percent in the financial year ended December 31, 2008 compared to 1.0 percent in the financial year ended December 31, 2007. Purchased services: Cost of purchased services increased by 4.5 percent, from 130.0 million in the financial year ended December 31, 2007 to 135.8 million in the financial year ended December 31, 2008. The increase primarily relates to higher interconnection and connectivity costs due to a higher base of Internet and telephony customers partially offset by savings under our BRN agreements with Deutsche Telekom. Our cost of purchased services as a percentage of total revenues decreased from 12.3 percent in the financial year ended December 31, 2007 to 11.1 percent in the financial year ended December 31, 2008.

Personnel expenses In addition to the core elements of personnel expenses discussed above, personnel expenses also include non-cash charges of 1.8 million in the financial year ended December 31, 2008 compared to 1.9 million in the same period 2007 for share-based payments to certain management members and the Board of Directors of Unitymedia Management S.A. Total personnel expenses increased by 0.6 percent from 104.1 million in the financial year ended December 31, 2007 to 104.7 million in the financial year ended December 31, 2008 due to a higher headcount in customer facing departments such as customer service as well as salary increases. These increases were partially offset by a lower headcount at the level of Unitymedia Services and lower personnel expenses at arena following the closure of the broadcasting business which led to personnel restructuring expenses in 2007. Our personnel expenses as a percentage of total revenues decreased to 8.6 percent in the financial year ended December 31, 2008 compared to 9.8 percent in the financial year ended December 31, 2007. As of December 31, 2008 Unitymedia had 1,602 employees, of which 11 were at arena. Depreciation and amortization expenses Depreciation and amortization increased by 10.8 percent, from 230.7 million in the financial year ended December 31, 2007 to 255.6 million in the financial year ended December 31, 2008. The increase relates to a higher fixed and intangible asset base primarily resulting from finalized upgrade projects as well as a higher amount of short-term depreciable CPE and capitalized customer acquisition costs. Our depreciation expenses as a percentage of revenues decreased to 20.9 percent in the financial year ended December 31, 2008 compared to 21.8 percent in the financial year ended December 31, 2007. Other expenses Other expenses increased from 522.4 million in the financial year ended December 31, 2007 to 527.8 million in the financial year ended December 31, 2008. This increase is primarily due to higher sales and marketing expenses as well as outsourcing and temporary staff costs for customer care in the cable segment. This increase was partially offset by lower operating costs at arena after the shut down of arenas broadcasting business and the incurrence of restructuring costs.

87

Financial income Financial income increased from 16.3 million in the financial year ended December 31, 2007 to 71.3 million in the financial year ended December 31, 2008. The increase is primarily due to the capital gain from the sale of Premiere shares of 42.1 million in the first quarter of 2008 and a gain of 15.5 million from the nominal 251 million repurchased NRW/Hesse Notes below par value in 2008. Financial expenses Financial expenses decreased from 163.2 million in the financial year ended December 31, 2007 to 153.4 million in the financial year ended December 31, 2008. The decrease in interest expenses year on year was primarily due to lower outstanding debt principal from the retired 75 million of NRW/Hesse Notes in December 2007, as well as a positive netting effect of interest payments from the nominal 251 million NRW/ Hesse Notes repurchased in 2008. The decrease was partially offset by a 4.8 million non-cash write-down on the value of prepayment options for the fixed rate Existing Senior Notes as they traded below par on December 31, 2008, as well as higher EURIBOR settings on the unhedged portion of NRW/Hesse Notes and the Term Loan and interest payments for the drawn portion of the NRW/Hesse Revolving Credit Facility. Income taxes We incurred net income tax expense of 19.3 million in the financial year ended December 31, 2008, primarily related to accrued trade tax and corporate income tax expenses of 17.9 million. We incurred net income tax income of 37.4 million in the financial year ended December 31, 2007 primarily due to the revaluation of deferred tax liabilities based on new tax rates according to the German tax reform which was introduced by the German government in the third quarter of 2007. Net profit/loss Net profit in the financial year ended December 31, 2008 was 86.1 million compared to a net loss of 48.8 million in the financial year ended December 31, 2007. The primary drivers for the increase in net profit were growth in revenues in the cable segment with its relatively stable fixed cost base, higher revenues at arena from the Premiere Agreement and the capital gain upon disposal of the Premiere shares in January 2008 as well as lower financial expenses due to the repurchase of 326 million NRW/Hesse Notes as of December 31, 2008. Financial year ended December 31, 2007 compared to the financial year ended December 31, 2006 Total Revenue Revenue Revenue in the financial year ended December 31, 2007 was 999.0 million. Revenue increased by 50.1 percent, from 665.6 million in the financial year ended December 31, 2006 to 999.0 million in the financial year ended December 31, 2007. Revenue represented 94.4 percent of total revenue in the financial year ended December 31, 2007 and 95.0 percent of total revenue in the financial year ended December 31, 2006. The increase in revenue was primarily due to increased revenues from arena, Digital TV Pay, broadband Internet and telephony subscribers, as well as price increases in basic cable services revenue. Basic cable services fees including analog and digital television access increased by 10.2 percent, from 486.4 million (or 69.4 percent of total revenue) in the financial year ended December 31, 2006 to 535.8 million (or 50.6 percent of total revenue) in the financial year ended December 31, 2007. This increase was primarily due to price increases resulting from harmonizing single-user rate cards, discontinuation of discounts for multidwelling unit customers in 2007 and additional fees from the introduction of our digital access product. Revenue from our Digital TV Pay business grew from 25.3 million (or 3.6 percent of total revenue) in the financial year ended December 31, 2006 to 54.5 million (or 5.2 percent of total revenue) in the financial year ended December 31, 2007. The increase was primarily due to the significant increase in RGUs of our Digital TV Pay offerings following the launch of arena in 2006, the introduction of the integrated Unitymedia brand, the introduction of our new Digital TV Pay packages (Digital TV Plus and Digital TV Extra) and an increase in the penetration of Digital TV Pay as a result of a growing basic digital access customer base.

88

Revenue from our Internet access business increased from 11.6 million (or 1.7 percent of total revenue in the financial year ended December 31, 2006 to 25.9 million (or 2.4 percent of total revenue) in the financial year ended December 31, 2007. The 123.3 percent increase represents an accelerated take-up of our Internet products following the introduction of our new 1Play, 2Play and Unity3play product portfolio in our upgraded regions in North Rhine-Westphalia and Hesse in 2007, which as of December 31, 2007 included approximately 66 percent of homes passed. This increase was partially offset by lower ARPU from bundling discounts with other products, which are attributed to broadband Internet, and the lower pricing of our MMA product. Revenue from our telephony business increased from 8.5 million (or 1.2 percent of total revenue) in the financial year ended December 31, 2006 to 26.8 million (or 2.5 percent of total revenue) in the financial year ended December 31, 2007. This increase reflects an accelerated take-up of our telephony products in our upgraded regions and the growth in our Internet access business. Carriage fees increased by 2.6 percent, from 53.0 million (or 7.6 percent of total revenue) in the financial year ended December 31, 2006 to 54.4 million (or 5.1 percent of total revenue) in the financial year ended December 31, 2007 due to increased revenues from shopping channels and digital cable television content on Unitymedia Cable. Installation fees decreased by 21.7 percent, from 11.5 million in the financial year ended December 31, 2006 to 9.0 million for the financial year ended December 31, 2007. This decrease was primarily due to fewer new homes being connected in 2007 versus 2006 as well as largely waived installation fees for New Services products. Revenue (on a consolidated basis) for arena increased significantly, from 69.3 million (or 9.9 percent of total revenue) in the financial year ended December 31, 2006 to 292.6 million (or 27.7 percent of total revenue) in the financial year ended December 31, 2007. Included in these numbers are both installation and subscription fees relating to arenaSAT packages as well as external wholesale revenues, sales generated from STBs sold, airtime sales earned, the Premiere AG share revenue recognition and sublicense fee payments by Premiere. The Premiere AG share and sublicense revenues (as well as the expenses for the Bundesliga Rights to the DFL) for the respective seasons are realized on a proportional basis depending on the number of matches broadcast in the respective period. Own work capitalized Own work capitalized costs increased by 38.0 percent from 10.8 million in the financial year ended December 31, 2006 to 14.9 million in the financial year ended December 31, 2007. This increase largely reflected an increase in the level of network projects staffed by in-house employees resulting from increased upgrade activity in our regions. A corresponding amount of expenditure was reflected in personnel expenses. Other income Other income increased by 83.0 percent, from 24.1 million in the financial year ended December 31, 2006 to 44.1 million in the financial year ended December 31, 2007 primarily due to a settlement agreement regarding the disposal of Out-of-Region Tele Columbus assets in October 2006. Cost of materials and services Total cost of materials and services for the financial year ended December 31, 2007 was 140.1 million. Total cost of materials and services increased by 3.6 percent, from 135.3 million in the financial year ended December 31, 2006 to 140.1 million in the financial year ended December 31, 2007. Cost of materials and services consists of raw materials and consumables, and purchased services. Raw materials and consumables primarily include the cost of repair and maintenance, cable modems and STBs, which we sell. Purchased services primarily consist of network infrastructure services, which include costs under long-term agreements with Deutsche Telekom, costs for arenas satellite platform as well as other agreements. Beginning in 2006, we increasingly focused our efforts on an STB rental model, whereby the boxes are capitalized and depreciated over their useful life. Our most significant costs include payments under long-term agreements with Deutsche Telekom for the use of assets which are shared between our network and Deutsche Telekoms network and for services provided by Deutsche Telekom. Cost of materials and services represented 19.3 percent of total revenue in the financial year ended December 31, 2006 and 13.2 percent of total revenue in the financial year ended December 31, 2007.

89

Raw materials and consumables Cost of raw materials and consumables decreased from 18.8 million in the financial year ended December 31, 2006 to 10.1 million in the financial year ended December 31, 2007. The decrease primarily related to a higher amount of STBs purchased in 2006 as part of the arena start-up activities. Our cost of raw materials and consumables as a percentage of total revenue decreased to 1.0 percent in the financial year ended December 31, 2007 as compared to 2.7 percent in the financial year ended December 31, 2006. Purchased services Cost of purchased services increased by 11.7 percent, from 116.4 million in the financial year ended December 31, 2006 to 130.0 million in the financial year ended December 31, 2007 primarily reflecting the impact of full year transponder costs for the arenaSAT business and higher interconnection expenses relating to a higher base of broadband and telephony subscribers. Our cost of purchased services as a percentage of total revenue decreased from 16.6 percent in the financial year ended December 31, 2006 to 12.3 percent in the financial year ended December 31, 2007. Personnel expenses Personnel expenses included non-recurring charges for restructuring costs of 3.6 million in 2007, relating to arenas broadcasting shut down, and 2.4 million relating to Unitymedia Services restructuring. Personnel expenses also include non-cash charges of 1.9 million in 2007 and 1.1 million in 2006 for share-based payments to certain management members and the board of directors at Unity Media S.A. Total personnel expenses increased by 14.3 percent from 91.1 million in the financial year ended December 31, 2006 to 104.1 million in the financial year ended December 31, 2007 due to a higher level of personnel following the growth in New Services demand as well as annual salary increases. Our personnel expenses as a percentage of total revenue decreased to 9.8 percent in the financial year ended December 31, 2007 compared to 13.0 percent in the financial year ended December 31, 2006. Depreciation and amortization expenses Depreciation and amortization increased by 1.2 percent, from 227.9 million in the financial year ended December 31, 2006 to 230.7 million in the financial year ended December 31, 2007. Our depreciation expenses as a percentage of total revenues decreased to 21.8 percent in the financial year ended December 31, 2007 compared to 32.5 percent in the financial year ended December 31, 2006, as a result of increased revenue generation. Other expenses Other expenses increased from 365.3 million in the financial year ended December 31, 2006 to 522.4 million in the financial year ended December 31, 2007. This increase is primarily due to full year DFL license payments for arena and an increase of customer care related costs following the accelerating take up in New Services. In addition, we incurred increased sales and marketing expenses in 2007 related to the re-branding of Unitymedia, the introduction of Unity3play and increasing New Services growth. Financial income Financial income increased from 10.6 million in the financial year ended December 31, 2006 to 16.3 million in the financial year ended December 31, 2007 due to a higher average cash balance in 2007 and a positive EU-IFRS valuation effect of the prepayment option for the outstanding Existing Senior Notes. Financial expenses Financial expenses decreased from 175.4 million in the financial year ended December 31, 2006 to 163.2 million in the financial year ended December 31, 2007. This decrease was primarily due to expenses related to the 2005 Financings which had been capitalized and subsequently expensed in 2006. Income taxes Our effective tax rate is positively affected by our prior tax losses. We incurred a deferred net tax gain of 37.4 million in the financial year ended December 31, 2007, primarily related to the release of deferred tax

90

liabilities due to lower tax rates introduced by the 2008 German tax reform as well as an 8.2 million tax gain recognized due to capitalized loss carryforwards related to arena. We incurred a net tax gain of 119.4 million during the financial year ended December 31, 2006. Discontinued operations Discontinued operations in the financial year ended December 31, 2006 accounted for the Out-of-Region assets which were sold to Kabel Baden-Wrttemberg GmbH & Co. KG and Orion Cable GmbH in August and October 2006, respectively. Profit/loss Loss in the financial year ended December 31, 2007 was 48.8 million compared to a loss of 166.7 million in the financial year ended December 31, 2006. The primary drivers for the decrease in loss were growth in revenue and improved EBITDA performance at arena after its start-up phase in 2006. Profit attributable to minority interests In the financial year ended December 31, 2006 a gain of 5.5 million was attributable to minority interests in the Out-of-Region assets. Liquidity and Capital Resources We maintain cash and cash equivalents to fund the day-to-day requirements of our business. We hold cash primarily in euros. Historically, we have relied primarily upon the proceeds of offerings of debt securities, bank borrowings and cash flow from operations to provide funds required for acquisitions and operations. Our principal source of liquidity on an on-going basis has been, and prior to completion of the Debt Pushdown is expected to be, our operating cash flows, drawings under the NRW/Hesse Revolving Credit Facility, a portion of the proceeds of the offering of the NRW/Hesse Notes as well as the Term Loan. Following the Debt Pushdown, our principal source of liquidity is expected to be our operating cash flows and drawings under the New Revolving Credit Facility. The proceeds from the Notes offered hereby will be used to fund the purchase price for the Acquisition, consummate the related Transactions and pay related fees and expenses. Our ability to generate cash from our operations will depend on our future operating performance, which is in turn dependent, to some extent, on general economic, financial, competitive, market, regulatory and other factors, many of which are beyond our control. Our high number of subscribers of basic cable services who pre-pay their annual bill in the months between November and February leads to higher cash inflows in these months as compared to the rest of the year. Until completion of the Debt Pushdown, Unitymedia will have access to funds to service our working capital and general corporate needs under the NRW/Hesse Revolving Credit Facility. Following completion of the Debt Pushdown, we will have access to funds for similar purposes under the New Revolving Credit Facility. The availability of the NRW/Hesse Revolving Credit Facility and the New Revolving Credit Facility is dependent upon certain conditions. Please refer to the Description of Other Indebtedness. The ability of our subsidiaries to pay dividends and make other payments to us may be restricted by, among other things, legal prohibitions on such payments or otherwise distributing funds to us, including for the purpose of servicing debt. In addition, the net equity of certain of our subsidiaries is low, which may restrict their ability to distribute funds, including for the purpose of servicing debt. Losses or other events could further reduce the net equity of our subsidiaries. We anticipate that we will be highly leveraged in the foreseeable future. Our high level of debt may have important negative consequences for you. See Risk Factors Risks Relating to Our Financial Profile Our high leverage and debt service obligations could have a material adverse effect on our business, financial condition and results of operations. There are also limitations on our ability to obtain additional debt or equity financing. See Description of the Senior Secured Notes Certain Covenants Limitation on Indebtedness, Description of the Senior Notes Certain Covenants Limitation on Indebtedness and Description of Other Indebtedness the New Revolving Credit Facility. In addition, any additional indebtedness that we do incur could reduce the amount of our cash flow available to make payments on our then existing indebtedness, including under the Notes offered hereby, and increase our leverage.

91

Overview of Financing Instruments Following the Transactions As of September 30, 2009, we had 159.6 million in cash and cash equivalents and 1,699.1 million nominal value of long-term indebtedness outstanding of outstanding indebtedness (net of 251 million of the NRW/Hesse Notes that have been repurchased but not retired), which we expect to refinance pursuant to the Transactions. Interest expense of Unitymedia GmbH and its subsidiaries for the 12 months ended September 30, 2009 was approximately 138 million. On an as adjusted basis after giving effect to the Transactions, our estimated interest expense for the twelve months ended September 30, 2009, would have been approximately 226 million. Following the Transactions, we expect our indebtedness to consist of the following:

approximately 1,430 million and $845 million aggregate principal amount of Senior Secured Notes offered hereby; 665 million under the Senior Notes offered hereby; 80 million undrawn and available under the New Revolving Credit Facility.

For additional information regarding the Notes, see Description of the Senior Secured Notes and Description of the Senior Notes. For additional information regarding the New Revolving Credit Facility, see Description of Other Indebtedness The New Revolving Credit Facility. Cash flow The table below summarizes our cash flow for the nine months ended September 30, 2009 and 2008 and for the financial years ended December 31, 2008, 2007 and 2006. The cash flow data presented below for the nine months ended September 30, 2009 and 2008 and for the financial years ended December 31, 2008 and 2007 are of Unitymedia on a consolidated basis, excluding the Out-of-Region assets. The cash flow data presented below for the financial year ended December 31, 2006 are of Unitymedia on a consolidated basis, including the Out-of-Region assets until the time of sale.
For the nine months ended September 30 2009 2008 For the financial year ended December 31 2008 (in thousands) (unaudited) (audited) 2007 2006

Cash flow from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . Cash flow from/(used in) investing activities . . . . . . . . . . . . . . . . . Cash flow from/(used in) financing activities . . . . . . . . . . . . . . . . . Total cash flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

205,018 (229,715) (30,624) (55,321)

375,988 423,635 81,020 37,542 (157,523) (233,403) (166,945) 29,172 (218,185) (202,354) (131,381) 332,736 280 (12,122) (217,306) 399,450

Cash flow from operating activities Cash flow from operating activities decreased by 171.0 million from a cash inflow of 376.0 million in the nine months ended September 30, 2008 to 205.0 million in the nine months ended September 30, 2009. The inflow in the nine months ended September 30, 2008 included the book value of the proceeds from the sale of the Premiere shares in January 2008. Net of this effect, cash flow from operating activities increased by 73.0 million which is primarily due to 33.7 million cash collection from a year-end 2008 billing run which occurred the first week of January 2009 as well as Unitymedia Cable EBITDA growth and lower interest payments. Cash flow from operating activities increased by 342.6 million from a cash inflow of 81.0 million in the financial year ended December 31, 2007, to a cash inflow of 423.6 million in the financial year ended December 31, 2008. This increase was primarily driven by the book value of the proceeds from the sale of the Premiere shares in January 2008 of 244.0 million as well as the Unitymedia Cable revenue growth and improved EBITDA performance at arena, partially offset by transaction-related tax expenses for Unitymedia Services in the amount of 21.4 million paid in the second quarter of 2008 related to the October 2006 acquisition of Tele Columbus in-region subscribers. Cash flow from operating activities includes interest expenses.

92

Cash flow from operating activities increased by 43.5 million from a cash inflow of 37.5 million in the financial year ended December 31, 2006 to a cash inflow of 81.0 million in the financial year ended December 31, 2007. This increase was driven primarily by Unitymedia Cable revenue growth and improved arena performance after the 2006 start-up, but offset by working capital effects from the revenue recognition of shares of Premiere AG, which were sold in January 2008. The increase in cash flow was also offset in part by an increase in interest expense of 39.5 million, from (116.0) million in the financial year ended December 31, 2006 to (155.5) million in the financial year ended December 31, 2007, due to an increase in the amount of principal outstanding. Cash flow from/(used in) investing activities Cash flow used in investing activities was (229.7) million in the nine months ended September 30, 2009, which primarily represents operating capital expenditures of 179.8 million (including 1.9 million of non-cash capitalized leases), 8.1 million of third party network acquisitions as well as 43.7 million for the purchase of shares in the parent company Unity Media S.C.A. In the nine months ended September 30, 2008, cash flow used in investing activities was (157.5) million, which was primarily due to operating capital expenditures of 151.1 million as well as 48.5 million in the share acquisition of the former Primacom Aachen and Wiesbaden networks, primarily offset by a capital gain of 42.1 million resulting from the sale of Premiere shares above book value in the first quarter of 2008. Cash flow used in investing activities was (233.4) million in the financial year ended December 31, 2008, which consisted primarily of capital expenditures of 233.0 million, including 6.6 million of non-cash capitalized future lease obligations, 3.0 million of asset deal acquisitions and 6.1 million of Aachen and Wiesbaden upgrades, primarily in the fourth quarter of 2008. Cash flow from investment activities also includes investments in the share acquisition of the PrimaCom Aachen and Wiesbaden subsidiaries of 49.1 million, offset by the 42.1 million capital gain portion of the sale of Premiere shares. Cash flow used in investing activities was (166.9) million in the financial year ended December 31, 2007 and consisted primarily of capital expenditures. In the financial year ended December 31, 2006, cash flow from investing activities was 29.2 million, which was primarily due to cash inflows relating to the sale of the Tele Columbus Out-of-Region assets, offset by capital expenditure. For additional information on our capital expenditure, see Capital expenditure and investments. Cash flow from/(used in) financing activities Cash flow used in financing activities was (30.6) million in the nine months ended September 30, 2009, primarily due to the repayment of the NRW/Hesse Revolving Credit Facility in the first quarter of 2009. In the nine months ended September 30, 2008, our cash flow used in financing activities was (218.2) million which primarily reflects open market repurchases of 236.0 million par value NRW/Hesse Notes. Cash flow used in financing activities was (202.4) million in the financial year ended December 31, 2008, primarily due to the open market repurchases of 251 million par value of NRW/Hesse Notes, offset by a net 30.0 million draw on the NRW/Hesse Revolving Credit Facility. Cash flow used in financing activities was (131.4) million in the financial year ended December 31, 2007 primarily reflecting a 55 million repayment on the NRW/Hesse Revolving Credit Facility and the 75 million par value open market buyback of the NRW/Hesse Notes, which were subsequently cancelled. In the financial year ended December 31, 2006 our cash flow from financing activities was 332.7 million which reflects the effects from the 2006 Refinancing, the drawdown of the Term Loan and draw downs on the NRW/Hesse Revolving Credit Facility.

93

Contractual commitments The following table summarizes the financial payments that we will be obligated to make including under our debt instruments as of September 30, 2009 on an as adjusted basis after giving effect to the Transactions. The information presented in the table below reflects managements estimates of the contractual maturities of our obligations. These maturities may differ significantly from the actual maturity of these obligations. The table includes contractual obligations with respect to both the Unitymedia Cable segment and the arena Segment.
Payments due by period (1) Less than 1 Year 1-3 Years 4-5 Years (in thousands)

Office rental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other rental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Network infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Content and copyright fees (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other financial obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long-term debt obligations (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,635 243 99,491 4,493 859 55,040 162,761 226,000 388,761

1,727 144 189,590 4,805 3,215 0 199,482 452,000 651,482

416 5 187,257 345 570 0 188,593 452,000 640,593

(1) We have not included our obligations beyond five years, including with respect to network infrastructure and the Notes. (2) Content and copyright fees are subject to challenge and could increase materially. See Business Intellectual Property and Business Legal Proceedings. (3) Reflects estimated as adjusted interest expense on the Notes offered hereby.

Capital expenditure and investments Our capital expenditure and investments relate primarily to extending or upgrading our network, installation and in-home wiring for new customers, the cost of STBs, smartcards and cable modems rented to our customers. Capital expenditure also includes increases in intangible assets (except our customer list) and do not include financial assets. The table below sets forth our capital expenditure and our capital expenditure ratio (as defined below) for the nine months ended September 30, 2009 and 2008 and for the financial years ended December 31, 2008, 2007 and 2006, on a segment and consolidated basis, as noted.
As of and for the nine months ended September 30 2009 2008 As of and for the financial year ended December 31 2008 2007 2006

(in millions, except percentages) (unaudited) (audited)

Capital Expenditure (1) Unitymedia Cable Segment . . . . . . . . . . . . . . . . . . . . . . . . . arena Segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Capital Expenditure Ratio (2) Unitymedia Cable Segment . . . . . . . . . . . . . . . . . . . . . . . . . arena Segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

187.4 0.5 187.9 27.2% 0.3%

150.3 0.8 151.1 23.9% 0.3%

231.5 1.6 233.0 27.0% 0.4%

171.7 1.8 173.6 23.1% 0.6%

103.9 14.7 118.6 16.3% 18.4%

(1) For the nine months ended September 30, 2008 excludes 48.5 million, and for the financial year ended December 31, 2008 excludes 49.1 million, for the share acquisition of the PrimaCom networks in Aachen and Wiesbaden and, for the nine months ended September 30, 2009, includes 8.0 million for the acquisition of the network of KfGW GmbH and approximately 100,000 for other smaller networks. (2) Capital Expenditure Ratio represents Capital Expenditure as a percentage of total revenue, on a segment basis. In the nine months ended September 30, 2009, the Capital Expenditure Ratio for the Unitymedia Cable segment includes 8.0 million related to the acquisition of the network of KfGW GmbH and approximately 100,000 of other third party network acquisitions. Excluding the network acquisitions in the amount of 8.1 million, the Capital Expenditure Ratio for the Unitymedia Cable segment in the nine months ended September 30, 2009 would have been 26.0 percent. In the financial year ended December 31, 2007, Capital Expenditure Ratio is presented as a percentage of adjusted total revenue, deducting 16.1 million of non-recurring settlement revenue and purchase price accrual releases in the second quarter of 2007 from total revenue at Unitymedia Cable.

94

In the nine months ended September 30, 2009, total capital expenditures amounted to 187.9 million, compared to 151.1 million in the nine months ended September 30, 2008, excluding share acquisitions of the PrimaCom networks in Aachen and Wiesbaden in the amount of 48.5 million. Capital expenditures included core network and other capital expenditures in the amount of 32.9 million in the nine months ended September 30, 2009, compared to 25.7 million in the nine months ended September 30, 2008. Capital expenditures in the nine months ended September 30, 2009 also included 31.5 million of customer premise equipment capital expenditure primarily related to STBs and cable modems rented as part of our digital and broadband cable offerings and a further 50.4 million related to the upgrade of in-home wiring where a specific Retail Broadband Internet or MMA contract was secured, compared to 28.2 million and 46.3 million, respectively, in the nine months ended September 30, 2008. In accordance with EU-IFRS, third-party sales commissions paid for our digital television and broadband Internet access and telephony services with minimum contract periods are capitalized and amounted to 23.6 million in the nine months ended September 30, 2009 (compared to 13.1 million in the nine months ended September 30, 2008). We continued the upgrade of our network during the first nine months of 2009, upgrading an additional approximately 617,000 homes to 862 MHz capacity during the first nine months of 2009 (compared to 882,000 million homes during the first nine months of 2008), with capital expenditure related to such upgrades and node splits of approximately 49.1 million (compared to 36.5 million in the first nine months of 2008). Capital expenditures for arena amounted to 0.5 million in the nine months ended September 30, 2009 (0.8 million in the nine months ended September 30, 2008). In the financial year ended December 31, 2008, total capital expenditures amounted to 233.0 million, excluding share acquisitions of the PrimaCom networks in Aachen and Wiesbaden in the amount of 49.1 million). Capital expenditures included core network and other capital expenditures in the amount of 47.9 million (including 3.0 million of asset deal acquisitions), 38.3 million in customer premise equipment capital expenditure, primarily related to set-top boxes and cable modems rented as part of our digital and broadband cable offerings, and a further 58.5 million related to the upgrade of in-home wiring where a specific Retail Broadband Internet or MMA contract was secured. 67.1 million of our capital expenditures in the financial year ended December 31, 2008 were related to the upgrade and development of our network, including completing certain node splits, other network development and the capitalization of 6.6 million of long-term fiber leases, as approximately 1.6 million additional homes passed were upgraded to bi-directional 862 MHz standard during the course of 2008. In accordance with EU-IFRS, third-party sales commissions paid for our digital and broadband Internet access and telephony services with minimum contract periods are capitalized and amounted to 19.6 million in the financial year ended December 31, 2008. Capital expenditures for arena amounted to 1.6 million in the financial year ended December 31, 2008. In the financial year ended December 31, 2007, total capital expenditures amounted to 173.6 million. Capital expenditures included core network and other capital expenditures in the amount of 35.8 million, 34.5 million in customer premise equipment capital expenditure (as discussed above) and a further 41.8 million related to the upgrade of in-home wiring. Increased capital expenditure, such as customer premises equipment, installation or in-home wiring upgrades or the introduction of a new product, is designed to ensure that minimum return on investment thresholds are met as Unitymedia continues to invest in its market growth opportunities. 52.9 million of our capital expenditures in the financial year ended December 31, 2007 were related to the upgrade and development of our network as approximately 2.0 million homes were upgraded to a bi-directional 862 MHz standard during the course of 2007. In accordance with EU-IFRS, third-party sales commissions paid for our digital and broadband Internet access and telephony services with minimum contract periods are capitalized and amounted to 6.8 million in the financial year ended December 31, 2007. Capital expenditures for arena amounted to 1.8 million in the financial year ended December 31, 2007. In the financial year ended December 31, 2006, capital expenditures related to upgrading approximately 1.9 million homes passed on our network to a bi-directional 862 MHz standard and new customer connections amounted to 37.7 million. Core network and other capital expenditures amounted to 22.3 million in the financial year ended December 31, 2006. Customer premise equipment capital expenditure of 18.4 million related to STBs and cable modems rented as part of our digital and broadband cable offerings and a further 21.9 million related to the upgrade of in-home wiring. In accordance with EU-IFRS and IFRS, third-party sale commissions paid for our digital and broadband Internet access and telephony services with minimum contract periods are capitalized and amounted to 3.6 million in 2006. Capital expenditures for the start-up and development of arena amounted to 14.7 million in the financial year ended December 31, 2006.

95

As of September 30, 2009, our capital expenditures to date during the current financial year amounted to 187.9 million and primarily related to customer premises equipment (39.5 million), installation and in-home wiring (38.2 million), network and platform growth (32.9 million) and upgrades of our network (49.1 million). Our capital expenditures have historically been higher in the fourth quarter than in other quarters. A significant portion of our capital expenditures is success-based, meaning that we make the majority of capital expenditures after acquiring the customer, and therefore is incurred in line with subscriber growth. Accordingly, our planned future capital expenditures could increase or decrease depending on changes in subscriber growth. Off-Balance Sheet Arrangements We are not a party to any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditure or capital resources, except with respect to our currency and interest rate hedging. Qualitative and Quantitative Disclosure of Market Risk Currency risk Our reporting currency is the euro. Historicially, Unitymedia GmbH and its subsidiaries have had no revenues, and few expenses or liabilities, that are denominated in currencies other than the euro, except for the U.S. dollar portion of the July 2005 Senior Notes. As the proceeds from the July 2005 Senior Notes were loaned to Unitymedia Hessen (the Proceeds Loan), Unitymedia Hessen hedged the entire amount of the U.S. dollardenominated Proceeds Loans into euros for the lifetime of the July 2005 Senior Notes so that interest payments and the payment of the principal amount could effectively be made in euros, and Unitymedia is not subject to foreign currency exchange risk. With respect to the July 2005 Senior Notes, on July 13, 2005, Unitymedia GmbH entered into a hedge agreement swapping U.S.$151.0 million in principal and the associated interest payments into euro-denominated principal and interest payments at a fixed rate over the lifetime of the July 2005 Senior Notes, the fair value of which as of September 30, 2009 was (28.2) million. Following the Acquisition, our policy is expected to be to match operational currency to debt where possible. To this end, we expect to hedge any Dollar Senior Secured Notes into euro so that interest payments and the payment of the principal amount may effectively be made in euros and to limit our exposure to foreign currency exchange risk. In the future, if we incur additional debt denominated in other currencies, such as dollar denominated bank or bond debt, we expect to continue with our policy to mitigate currency risk and, as such, could incur additional hedging costs. Interest rate risk Historically, the exposure of Unitymedia GmbH and its subsidiaries to market risk for changes in interest rates relates primarily to its floating rate debt obligations. Unitymedia GmbH and its subsidiaries have had interest rate risk on the NRW/Hesse Notes, the NRW/Hesse Revolving Credit Facilities and the Term Loan to the extent these obligations are not interest rate hedged. Following completion of the Transactions, we expect to have floating rate debt obligations only in respect of the New Revolving Credit Facility. We may enter into interest rate swaps with respect to these obligations. In the future, we may hedge against the exposure to interest rate risk that we may incur from time to time on other borrowings. As of September 30, 2009, Unitymedia GmbH and its subsidiaries had 800.0 million of interest rate swaps outstanding for the NRW/Hesse Notes and the Term Loan until April 30, 2011 at a swap rate of 3.35 percent. The fair value of the interest rate swap as of September 30, 2009 was (26.7) million. Unitymedia GmbH and its subsidiaries have not entered into any interest rate hedging for the NRW/Hesse Revolving Credit Facilities or the Term Loan. Following consummation of the Transactions, we expect to enter into, or maintain, interest rate swaps to hedge our interest rate exposure and manage our capital structure. With respect to fixed rate debt, changes in interest rates generally affect the fair value of the debt instrument but not our earnings or cash flows. For EU-IFRS purposes Unitymedia GmbH values the fixed rate debt at amortized cost, which does not necessarily reflect its fair value. Interest expense of Unitymedia GmbH and its subsidiaries for the 12 months ended September 30, 2009 was approximately 138 million. On an as adjusted basis after giving effect to the Transactions, our estimated interest expense for the 12 months ended September 30, 2009 would have been approximately 226 million.

96

Impact of inflation A portion of our costs are affected by inflation. We attempt to restrict increases in our costs below the rate of inflation through productivity improvements and capital expenditure. However, general inflation affects costs for our competitors and us. Accounting and Valuation Methods Critical management assumptions The following critical management assumptions have been made by management regarding the accounting and valuation methods. References herein refer to Notes to the Financial Statements:

The Company has rental contracts for using cable ducts. The rental contracts are based on a long term basis (up to 30 years). However the Company did not capitalize those cable ducts as finance leases because the cable ducts are not used by the Company alone. Therefore the cable ducts do not fulfill the requirements as a specific asset according to IFRIC 4. The Company is obliged to remove network equipment and infrastructure after the expiration of rental contracts. However no asset retirement cost has been included as a provision, because the probability of paying this asset retirement cost has been assessed as remote. Customer contracts acquired through the purchase of the shares of Unitymedia Hessen, Unitymedia NRW, Unitymedia Aachen and Wiesbaden and Tele Columbus In-Region-assets are depreciated on a basis of 10 to 20 years. The estimated useful life is based on the estimated contractual period with the customers. As of December 31, 2008, such customer contracts amounted to 635 million (2007: 685 million). The Company offers products that contain signal delivery and the right to use hardware devices (CPE). The hardware devices are essential for the signal delivery to the customer. Since the fulfillment of these arrangements is dependent on the use of a specific asset and the arrangements convey a right to use the asset, the contracts qualify as a lease with Unitymedia qualifying as a lessor. Certain management received options on the shares of Unitymedia and Unity Media S.C.A respectively, which have effectively been exchanged for Class B shares of Unity Media S.C.A. Further grants of B shares have been granted to management and members of the board of Unity Media S.A. The vesting of the shares depends on time vesting and/or the achievement of certain performance criteria. The options have been valued using the Black Scholes Model for the time vesting options and the Binomial Model for the Performance vesting options through July 2009. In August 2009, the Company changed certain vesting conditions and the valuation thereof as further described in Note 12 to our interim financial statements for the nine months ended September 30, 2009. The main parameters of these models are the expected volatility, the estimated term of the options and the risk free interest rate on the grant date. For further information, see such note as well as Note 24 to our consolidated financial statements for the financial year ended December 31, 2008. arena has sublicensed the Bundesliga Rights for Season 2 (2007/08) and Season 3 (2008/09) of DFL to Premiere in exchange for 16.4 million shares of Premiere in February 2007 and additional cash payments. The revenues (as well as the expenses for the Bundesliga Rights to the DFL) for the respective seasons are realized on a proportional basis based on the number of games in the respective season. The shares of Premiere have been classified as available for sale securities. These were measured with their fair market value as of December 31, 2007 by including the difference between the fair market value and the purchase price within a separate component of equity (Unrealized earnings). In 2008 all shares of Premiere hold by the Company have been disposed of. As a result of the sale cash inflow of 286.1 million was realized. In the cash flow statement the 244.0 million book value of the shares is recognized in cash flow from operating activities as the shares were originated from operating activities. The 42.1 million gain from the increase in the fair value of the shares during the holding period is recognized in cash flow used in investing activities as the gain is not incurred by operating activities.

We make estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. Assumptions are made based on managements current

97

understanding of facts and circumstances and managements evaluation of the economic environment, which are subject to change. Estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below:

Goodwill is tested for impairment on an annual basis by using discounted cash flow approaches which discount expected future cash flows. The estimate of future cash flows, discount rates and growth rates is based on assumptions with a relatively high uncertainty. Goodwill recognized as of December 31, 2008 was 581.5 million. If actual cash flows in future years were to differ by ten percent from managements estimates, we would not need to adjust goodwill. For further information, see Note 16 to our consolidated financial statements for the financial year ended December 31, 2008. We are subject to income taxes. Significant judgment is required in determining the provision for income taxes as well as the amount of loss carry forwards available. There are many transactions and calculations for which the ultimate tax determination is uncertain. We adjust the available loss carry forwards and recognizes liabilities for anticipated tax audit issues when they become likely. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made. We recognize deferred tax assets net of any existing tax loss carry forwards based on certain assumptions about our future performance and events as well as our forecast of taxable income from the operating business. Were the actual final outcome (on the judgment areas) or actual cash flows in future years to differ from managements estimates, we might need to adjust the capitalized deferred taxes. The book value of capitalized tax assets on tax loss carryforwards as of December 30, 2008 was 161 million.

Special accounting and valuation methods Property, plant and equipment Property, plant and equipment are measured at initial cost after deducting any accumulated depreciation or accumulated impairment losses. Impairment losses are reversed if the reasons for the impairment loss no longer exist or the impairment loss has decreased. The initial cost comprises its purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Borrowing costs, if applicable, are recognized as expenses in the period they are incurred and are not capitalized within the initial cost. Property, plant and equipment is generally amortized on a straight line basis over a period of three to 23 years. The cable network has an estimated useful life ranging from 15 to 20 years. The cable network infrastructure comprises technical equipment with estimated useful life ranging from eight to 15 years. The estimated useful lives are reviewed on an annual basis. Adjustments are recognized at the new basis going forward. Property, plant and equipment is impaired when there is a corresponding indication for the impairment. Impairment exists when the carrying value exceeds the recoverable amount. The recoverable amount is the higher amount between fair value less costs to sell and value in use. The impairment test is generally based on a single asset. Subsequent costs are included in the assets carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will be achieved and when the cost can be measured reliably. The carrying amount of the replaced item is derecognized. All other expenditures for repairs and maintenance are expensed as incurred. Profits and losses due to disposals are recognized within other income or expenses, respectively. Intangible assets Intangible assets acquired in a separate acquisition are measured at initial cost. Intangible assets acquired within a business combination are measured at fair value. Internally developed software is capitalized and measured at initial costs, if certain requirements are fulfilled.

98

The amortization of intangible assets with definite useful lives is based on the straight line method over the assets estimated useful life (1 to 15 years). Amortization begins when the asset is ready for use. The estimated useful life of customer contracts is based on the average number of terminations or churn or if shorter the remaining contract terms with the Suppliers who have the contractual relationship with the subscriber units (Gestattungsvertrge). Customer contracts acquired within a business combination are amortized generally over ten to 20 years. Unitymedia recognizes subscriber acquisition costs incurred to obtain new subscribers as an intangible asset if the costs directly attributable to obtaining specific contracts are incremental, payable to a third party, can be measured reliably and meet the definition and recognition criteria of an intangible asset in accordance with IAS 38. Unitymedia amortizes these costs over the initial contract period, which lasts from one to two years. Goodwill and other intangible assets with an indefinite life are not amortized on a straight line basis but tested for impairment on an annual basis. Straight line amortization and impairment losses are presented within depreciation and amortization expenses in the income statement. The estimated useful lives are reviewed on an annual basis. Adjustments are recognized prospectively at the new basis going forward. The impairment test of goodwill is done based on the respective cash generating units. The cash generating units are determined by the operating segments Unitymedia Cable and arena Satellite and Broadcasting. Profits and losses due to disposals are recognized within other income or expenses, respectively. Leasing Lease contracts according to IAS 17 can be divided into operating lease contracts and finance lease contracts. In the case of finance leases, the main risks and rewards are allocated to the lessee and therefore the leased asset has to be capitalized in the financial statements of the lessee. Assets leased under finance leases are recorded at the lower of fair value at the inception of the lease or the present value of the lease payments. The assets are depreciated using the straight line method over the shorter of the estimated useful life or over the lease period. The obligations related to future lease payments are recognized as liabilities. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. A lease is accounted for as an operating lease if the main risks and rewards incidental to ownership of the leased item remain with the lessor. Operating lease payments are therefore recognized as incurred. During 2008, finance leases for broadband cable network fiber upgrades were capitalized. In order to receive digital television and broadband services, Unitymedia leases the necessary CPE to customers. These leases for which the Company is the lessor, are classified as an operating lease. Therefore, Unitymedia capitalizes the CPE as fixed assets based on the acquisition cost. The CPE is depreciated over the estimated useful life of 3-8 years with the customer, using the straight line method. Inventories Inventories are measured at the lower of cost or net realizable value. Cost of inventories is determined using the weighted average cost method. Net realizable value is the estimated selling price in the ordinary course of business, less applicable variable selling costs.

99

Financial assets Classification We classify our financial assets in the following categories: at fair value through profit or loss, loans and receivables, and available for sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

Financial assets at fair value through profit or loss: which are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the shortterm. Derivatives are also categorized as held for trading unless they are designated as hedges; Loans and receivables: which are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. Our loans and receivables comprise trade and other receivables and cash and cash equivalents in the balance sheet; and Available-for-sale securities: which are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date.

Recognition and measurements Regular purchases and sales of financial assets are recognized on the trade-date the date on which we commit to purchase or sell the asset. Investments are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognized at fair value, and transaction costs are expensed in the income statement. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and we have transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are carried at amortized cost using the effective interest method. Gains or losses arising from changes in the fair value of the financial assets at fair value through profit or loss category are presented in the income statement within financial income/expenses in the period in which they arise. We assess at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered as an indicator that the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in profit or loss is removed from equity and recognized in the income statement. Impairment losses recognized in the income statement on equity instruments are not reversed through the income statement. Derivative financial instruments and hedging activities Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. We designate certain derivatives as either:

hedges of the fair value of recognized assets or liabilities or a firm commitment (fair value hedge); or hedges of a particular risk associated with a recognized asset or liability or a highly probable forecast transaction (cash flow hedge).

We document at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. We also document our assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

100

The fair values of derivative instruments used for hedging purposes are disclosed in Note 25 to the consolidated financial statements for the financial year ended December 31, 2008. Movements on the hedging reserve in shareholders equity are shown in the Consolidated Statement of Changes in Equity. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining hedged item is more than 12 months, and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified as a current asset or liability. Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any these derivative instruments are recognized immediately in the income statement within financial income / expenses. Fair value hedge Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. We only apply fair value hedge accounting for hedging currency risks on borrowings. The gain or loss relating to the effective portion of interest rate swaps hedging fixed rate borrowings is recognized in the income statement within finance expenses. The gain or loss relating to the ineffective portion is recognized in the income statement within financial income / expenses. Changes in the fair value of the hedge fixed rate borrowings attributable to interest rate risk are recognized in the income statement within finance expenses. If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortized to profit or loss over the period to maturity. Cash flow hedge The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in equity. The gain or loss relating to the ineffective portion is recognized immediately in the income statement within financial income / expenses. Amounts accumulated in equity are recycled in the income statement in the periods when the hedged item affects profit or loss (for example, when the forecast sale that is hedged takes place). The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognized in the income statement within finance expenses. The gain or loss relating to the ineffective portion is recognized in the income statement within financial income / expenses. When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognized when the forecast transaction is ultimately recognized in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement within financial income / expenses. Trade receivables Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that we will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. If permitted, trade accounts receivables are tested for bad debt expense on a portfolio basis. The portfolios comprise receivables with similar risk factors. Bad debt expense ratios are determined based on aging of the receivables and past experience of losses of receivables at certain aging levels. The amount of the provision is the difference between the assets carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognized in the income statement within other expenses. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against other income in the income statement. Cash and cash equivalents Cash and cash equivalents comprise cash at banks, cash in transit, checks and cash pledged as collateral.

101

Bonds and bank liabilities Bonds and bank liabilities are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the income statement over the period of the borrowings using the effective interest method. Trade payables Trade payables and other liabilities are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method. Employee benefits Defined contribution plans Defined contribution plans are post-employment benefit plans under which an enterprise pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further contributions. Defined contributions exist for former employees of Deutsche Telekom who qualify as civil servants and are currently employed at Unitymedia NRW and Unitymedia Hesse. A monthly consideration is paid without any further obligation for the respective entities. Such contributions are recognized in personnel expenses. As of December 31, 2008, 192 employees (as of December 31, 2007: 196 employees) participated in this defined contribution plan. Defined benefit plans Defined benefit plans are post-employment benefit plans other than defined contribution plans. Defined benefit plans exist for certain employees within the Unitymedia Group, who were with Deutsche Telekom prior to the sale of cable networks to Unitymedia NRW and Unitymedia Hesse, but are not civil servants. The valuation of the defined benefit plans is based on the projected unit credit method including several assumptions and expectations regarding increase of salary, increase of pension payments, fluctuation and mortality rate. The rate of mortality is based on the schedules of mortality of Mr. Heubeck (Heubeck Richttafeln 2005). The accrual of the defined benefit liability is presented completely within personnel expenses. As of December 31, 2008, 180 employees (as of December 31, 2007: 181 employees) participated in this defined benefit plan. The defined benefit liability does not include the actuarial gains or losses within a ten percent corridor based on the defined benefit obligation according to IAS 19. Only when the actuarial gains or losses exceed the ten percent corridor, the exceeding amount is amortized over the remaining service period. According to IFRS 1, no actuarial gains or losses were recognized at the transition date as of January 1, 2005 (fresh start method). Beginning with this point in time the ten percent corridor has been applied. Early retirement agreements Employees of certain entities are, in certain cases, offered early retirement agreements. The valuation of the provision is based on the total of claims received from employees requesting termination payments or payments due to services performed. If the employees have the opportunity to enter an early retirement agreement without having concluded a contract at the reporting date, the valuation of the provision is based on assumptions regarding the likelihood of an agreement in future. Share-based compensation We operate a number of equity-settled, share-based compensation plans, under which the entity receives services from employees as consideration for our equity instruments (options). The fair value of the employee services received in exchange for the grant of the options is recognized as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted, excluding the impact of any non-market service and performance vesting conditions (for example, profitability, sales growth targets and remaining an employee of the entity over a specified time period). Non-market vesting conditions are included in

102

assumptions about the number of options that are expected to vest. The total amount expensed is recognized over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At each balance sheet date, the entity revises its estimates of the number of options that are expected to vest based on the non-marketing vesting conditions. It recognizes the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised. Termination benefits Termination benefits are payable when employment is terminated by us before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. We recognize termination benefits when we are demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the balance sheet date are discounted to their present value. Provisions Provisions are liabilities of uncertain timing and/or amount. A provision is recognized when an enterprise has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Revenue recognition Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of our activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating intercompany sales within the group. We derive revenues from six main business activities: our analog and digital basic cable television business, Pay TV business, Internet business, Telephony (including subscription and usage fees), carriage fees and arenaSAT. Revenue generated by the delivery of analog and digital access products, Internet and Telephony services, Digital TV Pay subscriber fees, as well as carriage fees paid by television broadcasters, are recognized when services have been provided, the costs incurred can be measured reliably and the Company is not obliged to provide any future services. Prepayments are accounted for by deferring the received payments and amortizing them straight-line over the service period. When free months are offered to customers in relation to a subscription, the Company recognizes the total amount of billable revenue in equal monthly installments over the term of the contract provided that the Company has the enforceable and contractual right to deliver the customer with the products after the promotional free month period. If free months are given without a contract at the beginning of a subscription period, the Company does not recognize revenues during the free months as the customers continuance is not assured. Installation fees are realized as incurred matched by related internal handling and activation costs for new customers. Sublicensing fees are realized for the sublicensing of the Bundesliga Rights to Premiere by arena. The revenue (as well as the expenses to DFL) is realized on a proportional basis based on the number of games within the respective season. Interest income Interest income is recognized on a time-proportion basis using the effective interest method. When a receivable is impaired, Unitymedia reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income on impaired loans using the original effective interest rate.

103

Royalty income Royalty income is recognized on an accrual basis in accordance with the substance of the relevant agreements. Income taxes Current taxes Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities at undiscounted value. The tax rates and tax laws used to compute the amounts are those that are (substantively) enacted as of the balance sheet date. Deferred taxes Generally deferred taxes are recognized for any temporary differences between the tax base and the IFRS base, except on goodwill which is not recognized for tax purposes. Deferred tax assets are recognized for deductible temporary differences and tax loss carry forwards, if it is probable that future taxable profits will be available against which the unused tax losses or temporary differences can be utilized. However deferred tax assets are not recognized if the deferred tax asset arises from the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction affects neither accounting profit nor taxable profit. The recoverability of the carrying value of deferred taxes is determined by future taxable profits and assessed on an annual basis. If it is no longer probable that enough future taxable profits will be available against which the unused tax losses or temporary differences can be used, an impairment in a corresponding amount is recognized on the deferred tax assets. Deferred taxes are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates that have been (substantively) enacted by the balance sheet date. Deferred taxes must not be discounted. Deferred taxes are presented within long term assets and liabilities. If the changes in the value of assets or liabilities are recognized in a separate component of equity, the change of value of the corresponding deferred tax assets and liabilities are also recognized in this separate component of equity (instead of income taxes).

104

INDUSTRY OVERVIEW The information presented in this section has been derived from several sources, as there is no single industry report or other source that covers all of the areas in which we conduct operations. We have derived information from third-party sources. See Presentation of Financial and Other InformationThird-Party Information for more information. Our Footprint We operate our cable business in the federal states of North Rhine-Westphalia and Hesse. The two federal states have a population and combined households of 24.1 million and 11.5 million respectively and, together, would constitute the 6th largest economy in the European Union as measured by GDP. North Rhine-Westphalia and Hesse are home to ten of the 20 largest cities in Germany including Cologne, Essen, Dortmund, Dusseldorf and Frankfurt. These federal states are amongst the most prosperous regions in Germany, characterized by comparatively high GDP per capita and population density. (Sources: Federal Statistical Office of Germany, Hessian Statistics Office, North Rhine-Westphalia Statistics Office and World Bank). North Rhine-Westphalia, which is the largest federal state with a population of 18.0 million, is a leading industrial region and an important international economic and technology center, while Hesse with a population of 6.1 million is home to one of the largest financial centers in Europe. (Sources: Hessian Statistics Office and North Rhine-Westphalia Statistics Office). Cologne, the home of our head office, is one of Germanys main television hubs with broadcasters such as the RTL Group (the RTL Group) and Westdeutscher Rundfunk and is also an important media and multimedia production center. High population density reduces the overall cost associated with the deployment, operation and maintenance of cable infrastructure and allows for more efficient marketing. Cable operators which operate in urban areas with high population density benefit from easier access to customers and more cost effective network upgrades and maintenance. Higher disposable income translates into relatively higher spending on media and communications services. Furthermore, in North Rhine-Westphalia and in Hesse, approximately ten percent and 12 percent, respectively, of the population are foreigners, making the market particularly attractive to content providers that provide specifically tailored foreign-language digital pay TV programming. (Sources: Hessian Statistics Office and North Rhine-Westphalia Statistics Office).
North Rhine-Westphalia 2006 2007 2008 2006 Hesse 2007 2008 2006 Germany 2007 2008

Population (in millions) . . . . . . . . . . . . . . Density (population/km2) (1) (2) (3) . . . . . . GDP (in billion) . . . . . . . . . . . . . . . . . . . GDP/capita (in ) . . . . . . . . . . . . . . . . . . . Population breakdown (in millions) German citizens . . . . . . . . . . . . . . . . Foreign nationalities . . . . . . . . . . . .

18.029 529 503 27,888 16.115 1.914

17.997 528 525 29,156 16.089 1.908

17.993 528 541 30,172 16.046 1.887

6.075 288 208 34,267 5.339 0.736

6.073 288 215 35,434 5.345 0.728

6.065 287 221 36,408 5.343 0.722

82.315 231 2,322 28,203 75.059 7.256

82.218 230 2,423 29,469 74.961 7.257

82.002 230 2,492 30,390 74.816 7.186

Sources: Federal Statistical Office of Germany, Hessian Statistics Office, North Rhine-Westphalia Statistics Office. (1) (2) (3) North Rhine-Westphalia is an area of 34,086 km2. Hesse is an area of 21,115 km2. The Federal Republic of Germany covers an area of 357,104 km2.

Industry Convergence The media and communications market is progressively characterized by convergence as customers are increasingly looking to receive their media and communications services from one provider at attractive prices. In response, service providers are providing digital television, broadband Internet access and telephony services bundled into integrated, or triple play, offerings. Offering bundled services allows media and communications service providers to meet customers communication and entertainment requirements and increase customer loyalty as the value proposition of the offering is enhanced, while at the same time lowering churn.

105

German cable operators are well positioned to benefit from these convergence trends as they increasingly upsell broadband Internet access, telephony, access to a large number of free TV channels and Pay TV services to their existing basic cable television customer base. The German television subscription market size in 2008 is estimated to be 2.8 billion (Source: Screen Digest Ltd.) compared to 5.5 billion for the fixed Internet broadband access market and 16.1 billion for the fixed-line telephony market including traditional voice and VoIP (Source: IDC). The Internet broadband access and telephony markets therefore offer an opportunity that is a multiple in size compared to the television subscription market cable operators traditionally focused on. In the German market, there are principally two major distribution platforms through which triple play services are provided: cable and DSL. Cable networks upgraded to a bi-directional, 862 MHz standard are particularly suited for the provision of triple play services with high bandwidth requirements due to their network characteristics. As they were originally designed for transmission of large data amounts, cable networks are able to deliver consistent speeds irrespective of the distance to the customer, unlike other distribution platforms. While the DOCSIS 2.0 standard can provide speeds of approximately 50 Mb/s, the new DOCSIS 3.0 broadband technology will allow speed levels of 100 Mb/s and above, which currently cannot be matched by DSL without deep fiber deployment or only at comparatively less attractive economics. End-to-end network ownership is a key advantage for cable operators to provide their services cost-effectively, design their services according to market demand and accelerate time-to-market. Cable operators are at the forefront of providing integrated, triple play services due to the ability to bundle existing TV services with broadband and telephony, where upgraded, as their networks are particularly suited for bi-directional high speed data transfer. In addition, cable operators large basic cable television customer bases provide an opportunity to up-sell digital, broadband and telephony services to such customers. DSL-based competitors such as Deutsche Telekom and Vodafone, need to upgrade their respective infrastructures to at least ADSL2+ and ideally VDSL to offer integrated triple play services at a quality level comparable to cable operators. In 2007, Deutsche Telekom announced its intention to roll-out VDSL to a total 50 cities by the end of 2008. As of August 2009, Deutsche Telekom announced that it had equipped 50 towns and cities with VDSL, offering transmission speeds of up to 50 Mb/s. (Source: Deutsche Telekom press release) German Television Market Introduction The German television market is the largest in Europe, with approximately 37.7 million television homes according to SES Astra and a combined cable, satellite and terrestrial penetration rate of approximately 94.1 percent based on approximately 40.1 million households. (Source: Federal Statistical Office of Germany). Similar to other European markets television consumer behavior in Germany is starting to put more emphasis on digital, innovative, high definition and interactive television services such as video on demand requiring highbandwidth, bi-directional distribution platforms. Although digital TV penetration is currently still low, cable is well positioned to benefit from the growth opportunities arising from these new services given its network characteristics. Television Content Providers Basic Television The German broadcasting market is characterized by a relatively large availability of free television channels. The free television offering is dominated by two broadcasting groups including public broadcaster groups and major commercial broadcasters. Within the public sector, there are two national broadcasting groups (ARD and ZDF), which provide a variety of nationwide programs. Public broadcasters are predominantly financed through statutory fees, called GEZ Gebhren. GEZ (Gebhreneinzugszentrale der ffentlich-rechtlichen Rundfunkanstalten in der Bundesrepublik Deutschland) is a fee collection organization of public broadcasting institutions in Germany. Public broadcasters are also permitted to sell a certain amount of advertising airtime, which is, however, subject to significant restrictions. The commercial sector is dominated by two groups of broadcasters, RTL and ProSiebenSat.1. The commercial broadcasters finance themselves predominantly through the sale of advertising. Their ability to generate advertising revenue is affected by regulatory restrictions that are more lenient than those applied to the public broadcasters.

106

Both public and commercial broadcasters in Germany currently pay carriage fees to cable operators for the transmission and distribution of analog and digital television and radio signals via their network. Premium Television The German premium television market is less developed than other European premium television markets. According to Screen Digest, digital pay TV penetration in Germany was at 15.8 percent of total television households, compared to 37.6 percent in France and 50.1 percent in the UK. Historically, the key reasons for the underdevelopment of the German premium television market have been the availability of a large variety of free television programming and a reluctance in the market to move from analog to digital transmission. However, three main developments are viewed to provide stimulation to the German premium television market in the medium- to long-term. First, content providers are increasingly interested in offering their content within the premium television segment to maximize their revenue and diversify their exposure away from the more volatile advertising revenue in the free television segment, particularly given the advertising market volatility in recent years. Commercial broadcasters such as RTL are increasingly encrypting part of their content and making it available through pay television platforms. Second, German cable operators, with support from regulators, are focused on migrating their television customer base from analog to digital reception, which is viewed as a precondition to up-sell premium television packages and the basis for enhanced functionalities associated with premium television such as VoD and interactive TV. Third, the audience is undergoing a generational shift towards a digital and interactive way of consuming TV content. The following table illustrates the actual and projected digital television penetration rates in key European countries for 2008 and 2011, respectively.
2008 2011 (in percent)

Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . UK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Switzerland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Source: Screen Digest Ltd.

48.2 67.3 87.9 81.8 63.4 48.8 28.5

65.4 99.3 99.2 95.0 93.3 76.3 47.3

Sky Deutschland, formerly branded Premiere, has historically been the major pay television operator in the German market with a comprehensive premium content offering. Sky Deutschland distributes its pay television offerings through both cable and satellite platforms on the basis of carriage and transponder lease agreements, but does not operate its own distribution network. News Corporations investment in Sky Deutschland and its management involvement has highlighted the potential of the German premium television market and represents a significant step in its further development. In recent years, cable operators like Unitymedia and Kabel Deutschland have successfully entered the premium cable television market on the back of popular content offerings, including Hollywood movies, premium sports content (including live Bundesliga), adult entertainment and international channels primarily targeted at foreign communities. Premium television is an important growth driver for German cable operators. Distribution Platforms Television signal distribution platforms in Germany include cable networks, satellite and terrestrial systems. TV signals are also distributed as IPTV signal. As of December 31, 2008, approximately 18.5 million, or 49.0 percent, of German television homes used cable as their primary means for receiving television signals. Satellite was used in approximately 16.2 million, or 43.0 percent, of German television homes, and terrestrial transmission systems were used in approximately 2.8 million, or 7.3 percent, of German television homes. (Source: SES Astra) Although German cable operators have implemented price increases and harmonized their rate-cards over the last three years, cable market share has remained relatively stable and increased in 2008 compared to 2007. Given the importance of convergence and the trend toward bundled offerings, cable market share in TV signal distribution is expected to further benefit from its ability to deliver triple play services.

107

The following table illustrates the development of market shares of cable, satellite and terrestrial distribution of television signals in Germany for the period from 2006 to 2008.
2006 2007 (in percent) 2008

Cable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Satellite . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Terrestrial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TV over DSL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

49.8 45.0 5.1 0.1

48.4 45.1 6.2 0.1

49.0 43.0 7.3 0.7

Source: SES Astra SA

Cable Germany is the largest cable television market in Europe with approximately 29.4 million homes passed by cable and approximately 18.5 million homes connected to cable networks as of December 31, 2008. Cable television is the most commonly used transmission medium for television services in Germany with a penetration rate of approximately 62.9 percent of homes passed (Source: SES Astra and Screen Digest Ltd.). Cable is a ubiquitous television distribution platform as approximately 73 percent of German households are passed by cable networks. Cable network services are characterized by easy-to-use technology, efficient installation of customer equipment and reliability of a protected signal delivered directly to the home. Unlike in the case of services provided via satellite platforms, cable television subscribers have the additional benefit of customer services provided ensuring a point of contact with the cable service provider. Cable network operators generate revenues principally from relationships with customers which pay subscription fees for the services provided. Basic cable services are typically included in utility fees. In addition, cable operators are compensated by broadcasters which pay carriage fees for the transmission and distribution of their television and audio signals via their networks. The structure of the German cable network has been strongly influenced by historical factors. The most important of these factor was the former monopoly position of Deutsche Telekom and its predecessors, which permitted Deutsche Telekom to control the implementation of the build-out of the cable network and of telecommunications services, generally, in Germany. Deutsche Telekom sold off its cable infrastructure from 2003 onwards. The cable market has been progressively consolidated since 2004. In recent years, there has generally been an increasing consolidation trend between operators, led by Unitymedia removing the historically prevailing vertical fragmentation. The acquisition of Tele Columbus by Unitymedia in December 2005, the subsequent sale of the Out-of-Region assets by Unitymedia to Orion Cable and Kabel Baden-Wrttemberg in 2006, and the acquisition of certain Orion Cable assets by Kabel Deutschland in September 2007 resulted in additional direct access to end-users. (See Managements Discussion and Analysis of Financial Condition and Results of Operations Key Factors Affecting Our Results of Operations Acquisitions and divestitures). Direct access to end-users allows operators like Unitymedia to better serve their customers, by identifying and fulfilling demand for specific products and services on a local basis and enabling a successful roll-out of premium cable television, Internet access and telephony services directly to end-consumers. Satellite A major competitive force in the German television market is satellite television, which can be divided into three types of access: (i) free to air (FTA) satellite, (ii) satellite master antenna television systems (SMATV), and (iii) premium satellite television. With respect to FTA satellite, residential subscribers in single or small dwelling units may install a satellite receiver to view a large number of programs without paying subscription fees. With respect to SMATV, Level 4 operators and in certain cases larger housing associations may install a satellite receiver and headend equipment to provide satellite television to their subscribers or tenants, as the case may be, on a shared access basis. In this case, the Level 4 operator or the housing association will not incur ongoing subscription fees but may pay copyright fees to broadcasters and collecting societies and charge certain fees to their subscribers or tenants. Residential subscribers must also install a satellite receiver when they subscribe to premium television via satellite, in particular Premiere or arenaSAT.

108

Satellite operators, such as SES Astra and Eutelsat, distribute analog and digital signals nationally via satellite directly to television viewers. To receive programming distributed via satellite, viewers need a satellite dish and a satellite receiver, and, for digital channels, an STB. Viewers also require a smartcard for premium cable television services distributed via satellite. Satellite providers do not have any relationships with end customers in Germany and, consequently, do not receive any subscription or other fees from them. If applicable, satellite customers are charged premium television subscription fees directly by the providers of such programs. For tenants in single- or multiple-dwelling, the property owner or the housing association usually decides whether to use cable or satellite. Due to structural damage, zoning laws and the unsightly nature of satellite dishes, many property owners and housing associations have contractually prohibited tenants from installing satellite dishes, through negative covenants in their tenants leases. We believe that satellite has the following disadvantages compared to cable:

the installation of a satellite dish, as compared to the plug-and-play convenience of cable; the lack of an ongoing maintenance service, which cable network operators offer to their subscribers; the susceptibility of satellite reception to external interferences, such as adverse weather conditions; the inability to deliver easy to handle triple play services via satellite given the lack of an integrated return path signaling; zoning laws and contractual arrangements with property owners that prohibit the installation of a satellite dish (although such restrictions may loosen in the future as a result of EU regulations); and the higher up-front cost of procuring and installing a satellite-based solution.

We believe that the principal advantages of receiving television signals via satellite compared to cable are:

lower cost over time, given that the initial cost of purchasing a satellite dish is offset by the absence of recurring subscription fees; satellites almost universal coverage across Germany, including remote and rural areas where a cable connection is not available; and a broader offering of free-to-air (FTA) channels.

Terrestrial Other television delivery media include analog terrestrial television and DVB-T. Analog terrestrial television has recently been terminated in Germany. The DVB-T format increases the number of available channels (to between 18 and 24) but, similar to satellite, does not allow for the provision of enhanced bi-directional functionalities given the lack of a return path. Because the transmission footprint of DVB-T is smaller than that of analog terrestrial television, more towers are required to cover the same geographic area, which increases the cost of transmission. The terrestrial transmission infrastructure is owned and operated by Media Broadcast, a subsidiary of the TDF Group. First DVB-T efforts were already launched in 2003 and initially supported by the German state media authorities as a means to provide more channels on terrestrial television. However, on a number of occasions since 2005, European Union regulators prohibited German state media authorities from funding commercial TV programs on DVB-T, on the grounds that subsidies granted to commercial broadcasters for the use of the network were against the European common market and unfair to cable and satellite operators. Video and Television Distribution Over the Internet As a consequence of improvements in Internet access and data transmission technologies, in particular DSL technologies, the Internet is increasingly being used as a platform for the distribution of IPTV and VoD services and, in particular, VDSL services. The growth of deliverable speeds via DSL, the fiber-to-the-street and fiber-to-the-home (FTTH) technologies have allowed new competitors to enter the market. According to Screen Digest, as of December 31, 2008, there were 437,500 active IPTV customers, representing 1.2 percent of total TV households in Germany.

109

Deutsche Telekom, Vodafone (formerly Arcor) and Alice currently offer IPTV services to their customers in areas with broadband speeds of at least 16 Mb/s. In order to provide IPTV services at a comparable technical quality to cable, satellite and terrestrial TV offerings, Deutsche Telekom has rolled out VDSL and ADSL+2 across 50 cities. The German Internet Broadband Access Market According to Euromonitor International, Germany is the largest Internet access market in Europe with approximately 63 million Internet users and approximately 27 million individuals with contracts for Internet service provision. Technologies with transmission-line speeds higher than 128 Kb/s are generally classified as broadband. The main broadband access technologies are DSL and cable. Other Internet access technologies comprise FTTH and Internet access via power-line. Mobile technologies and satellite services like UMTS, wireless local area network (WLAN) and WiMAX are also classified as broadband. Access to these technologies depends on local availability of the services. The broadband market in Germany is well established, and while currently penetration rates are lower in Germany than in other main European markets, market data indicates that penetration rate growth in Germany is generally faster than in other European markets. As of December 31, 2008, the German broadband Internet access penetration stood at 57.5 percent of 40.1 million total households, according to Screen Digest. The following table illustrates the actual and projected broadband penetration rates in key European countries for 2008 and 2011, respectively. The average broadband Internet penetration in the rest of Western Europe is 63.2 percent (Source: Screen Digest Ltd.).
2007-2008 Penetration Growth Cable Broadband Penetration 2008 (in percent) Other Total Cable 2011 Other Total

Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Switzerland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . UK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Source: Screen Digest Ltd., Households from Euromonitor.

16.6 5.0 8.2 13.0 9.8 12.0 10.3

5 31 22 4 14 10

53 51 53 64 51 43 48

58 82 75 67 65 53 48

11 35 24 5 16 12

67 55 61 73 60 50 59

78 90 84 78 76 62 59

The following table shows the historical development of the number of broadband subscribers in Germany, by access platform.
2004 2005 2006 (in thousands) 2007 2008

DSL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deutsche Telekom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other (satellite, power-line) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,769 5,800 969 111 50 6,930

10,456 7,918 2,538 191 67 10,714

14,428 10,280 4,148 507 66 15,001

18,484 12,543 5,941 1,044 74 19,602

21,064 13,337 7,727 1,891 101 23,056

Source: Screen Digest Ltd.

DSL remains the leading broadband access platform in Germany, with 21.1 million subscribers as of December 2008 according to Screen Digest. Deutsche Telekom is the major DSL-based broadband provider with approximately 10.6 million retail and 2.5 million resale subscribers as of December 31, 2008 (Source: Deutsche Telekom AG, H1/2009 conference call presentation). Unbundlers, such as Arcor (now Vodafone), Hansenet and Telefnica, accounted for approximately 7.9 million subscribers as of December 31, 2008. Resellers continue to loose market share with subscribers declining to 2.0 million as of June 30, 2009 due to Deutsche Telekoms more competitive marketing approach and the increasing importance of cable as demonstrated by the approximately 3.1 percentage points market share increase of cable in the broadband Internet access market between December 31, 2008 and June 30, 2009 (Source: Screen Digest Ltd.).

110

In the last two years, cable has emerged as an increasingly important broadband Internet access platform as a result of German cable operators strategy to upgrade their networks, provide new digital services to customers by leveraging existing customer relationship and driving branding initiatives. German cable operators, based on the strengths of their network and their sales and marketing capabilities, are capturing an increasing share of the German broadband Internet access market (48.5 percent of net subscriber additions for Q2 2009 according to Screen Digest Ltd.). As German cable operators are gaining a significant share of the market net additions, the high competition and subscriber movements due to high churn levels in the market, are a supporting element to the German cable operators gain in broadband Internet subscribers. The German Telephony Market In recent years, fixed-line telephony has been transformed into a commodity and is highly dependent on a quality broadband offering, as telephony is increasingly bundled with broadband services. Fixed-line telephony has experienced a significant price decrease over the last years, with operators increasingly offering flat-rate products (the standard national tariff decreased from 12.3 cents per minute in 2002 to 4.0 cents per minute in 2008). At the end of 2008, the combined number of fixed telephony connections of Deutsche Telekom and alternative service providers was 39.1 million. The number of access lines sold by Deutsche Telekom to alternative operators has been increasing over the last years and amounted to 10.3 million at the end of 2008 as compared with 5.1 million at the end of 2006, highlighting the line loss Deutsche Telekom is suffering from (Source: Federal Network Agency, 2008 Annual Report). We believe price decreases and loss of access lines by Deutsche Telekom are not only driven by growing competition in the fixed-line telephony market, but also by the emergence of alternative technologies for voice communication such as VoIP. The use of VoIP for telephony services offers significant cost advantages to both operators and subscribers. In addition, the use of these services has become increasingly user-friendly in recent years. As of the end of 2007, approximately 80 operators provided VoIP services to retail customers in Germany. VoIP services are increasingly bundled with broadband service, offering users lower-cost fixed-line calls compared to a traditional public switched telephone network (PSTN) or integrated services digital network (ISDN) services. At the end of 2008, there were approximately 3.9 million VoIP users in Germany (Source: Business Monitor International Germany, Q3 2009). We expect that the current competitive dynamics within the Internet broadband market will extend to the VoIP market. Cable operators in Germany offer voice services generally as a flat rate product for domestic fixed-line calls with additional charges for international and mobile calls. Voice services are offered both on a stand-alone basis and as part of a triple play product offering. The key factors differentiating the telephony offering of cable companies are its pricing and the fact that it is typically integrated into product bundles. German cable operators typically price their flat-rate voice offerings below that of Deutsche Telekoms equivalent service. Furthermore, the bundling of services is an appealing value proposition for the customer, while at the same time providing attractive economics to the cable operator. The basic cable TV subscriber base of German cable operators are typically under penetrated with respect to broadband Internet and VoIP offerings. This relative under penetration of German cable customers offers significant growth opportunities.

111

BUSINESS Overview Unitymedia is the largest cable television operator in the German federal states of North Rhine-Westphalia and Hesse and is, we believe, the third largest cable operator in Europe, as measured by the number of television subscribers. We provide basic cable television services and digital cable television, Internet and telephony services to customers who reside in our upgraded network area. We believe our cable network, which passes approximately 8.8 million homes, is one of the most technically advanced in Europe. As a result, we believe that Unitymedia is ideally positioned to meet the needs of its customers by providing immediate access to information, entertainment and a range of individual communication options in a simple, secure and cost effective manner. Our total revenue for the financial year ended December 31, 2008 was 1,221.3 million and for the nine months ended September 30, 2009 was 862.6 million. Our Adjusted EBITDA (as defined herein) for the financial year ended December 31, 2008 was 436.2 million and for the nine months ended September 30, 2009 was 347.6 million. Our cable business (Unitymedia Cable) is our core business and generated 90.5 percent and 95.3 percent of our total Adjusted EBITDA in the financial year ended December 31, 2008 and the nine months ended September 30, 2009, respectively. We also operate a digital pay TV satellite platform, arenaSAT, which is part of our arena segment. Following the Acquisition, we will be indirectly owned by Liberty Global Europe, an affiliate of UPC Holding. Unitymedia Cable We operate our cable business Unitymedia Cable in North Rhine-Westphalia and Hesse, which together had a population of 24.1 million and 11.5 million households as of December 31, 2008 (Source: Hessian Statistics Office and North Rhine-Westphalia Statistics Office and Federal Statistical Office of Germany). Our cable footprint covers ten of the 20 largest cities by inhabitants in Germany, including Cologne, Dortmund, Dusseldorf, Essen and Frankfurt. Both North Rhine-Westphalia and Hesse are among the most prosperous and densely populated regions in Germany and Europe. Combined, these federal states would constitute the 6th largest economy in the European Union as measured by GDP. Our cable business is characterized by recurring revenues and cash flows. The foundation of our business is the provision of basic cable and Digital TV Pay services. In our upgraded network coverage area we provide an integrated triple play service under the brand Unity3play, offering our customers access to Internet, telephony and digital cable television services in addition to our basic cable television services, which gives us the opportunity to generate attractive operating and financial growth. By the end of 2009, we will have largely completed the upgrade of the Unitymedia Cable network. Further, we are currently able to market our triple play service to over 95 percent of our cable television subscribers who reside in the upgraded portion of our network coverage area. Going forward, based on our current competitive position and return on investment estimates, we expect that only a limited amount of network-related investment will be required to provide our current triple play service to homes in our upgraded network area. Most of our capital expenditure is success-based for subscriber growth or usage and/or related to new product development. We provide the following products and services to our customers:

Basic Cable Services: as of September 30, 2009, we provided our basic cable services to 4.5 million subscribers, or 51.9 percent of homes passed by our network. 28.6 percent of these basic cable subscribers had switched to digital access as of September 30, 2009. Our basic cable analog access consists of up to 36 television channels and up to 34 radio channels, depending on the geographic area. Our basic cable digital access comprises up to 72 digital channels, including the simulcast analog channels, and 65 radio channels. We provide basic cable services via individual contracts with single dwelling units or bulk contracts with landlords or housing associations. For the nine months ended September 30, 2009, our basic cable services generated an ARPU of 10.12 per month. We recently announced a rate increase effective as of January 1, 2010 for certain multi-user contracts. In addition, in the nine months ended September 30, 2009, we generated 62.5 million in revenue in carriage fees from both public and commercial broadcasters (including Premiere (now Sky Deutschland)).

112

Digital TV Pay Services: as of September 30, 2009, we provided our Digital TV Pay services to approximately 470,000 RGUs. Our Digital TV Pay services consist of programming that we assemble into packages as well as pay TV content sourced from other providers, including international and domestic German broadcasters. For the nine months ended September 30, 2009, our Digital TV Pay services generated an ARPU of 9.08 per month. Internet Access Services: we provide Internet access services both on a retail and wholesale basis.

Retail Broadband: as of September 30, 2009, we provided our Retail Broadband Internet access services to approximately 537,000 RGUs. Our current Retail Broadband Internet access service portfolio consists of services with download speeds ranging from 2 Mb/s to 32 Mb/s with no time or data volume restrictions, with a 120 Mb/s service available for subscription in selected cities beginning in November 2009. Our customers can choose between different attractive and competitively-priced packages, including our core triple play product, Unity3play. For the nine months ended September 30, 2009, our Retail Broadband Internet access services generated an ARPU of 15.37 per month. Wholesale MMA: as of September 30, 2009, we provided our wholesale MMA Internet access services to approximately 340,000 RGUs (excluding those customers who had upgraded to our Retail Broadband Internet access services). Our MMA offer is a service tailored for housing associations to purchase Internet access at 128 Kb/s on a bulk basis and enable their properties with plug-and-play Internet access. Tenants in MMA-equipped apartments have the opportunity to upgrade to any of our digital television, broadband and flat rate telephony services. As such, in addition to incremental revenue, the MMA business segment offers us an additional sales channel and serves as a catalyst for the implementation of our triple play strategy. As a result, we typically benefit from significantly higher Retail Broadband penetration in the MMA business segment. For the nine months ended September 30, 2009, our wholesale MMA Internet access services generated an ARPU (excluding those customers who had upgraded to our Retail Broadband Internet access services) of 1.55 per month.

Telephony Services: as of September 30, 2009, we provided our telephony services to approximately 535,000 RGUs. We market our telephony services principally as a component of our Unity3play product bundle. For the nine months ended September 30, 2009, our telephony services generated an ARPU of 12.89 per month.

The German broadband and digital pay TV markets have historically been underdeveloped compared to other European markets. Unitymedia has been at the forefront of removing the structural impediments to growth in the German broadband and digital pay TV markets, when, for example, it received regulatory approval in 2005 to integrate operators of distribution (level 3) and in-building (level 4) networks. This has allowed us to upgrade our networks and roll-out the internationally proven triple play cable model using established technology, which in turn permits us to significantly mitigate risks related to competitive and technological developments and unit pricing of network and customer equipment. We believe we are able to quickly and efficiently implement innovations in triple play services and increasingly take a leading position in innovative product development. This is evidenced by our deployment of DOCSIS 3.0 in selected cities in November 2009. Our cable business is supported by a dense, high quality network that, as of September 30, 2009, covered approximately 77 percent of all households, or 8.8 million homes passed, in North Rhine-Westphalia and Hesse. The network was built by Deutsche Bundespost, the predecessor of Deutsche Telekom, in the 1980s to high specifications and is characterized by homogenous design, high reliability and low maintenance requirements. Our network is one of only two networks with extensive local loop infrastructure across our markets and combined with our regional backbone positions us, we believe, as the only alternative high bandwidth end-to-end, infrastructure-based competitor to Deutsche Telekom. Total revenue generated by the Unitymedia Cable segment was 856.6 million for the financial year ended December 31, 2008 and 689.7 million for the nine months ended September 30, 2009. Adjusted EBITDA for the Unitymedia Cable segment for the financial year ended December 31, 2008 was 394.9 million and for the nine months ended September 30, 2009 was 331.3 million. For the nine months ended September 30, 2009, our cable business generated an ARPU of 14.11 per month.

113

arena Through our national satellite digital pay TV platform arenaSAT, as of September 30, 2009 we provided pay TV services to approximately 68,000 RGUs across Germany. Our satellite platform offers subscribers a range of digital pay TV channels within various packages. Until June 30, 2009, arenaSAT also offered Bundesliga programming via a wholesale agreement with Premiere (now Sky Deutschland) that expired at such time. We regularly evaluate a range of strategic options for arenaSAT. Total revenue generated by the arena segment for the financial year ended December 31, 2008 was 365.8 million and for the nine months ended September 30, 2009 was 173.4 million. Adjusted EBITDA for the arena segment in the financial year ended December 31, 2008 was 41.3 million and for the nine months ended September 30, 2009 was 16.3 million. Excluding the legacy broadcast business, our arenaSAT platform generated Adjusted EBITDA of 7.8 million and 2.4 million for the financial year ended December 31, 2008 and the nine months ended September 30, 2009, respectively. For the nine months ended September 30, 2009, our arenaSAT platform generated ARPU of 18.77 per month. Our Strengths We believe the following strengths will allow us to execute our growth strategy described below: We operate in a highly attractive cable footprint. We are the largest cable television service provider in terms of revenues, homes passed and subscribers in North Rhine-Westphalia and Hesse (Source: Paul Budde Communication Pty. Ltd, May 2009). We serve the industrial and technological heartland of Western Germany including the Rhine-Ruhr and Rhine-Main regions. In 2008, North Rhine-Westphalia and Hesse generated approximately 31 percent of Germanys GDP and, together, constituted the 6th largest economy in the European Union as measured by GDP. With a combined population of 24.1 million and combined average GDP per capita of approximately 32,000 in 2008 (Source: Hessian Statistics Office and North Rhine-Westphalia Statistics Office), North Rhine-Westphalia and Hesse are among the most densely populated and economically prosperous regions in Europe, and we believe they therefore provide us with attractive growth opportunities. We believe that higher disposable income translates into relatively higher spending on media and communications services, while high population density allows for more efficient cable network operations and marketing. The German market offers significant growth opportunities for our sector. The market for broadband Internet access services in Germany has grown rapidly over the last five years with a compound annual growth rate from 2004-2008 of 35.9 percent (Source: Screen Digest Ltd.). Despite the rapid growth, broadband penetration in Germany of 57.5 percent is still relatively low compared to the broadband Internet access penetration in Western Europe, which averaged 63.2 percent, and in neighboring markets such as Belgium and the Netherlands, which were 65.0 percent and 81.9 percent, respectively, in each case as of December 31, 2008 (Source: Screen Digest Ltd.). We also see significant upside in migrating customers from free-to-air TV to pay TV, as investment in and development of pay TV broadcast channels and content continue to accelerate. As of December 31, 2008, German digital pay TV subscribers represented only 15.8 percent of total television households, compared to a Western European average of 41.2 percent (Source: Screen Digest Ltd.). We are well positioned to participate in the growth in our sector as a result of our advanced products and services and our reputation in our markets as a leading triple play provider. The Transactions will result in various synergies as a result of our affiliation with UPC Holding. As a result of the Transactions, we expect to take advantage of various synergies available to us as a result of our affiliation with UPC Holding. We believe that our increased scale and advanced infrastructure will enable us to reduce costs, limit capital expenditures, decrease reliance on suppliers, and open up new strategic opportunities. By increasing our reach, and with the advent of new interactive technologies, we believe that we can offer traditional broadcasters more opportunities. Our current intention is to close our existing network operations center and migrate these functions to the UPC Holding network operations center, and we believe that the combined entity will benefit from this and other cost synergies as well as the harmonization of best practices and products across both UPC Holding and the Company. The integration of these businesses in Europe is expected to be facilitated by their similar network strategies. Our basic cable services provide us with strong, stable cash flows. A significant portion of our residential customers pay via direct debit, and many of our housing association customers pay annually or semi-annually in advance pursuant to multi-year contracts. These characteristics, together with the high value proposition of our basic cable services, have historically been responsible for low gross churn rates and a relatively stable basic cable service subscriber base. As a result, our business enjoys reliable revenues, which, when combined with our predictable cost base and capital expenditures, have led to strong and stable cash flows. Historically, we have experienced limited churn even while implementing price increases.

114

Our established brand, local presence and triple play service offering are key drivers of growth. Since rebranding our cable operations as Unitymedia in 2007, we have significantly increased brand recognition and loyalty, establishing ourselves, we believe, as the leading provider of triple play services in our regions. We are able to leverage our local presence by rolling out integrated marketing plans by city, including, for example, coordinated waves of traditional and ambient advertising tailored to the cultural nuances of target cities combined with targeted marketing, sponsoring and sales channel distribution. Our cable network allows us to provide customers with a triple play service quality experience that we believe is superior to the experience of customers served by competitive infrastructures. We are able to lead pricing for our triple play service offerings based on our comparatively lean cost structure, high customer density and end-to-end control of our network. As a result, we increased our RGUs from New Services (consisting of Digital TV Pay, Retail Broadband Internet access, wholesale MMA Internet access and telephony) to 1.9 million in the nine months ended September 30, 2009 from 1.4 million in the nine months ended September 30, 2008. Further, in the nine months ended September 30, 2009, we believe that we captured more than 50 percent of Internet subscriber growth in our upgraded footprint, with approximately 80 percent of our new Retail Broadband Internet access RGUs opting for triple play services and, in addition, over 10 percent of our new Retail Broadband Internet access RGUs subscribing to a double play package, consisting of Retail Broadband Internet access and telephony. We have a large customer base to which we can up- and cross-sell our triple play services. Our basic cable services subscriber base represents a unique asset to which we can up- and cross-sell digital products and services using our extensive sales and distribution network. Due to the delayed roll-out of digital products in Germany, our total ratio of RGUs per basic cable subscriber was relatively low at 1.4:1 as of September 30, 2009. Our single and combined offering of digital television, broadband Internet access and telephony services, in connection with our established brand and the current general trend towards digitalization, provides us with the opportunity to sell additional services to our existing customers. During the past year, we have significantly enhanced the service capabilities at our call centers by implementing new systems and reorganizing our call center operations to focus even more on customer retention and upselling opportunities. In addition, we believe that our triple play product offerings, which can be marketed to over 95 percent of our cable television subscribers within our upgraded footprint, will further increase our ability to attract new customers and open additional customer segments that we could not previously access. Our network provides us with a superior platform. Our cable network is, for the majority of our footprint, one of only two networks with extensive local loop infrastructure across North Rhine-Westphalia and Hesse. It is highly engineered and benefited from a publicly funded homogenous roll-out, resulting in high network reliability and low maintenance requirements. Our regional backbone and local loop network position us, we believe, as the only alternative end-to-end, infrastructure-based competitor to Deutsche Telekom across our market. We believe that control over the local loop last mile, allowing us to connect our network directly to the end-user premises, provides us with increased flexibility in product design and delivery, time-to-market advantages and certain cost advantages relative to operators without their own local loop. As of September 30, 2009, approximately 90 percent of our network had been upgraded to a bi-directional HFC standard with 862 MHz capacity. We benefit from an advantageous cost structure with inherent operating leverage and success-based capital expenditures. We benefit from an advantageous cost structure as a result of our secure, long-term access to the cable ducts of Deutsche Telekom and our stringent focus on cost control. Despite significant upfront investments into our sales and marketing capabilities, network upgrades as well as our customer premises equipment we have been able to deliver strong financial results. Certain of our cost elements, such as a portion of our network operations, customer care, billing and administration costs, are relatively fixed, which allows us to generate high incremental returns as we grow our business. In addition, as we have upgraded a substantial part of our network, we expect the majority of our future capital expenditures to be success-based and thus directly linked to incremental revenue generating unit growth, including investments related to providing new products and services to existing subscribers. We have a highly experienced management team with a successful track record at Unitymedia. Our management team has significant experience in the German and international cable television industries and mixes international and local expertise. We have a stable and long-serving management team whose members have held senior management positions at various domestic and international cable operators prior to joining Unitymedia and who have developed strong relationships with our market partners, including housing associations and broadcasters.

115

Strategy The key components of our growth strategy are as follows: Drive growth from an integrated triple play product strategy. We believe that our upgraded network provides us with a superior technological infrastructure for delivering triple play services as a high value consumer proposition. We plan to continue to provide comprehensive, innovative multimedia and entertainment service bundles to existing and new customers, which bundles will offer customers both higher speed and more product breadth at competitive prices. We believe that the competitive price and quality of our bundled services allow us to differentiate ourselves from our competitors and gain new customers, increase customer retention, maximize revenues generated from existing customers through cross- and up-selling and enhance our profitability. Since the beginning of 2006, we have achieved significant growth in our Digital TV Pay, Internet access and telephony services, in particular in the period since we rebranded and started offering Unity3play. The relatively low penetration in the New Services offers us significant potential for further growth. Increase our broadband Internet access and telephony penetration. We plan to grow our Retail Broadband Internet access customer base by emphasizing our bandwidth capabilities and high value-for-money service proposition, and by converting our growing wholesale MMA Internet access service customers into Retail Broadband Internet access customers. We intend to acquire a substantial share of new broadband Internet access customers on our footprint and win customers away from our competitors based on our competitive pricing and service quality as well as the superior speed of our offerings. In November 2009, we deployed DOCSIS 3.0 in selected cities (initially Aachen and Cologne), which will allow customers in the upgraded areas to download data from the Internet at speeds of up to 120 Mb/s. We plan to market our Internet and telephony products aggressively in our footprint either in a service bundle or as standalone products. We see our telephony product, which is used as a first line service, as a potent way to disconnect customers from our competitors for current and future media and telecommunications products using alternative access technologies. Further develop our Digital TV Pay and other product offerings. We plan to continue the digitalization of our basic cable services subscriber base, which is a prerequisite for Digital TV Pay growth. Our Jetzt Digital digitalization initiative has received significant support of state media authorities in North Rhine-Westphalia and Hesse. Full simulcast of analog channels in digital format and increasing brand awareness further support the demand for Digital TV Pay. We intend to market additional attractive content, which is becoming increasingly available in Digital TV Pay, to our customers. In addition, in December 2008 we increased the functionality of our services by introducing DVRs. Maintain and expand strong competitive position in our market. We believe that Unitymedia currently has a very competitive product offering, enabled by our upgraded network which we believe is much better suited to data transmission than our competitors networks. We market all of our products and services using the single Unitymedia brand, which according to independent research commissioned by the Company, is one of the most strongly associated with triple play services in North Rhine-Westphalia and Hesse. Moreover, the pricing of our product is below most of our competitors as we continue to benefit from an advantageous cost structure and have implemented stringent cost controls. This allowed us, for example, to capture what we believe to be more than 50 percent of Internet subscriber growth in our upgraded footprint in the nine months ended September 30, 2009. We also believe that our competitive position will be strengthtened as a result of the Transactions as we take advantage of cost synergies and our affiliation with UPC Holding. Expand our network coverage area through acquisitions. We regularly evaluate potential value accretive acquisition targets and, subject to market conditions and the availability of suitable investment opportunities, intend to expand our network coverage area through acquisitions of related businesses in our existing regions or natural extension through contiguous operations. In selecting potential targets, we intend to focus on gaining access to new markets and product segments, minimizing overlap with our existing network and creating operational synergies. We believe that due to our experience with, and track record of, integrating past acquisitions, such as ish, Tele Columbus and PrimaCom Aachen and Wiesbaden, we will be able to successfully integrate companies and realize synergies. Maintain focus on operational excellence. We have streamlined our operations, automated and integrated various customer care and billing platforms, established closer relationships with our sales agents and implemented earnings-based incentives. We closely monitor key performance indicators to assess our operational processes, sales and marketing efficiency and the reliability of our infrastructure. Call answer rates have exceeded 90 percent for all but one month since January 2008, and we have created specialized inbound and

116

outbound departments in customer care to address billing and collections, customer retention and sales. We are focused on the continued training and development of our sales force and call center agents, so that we can efficiently provide high quality service to our customers. Focusing on cash flow growth and an efficient capital structure. We are committed to exploiting the growth opportunities that we believe are available to our business and generating high incremental returns on our investments. We intend to leverage the scalability of our operations and our significant historical network investments to translate revenue growth into Adjusted EBITDA. We also expect to improve our cash flow conversion as we benefit from operating and capital expenditure leverage as our business grows. Our History Unitymedia GmbH was formed on July 29, 2002 as a German limited liability company (Gesellschaft mit beschrnkter Haftung) under the name CEDRO Vermgensverwaltungsgesellschaft mbH, having its registered office in Hamburg, Germany, and a registered share capital of 25,000. We were recorded in the commercial register (Handelsregister) of the local court (Amtsgericht) of Hamburg on September 20, 2002 under the registration number HRB 84907. On the basis of a resolution adopted by our shareholders on December 10, 2002, our name was first changed to iesy Repository GmbH and subsequently, by shareholders resolution adopted on August 5, 2005, to Unity Media GmbH. In March 2006, our registered office was moved from Hamburg to Cologne, Germany, and we were registered in the commercial register of the local court of Cologne on March 1, 2006 under the registration number HRB 57237. On January 5, 2009, our name was changed to Unitymedia GmbH. Unitymedias operations result from the acquisition by iesy Hessen GmbH & Co. KG of ish NRW GmbH & Co. KG in 2005 and the integration of the In-Region assets. The combinations allowed us to interconnect the broadband cable networks in North Rhine-Westphalia and Hesse and build the first fully integrated cable network in Germany. In 2007, we introduced a single Unitymedia brand for our products and services and in our upgraded network coverage area began to offer a triple play product, combining digital cable television services with broadband Internet access and telephony products under the brand Unity3play. In September 2007, we launched our comprehensive Jetzt Digital campaign to promote the benefits of converting from analog to digital television. In August 2008, we acquired the network assets of PrimaCom in the cities of Aachen and Wiesbaden. In November 2009, the Issuer, an indirect wholly-owned subsidiary of LGI, entered into a purchase agreement to acquire us. See The Transactions. Products and Services We currently provide analog and digital cable television and radio services as well as Digital TV Pay products to customers in North Rhine-Westphalia and Hesse. In addition, in the upgraded portion of our network coverage area (which as of September 30, 2009 covered approximately 90 percent of our total network coverage area), we offer our customers access to triple play services consisting of digital cable television, Internet access and telephony, which we market under the name Unity3play. We are focused on continuing to convert analog cable television subscribers to digital cable television and on selling such customers our premium products and services, such as Digital TV Pay, Internet access and telephony, which generate significantly higher ARPU than our basic cable television services. We believe that the provision of the New Services, either on a stand-alone basis or together in our product bundles, is a key driver of revenue and ARPU growth and strengthens customer loyalty. Unitymedia Cable Basic Cable Television We market our basic cable television services under the integrated Unitymedia brand. As of September 30, 2009, our network passed approximately 8.8 million homes in North Rhine-Westphalia and Hesse, of which approximately 4.5 million are connected and subscribe to our basic cable services, a 51.9 percent penetration rate. Our basic cable television services accounted for 60.4 percent of our total cable revenues for the nine months ended September 30, 2009 (compared to 64.6 percent for the financial year ended December 31, 2008).

117

Subscriber Segments We divide our basic cable subscribers into three specific market segments, each targeted with tailored marketing, sales and advertising techniques: Residential Subscribers. Residential subscribers represent accounts with single or small multi-dwelling units of up to five homes. We typically enter into standard form contracts with, and deliver targeted marketing directly to, our residential subscribers. Small and Medium Enterprises (SMEs). SMEs represent accounts with multi-dwelling units of six to 300 homes. These customers are generally landlords, housing management companies and special organizations such as hotels and hospitals. We market our basic cable television service directly to the business and our digital and broadband services to the end-customer. Key Accounts. Key accounts represent customers with multi-dwelling units of more than 300 homes. There are numerous sub-segments within this category encompassing housing associations (professional property investors, public property owners and property management firms) as well as professional Level 4 operators. This segment includes customers that not only own and operate their own in-building networks, but may also operate and administer the networks of other housing associations. While the majority of housing associations subscribe to our services pursuant to our standard terms and conditions, we have multi-year framework agreements with a number of our larger customers within this segment. See Our Basic Cable Services Fees. We focus on expanding the number of housing associations that have signed multi-year contracts to further secure our basic cable subscriber base. Many housing associations enjoy volume-based discounts built into our standard rate card. Housing associations that sign multi-year contracts typically receive additional discounts. Our key account managers seek to develop strong personal relationships with our key account customers. Pursuant to the concession agreements that we sign with housing associations, we typically have the exclusive right to offer and provide cable television services to individual tenants and include other general terms governing the provision of such services. Under such agreements, we are typically allowed to offer our full Unity3play offerings, including broadband Internet and telephony as well as Digital TV Basic and Digital TV Pay, directly to the tenant. Level 4 operators, such as EWT, procure basic television signals from us and generally resell them to housing associations. Professional Level 4 operators generally enjoy volume-based discounts built into our standard rate card, which create incentives for these operators to cluster their subscribers behind individual connection points. Historically, our agreements with professional Level 4 operators have included additional volume-based rate discounts to our standard rate card. Operator-specific discounts, when combined with volumebased discounts built into the standard rate card, have traditionally resulted in a substantially lower ARPU within this subscriber segment. However, our costs associated with these customers are also lower for a variety of reasons, particularly since we are not responsible for certain activities such as customer care, which the Level 4 operators provide. We have entered into agreements that allow us to market our products and services directly to the Level 4 operators subscriber base (pass-through agreements), including a pass-through agreement relating to our complete range of products and services with EWT. Volume-based discounts have on average decreased significantly over the past three years. Our Current Basic Cable Television Products As of September 30, 2009, approximately 3.2 million RGUs subscribed to our basic analog package of television channels and approximately 1.3 million RGUs subscribed to our additional basic cable digital television product, Digital TV Basic, either through a single-user contract or through an additional package on top of the basic analog package. As of September 30, 2009, the digitization rate of our basic cable subscribers was 28.6 percent, compared to 26.6 percent as of December 31, 2008, which is in line with our goal of increasing our digital subscriber base, as such customers then have access to our premium pay TV services, which generate incremental ARPU to the underlying basic cable television services revenue.

118

Analog All of our approximately 4.5 million basic cable RGUs as of September 30, 2009 received a basic analog package, which as of September 30, 2009 consisted of up to 36 television channels (depending on the region served) and up to 34 radio channels. Most of our standard analog packages generally included the following programs as of September 30, 2009 (depending on the geographic location):
Program 1-2-3.tv . . . . . . . . . . . . . . . . . . . . . . 3sat . . . . . . . . . . . . . . . . . . . . . . . . . 9Live . . . . . . . . . . . . . . . . . . . . . . . ARTE . . . . . . . . . . . . . . . . . . . . . . . Bayerisches Fernsehen . . . . . . . . . . BBC World News . . . . . . . . . . . . . MTV . . . . . . . . . . . . . . . . . . . . . . . . CNN International . . . . . . . . . . . . . Das Erste ARD . . . . . . . . . . . . . Das Vierte . . . . . . . . . . . . . . . . . . . DMAX . . . . . . . . . . . . . . . . . . . . . . DSF . . . . . . . . . . . . . . . . . . . . . . . . EuroNews . . . . . . . . . . . . . . . . . . . . EUROSPORT . . . . . . . . . . . . . . . . HSE 24 . . . . . . . . . . . . . . . . . . . . . . hr-fernsehen . . . . . . . . . . . . . . . . . . kabel eins . . . . . . . . . . . . . . . . . . . . KI.KA . . . . . . . . . . . . . . . . . . . . . . MDR FERNESEHEN . . . . . . . . . . Regional Channels (Center TV) . . . NED2 . . . . . . . . . . . . . . . . . . . . . . . Description Transaction channel, auction News and culture Transaction channel (shows) Cultural, arts General interest English international news Music television English international news General interest Entertainment Information documentary Sports European news Sports Teleshopping General interest, regional Entertainment Kids entertainment General interest, regional Local interest, regional Entertainment (Netherlands) Program n-tv . . . . . . . . . . . . . . . . . . . . . . N24 . . . . . . . . . . . . . . . . . . . . . . NICK/Comedy Central . . . . . . . NDR Fernsehen . . . . . . . . . . . . . NRW TV . . . . . . . . . . . . . . . . . . Phoenix . . . . . . . . . . . . . . . . . . . ProSieben . . . . . . . . . . . . . . . . . QVC . . . . . . . . . . . . . . . . . . . . . RTL . . . . . . . . . . . . . . . . . . . . . . RTL2 . . . . . . . . . . . . . . . . . . . . . Channel21 . . . . . . . . . . . . . . . . . SAT.1 . . . . . . . . . . . . . . . . . . . . sonnenklar.TV . . . . . . . . . . . . . . SWR Fernsehen RP . . . . . . . . . . Super RTL . . . . . . . . . . . . . . . . . Tele 5 . . . . . . . . . . . . . . . . . . . . TV5MONDE Europe . . . . . . . . VIVA . . . . . . . . . . . . . . . . . . . . VOX . . . . . . . . . . . . . . . . . . . . . WDR Fernsehen . . . . . . . . . . . . ZDF . . . . . . . . . . . . . . . . . . . . . . Description News and information News Kids entertainment General interest, regional General interest, regional Documentary + political events Entertainment Teleshopping Entertainment Entertainment Teleshopping Entertainment Transactional channel, travel General interest Family entertainment Entertainment French general interest Music television Entertainment General interest, regional General interest

Digital We offer an additional basic cable digital access product, Digital TV BASIC, which is an entry level digital cable product with up to 72 digital channels, including the analog simulcast and 65 radio channels (as of September 30, 2009). We distribute our digital programming from our NOC in Kerpen via digital fiber optic lines and provide our subscribers with the smartcards required for these digital subscriptions. With Digital TV Basic, the following additional channels are generally included:
Program AL Jazeera Int. . . . . . . . . . . . . . . . . ANIXE SD . . . . . . . . . . . . . . . . . . . Astro TV . . . . . . . . . . . . . . . . . . . . Bayerisches Fernsehen Nord/Sd . . . . . . . . . . . . . . . . . . Bibel TV . . . . . . . . . . . . . . . . . . . . . DELUXE MUSIC . . . . . . . . . . . . . Deutsches Gesundheits FS . . . . . . . EinsExtra . . . . . . . . . . . . . . . . . . . . EinsFestival . . . . . . . . . . . . . . . . . . EinsPlus . . . . . . . . . . . . . . . . . . . . . France 24 . . . . . . . . . . . . . . . . . . . . GIGA.TV . . . . . . . . . . . . . . . . . . . . Jamba TV . . . . . . . . . . . . . . . . . . . . Juwelo . . . . . . . . . . . . . . . . . . . . . . Kino Vorschau . . . . . . . . . . . . . . . . iMusic 1 . . . . . . . . . . . . . . . . . . . . . MDR Sachsen . . . . . . . . . . . . . . . . MDR Sachsen-Anhalt . . . . . . . . . . Description News Entertainment Astrology General interest Religion Music Information General interest General interest General interest News Games Transaction channel Teleshopping VOD movie trailer Music General interest + regional info General interest + regional info Program MDR Thringen . . . . . . . . . . . . NDR Hamburg . . . . . . . . . . . . . NDR Schleswig-Holstein . . . . . NDR MecklenburgVorpommern . . . . . . . . . . . . . rbb Berlin . . . . . . . . . . . . . . . . . rbb Brandenburg . . . . . . . . . . . . Schmuckkanal . . . . . . . . . . . . . . Sky News . . . . . . . . . . . . . . . . . Sonnenklar TV . . . . . . . . . . . . . SWR Fernsehen BW . . . . . . . . . TIMM . . . . . . . . . . . . . . . . . . . . TRT Int. . . . . . . . . . . . . . . . . . . . TW1 . . . . . . . . . . . . . . . . . . . . . Unitymedia Infokanal . . . . . . . . Voyages TV . . . . . . . . . . . . . . . ZDFneo . . . . . . . . . . . . . . . . . . . ZDFinfokanal . . . . . . . . . . . . . . Description General interest + regional info General interest + regional info General interest + regional info General interest + regional info General interest General interest + regional info Teleshopping English international news Travel General interest + regional info Homosexual Audience Turkish full program News Information about UM products Travel News and information News and information

Our subscribers also have access to programs produced by smaller, regional and local broadcasters, which are typically targeted at smaller audiences, in some cases only a few thousand viewers. These programs are often included in certain regional areas if the broadcast license is restricted to those areas. Due to the high costs of satellite transponders, certain regional and local content providers offer these programs only over our cable network and via terrestrial television. We regularly update our basic cable program offerings to reflect changes in viewer interest.

119

Our Basic Cable Services Fees In January 2008, we introduced a new price scheme for basic cable services for single dwelling units. As of January 1, 2008, single dwelling unit subscribers to Digital TV BASIC were charged 16.90 a month (including VAT), while single dwelling unit subscribers to our analog access product were charged 17.90 a month (including VAT), with the price differential intended to encourage customers to switch from analog to digital reception. On July 1, 2008, we increased the pricing for certain multi-users and single-users on multi-user framework agreements. The pricing under certain multi-user contracts was increased via a rate increase and/or a discount reduction for lump sum contracts. In October 2009, we announced a rate increase, effective as of January 1, 2010, for certain multi-user contracts, ranging from 4.9 percent to 9.8 percent, depending on the number of customers under contract. We regularly review our pricing policy and price increases may lead to increased churn of our analog and digital basic cable subscribers, and as a result, lower revenue in future periods as well as higher customer service requirements and related expenses. In January 2009, we launched a new product Tele&fon, which comprises a basic cable access line and a telephony connection with usage-based charging, targeted primarily at basic cable customer retention. Analog Basic Cable Television Subscription fees for our basic analog cable television services for customers with multi-dwelling units are based on our standard rate card. The rate card is based on the number of dwelling units connected to each connection point to the end-customers premises. The table below sets forth our standard rate card for basic analog cable offerings for multi-dwelling units as of September 30, 2009.
Standard (1)* Flat (2)* (in , excluding VAT)

2 and 3 dwelling units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-10 (for more than 4) dwelling units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-10 (for more than 6) dwelling units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-20 dwelling units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21-40 dwelling units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41-100 dwelling units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101-200 dwelling units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Each additional dwelling unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11.90 9.81 n/a 8.12 6.43 4.97 3.35 2.27

n/a n/a 9.42 7.80 6.17 4.77 3.22 2.18

(1) The standard rate is charged for each dwelling unit per building that actually uses our services. Annual pre-pay customers receive a discount of 3.0 percent on their annual subscription fee. (2) The flat rate is lower than the standard rate, but is charged for the total number of dwelling units per transfer point, regardless of the number of occupied dwelling units. Annual pre-pay customers receive a discount of 3.0 percent on their annual subscription fee.

Digital Basic Cable Television In order to upgrade to basic digital access, tenants under a multi-user contract have the option to enter into a direct contract with Unitymedia and pay an additional 3.90 per month for our Digital TV BASIC product, which is in addition to the basic analog cable fee paid by their landlord and typically charged to the tenant as part of the monthly utility bill. The Digital TV BASIC product for both residential basic digital customers (who pay 16.90 per month) and customers under multi-user contracts includes a digital STB, access to up to 72 digital television and 65 radio channels (including the simulcast of the analog channels in digital format). Digital TV BASIC also provides access to KINO auf Abruf, our pay-per-view service.

120

The table below sets forth our standard rate card for basic digital cable monthly subscription fees charged for multi-dwelling units as of September 30, 2009.
Standard (1)* Flat (2)* (in , excluding VAT)

2 and 3 dwelling units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-10 (for more than 4) dwelling units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-10 (for more than 6) dwelling units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-20 dwelling units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21-40 dwelling units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41-100 dwelling units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101-200 dwelling units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Each additional dwelling unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14.20 12.24 n/a 10.55 8.86 7.40 5.79 4.71

n/a n/a 11.86 10.23 8.60 7.21 5.65 4.61

(1) The standard rate is charged for each dwelling unit per building that actually uses our services. Annual pre-pay customers receive a discount of 3.0 percent on their annual subscription fee. (2) The flat rate is lower than the standard rate, but is charged for the total number of dwelling units per handover point, regardless of the number of occupied dwelling units.

In addition to the monthly subscription fees, subscribers generally pay an activation fee upon connecting or re-connecting to our network. This activation fee is sometimes waived for larger multi-dwelling unit customers, when a subscriber is reconnecting to our network, when a customer moves into a previously connected household, or as part of periodic marketing promotions to increase our customer base. We charge a standard activation fee for both analog and digital basic cable services of 39.90 (including VAT), which historically we have often waived as a promotion. When a customer converts from analog to digital cable access, we charge a reduced activation fee of 19.90 (including VAT). Digital TV Pay Our Digital TV Pay products include programming that we assemble into packages as well as digital pay content of other content providers. As of the date hereof, we offer four Digital TV Pay packages, which can be ordered individually for 8.90 or in package bundles at discounted rates. All packages feed into the networks in North Rhine-Westphalia and Hesse from our own state-of-the-art NOC in Kerpen. Digital TV FAMILY offers 19 film, series, documentary, children and music channels. As part of our modified Digital TV FAMILY package, we started broadcasting Discovery Channel and Animal Planet on July 1, 2009. Digital TV SPORT & MEHR contains 14 channels with English and German language content, including eight sports channels, three channels with film, entertainment and lifestyle content, one weather channel and two adult channels. Digital TV LIFESTYLE offers 13 channels with travel, lifestyle and music content. Digital TV KINDER offers eight cartoon and entertainment channels with specific content for children. Digital TV INTERNATIONAL consists of our individual foreign language programming packages in Arabic, Bosnian, Croatian, Greek, Italian, Japanese, Polish, Portuguese/Spanish, Russian, Serbian and Turkish (Basic, Premium and Professional). Furthermore we offer an International Komplett package, including a variety of foreign language packages. In December 2008, we started offering DVRs to further enhance our customers TV viewing experience. A key element of our strategy to migrate basic cable subscribers to Digital TV Pay has been to provide one of the four genre-based packages (Digital TV FAMILY, Digital TV SPORT & MEHR, Digital TV LIFESTYLE or Digital TV KINDER) for three months on a free trial basis. We have been granted relief from many of the content providers for fees during this trial period. For the nine months ended September 30, 2009, total Digital TV Pay revenues were 6.3 percent of our total cable revenue (compared to 7.0 percent for the financial year ended December 31, 2008). Our Digital Pay Subscription Fees New customers who subscribe to any of our Digital TV Pay packages must either have basic digital cable access if on a single-dwelling unit contract or subscribe to Digital TV BASIC for a 3.90 monthly fee (including VAT) if the analog cable contract is through their landlord or if they subscribe to a Unity3play product. Our Digital TV Pay packages are only available for subscription using direct debit.

121

The table below sets forth monthly subscription fees for our Digital TV Pay packages as of September 30, 2009.
Monthly Subscription Fee (in , including VAT)

Digital TV FAMILY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital TV SPORT & MEHR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital TV LIFESTYLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital TV KINDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Digital TV Packages out of Digital TV FAMILY + SPORT & MEHR + LIFESTYLE + KINDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Digital TV Packages (Digital TV FAMILY + SPORT & MEHR + LIFESTYLE + KINDER) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Kino auf Abruf (per movie) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adult (per movie) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital TV TRKEI BASIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital TV TRKEI PREMIUM (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital TV TRKEI PROFESSIONAL (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital TV SPANIEN/PORTUGAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital TV RUSSLAND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital TV ITALIEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital TV GRIECHENLAND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital TV POLEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital TV BOSNIEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital TV KROATIEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital TV JAPAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital TV ARABISCH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital TV PINK (Serbien-Montenegro) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital TV International Komplett (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8.90 8.90 8.90 8.90 13.90 19.90 1.50-4.00 6.00 6.95 22.50 97.45 4.45 13.90 4.45 2.95 6.00 8.90 2.90 49.90 9.90 15.90 18.95

(1) Includes Digital TV TRKEI BASIS plus Turkish premium programming, Lig TV and Turkmax. (2) For business users such as cafs and bars. (3) Includes all foreign-language programming except Turkish premium programming, Lig TV, Turkmax, Digital TV KROATIEN, Digital TV BOSNIEN, Digital TV PINK, Digital TV ARABISCH and Digital TV JAPAN.

In addition to monthly subscription fees, new subscribers pay an activation fee of 39.90 (including VAT), or 19.95 (including VAT) if a basic cable connection is already active, upon subscribing to any Digital TV Pay package which may be discounted or waived as part of the promotion. The monthly Digital TV Pay subscription fees are in addition to the basic cable services fees paid by such customers to us. For Digital TV Pay packages, we deal directly with the individual subscriber and not the housing associations or Level 4 providers. As a result, we do not offer volume discounts or flat rates for these services. Our Programming Content and Payments We mainly license our Digital TV Pay foreign language programming from third-party content providers. With respect to our foreign-language programming packages, we procure content via Mediapool, which aggregates and procures supply on behalf of the larger German cable operators (Unitymedia, Kabel Deutschland and Kabel Baden-Wrttemberg). We procure the content for our other Digital TV Pay offerings (i.e., Digital TV FAMILY, Digital TV SPORT & MEHR, Digital TV LIFESTYLE and Digital TV KINDER) directly from broadcasters and procure our pay-per-view content from On Demand Deutschland and the tmc Content Group. In general, we pay license fees based on subscriber numbers to these content providers and our agreements with certain providers require us to pay minimum guarantees. For the nine months ended September 30, 2009, the total cable content fees we paid amounted to 5.2 percent of our total cable revenues (compared to 5.5 percent for the financial year ended December 31, 2008).

122

Our Carriage Fees In addition to subscription and activation fees, we receive carriage fees from broadcasters for the delivery of television and audio signals in analog and digital mode via our network. Private as well as public broadcasters pay carriage fees. The underlying contracts typically have an average of one- to four-year terms with automatic renewal clauses for successive one-year terms. We generally collect the carriage fees directly from our broadcasters under regime-specific feed-in contracts on a regional basis. In general, carriage fees for analog and digital channels are charged on a monthly basis, depending on the number of subscribers. Under a collective agreement with all public broadcasters we have flat-fee arrangements with each of the public broadcasters in connection with the transmissions of their analog and digital programming. The current collective agreement came into effect June 30, 2008 with a retroactive effect as of January 1, 2008. We invoice the carriage fees directly to all broadcasters. For the nine months ended September 30, 2009, carriage fees for basic cable service amounted to 9.1 percent of our total cable revenues (compared to 9.5 percent for the financial year ended December 31, 2008). Internet Access During 2008, we upgraded our network in several cities in North Rhine-Westphalia and Hesse, providing approximately 1.6 million additional homes with 862 MHz bi-directional capability. Following additional network upgrade work in the first nine months of 2009, as of September 30, 2009, a total of 7.8 million homes were upgraded to bi-directional capability across North Rhine-Westphalia and Hesse. As of September 30, 2009, we served approximately 877,000 Internet access RGUs both on a retail and wholesale basis. Since June 2007, we have marketed our Retail Broadband Internet services through a new product portfolio under the unified brand name Unitymedia with particular focus on our Unity3play offer. Retail Broadband Internet As part of our standard Internet product portfolio, we currently provide Retail Broadband Internet services at a download speed of up to 2 Mb/s, 10 Mb/s, 20 Mb/s and 32 Mb/s without any time or data volume restrictions. Customers can choose between different packages: 1play, our stand-alone broadband Internet access, is available with a download speed of up to 2 Mb/s; 2Play 10.000, 2Play 20.000 or 2Play 32.000, including telephony access with a flat rate to national landlines and our broadband Internet services, can be subscribed to at download speeds of up to 10 Mb/s, 20 Mb/s or 32 Mb/s. In addition, following the deployment of DOCSIS 3.0 in selected cities (initially Aachen and Cologne), customers in the upgraded areas will be able to subscribe to Unity3play 120.000, which provides download speeds of up to 120 Mb/s. Our core product is Unity3play, which includes broadband Internet and telephony and bundles our digital access product Digital TV Basic free of charge. As of September 30, 2009, we had approximately 537,000 Retail Broadband Internet customers with either a 1Play, 2Play or Unity3play product. In July 2009, we introduced on a free trial basis an Internet security package bundled with all 1Play, 2Play and Unity3play products. The security package includes anti-virus, anti-spy, firewall and spam protection and costs 4.90 per month after the three-month free trial period expires. Wholesale (MMA) Internet In addition, we offer the MMA, a service tailored for housing associations to purchase Internet access at 128 Kb/s on a bulk basis and to enable their properties for Internet access. Tenants in these MMA equipped apartments have the opportunity to upgrade to any standard broadband package offered by Unitymedia providing higher speeds and flat rate telephony. Our experience is that, on average, after 12 months of offering MMA Internet access services, we benefit from approximately ten percent penetration of our upgraded product offerings and to date we have seen that we continue to increase at similar rates thereafter. MMA contracts are increasingly becoming the standard when entering into or extending the contractual relationship with housing associations. Alongside the basic cable access fee, our key account customers under an MMA contract pay us an additional fee per apartment for the life of the typically long-term contract. The standard MMA product was already introduced in Hesse in 2004, whereas in North Rhine-Westphalia it was rolled out during 2006. As of September 30, 2009, approximately 340,000 RGUs subscribed to our MMA product excluding upgrades to retail. As an additional service to housing associations in our upgraded areas, we have offered a digital MMA (DMMA) since May 2007, which provides Internet access at 128 Kb/s on a bulk basis and a Digital TV Basic access product including the digital receiver. Our telephony MMA offers Internet access at 128 Kb/s on a bulk basis plus flat rate telephony access.

123

Our Internet operations generated 9.9 percent of our total cable revenues for the nine months ended September 30, 2009 (compared to 6.4 percent for the financial year ended December 31, 2008). Telephony In June 2007, we began to offer telephony services bundled with broadband Internet as part of the new Unity3play product portfolio. The telephony products offered as part of these packages included a flat rate for unlimited calls to landlines in Germany. In March 2007, we introduced Spar International, an option which can be added to existing telephony contracts, where customers who pay one additional euro can benefit from significant savings on their international calls as well as ISDN functionality. Since February 2008, we have offered an international flat rate providing subscribers wireline calls without any time restrictions to 27 countries. We further expanded our product portfolio by introducing Telefon PLUS, a new product with ISDN functionality and compatibility. Since April 1, 2008, we have offered 1Play Telefon, a stand-alone access telephony product that does not require Internet access services. In January 2009, we launched a new product Tele&fon, which comprises a basic cable access line and a telephony connection with usage-based charging, primarily targeted at basic cable customer retention. As of September 30, 2009, we had approximately 535,000 telephony RGUs. Our telephony services use VoIP as a method of transporting voice over our cable network. Analog voice information is digitally encoded and converted into packets, and then sent to their destinations via our own telephony switches. We pay interconnection fees to other Internet and telephony providers when our subscribers connect with another network and receive similar fees from providers when their users connect with our network through interconnection points. Our telephony operations generated 7.7 percent of our total cable revenues for the nine months ended September 30, 2009 (compared to 6.0 percent for the financial year ended December 31, 2008). Internet and Telephony Product Portfolio Subscription Fees Subscribers to any of our Internet/telephony packages receive the cable modem free of charge (except MMA 128 Kb/s customers who pay a one-time modem fee) and pay a fee that is in addition to their basic cable services fees. Since April 2007, we have marketed a part of our broadband services to households without basic cable services subscriptions in the upgraded portion of our network coverage area. As our Digital TV Pay packages, these products are only available for subscription using direct debit, unless subsequently changed by the customer. In addition to monthly subscription fees, subscribers pay an activation fee as well as an installation fee upon subscribing to one of these products. To date, these one-time charges have often been waived for promotional reasons. To promote additional take-up of our services, we introduced a special promotional campaign in September 2009 focused on attracting DSL customers from competitors that grants DSL customers who switch from competitors up to six months of free broadband services if their existing DSL contract term is longer than three months. The following table shows the monthly subscription fees for our standard Internet product portfolio for the minimum contract duration of one year as of the date hereof. Each Internet product includes flat rate Internet access.
Telephone flat rate (1) Download speed Digital TV basic (2) Total Cost

1Play Internet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Play Telefon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Play 10.000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Play 20.000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Play 32.000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unity3play 10.000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unity3play 20.000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unity3play 32.000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unity3play 120.000 (3) . . . . . . . . . . . . . . . . . . . . . . . . . . .

n/a Included Included Included Included Included Included Included Included

2 Mb/s n/a 10 Mb/s 20 Mb/s 32 Mb/s 10 Mb/s 20 Mb/s 32 Mb/s 120 Mb/s

n/a n/a n/a n/a n/a Included Included Included Included

20.00 20.00 25.00 30.00 45.00 25.00 25.00 45.00 80.00

(1) Includes calls to German fixed-line destinations without time or volume restrictions (except for value added services). Calls to the national mobile networks are charged at 0.189 per minute, while international call charges start at 0.079 per minute. (2) Digital receiver is included free of charge with the subscription. (3) Available as of November 2, 2009 in selected regions, initially in Aachen and Cologne.

124

From time to time we offer limited promotional offers, whereby certain packages are offered at discounted prices and/or for extended contract periods. For example, the pricing of our flagship product Unity3play 20.000 is set at 25 per month in promotional offers and increases to 30 per month after the initial minimum contract term expires. arena arena customers can subscribe to a range of digital television programs by subscribing to arenaSAT FAMILY, arenaSAT FAMILY XL or arenaSAT FAMILY XXL. Additionally, we currently bundle in arenaSAT MOVIES, a 12-month DVD rental service, free of charge when customers subscribe to any new two-year arenaSAT FAMILY package. The following table sets forth our pricing for satellite packages as of September 30, 2009.
Monthly Subscription fee (1) (in , including VAT)

arenaSAT FAMILY (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . arenaSAT FAMILY XL (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . arenaSAT FAMILY XXL (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . sportdigital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14.90 18.90 22.50 9.99

(1) Excludes technical access fee of 5.00. An STB costs 119.00 (6 month contract) or 0 (12 month contract for any of the arenaSAT FAMILY packages. Subject to an activation charge of 29.95 and postage and packaging of 4.90. (2) As of September 30, 2009, arenaSAT FAMILY was comprised of the following 22 channels: Kinowelt TV, Boomerang, AXN, National Geographic Channel, The History Channel, RTL Crime, RTL Passion, RTL Living, Cartoon Network, TNT Film, Romance TV, NASN, Eurosport 2, MTV Hits, VH 1 Classics, MTV Dance, SAT1 Comedy, bio, Kabel 1 Classics, Animax, Travel Channel and Fox. (3) Includes the arenaSAT FAMILY channels plus the two adult entertainment channels, Playboy and Alpenglhen, as well as access to the Playboy online cyberclub portal. (4) Includes the arenaSAT FAMILY XL channels plus sportdigital as well as Auto Motor & Sport.

As of September 30, 2009, arenaSAT had approximately 68,000 digital pay TV satellite RGUs. arena generated total revenue of 173.4 million in the nine months ended September 30, 2009 and 365.8 million in the financial year ended December 31, 2008. arena generated EBITDA of 5.0 million in the nine months ended September 30, 2009 and 47.4 million in the financial year ended December 31, 2008. The arenaSAT ARPU was 18.77 in the nine months ended September 30, 2009 and 18.67 in the financial year ended December 31, 2008. In the second half of 2008, we incurred subscriber churn as the two-year contracts offered in connection with the launch of arena in 2006 expired. As a response to this anticipated contract churn, we made retention offers to these customers, including offering a free Bundesliga subscription until the end of the 2008/2009 Bundesliga football season if customers subscribed to a new two-year contract with non-Bundesliga content. We experienced further churn as a result of the expiry of our rights to retail Bundesliga programming as of July 1, 2009 and expect further churn on the platform going forward. Marketing and Sales Marketing Our marketing department is responsible for designing and promoting new products and services to customers. We market all of our products and services under the Unitymedia brand, which according to independent research commissioned by the Company, is one of the brands most strongly associated with triple play services in North Rhine-Westphalia and Hesse. Our marketing department is divided into the following three groups: Television Services The television services group is responsible for programming content, marketing strategy and product development of our basic cable and Digital TV Pay services. This includes the content portfolio of the television products, from content acquisition to package structure. It also includes the management and development of

125

new television products and services as per our overall television product strategy. The television services group is also responsible for the marketing and sales plan for these products to drive growth of the basic cable and Digital TV Pay subscriber base. Broadband Services including Telephony This group focuses particularly on the development and marketing of broadband Internet access and telephony services as well as pricing and bundling. This includes business development and the long-term product strategy for our customer base, the development of a marketing, sales and service strategy as well as the management of product-related end-to-end processes. Marketing Communication This group focuses on the production of marketing and other materials required to brand and sell our products and services. It provides its services to all internal groups including all sales functions, product marketing functions and other departments with respect to external marketing communication. It is responsible for managing external agencies, placing outdoor advertisements, direct mailing and data sourcing. This group provides data and logistical support for all marketing and sales channels. Sales We market and sell our products to customers using a broad range of sales channels, primarily including retail outlets, online, inbound and outbound telesales and field sales as well as informal customer-getscustomer promotions. The manner in which we target customers depends on the customer segment. A team of over 70 in-house key account and sales support managers work exclusively with our key account customers, such as housing associations, housing administrations, real estate investors as well as wholesale partners and carriers, who have generally more than 300 units under contract. This in-house sales staff develops and cultivates close working relationships with our key account customers and works with residential sales teams to generate customer sales leads and increase retention of existing customers. In addition, this in-house sales staff develops and maintains contact with local authorities and construction companies in order to help expand the cable network in North Rhine-Westphalia and Hesse. We promote our products and services to both SME and residential customers through door-to-door marketing. We have approximately 50 field sales agents working to sell our products and services to SME customers and approximately 400 field sales agents working to sell our products and services to residential customers. The field sales agents are responsible for sales of our basic cable television, Digital TV Pay, broadband Internet access and telephony services and also manage disconnections of services. Our field sales agents are independent contractors who work on commission. To encourage our field agents to minimize our future administrative costs, we offer higher sales commissions for basic cable subscriber contracts procured through direct debit and have created incentives for our sales teams to assist in reducing churn by adjusting commissions for churn during a 120-day period. In addition, we target residential customers through partnerships with retail outlets, such as multi-media retailers, electronics and telecommunications stores. We have a customer center at our headquarters in Cologne and, in 2008 and 2009, opened 25 Unitymedia flagship stores in major cities in our network coverage area, such as Darmstadt, Dusseldorf, Essen, Frankfurt, Fulda, Hagen, Oberhausen and Wiesbaden. We also develop partnerships with construction companies to assist in promoting our basic cable television services and use our Info-Mobil, a mobile point of contact for tenants in MMA buildings, to allow people to test and order our retail products. In addition, as of September 30, 2009 we had contracts with approximately 200 commission-based outbound telesales agents to promote our services. For the nine months ended September 30, 2009, our combined sales and marketing expense was 53.4 million, excluding 23.6 million in third-party commission expenses relating to subscriber acquisition cost, which are capitalized under IFRS (compared to 72.8 million for the financial year ended December 31, 2008, excluding 19.6 million third party commission expenses relating to subscriber acquisition cost).

126

Customer Operations Customer Care The customer service function is responsible for all customer care activities, including handling customer queries and complaints. In addition, customer service also provides inbound telemarketing and sales support functions for the residential and SME segments. In 2008, we implemented a comprehensive customer care initiative to improve operational performance, including call response times, significantly increased the capacity of our call centers and expanded outsourcing for specific areas. Continuing into 2009, we also invested in systems that support customer operations, such as document and workflow management systems and computer telephony integration (CTI), which enables call distribution based on a customers contract status. In the nine months ended September 30, 2009, our call answer rate was consistently above 90 percent, however, to the extent we experience high volume or variability in customer acquisition, our customer service levels and activation periods will continue to fluctuate. We operate dedicated customer service centers in Bochum and Marburg with approximately 450 customer service agents as of September 30, 2009, supplemented by outsourced call-center capacity. All of our customer service agents are skilled in multiple areas, including marketing campaigns and customer care for a variety of analog and digital products. Our customer service organization is structured as a process-oriented organization with special teams for the various processes, such as order entry, number porting and complaint management. We also have special teams in Marburg for SME, sales and retail services and a department in Bochum that is dedicated solely to providing customer service to all Level 4 customers. As part of our customer retention efforts, we focus on minimizing the number of contract cancellations by customers. Customers may contact us through a variety of means, mainly by telephone, although approximately one-third of all customer contacts are by regular mail, email or fax. Typical queries involve invoices, account details and collection notices. We monitor performance using a variety of key performance indicators to ensure customers receive a high standard of service. In addition, the operations development department is responsible for optimizing processes and designing new procedures as well as change and project management. Billing Our billing operations, including customer care, billing and accounts receivable management, are based primarily on CableMaster, which is supported by Convergys Information Management Group Inc. (Convergys), an established billing and IT service provider. For our broadband customers, we use an e-billing function, while all other retail customers can choose to receive either paperless or regular mail invoices. In addition, we have been further developing our web-based customer self-care platform, which has been used increasingly by our customers and includes functions such as order entry, service and customer data changes. We expect to more efficiently accommodate subscriber growth and increase customer satisfaction from these measures. In addition, in 2009 we introduced credit checks for our web and door-to-door based sales activities in order to further enhance bad debt management. Network Operations Our Network and Technical Infrastructure In total, our network extended over approximately 134,000 kilometers, passing approximately 8.8 million homes, as of September 30, 2009. Average annual network availability of our network and product platforms is high, at approximately 99.9 percent for both 2007 and 2008. The original infrastructure, which was a single direction broadcast network, was based on the homogeneous topology developed by Deutsche Telekom. The analog and digital television signals are distributed over the 50-450 MHz band on the remaining ten percent of our network that has not been upgraded to bi-directional 862 MHz. This 450 MHz network delivers up to 36 analog television channels (depending on the region served), up to 34 analog radio channels and 30 digital channels with up to 12 digital television and radio program streams each (representing the capability for over 350 programs). Approximately 90 percent of our homes passed were served by an upgraded network with full bi-directional capability as of September 30, 2009, thereby enabling the provision of advanced bi-directional cable services such as Internet access, telephony and ultimately VoD, and the distribution of digital and analog signals over a 862 MHz band. This upgraded network has been designed as a broadband, HFC-based system, capable of

127

providing a range of digital bi-directional services. The upgraded network comprises a central signal feed coming from the NOC in Kerpen, connecting to a series of interconnected primary and secondary fiber optic links in a ring structure. Besides a high service quality, a key feature of the digital fiber optic link architecture is the alternate routes to the hubs, which protect against faults in the backbone network. Through the fiber optic backbone network all 23 content hubs are served with Internet and telephony services, analog and digital television and radio programs as well as Digital TV Pay cable television channels supplied by the central playout facilities in the NOC in Kerpen. In Hesse, the majority of analog programs are received and processed directly at each content hub. In the content hubs the incoming signals are processed, assigned to channel positions and amplified for distribution. The master headends transmit the signals to approximately 212 headends at the city level, via analog fiber optic transmission. Some master headends and the vast majority of the headends at city level and hubs are located in facilities owned by Deutsche Telekom. We lease these facilities from Deutsche Telekom under MSAs. Deutsche Telekom and its predecessors originally constructed both our cable television network and Deutsche Telekoms current fixed-line telephony network. Certain parts of the infrastructure (including cable ducts, towers, fiber optic transmission systems, and equipment locations) are shared by both the Deutsche Telekom telephony network and our cable television business. Unitymedia NRW and Unitymedia Hessen lease these assets from Deutsche Telekom under the MSAs and the BRN agreements. For a description of the MSAs and the BRN agreements, see Material Contracts Material Supply Contracts Supply Agreements with Deutsche Telekom and Risk Factors Risks Relating to Our Business We rely on Deutsche Telekom and certain of its affiliates for access to and the operation of a significant part of our network . From the hubs, A lines extend through public rights of way (ffentlich-rechtliche Wegerechte). From the A lines, primary extension lines, extension lines and drops, or B lines, C lines and D lines, respectively, extend via splitters to the connection points. For an explanation of A lines, B lines, C lines and D lines, see Glossary. In total there are approximately 2.3 million connection points available on the network. In the case of multidwelling units, the connection point may be located in the basement of the building. At the connection point, our network is connected to either our own in-building network or the in-building networks of housing associations or other professional Level 4 operators. All third parties connecting to the network are required to meet our technical standards. In general, the network is comprised of co-axial cable that is either buried in the ground or housed in cable ducts. The ducts are typically owned by Deutsche Telekom, and we lease duct space for our network from Deutsche Telekom under the MSAs. The distribution plant is powered by over 61,000 amplifiers. With the exception of the duct and fiber, we operate all of the distribution plant and associated electronics. We purchase the electrical power required to operate the master headends, regular headends, hubs and amplifiers through Deutsche Telekom under the MSAs. Purchasing the power from Deutsche Telekom is necessary because, in many cases, the same power source supplies Deutsche Telekoms telephone plant and our cable plant. In general, Deutsche Telekom sells the power to us at cost plus a margin of approximately five percent. We have made in the past, and will continue to make, improvements to the networks. Future upgrades above 450 MHz can be executed in order to meet customer demand for broadband Internet services or in conjunction with long-term MMA agreements in certain regions. In such instances, we can upgrade our 450 MHz network to 862 MHz bi-directional networks with minimal digging by utilizing existing fiber in the ground, by pulling new fiber through the Deutsche Telekom duct systems and by exchanging the amplifiers. Full bi-directional capabilities are now approximately 90 percent and significantly increase our ability to upgrade our service offerings. For example, in November 2009, we deployed DOCSIS 3.0 in selected cities (initially Aachen and Cologne), which will allow customers in the upgraded areas to download data from the Internet at speeds of up to 120 Mb/s. Product Platforms The product platforms are hosted in Kerpen, where the NOC is located, and in several hub sites in North Rhine-Westphalia and Hesse. The highly scalable platforms consist of the following platforms:

the Playout Center for both analog and digital television and radio services; the IP Platform for Internet access and other IP services (broadband Internet products); and the Telephony Platform, which provides both standard and enhanced telephony services as well as additional services like voicemail.

128

Unitymedia uses an IP-based Playout Center from Scientific Atlanta. It currently serves 30 digital transport streams, each carrying up to 12 digital programs. An efficient bandwidth management ensures high signal quality and optimal bandwidth usage. Digital modulators and step-up converters, called edge QAM devices, compile the digital channels for each network region and permit the feed-in of regional channels. From our NOC we are able to remotely modify the channel lineup presented to our customers. Since July 2004, the NOC has operated its own conditional access system, a system utilized by television operators across the world to manage transactions and ensure that only subscribers to a service can gain access to it. Previously, we relied on MSGs conditional access system and since July 2006 we have in-sourced those services for our own digital packages and purchased our own smartcards. In 2008, all smartcards that were not controlled by our conditional access system were removed from our network. Our IP Platform is based on a EuroDOCSIS CMTS and cable modem infrastructure. CMTS systems from Cisco and Motorola serve all customers in the upgraded areas of the network. An extensive server platform provides enhanced web and email services for our clients. IP peering arrangements currently exist with TeliaSonera, Tiscali, ECIX, DE-CIX, Cogent and Mesh. In order to provide first line telephony service across the IP network, we have implemented end-to-end quality of service (QoS) for voice calls by using the EuroDOCSIS 1.1 and 2.0 service flows within the access network and multiprotocol label switching (MPLS) between the core routers. The Telephony Platform deploying PacketCable VoIP services is currently based on three geo-redundant Nortel CS2000 Compact telephony switching systems and one Nortel CS2000 XA-Core telephony switching system. Interconnection links currently exist with Deutsche Telekom, Verizon, Versatel and British Telecom. Network Operations Center Our NOC in Kerpen is a central facility designed to ensure around-the-clock network monitoring and network operation. It monitors the product platforms, the fiber backbone as well as active Level 2 and Level 3 equipment, including the last amplifier of the A line (i.e., the C amplifier), and facility equipment located in hubs. The NOC also features a dedicated equipment room that houses the Playout Center as well as headend and Digital TV Pay equipment (including a VoD server on site), ISP servers and voice switching services, as well as a testing laboratory that evaluates new equipment for all services, including Internet, digital television, voice, operations support and our HFC cable plant. The NOC is a highly capable facility capable of performing a range of monitoring functions, including remote diagnosis and fault fixes, surveillance of active parts of the network and acting as an interface and dispatching center to the service field force. It also operates mobile headends that can be deployed to back up faulty reception equipment or line failures anywhere in the region. The central technical service functions as well as the technical call center for our end customers are also located in the NOC, ensuring close communication between all parties and efficient end-to-end fault resolution processes. Competition The cable television, Internet access and telephony industries are competitive, and we face significant competition from established and new competitors in these areas. See Risk Factors Risks Relating to Our Industry We operate in competitive industries, and competitive pressures could have a material adverse effect on our business. Cable Television We face competition for housing association contracts within North Rhine-Westphalia and Hesse from Level 4 operators. In addition, certain housing associations own and operate Level 4 networks on behalf of others, and accordingly, may display certain characteristics similar to Level 4 operators. Level 4 operators typically enter into long-term contracts with housing associations and may have greater flexibility in their pricing strategies, which limits our opportunities to win new contracts with these housing associations and may hinder our efforts to effectively market our services to housing associations.

129

We further compete with the providers of digital pay TV products that currently utilize our network to reach their own subscribers. These providers may decide to develop or use alternative distribution platforms, such as free to air satellite, adversely affecting our ability to generate carriage fees and subscriber revenues, and potentially reducing the appeal of cable television. Certain digital pay TV providers, such as Premiere AG (now Sky Deutschland), have made use of their own the satellite platforms and introduced DVRs to provide additional functionality for those subscribers who receive their digital pay programming through satellite, thereby making satellite more attractive to potential customers. Satellite Although data is limited, one satellite industry source has published data indicating that for the whole of Germany the market share of satellite distribution decreased from 43 percent to 42 percent between 2005 and 2008, while the market share of cable television was stable at 52 percent (Source: Digitisation Report 2008, Association of Regulatory Authorities). While we provide our own satellite service through arenaSAT, the continued increase in the market share of satellite distribution, particularly free-to-air satellite, may have a negative impact on our cable television subscriber base in the future. Digital Terrestrial Transmission and Emerging Technologies We face significant competition from companies engaged in the terrestrial transmission of digital cable television, other means of television signal delivery and emerging technologies such as IPTV, hybrid television, OTT-TV and wireless broadband. Demand for digital terrestrial television may increase in the future as it becomes more widely available and the price of the receiving equipment decreases. Improvements are also being made to alternative means of transmission, such as the provision of video signals by Internet service providers. Marketing and competition from providers of video over the Internet, such as T-Home, an affiliate of Deutsche Telekom, may increase in the future. According to Screen Digest, as of June 30, 2009, Deutsche Telekom had approximately 561,000 active subscribers to its IPTV product, which is available in more than 1,000 cities across Germany using ADSL2+ technology. In addition, regionally-focused telecommunication network providers, such as Alice and Vodafone, also offer IPTV and VoD services, in particular VDSL services, in selected cities. To promote IPTV, competitors in the market are offering, among other things, free IPTV subscriptions and the ability to try the service with no obligation to subscribe. In addition, in other markets, such as the United States, a range of internet-based TV options such as AppleTV and Hulu have gained significant traction. The full extent to which these alternative technologies will compete effectively with our cable television system is currently not known. Broadband Internet Access We compete with companies that provide low-speed and low-cost (or potentially even free) Internet services over traditional telephone lines. For broadband Internet access, DSL is currently the dominant technology and Deutsche Telekom is the major DSL provider in Germany, followed by United Internet, Vodafone and Hansenet (owned by Telecom Italia). We also compete with service providers that use other alternative technologies for Internet access, such as satellite technologies or mobile standards such as UMTS. In the future, additional access technologies may be launched, which could further increase competition or force us to increase capital expenditure for additional upgrades. Telephony The market for residential telephony services is highly competitive. The fixed-line telephony services market is under increasing pressure from resellers, alternative carriers, declining mobile phone charges and alternative access technologies like VoIP and Internet telephony offered via DSL and other broadband connections. The German market for residential telephony services is relatively price sensitive and is price competitive when compared to similar product offerings in other European countries. We expect increasing competition, including price competition, from traditional and non-traditional telephony service providers in the future. Despite these pressures, Deutsche Telekom continues to be the dominant provider of fixed-line communications in Germany. Besides Deutsche Telekom, significant providers in the fixed-network sector include Vodafone, United Internet and Versatel. The success of alternative carriers and resellers varies by region, including, for example, the regional DSL operator NetCologne, which has gained significant market share for Internet and telephony services in cities such as Cologne and expanded to Bonn and Aachen.

130

Intellectual Property Third-Party Copyrights The German Copyright Act (Urheberrechtsgesetz) requires operators of cable networks to acquire rights for the retransmission of radio and television programs. Claims for royalties can exclusively be asserted by collecting societies (Verwertungsgesellschaften) and not by individual holders of copyrights themselves. As an exception, broadcasters can assert their rights individually. The German Society for Musical Performing and Mechanical Reproduction Rights (Gesellschaft fr musikalische Auffhrungs- und mechanische Vervielfltigungsrechte) (GEMA), a major German collecting society, has been mandated by most of the other relevant German collecting societies to collect royalties from the cable network operators, whereas various commercial broadcasters have mandated the collecting society VG Media to assert their rights. Together with the other major cable network operators we have entered into two agreements on annual royalty payments for protected works included in both analog and digital retransmissions with GEMA and VG Media. As the renewal of the collective agreement with GEMA failed, we continued making our royalty payments to both GEMA and VG Media at levels lower than our payment obligations under the previous agreements. After GEMA was not successful in claiming royalties based on a new tariff, in March 2009 GEMA and ANGA, the Association of German Cable Operators, signed a new collective contract (GEMA Contract 2009) for a period from 2007 to 2012. In April 2009, based on the GEMA Contract 2009 we entered into a separate license agreement with GEMA, which is representing other collecting societies, including public and some private broadcasters. Pursuant to the GEMA Contract 2009 the Level 3 cable operators are obliged to pay a total of 49 million for the year 2007. Our share in this aggregate number amounts to 32.41 percent or 15.9 million. For any subsequent periods, Level 3 operators may chose to pay 3.2505 percent of their BCS revenues (as published in their annual reports) or 3.3 percent of basic cable access revenues as defined in the GEMA Contract 2009 in greater detail. After the agreement with VG Media had expired at the end of 2005, we made payments on the basis of interim agreements setting forth preliminary fees. VG Media has initiated arbitration proceedings against us regarding the amount of royalty payments due under its new analog and digital tariffs. In March 2009, the arbitration panel ruled that the digital tariff was not applicable and that royalty payments due shall not exceed 1.1 percent of BCS revenues or 1.38 percent if an association discount did not apply. Both parties have objected to the arbitration panels decision. We are currently in negotiations with VG Media to explore a new contractual agreement. In addition, collecting society TWF claims that it is also entitled to royalty payments from cable network operators but it has not yet initiated litigation or arbitration against us. See Legal Proceedings Pending Intellectual Property Proceedings. Domain Names We have registered various domain names, including www.unitymedia.de. We also own numerous German and community trademarks, including Unitymedia, arena, arena live and arenaSAT. In March 2006, arena acquired the German trademark arena from arena media GmbH. However, the acquisition of that trademark does not guarantee that arena may freely use the name arena as there may be superior rights to the arena name held by prior right holders. The prior right holders could prohibit arena from using arena, forcing arena to rename its satellite platform, its pay TV products as well as its company name. In addition, prior right holders may bring a claim for damages to compensate for the infringement of their prior rights. Moreover, certain parties have filed oppositions against the registration of the trademarks arena, arena live and Unitymedia, including the public broadcaster, Mitteldeutscher Rundfunk (MDR), who has objected to the use of the brand arena. However, the dispute with MDR has been settled in connection with the conclusion of the new ARD distribution contract, and with other parties we have been able to settle the claims or agree on a contract of demarcation. In all other cases of oppositions, we will continue to defend our trademarks vigorously. See Risk Factors Risks Relating to Our Business Any negative impact on the reputation of and value associated with our brand, including as a result of the Acquisition or potential infringement of trademarks or similar rights of prior holders, could adversely affect our business.

131

Real Property The following table sets forth certain information with respect to the facilities that we currently operate and which we believe are of importance to our operations. We lease all of the following facilities.
Location Approximate Area (m2) Use of Facility

Cologne . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Kerpen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bochum (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Frankfurt am Main . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Marburg . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Krefeld . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Kassel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Technical sites . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10,745 8,850 8,365 2,270 1,488 1,380 840 965 9,645

Head office NOC and technical hot line Customer service Branch office Branch office Branch office Branch office Branch offices Technical sites

(1) Our lease for the customer service office in Bochum is currently scheduled to expire on December 31, 2009. We are negotiating an extension to this lease and evaluating other options.

We believe that our facilities meet our present needs and that our properties are generally well maintained and suitable for their intended use. We believe that we generally have sufficient space to satisfy the demand for our products in the foreseeable future, but keep flexibility to move certain operations to alternative premises. Employees and Pension Obligations As of September 30, 2009, we had 1,672 employees. The table below sets forth the number of permanent employees we employed as of the dates indicated.
September 30 2009 2008 December 31 2007 2006

Sales and marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Network and technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Customer services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Administration and finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . arena . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total number of employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

205 829 480 147 11 1,672

194 795 457 145 11 1,602

182 753 435 141 14 1,525

150 645 366 174 38 1,373

We have continued to increase the resources dedicated to our sales and marketing and customer services functions, increasing permanent sales and marketing headcount from 150 as of December 31, 2006 to 205 as of September 30, 2009 and permanent customer services headcount from 366 as of December 31, 2006 to 480 as of September 30, 2009. In connection with the acquisition of the predecessor company of Unitymedia NRW by Unitymedia Hessen, we integrated our network and technology and customer operations departments which resulted in a reduction of 42 employees in 2006. In 2007, we started to recruit additional headcount for our customer services as well as network and technology operations based on increasing customer growth. All of our employees work in Germany. The number of our employees has not changed significantly from September 30, 2009 to the date hereof. Approximately 10.8 percent of the Unitymedia Hessen and Unitymedia NRW employees have civil servant status. These employees have a permanent right to return to Deutsche Telekom upon giving us prior notice. We estimate that approximately one-third of our employees are members of a labor union, the German United Services Labor Union (Vereinte Dienstleistungsgewerkschaft or Verdi). We entered into a collective bargaining agreement with Verdi in 2002, which applies to 84.6 percent of our employees and provides for annual salary increases. Following the acquisition of the predecessor company of Unitymedia NRW by Unitymedia Hessen, we agreed with Verdi to renegotiate the collective bargaining agreements on a one-company basis to achieve a unified collective bargaining agreement. Furthermore, Verdi terminated the Compensation Tariff Agreement (Entgelttarifvertrag) in December 2007. In April 2008, the negotiations led to a new Compensation Tariff Agreement, which is valid retroactively from January 1, 2008. The new agreement resulted

132

in salary increases at Unitymedia Hessen, Unitymedia NRW and Unitymedia Services for 2008 and 2009. The Compensation Tariff Agreement is scheduled to expire in April 2010, which will include negotiations for a new collective bargaining agreement. As of September 30, 2009, approximately 7.0 percent of our employees were covered by a pension program that was transferred to us from Deutsche Telekom (compared to 7.5 percent as of December 31, 2008). The covered employees receive a percentage of the previous years gross income, multiplied by a variable age factor. As of September 30, 2009, we had 9.0 million reserved on our balance sheet relating to pension obligations and other long-term employee benefits (compared to 8.5 million as of December 31, 2008). As of September 30, 2009, an additional 10.8 percent of Unitymedias workforce participated in a pension plan with Deutsche Telekom. We are required to make monthly payments to Deutsche Telekom via a special fund (Untersttzungskasse) for each employee concerned. These payments equal 30 percent of the covered individuals gross civil servant salary (versorgungsfhige Beamtenbezge) and amount to approximately 700 to 1,500 per month per eligible person. Environmental Matters We are subject to a variety of laws and regulations relating to land use and environmental protection, including those governing the clean-up of contaminated sites. For example, in the past asbestos-containing materials and polychlorinated biphenyls have been identified at some of the facilities we lease from Deutsche Telekom. We believe the legal obligation to refurbish these facilities is entirely Deutsche Telekoms responsibility, and have no reason to believe that Deutsche Telekom has failed or would fail to fulfill its obligations. While we could incur costs, such as clean-up costs, fines and third-party claims for property damage or personal injury, as a result of violations of or liabilities under environmental laws and regulations, we believe that we are in substantial compliance with applicable requirements of such laws and regulations. Insurance We have insurance coverage under various liability and property insurance policies for, among other things, damages in the areas of operations, environmental liabilities and business interruption. Our own fixed assets such as technical, IT and office equipment in our NOC, hubs and headends, office locations and warehouses (except for the buildings (leases)) and except for our cable network (cable, fiber in the ducts and amplifier points in street cabinets) and parts of our current assets are protected by a bundled industrial insurance policy (damages from fire, catastrophes, burglary, piped water, storm and hail) that includes a business interruption insurance when business interruption is caused by an insured property damage. We do not have insurance coverage for all interruption of operations risks because in our view, these risks cannot be insured or can only be insured at unreasonable terms. There is also no protection against the risk of failure by customers to pay. We also have various legal services and motor vehicle insurance policies including third-party liability insurance as well as fully comprehensive coverage for our vehicle fleet. For all members of the management board and the supervisory board as well as certain other persons within Unitymedia a directors and officers liability insurance exists (D&O insurance). The D&O insurance policy has no deductible. In our view, the existing insurance coverage, including the amounts of coverage and the conditions, provides reasonable protection, taking into account the costs for the insurance coverage and the potential risks to business operations. However, we cannot guarantee that no losses will be incurred or that no claims will be filed against us which go beyond the type and scope of the existing insurance coverage. Legal Proceedings We are involved in a number of legal proceedings that have arisen in the ordinary course of our business. Other than as discussed below, we do not expect the legal proceedings in which we are involved or with which we have been threatened to have a material adverse effect on our business or consolidated financial position. The outcome of legal proceedings, however, can be extremely difficult to predict with certainty, and we can offer no assurances in this regard.

133

Pending Intellectual Property Proceedings The collecting society VG Media initiated arbitration proceedings on behalf of various commercial broadcasters against all four major cable operators (including Unitymedia NRW and Unitymedia Hessen) to declare their new tariffs for the retransmission of radio and television programs adequate, which had been rejected by the cable operators. VG Media requested that a new tariff apply with retroactive effect as of January 1, 2006, which would provide for royalty payments of 2.09 percent of the relevant subscriber revenue for analog retransmissions and 2.51 percent of the relevant subscriber revenue for digital retransmission. The new tariff would more than double our current preliminary royalty payment obligations of approximately 4.59 million per calendar year under the existing interim agreement with VG Media, which terminated at the end of December 2008, but was extended until the end of 2009 on the basis of a payment of 2.75 million plus VAT per calendar year. In March 2009, the arbitration panel ruled that the digital tariff was not applicable and that royalty payments due shall not exceed 1.1 percent of BCS revenues or 1.38 percent. if an association discount did not apply. Both parties have objected to the arbitration panels decision. We are currently in negotiations with VG Media to explore a new contractual agreement. The collecting society TWF has asserted that it is also entitled to royalty payments from cable network operators, but it has not yet initiated litigation or arbitration against us. Other Material Legal Proceedings Subsequent to our termination of a service agreement dated July 14, 2004 between Unitymedia NRW and Chellomedia Programming B.V., an indirect subsidiary of LGI (Chellomedia), for provision of video-on-demand and near-video-on-demand services on May 24, 2006, Chellomedia initiated litigation against Unitymedia NRW in the District Court of Amsterdam, The Netherlands, on April 21, 2008 to enforce claims for compensation in the amount of 5.9 million. We believe that Unitymedia NRW does not owe any compensation to Chellomedia and will defend our position. The litigation is ongoing, with a court decision expected in November 2009, subject to adjournment. arena is party to a dispute with Mediamarkt-Management Gesellschaft/Saturn Management Gesellschaft mbH (Mediamarkt/Saturn) in connection with several agreements entered into regarding the marketing of arena subscriptions in Mediamarkt and Saturn stores. Mediamarkt/Saturn claim payment of the amount of 4.6 million from arena, whereas arena raised counterclaims against Mediamarkt/Saturn and has claimed a net settlement in the amount of 1.0 million. arena has initiated litigation proceedings against Mediamarkt/Saturn. The Federal Cartel Office has initiated regulatory proceedings against us and other German cable network operators and pay TV providers under the provisions on market dominance regarding market foreclosure effects resulting from our set-top box procurement strategy and the encryption technology used therein. See Risk Factors Risks Relating to Regulatory and Legislative Matters The German Federal Cartel Office has initiated regulatory proceedings against us and other German cable network operators and pay TV providers, which may adversely affect our revenues or lead to other disadvantages. The consumer protection association (Verbraucherzentrale) in North Rhine-Westphalia has obtained a first instance judgment of the district court (Landgericht) of Cologne against us, holding that our agents or representatives have placed marketing calls to consumers without obtaining the consumers prior consent to receive such marketing calls. We have filed an appeal against this court decision. In August 2009, newly enacted legislation imposed additional restrictions for outbound telesales. Also, Deutsche Telekom has obtained a preliminary injunction against us that prohibits us from making marketing calls to consumers without obtaining such consumers prior consent to receive marketing calls. See Risk Factors Risks relating to our Business Consumer protection associations and other entities monitor the conditions we impose on, and our interactions with, our customers. GemStar-TV Guide International, Inc. (now renamed to Rovi) holds a large patent portfolio related to electronic program guide (EPG) products and services (more than 1,300 issued patents and 900 patent applications worldwide, including more than 80 issued European patents). On February 26, 2009 GemStar alleged that Unitymedia infringes upon at least three of these patents. Gemstar claims that any pay-TV operator must acquire from Gemstar an EPG-License for its digital TV services irrespective of whether cable operators only distribute TV-signals or STB were provided by third parties. Therefore, GemStar claims that any of our cable customers who receive digital TV (free-TV or pay-TV) is infringing GemStars patents by using EPG functionalities which involve GemStars patents and that we as a service provider are liable for such infringements regardless of whether any individual cable customer uses an STB rented from Unitymedia, an own

134

device or a STB from a third party. Gemstar has discussed potential solutions for historical items; however, we believe that both the historical and future claims asserted by Gemstar lack merit. GemStar has threatened to initiate litigation against Unitymedia for patent infringement, and if litigation is initiated we will accordingly defend our position. In September 2009, Sky Deutschland initiated arbitration proceedings against arena, Unitymedia NRW and Unitymedia Hessen. In the arbitration proceedings, Sky Deutschland alleges that the Premiere Bundesliga product distributed in the network of Kabel BW GmbH & Co. KG (Kabel BW) was made available to a significantly larger number of subscribers than Kabel BW reported to arena, and arena subsequently reported to Premiere, and Sky Deutschland therefore has made an initial claim of 30 million and indicated that it believes that it may be entitled to a significantly larger amount. The claim may be significantly increased during the course of the proceedings. In the arbitration proceedings, Sky Deutschland claims that Kabel BW distributed the same limited Free Bundesliga Friday offer as Unitymedia Cable, and claims wholesale payments for the full premium product over Kabel BWs entire subscriber base. In addition, Sky Deutschland alleges that Unitymedia wrongfully continued to distribute non-Bundesliga content to its cable subscribers after the term sheet agreement providing for such distribution was cancelled in July 2007. Moreover, Sky Deutschland alleges that Unitymedia did not account for the correct number of smartcards activated for the Premiere Bundesliga product and thus did not pay the full amount owed to Premiere. We believe that the claims asserted in the arbitration proceedings lack merit and will accordingly defend our position. Material Contracts The agreements described below are or have been in the last three financial years of material importance to the Company or a company of the Unitymedia Group. Agreements concluded in the ordinary course of business are not described. For a description of our material financing agreement, see Description of Other Indebtedness. Material Supply Contracts Agreements with Deutsche Telekom We have entered into various long-term agreements mostly with Deutsche Telekom that are significant to our business. We estimate that we lease, pursuant to these agreements, cable duct space for approximately 10.6 percent and 11.6 percent of the cable network of Unitymedia Hessen and Unitymedia NRW, respectively, as well as the use of fiber optic transmission systems, tower and facility space. In addition, we purchase the electrical power required for the operation of our network through Deutsche Telekom under such agreements. Master Service Agreements The various services offered by Deutsche Telekom are defined under so-called Term Sheets that are based on two MSAs, one with Unitymedia Hessen and one with Unitymedia NRW. The Term Sheets govern the co-use of cable ducts, the use of cable protection tubes, the offer of co-use of further cable ducts, the use of fiber optic transmission systems, the lease of space for broadband cable technology and the purchase of energy for broadband equipment. Except for the Term Sheets on the offer for co-use of further cable ducts, which have already expired, the terms of the Term Sheets are generally indefinite, but the Term Sheets are subject to certain termination rights and, according to German law, lease agreements are subject to a mandatory statutory termination right of either party after a term of 30 years. Furthermore, the MSAs and most of the Term Sheets with Unitymedia Hessen and Unitymedia NRW provide for various termination restrictions for Deutsche Telekom according to which Deutsche Telekom is generally not entitled to terminate the services provided under the Term Sheets on co-use of cable ducts (not including the offer of co-use of further cable ducts), cable protection tubes, fiber optic transmission systems or lease of space for broadband cable technology except under certain circumstances that are related to situations in which Deutsche Telekom discontinues the use of assets previously used for the provision of the respective services, intends to transfer the assets to a third party or intends to abandon leased space in its function as space used for technical purposes. The charges for the individual services are set out in the Term Sheets. The MSAs include price adjustment clauses related to a change of Deutsche Telekoms costs. Under the MSA with Unitymedia NRW, price increases may not exceed the increase of the German cost of living index and a decrease may not fall below the prices as of October 1, 2002 set out in the individual Term Sheets. Some of the Term Sheets provided for fixed-price periods which, however, have already expired. Furthermore, there have been issues with Deutsche Telekom as to the charges, quality and accessibility of leased surfaces in relation to the Term Sheet governing lease space for

135

broadband cable technology. Discussions about the increase and of charges under the Term Sheet governing the supply of energy for broadband equipment are pending and may lead to disputes, but no litigation has been initiated. It cannot be excluded that such disputes ultimately could result in higher costs for Unitymedia under the Term Sheets. We are currently discussing terms of an agreement proposed by Deutsche Telekom relating to the lease of additional surfaces, which as proposed includes an obligation to separate technical equipment. We do not expect to enter into an agreement related to these surfaces in the near future. Both MSAs exclude either partys liability for lost profits of the other party. Under the MSA with Unitymedia Hessen, either partys liability is limited to 100.0 million in case of property damage. Otherwise it is limited to ten percent of the annual net charge per damaging event and to an annual total of 30 percent of the annual net charge payable under the respective Term Sheet. In addition, in an amendment agreement to the MSA of April 2005, Unitymedia Hessen agreed to indemnify Deutsche Telekom for any previous or future damage caused by the laying of cables owned or used by Unitymedia Hessen. The MSA with Unitymedia NRW limits Deutsche Telekoms liability in case of slight negligence to 10 million per damaging event and to 65 million per calendar year in relation to all Term Sheets, collectively. Deutsche Telekoms liability for services procured from third parties is excluded, but Deutsche Telekom assigns its claims against the respective supplier to Unitymedia NRW. In addition, Unitymedia NRW entered into a settlement agreement with Deutsche Telekom in November 2006 pursuant to which the parties amended the individual Term Sheets and settled various open issues, including those regarding the responsibility and liability for previous and future damages caused by the laying of cables owned or used by Unitymedia NRW. Unitymedia NRW agreed to take over responsibility up to an amount of 100,000 per calendar year, above which the responsibility has to be determined. BRN Agreements Unitymedia Hessen and Unitymedia NRW have each entered into BRN agreements with Deutsche Telekom, under which Deutsche Telekom is to install, make available and operate fixed-line broadband and broadcasting distribution networks. These networks, which are made up of optical leased lines, replaced the AMTV technology and analog lines of both Unitymedia Hessen and Unitymedia NRW, as well as, in the case of Unitymedia Hessen, the Diamant system, and in the case of Unitymedia NRW, microwave, satellite and radio transmission capacity. Unitymedia Hessen and Deutsche Telekom entered into the BRN-Unitymedia Hessen agreement in March 2005 with six amendments in 2006 and 2007 under which Deutsche Telekom agreed to build, make available and operate a uni-directional fixed-line broadband and broadcasting distribution network in the 630 MHz spectrum. Similarly, Unitymedia NRW and Deutsche Telekom entered into the BRN-Unitymedia NRW agreement in March 2004, with six amendments during 2005-2008, under which Deutsche Telekom agreed to design, build, make available and operate a fixed-line broadband and broadcasting distribution network in the 574 MHz spectrum with feedback channel preparation and an option to order an upgrade to 630 MHz with one feedback channel or 862 MHz with five feedback channels. Both the BRN-Unitymedia NRW agreement, as amended, and the BRN-Unitymedia Hessen agreement, as amended, will terminate on December 31, 2009 and be replaced by a successor BRN agreement entered into by Unitymedia NRW and Deutsche Telekom in March 2009 unless either party objects to such termination within that period. Both Unitymedia NRW and Unitymedia Hessen are entitled to receive services from Deutsche Telekom under the new BRN agreement. The services previously provided under the old BRN-Unitymedia Hessen agreement and BRN-Unitymedia NRW agreement are combined and the analog optical broadband cable connection lines (BKVLs) that were the subject of one of the Term Sheets between Unitymedia NRW and Deutsche Telekom are transferred to the new BRN agreement. In addition, the agreement provides the basis for an extension and upgrade of optical BKVLs with a frequency range of up to 862 MHz. The agreement is structured as a framework agreement with a minimum term until December 31, 2017 and more flexible termination rights compared to the old BRN agreements; it also amends the termination rights under the Term Sheets to give Unitymedia more flexibility. The agreement may be terminated by either party without a termination fee with 12 months notice effective as of the end of a calendar year. Individual optical BKVLs or optional services can generally be terminated by Unitymedia with 12 months notice effective as of the end of a calendar month or, in the case a termination takes effect prior to December 31, 2012 and reduces the number of optical BKVL that have not been terminated to less than 263, 24 months notice effective as of the end of a calendar month. Starting 2014, Deutsche Telekom may terminate up to ten percent of the then-current lines in the years 2014, 2015, 2016 and 2017 and up to 20 percent of the then-current lines in the years 2018 and 2019 with 24 months notice. Termination of the framework agreement does not automatically terminate individual services

136

of Deutsche Telekom. We have the right to terminate lines subject to the BRN agreements and have done so in most of our upgraded areas where we have either built our own fiber or leased dark fiber from third parties. Currently only five percent of our upgraded networks are subject to the BRN agreements. The base fee under the new BRN agreement will be gradually reduced, such reduction ranging from 68 percent (starting January 1, 2014) to 100 percent (i.e., no more base fee) over the subsequent years. Prices for all additional services will be more than 30 percent lower than under the old BRN agreements. The budgeted charge for the year 2010 under the new BRN agreement amounts to approximately 12.9 million. The charges are payable in 12 monthly installments and are borne by Unitymedia NRW. Deutsche Telekoms liability in case of negligence is limited per damaging event to 12.5 percent of the annual charges agreed for all services in the preceding year and Deutsche Telekoms liability within a calendar year is limited to 25 percent of the total annual charges payable for all services under the agreement in the year preceding the damaging event. In the first contract year, this is based on the amount of the agreed annual service charge. In relation to damage claims of customers against Unitymedia, Deutsche Telekoms liability is limited based on the statutory limitation according to the German Telecommunications Act, i.e., 12,500 per end customer and a total of 10 million per damaging event. Interconnection with Deutsche Telekom In order to deliver telephony services to our customers, Unitymedia NRW entered into a voice interconnection agreement with Deutsche Telekom. Although this agreement was terminated as of June 30, 2003, the Federal Network Agency subsequently ordered the continuation of the voice interconnection on the basis of the standard Deutsche Telekom interconnection agreement, with certain changes, for an indefinite period of time. This interconnection agreement with Deutsche Telekom is a standard agreement as the interconnection regime is heavily regulated. In addition, we entered into several amendments to the interconnection agreement with Deutsche Telekom under which we extended the scope of services provided by Deutsche Telekom to us. Other Interconnection Agreements In addition to our interconnection agreement with Deutsche Telekom, we have entered into interconnection agreements with other major operators of interconnection networks, including BT (Germany) GmbH & Co. oHG (BT Germany), MCI Deutschland GmbH (Verizon), QSC AG, Versatel Sd GmbH and Vodafone (formerly Arcor AG & Co KG); an interconnection agreement with Telefnica is likely to be signed in the near future. These interconnection agreements generally provide for the interconnection of telecommunications networks to forward and terminate traffic into or through certain national and international fixed-line and mobile networks. The terms of the interconnection agreements are generally indefinite, in some cases after a fixed initial term and in the case of BT Germany an initial term of 18 months with automatic renewal by 12 months periods. The agreements are subject to termination rights with between one to six (mostly three) months notice prior to the end of the relevant period. Of those agreements providing for an initial term, the initial term of each agreement except for the agreement with QSC has already ended. Under the agreements, prices are calculated based on a charge per minute per connection, with no minimum commitments except in the case of the BT Germany (25,000 per calendar month, but only during the first 12 months of the term) and Versatel Sd (150,000 minutes per calendar month and per point of interconnection) agreements. Agreements Regarding the Use of Fiber Optic Cables In 2007 and 2008, Unitymedia NRW and Unitymedia Hessen entered into several agreements (including a framework agreement) with GasLINE Telekommunikationsnetzgesellschaft deutscher Gasversorgungsunternehmen mbH & Co. KG (GasLINE) for the use and maintenance of fiber optic cables, under which the right to grant the use of dark fiber to third parties is expressly excluded. The agreements have an initial term of 18 years (in case of the framework agreement, an initial term is ten years) in relation to each of the leased cables as of the date on which such cables were made available. Some of the agreements grant an option to Unitymedia NRW to extend the term of each of the cables by up to 12 years. The right to terminate for convenience (ordentliche Kndigung) is excluded. The budgeted charge for the cables in 2009 amounts to a total of approximately 600,000 for Unitymedia NRW and Unitymedia Hessen. It consists of a one-time installation fee, an annual lease fee per meter of the leased cable and an annual maintenance fee per meter of the leased cable. The annual lease fee is subject to adjustment based on the German index for producers costs of commercial products in Germany (Index der Erzeugerpreise gewerblicher Produkte (Inlandsabsatz)) and the

137

annual maintenance fee is subject to adjustment based on the development of wages under the relevant collective labor agreement. Both adjustment rights have been exercised by GasLINE in the past. Since 2001, Unitymedia Hessen and Unitymedia NRW have entered into several similar agreements for the use and maintenance of fiber optic cables with other providers of fiber optic cables (e.g., MIT Teleport Mnchen GmbH, Conlinet GmbH, WinGas) with durations of mostly 18 to 20 years and automatic extension by one year terms, under which Unitymedia Hessen or Unitymedia NRW, as applicable, have extension rights for up to five years. Other Significant Supply Agreements Premiere (now Sky Deutschland) / MSG On July 19, 2007, we announced our entry into the Premiere Agreements, which led to the Federal Cartel Offices written confirmation that it had completed its formal review of the original cooperation agreement. This new set of agreements includes the distribution of the Premiere (now Sky Deutschland) content in a pass-through model for a six-year term with effect as of January 1, 2008. The distribution contract replaces the former MSG distribution contract which Unitymedia was bound by until December 31, 2007. Instead of being technically implemented via the MSG digital platform, Premiere (now Sky Deutschland) content and all other digital programming are being implemented via Unitymedias platform. Therefore, the parties agreed to implement a smartcard exchange in order to avoid future use of MSG smartcards. The smartcard exchange was carried out in February 2008. Nagravision On August 31, 2007, Unitymedia NRW and Nagravision agreed on an amendment to the conditional access system agreement dated March 17, 2004, under which Nagravision agreed to (i) sell and install parts of Unitymedia NRWs conditional access system, including hardware equipment; (ii) grant licenses for the respective intellectual property rights for the conditional access system; and (iii) provide maintenance, support and security services to Unitymedia NRW. We also ordered smartcards under this agreement. The amendment agreement introduced revised and improved terms for the acquisition of smartcards and for determining the responsibilities relating to a security breach. Under the amendment Unitymedia NRW may not terminate the agreement before December 31, 2009, except for cause. Subject to certain notice requirements, Nagravision may terminate the maintenance and support agreement if it becomes unable to maintain and support the conditional access system under certain conditions. In early 2006, Nagravision confirmed that there had been a breach of security with respect to certain smartcards in the system. Unitymedia NRW has cooperated with Nagravision in counteracting the effects of the breach and will continue to implement measures to that effect, including the replacement of first generation smartcards in 2008 and the introduction of new variants of smartcards in the third quarter of 2008. In 2007, we ordered additional components, services and smartcards in connection with our agreement with Premiere, whereby Unitymedia will provide conditional access services and smartcards. This will allow subscribers to have access to Unity Digital TV and Premiere (now Sky Deutschland) programs via a single smartcard. CryptoWorks Agreement On March 22, 2006, Arena Sport Rechte und Marketing GmbH entered into the CryptoWorks Agreement with Philips Digital Networks B.V., acting through its business unit Philips CryptoTec regarding conditional access services. In January 2007, Philips Digital Networks B.V. assigned the CryptoWorks Agreement to Irdeto Access B.V.. Irdeto Access B.V. agreed to provide arena with its conditional access system for the distribution of arenas pay TV and potential pay-per-view offers by cable and satellite. The system consists of certain hardware, software and technical services necessary to securely deliver the pay TV products of arena and/or its affiliates and to ensure that customers have conditional access to these products. Pursuant to the CryptoWorks Agreement, Irdeto Access B.V. shall render the services until June 30, 2009. An extension of the term until June 30, 2010 has been agreed. Betacrypt Agreements On April 21, 2005, Unitymedia NRW entered into the Betacrypt Agreements with Premiere AG (now Sky Deutschland AG), SCAS, Nagra and BetaResearch. These agreements were subsequently modified in June, September and October 2005.

138

The Premiere Agreements amended the Betacrypt Agreements and removed the restrictions preventing cable subscribers in NRW and Hesse from having access to both Digital TV Pay and Premiere (now Sky Deutschland) content via a single smartcard. Convergys On December 18, 2000, Convergys granted Unitymedia NRW a non-transferable and non-exclusive license to use the CableMaster software for its customer support and billing operations. The license agreement is effective for the longer of (a) the duration of the copyright of the licensed program materials and derivative works or (b) 50 years. On May 8, 2006, Convergys and Arena Sport Recht and Marketing GmbH entered into a new Software License Agreement thereby granting arena a perpetual, non-transferable and non-exclusive license within the territory of the European Union for Pay-TV services including pay-per-view services. The license is subject to the termination provisions applicable under German law. An amendment agreement was entered into in December 2007 by Convergys Information Management Group INC, Convergys EMEA Ltd., Unitymedia NRW GmbH and Unitymedia Hessen GmbH & Co. KG, whereby the number of perpetual licenses purchased was increased to provide for the inclusion of subscribers in Hesse. The maintenance and support agreement was also renewed and extended to December 2010 based on a clause providing for an automatic renewal for one year terms. It may be terminated by Convergys if Unitymedia NRWs hardware or operating software cease to be able to run the system successfully. The license agreement may be terminated for cause by either party. Nortel On December 21, 2007, Unitymedia NRW and Nortel GmbH entered into a contract on the deployment and installation of hardware and software (Purchase and Installation Agreement) to expand the new voice platform on a price per line basis to meet the customer growth and provide additional functionality, and to replace the original switch which was delivered in 2001. The agreement does not provide for a specific term, but sets out certain discounts for each of the years 2008 to 2011 and beyond in relation to the service charges payable under two service level agreements between the parties. Nortel is obliged under the Purchase and Installation Agreement to provide spare or replacement parts for voice equipment for a period of eight years and in case of optical equipment ten years from delivery at its then prevailing prices. Furthermore, Nortel GmbH is obliged to offer software support for a period of ten years from the date of delivery at its then prevailing prices. Also on December 21, 2007, Unitymedia NRW and Nortel GmbH entered into two service level agreements for central office voice equipment and central office optical equipment, both agreements pertaining to technical support services in relation to network components delivered and installed by Nortel. The agreements have an initial term from May 1, 2007, to December 31, 2008, and while not formally extended are being performed by both parties with charges based on the discounts provided for in the Purchase and Installation Agreement. On January 14, 2009, Nortel Networks Corp. filed for bankruptcy protection under the Canadian Companies Creditors Arrangement Act, Chapter 11 of the U.S. Bankruptcy Code and administration under English insolvency law. Unitymedia is actively working with Nortel GmbH to ensure contractual compliance for its support obligations, as well as evaluating alternative and back-up solutions. Cisco/Scientific Atlanta In 2007, Unitymedia NRW entered into an agreement with Scientific Atlanta (SA), a Cisco company, to update, expand and support its digital headend equipment. In December 2007, Unitymedia NRW entered into another agreement with Cisco whereby Cisco agreed to provide Cable Modem Termination System (CMTS) equipment in 2008 for NRW and/or Hesse, together with Multi Media Terminal Adaptors (MTAs), which are the voice-enabled cable modems. Motorola In 2006, Unitymedia NRW entered into an agreement with Motorola GmbH under which Motorola GmbH agreed to replace part of the existing CMTS platform and provide new CMTS for Unitymedia NRWs expansion. Motorola GmbH also provides Unitymedia NRW with MTAs and cable modems. STBs During 2007, Unitymedia purchased new STB variants from Samsung and Technotrend based on the Nagravision international Conditional Access Kernel, which include features that optimize the user experience when watching the digital content provided by Unitymedia. The orders placed supported the higher subscriber growth; no long-term commitments were made to the manufacturers.

139

Other Network Agreements We also lease fiber capacity in connection with the network upgrade from other telecommunications service providers under several dark fiber service agreements. In particular, we are a party to several dark fiber, as well as hardware and software agreements in connection with the integration of the Unitymedia networks. Where an amount has been prepaid upon signing of the agreement, it is amortized over the life of the agreement resulting in a non-cash charge to our income statement. In connection with the integration of the Unitymedia Hessen and Unitymedia NRW networks, Unitymedia Hessen also entered into an agreement with Circular Informationsysteme, which provides certain technical elements necessary for the connection of the Unitymedia NRW and the Unitymedia Hessen networks. Moreover, Unitymedia NRW entered into several interconnection agreements with other telecommunications providers under which certain interconnection services, especially national and international call termination services, are provided to and by Unitymedia NRW, see Other Interconnection Agreements. Feed-in Agreements We have entered into numerous feed-in agreements with public and commercial broadcasters for the analog and/or digital non-pay and pay carriage of their signals. The most important feed-in agreements are with the public broadcasters (ARD and ZDF), the RTL Group and ProSiebenSat.1. Content Agreements For our digital cable television offerings, we are party to a number of content agreements with content providers, including individual channels, in particular ARD and ZDF, as well as the History Channel and Fox, as well as Mediapool, a provider of international content. The majority of our content agreements provide for the payment of a variable fee to the content provider per subscriber per month, with low if any minimum guaranteed payments. As more premium content becomes available in our markets, however, we may be increasingly required to make certain minimum subscriber guarantees in order to secure rights to such content. In general the terms of these agreements vary from one to seven years and typically contain automatic extension clauses for additional one-year periods unless terminated within the three to six month notice periods. Some agreements provide that although we do not have to pay a fee to the broadcaster, we may retransmit the program. See Business Intellectual Property.

140

REGULATORY Introduction Our business is subject to various regulatory requirements and obligations including the telecommunications and media laws, general antitrust law as well as technical and other regulations. Telecommunications Regulation The telecommunications business in Germany is subject to the regulatory regime of the German Telecommunications Act and certain ordinances promulgated under the German Telecommunications Act. The German Telecommunications Act covers the transport of any signal by telecommunications installations, encompassing TV signals, Internet data transport and voice telephony, all of which we provide. The German Telecommunications Act contains provisions regarding, among other things, (i) the establishment and powers of a regulatory body, the Federal Network Agency (Bundesnetzagentur); (ii) notification requirements; (iii) the allocation of frequencies; (iv) the regulation of fees for telecommunications services; (v) interconnection and access obligations; and (vi) rights of way. The last amendment of the German Telecommunications Act of August 14, 2009 came into effect on August 20, 2009. Ordinances prescribe further details in respect of and in addition to certain sections of the German Telecommunications Act. The German regulatory framework is predominantly based on the European regulatory framework. In the latest major reform, the European Union adopted a series of six directives in 2002 (the Telecom Package) to establish effective and regulated competition in the electronic communications market in Europe. The Telecom Package includes Directive (2002/21/EC) on a common regulatory framework for electronic communications networks and services, Directive (2002/20/EC) on the authorization of electronic communications networks and services, Directive (2002/19/EC) on access to, and interconnection of, electronic communications networks and associated facilities, Directive (2002/22/EC) on universal service and users rights relating to electronic communications networks and services, Directive (2002/58/EC) on the processing of personal data and the protection of privacy in the electronic communications sector and Directive (2002/77/EC) on competition in the markets for electronic communications networks and services. The implementation of the Telecom Package into the German Telecommunications Act came into effect on June 26, 2004. Directive 2002/58/EC has been amended in 2006 by Directive (2006/24/EC) on the retention of data. The amendment has been implemented into the German Telecommunications Act and came into effect on January 1, 2008 providing for special time periods in which telecommunications providers are obliged to ensure compliance with the retention of data obligations set out in the Directive 2006/24/EC. The European Parliament and the Council of Ministers have recently reached an agreement on all provisions of a revision of the Telecom Package. Following final votes by the parliament and council which are scheduled for late November 2009, the legislation is expected to come into force in early 2010. The telecoms legislation covers a broad range of issues, including setting up a European Body of Telecoms Regulators (BEREC), which is expected to start work in spring 2010. The new European Body of Telecoms Regulators will be consulted in connection with regulatory proceedings and otherwise support the European Commission and the national regulators. The revision also strengthens the rights of the European Commission to participate in national regulatory procedures. Other issues addressed by the revised Telecom Package include shortening the time to change the fixed or mobile telephone provider to one day while keeping ones old telephone number (number portability), thus facilitating the change of providers and thus heightening competition. Moreover, access to emergency services by extending the access requirements from traditional telephony to new technologies and consumer information, in particular such provided by operators in their contracts on service quality and information in the event of data protection breaches, shall be improved. Measures taken by Member States regarding end-users access to internet services, e.g. when disconnecting internet users for suspected illegal activity online, must respect the fundamental rights and freedoms of natural persons. In such case, a prior fair and impartial procedure shall be guaranteed, including the right to be heard of the person concerned. Furthermore, the national telecoms authorities shall have the powers to set minimum quality levels for network transmission services so as to promote the same quality of service irrespective of the technology used and to prevent discrimination of services. In addition, the tool of functional separation of network operators is introduced. National regulators may order functional separation as a last-resort remedy, requiring undertakings to place activities related to the wholesale provision of access products in an independently operating business unit. Unlike full ownership unbundling, separate ownership is not required. EU countries will have 18 months to

141

incorporate the entire legislation into their national laws. In addition hereto, under a new Directive (2009/114/EC) amending the GSM Directive, the spectrum usage provisions have been changed so as to improve technology and service flexibility in spectrum use, in particular making it easier for operators to introduce innovative mobile broadband services, thus strengthening our competitors. Further measures to strengthen broadband services are being planned and have partly already been adopted by the European Commission, such as subsidies for broadband coverage under the European Broadband Gap Policy. Market analysis procedure Important aspects concerning the regulation of access and fees for telecommunications markets, including transmission of broadcasting signals, internet and telephony services, are determined by a market definition and analysis procedure which is further specified in the German Telecommunications Act and is conducted by the Federal Network Agency. The outcome of this market analysis must be in line with the European regulatory framework. In particular, national regulators must take into account the European Commission recommendation on relevant product and service markets within the electronic communications sector which defines the markets that shall be analyzed. Before adopting a market analysis the Federal Network Agency must consult interested parties, the European Commission and the regulatory authorities of other European Union member states. The same is true before adopting subsequent remedies provided that such measures would affect trade between member states. The European Commission had initially defined 18 relevant telecommunications markets in the Recommendation (2003/311/EC) on relevant markets of February 11, 2003. Since then the Federal Network Agency analyzed such markets and decided whether such markets require sector-specific regulations. The market analysis carried out by the Federal Network Agency for each of the markets has to be renewed every two years. The European Commission passed a revised Recommendation 2007/879/EC on relevant product and service markets dated December 17, 2007 reducing the number of defined markets from 18 to 7, partly by merging markets and partly by limiting the scope of the regulation. For instance, the market for broadcasting transmission services (market number 18) has been deleted from the list of markets which need, in the view of the European Commission, prior regulation by the national regulators. Thus, the broadcasting markets which are currently subject to specific fee and access regulation rules might not be subject to regulation in the next market analysis procedure. The particularities of the German cable market could, nevertheless, prompt the Federal Network Agency to continue regulation. The Federal Network Agency already started to release some areas from ex ante regulation. The Regulatory Body The Federal Network Agency is responsible for the regulation of the German telecommunications market. It is an independent governmental body and responsible for the regulation of telecommunications network operators and service providers. The Federal Network Agency has various powers with respect to the enforcement of telecommunications laws and ordinances. All decisions of the Federal Network Agency may be challenged before the competent administrative court (Verwaltungsgericht) in Cologne and further appealed at higher instances. In addition, the Federal Cartel Office has powers under the German Act against Restraints of Competition (Gesetz gegen Wettbewerbsbeschrnkungen) that prohibits the abuse of a market-dominant position as well as the distortion of competition through agreements or collusive behavior by market participants. Similar powers are vested with the European Commission under the EC Treaty and implementing European Regulations. Notification Requirements The German Telecommunications Act provides for an obligation to notify the Federal Network Agency of the commencement, any modification and the termination of the operation of a public telecommunications network and of the offering of telecommunications services to the public. Interconnection and Access Obligations Every operator of a public telecommunications network, irrespective of its market position, is obligated upon request to offer interconnection with its network to other network operators. If the parties cannot agree upon the conditions of such interconnection, the Federal Network Agency can impose on an operator that controls access to end customers the obligation to provide interconnection and other access obligations upon application by one of the parties.

142

The regulatory powers of the Federal Network Agency are comprehensive vis--vis operators with significant market power, irrespective of their granting access to end customers. Based on a market analysis, the Federal Network Agency may impose operators of public telecommunications networks with significant market power various obligations to interconnect and to grant other undertakings access to their telecommunications networks for the provision of telecommunications services. The Federal Network Agency has some discretion to determine whether and how access must be granted. However, any such obligation imposed by the Federal Network Agency must be reasonable in light of the circumstances of each individual case. The obligations imposed by the Federal Network Agency may encompass, among others, obligations to grant third parties access to certain network components and services used in connection with the provision of telecommunications services, to offer unbundled services, to offer the resale of their telecommunications services on a wholesale basis, as well as transparency and non-discrimination obligations. When a non-discrimination obligation has been imposed, access must be granted on the same conditions that apply to the providers own use of such facilities and services. If a third-party undertaking requests an offer for access or interconnection from an operator of a public telecommunications network with significant market power and the parties fail to come to an agreement in this respect, the Federal Network Agency is, upon application, entitled to order the access and the terms and conditions (including fees) of such access. Moreover, providers of telecommunications services with significant market power must generally not abuse their market power. Such abuse is assumed when the provider offers services used by himself or his affiliates to competitors only under discriminatory conditions. Our Interconnection and Access Obligations We are subject to the general interconnection obligation of every telecommunications operator in respect of those parts of our telecommunications networks that have bi-directional transmission capability and are used for public telecommunications services. We have entered into various interconnection agreements, with Deutsche Telekom and other network operators. See Material Supply Contracts Agreements with Deutsche Telekom and Material Supply Contracts Other Interconnection Agreements. The Federal Network Agency has carried out market analyses with regard to different telecommunications markets, among others the market for radio and television broadcasting services (market 18 of the Recommendation 2003/311/EG), and has determined which companies are deemed to have significant market power in these markets and if these companies will be subject to regulatory requirements. In a Federal Network Agency decision of April 17, 2007, Unitymedia was held to have significant market power in the markets for broadcasting transmission services, i.e. the feeding-in of broadcasting signals into our networks, and delivering broadcasting signals to Level 4 network operators with clusters (e.g. an apartment block) of not more than 500 housing units. The Federal Network Agency also imposed certain additional obligations on us. With regard to our services for broadcasters to carry their programs through our cable network we are required to publish information on technical specifications, network characteristics, terms and conditions of supply and use, and charges payable. The carriage fees are subject to ex post regulation in accordance with the German Telecommunications Act. See Telecommunications Regulation Regulation of Fees. In the signal delivery market with clusters of up to 500 housing units, we are required to grant signal delivery access, provide collocation for the purpose of granting signal delivery access and, as part of this, give operators and their agents access to these facilities at all times. Agreements on access must be based on objective criteria, be transparent, non-discriminatory and fair. The fees for granting signal delivery access and collocation are subject to ex post regulation in accordance with the German Telecommunications Act. Upon request, we must submit to the Federal Network Agency information on sales volumes and revenues and we are required to publish a standard contract, which must be approved by the Federal Network Agency. We have provided the Federal Network Agency with our standard contract and on August 14, 2008, we (and other network operators) received a resolution of the Federal Network Agency criticizing certain elements of our standard contract and requesting that we amend our standard contract accordingly by September 19, 2008. After certain amendments to the original draft, the standard contract was finally approved by the Federal Network Agency on March 11, 2009. In providing signal delivery services to Level 4 operators, we are now bound by the terms of the standard contract. Although the Federal Network Agency must consider capacity constraints when requiring us to provide access to third parties, granting access or interconnection would limit the bandwidth available for us to provide

143

services to our customers, which could limit our ability to maximize our revenues and profitability, create a capacity shortage on our networks, and strengthen our competitors positions by granting them access and lowering their costs to enter into our markets. The market for broadcasting transmission services has been deleted from the European Commissions list of markets which need prior regulation by the national regulators. Thus, the broadcasting markets which are currently subject to specific fee and access regulation rules might not be subject to regulation in the next market analysis procedure. The particularities of the German cable market could, nevertheless, prompt the Federal Network Agency to continue regulation. Another decision of the Federal Network Agency, dated September 7, 2009, found, that we have significant market power with regard to the termination of calls to our subscribers and subjects our termination fees to an ex post fee control. Agreements on the termination of inbound calls must be based on objective criteria, be transparent, non-discriminatory and fair. We must furthermore publish information on technical specifications, network characteristics, access and usage conditions, as well as fees. Agreements concluded must be filed with the Network Agency. Conversely, other network operators must terminate outbound calls from our endcustomers into their network. Further interconnection or other access obligations could in the future be imposed on us on the grounds that we control access to end-users or are found to have significant market power with regard to additional markets. Regulation of Fees Under the German Telecommunications Act, the fees for telecommunications access services offered by providers can be subject to pricing regulation, if significant market power has been determined or if the operator controls access to end-users. The German Telecommunications Act distinguishes between fees that require prior regulatory approval (ex ante) and those that are subject to an ex post review. The way in which fees are regulated is dependent on the possession of significant market power as well as on the imposition of access obligations. Fees of a company with significant market power for access services are generally subject to regulatory review after they have been introduced to the market (ex post review). However, such fees are even subject to prior approval by the Federal Network Agency (ex ante review), in the event that the Federal Network Agency has imposed access obligations on a company having significant market power. The access fees of companies without significant market power which control access to the end-user and on which the Federal Network Agency has imposed access obligations are also subject to ex post review. End customer fees, again as a rule, are subject to ex post review. However, end customer fees charged by companies with significant market power may become subject to prior approval by the Federal Network Agency if effective competition is not to be expected in that particular market in the near future. The German Telecommunications Act provides for various exceptions as to these rules which allow for taking account of the individual circumstances. To the extent regulation of fees applies to us, such regulation is limited to ex post reviews. See Telecommunications Regulation Our Interconnection and Access Obligations. During an ex ante review of fees, the Federal Network Agency examines the fees charged to determine whether they are based on efficient service provision and also whether they are not abusive. In case of an ex post review, the Federal Network Agency only examines the fees to determine whether they result from an abuse of the companys significant market power. Fees are found to be abusive in particular when they are imposed solely as a result of having significant market power, are discriminatory or significantly restrict competition of other telecommunications operators. The latter, for example, is the case if the fees do not cover the costs, result in a margin squeeze, or cover unreasonably bundled products. If the Federal Network Agency becomes aware of facts warranting the assumption that the fees for access services of undertakings with significant market power are abusive, it must initiate a review of such fees and, if it establishes that they are in fact abusive, must declare the fees to be invalid, and forbid such conduct and may order the application of fees which are not abusive. Regulation of New Markets Pursuant to a provision incorporated as part of the amendment to the German Telecommunications Act dated February 18, 2007, new markets are generally exempt from regulation unless the Federal Network Agency finds that such new markets should be regulated to promote competition. The German Telecommunications Act does not define such new markets, but intends to capture the introduction of new technologies or new types of services. This might cause greater (unregulated) competition from Deutsche Telekom for the provision of such technologies or services. The European Commission launched infringement proceedings against Germany on February 26, 2007 with regard to the relevant provision arguing that such regulatory protection of the incumbent

144

Deutsche Telekom infringes the European regulatory framework. The European Commission was concerned that the Federal Network Agency would not regulate Deutsche Telekom with regard to its new generation of broadband access (Very High Speed Digital Subscriber Line or VDSL) at least for an initial period (the so called regulatory holiday). The ruling of the European Court of Justice on the regulatory holiday in Germany is scheduled for December 3, 2009. The Advocate General already pleaded that, in his view, the German provision infringes European law. The European Court of Justice is not bound by his opinion but mostly follows it. VDSL is a high-speed DSL technology allowing data transfers of up to 52 Mb/s via conventional telephone lines. However, the Federal Network Agency has already ordered Deutsche Telekom to offer access to certain infrastructure needed by competitors to set up their own VDSL products and announced in the recently initiated new market analysis procedure for the IP bitstream market and the draft regulatory order to extend its rulings to VDSL bitstream access. This will further strengthen the competitors who are depending on the infrastructure of Deutsche Telekom. Allocation of Frequencies In addition to the notification requirement mentioned above, in principle, a frequency allocation by the Federal Network Agency is required for the use of frequencies in our cable network. The allocation of frequencies is subject to a one time fee and the usage of frequencies is subject to annual fees. The requirement of a frequency allocation generally applies to the use of terrestrial frequencies as well as, in principle, to the use of frequencies in cable network. Up to July 2009, frequencies in cable networks within the frequency range from 9 kHz to 3 GHz could be used on the basis of the German Frequency Range Allocation Plan Ordinance (Frequenzbereichszuweisungsplanverordnung) without an additional allocation decision by the Federal Network Agency, subject to certain conditions regarding electromagnetic interferences and security-related radio services. Due to a recent change of the German frequency allocation framework which revoked the pertinent provision, the usage of frequencies within cable networks would, according to the wording of the German Telecommunications Act, now require a frequency allocation decision by the Federal Network Agency either by way of a general assignment or by an individual frequency assignment upon application. The Federal Network Agency, however, stated orally that they do not intend to require individual frequency assignments for cable networks and that the unclear legal situation shall be clarified in the future. The German Telecommunications Act furthermore provides that the Federal Network Agency shall, as a rule, revoke frequency assignments for analogue broadcast transmissions no later than 2010 for television and 2015 for VHF (UKW) radio broadcasting. The frequency assignment shall then expire after an appropriate period of time, granting at least an interim period of one year for broadcasters. The wording of the statutory provision does not specify whether this only applies to terrestrial frequencies or also to frequencies used by cable networks. The Federal Network Agency has not issued an official position in this regard. Judging from the context and the history of the provision, as well as the technical differences between a frequency usage for terrestrial transmission and by a cable network, it seems unlikely that it would be applied to cable networks. Nevertheless, this cannot entirely be excluded. Some broadcasters have announced their intention to cease delivery of their signals in analog format by April 2012. In addition, future legislation or orders of the Federal Network Agency, the media authorities or the needs of the market may require us to digitize our entire cable network. Customer Protection and Number Portability The German Telecommunications Act provides for special rights and obligations between providers of telecommunications services to the public and their subscribers. Subscribers, for example, may request that their voice telephony providers eliminate or fix any malfunction immediately, including at night and on Sundays and holidays. Furthermore, subscribers can request a free itemized statement of their calls in order to enable them to check and monitor the accuracy of their bills. If a subscriber has made no other arrangements with another provider, the customer will receive a combined bill from his local carrier in which the charges for all calls that the customer has made via other providers must be listed separately. Further customer protection provisions relate, among others, to the notation of the charges for certain services, in particular premium services, and to dialer programs. The provisions also allow for certain limitations on the liability of telecommunications service providers. With regard to claims for damages for financial losses, the liability of telecommunications services providers is limited to 12,500 per end-user in case of unintended action. In case of a single action or an event causing a single damage affecting several end-users, the liability of the provider in case of unintentional action is limited to a maximum amount of 10.0 million. The amount of liability vis--vis end-users that are not consumers may be individually agreed between the parties.

145

Each public telephone network operator is obliged to enable its customers to retain their telephone numbers if the customer changes providers or in the case of geographic numbers if the customer moves within the specific geographical area (number portability). The reform of the Telecom Package will further strengthen number portability in order to facilitate the change of providers and thus heighten competition. See Telecommunications Regulation. Privacy and Direct Marketing Each provider of telecommunications services is obligated to maintain telecommunications secrecy. This means that the content and detailed circumstances of telecommunications, in particular the fact of whether or not a person is or was engaged in a telecommunications activity, may not be disclosed to third parties. Similar to other companies operating in Germany, each operator of telecommunications services is obliged to protect personal data of its customers and users in connection with the collection and use of such data. In addition, recent legislation (in particular an amendment to the German Federal Data Protection Act (Bundesdatenschutzgesetz) and the German Act Against Unfair Competition (Gesetz gegen unlauteren Wettbewerb) and the enactment of the German Act against Unlawful Telephone Marketing (Gesetz zur Bekmpfung unerlaubter Telefonwerbung)) and decisions of the German Federal Supreme Court restrict the use by companies generally of direct marketing, and such restrictions hinder our ability to advertise our services to existing and potential customers in a cost efficient manner. In particular, the amendments to the Act against Unfair Competition further restricts, among other things, certain telephone marketing activities with effect from December 30, 2008, and the recent revisions to the Data Protection Act, which came into force on September 1, 2009, restrict the use of certain address data for marketing purposes. In addition, the German Act against Unlawful Telephone Marketing, which came into force on August 4, 2009, introduces new requirements for lawful telephone marketing and sanctions against unlawful telephone marketing. This includes, among other new sanctions, fines up to 50,000 per unlawful telephone call that is made for marketing purposes. See Risk Factors Risks Relating to Regulatory and Legislative Matters Changes in laws and regulations may significantly increase costs or lead to other disadvantages. Interception and Data Retention The German Telecommunications Act prescribes certain obligations for telecommunications service providers and operators to assist public bodies with regard to the rights and authorizations under the German Criminal Procedure Code (Strafprozessordnung) and similar laws. This includes such obligations as storing and providing access to customer data and making certain technical interception measures available. The obligations under the German Telecommunications Act apply depending on the role of the provider. A wide range of obligations, including those to implement technical measures that allow interception, to implement technical facilities for telecommunications interception measures and to make organizational arrangements for the implementation, apply to operators of telecommunications systems. Providers of telecommunications services have to store customer data (e.g., name, postal address and date of birth). The data has to be stored in a database that allows direct access by the Federal Network Agency. Information requests by public authorities have to be answered. Most obligations apply to anyone who takes part in providing the services. The German Telecommunications Act has been amended with effect as of January 1, 2008 in order to implement Directive 2006/24/EC on the retention of data generated or processed in connection with the provision of publicly available communications services or of public communications networks. The obligations under the new amendment include an obligation to retain certain communication related data (e.g., callers and recipients telephone numbers, start and end time of communication, senders and recipients e-mail and IP-address) for six months. The providers have to maintain sufficient resources, at their own expense, to store the retained data safely, operate a gateway to the authorities and provide the requested data immediately upon request by the authorities. The data retention rules are still under legal scrutiny by the courts in connection with the cost allocation and other issues. The hearing by the German Constitutional Court is scheduled for December 15, 2009, and a written ruling should be issued in the first quarter of 2010. The court could require the German legislature to change the data retention rules. While we further expand our business in the area of broadband Internet and telephony services, such obligations may require additional investment and ongoing compliance costs. Rights of Way Operators of public telecommunications networks that wish to use public streets, squares, bridges and public waters for the laying and operating of telecommunications lines have to apply to the Federal Network Agency in

146

order to obtain the respective rights of way. In particular, the Federal Network Agency has to determine whether the applicant has demonstrated sufficient professional expertise, reliability and financial capability to operate telecommunications lines. Both the installation of new telecommunications lines and the modification of existing telecommunications lines also require the consent of the competent road construction and maintenance authority. Any such consent may be subject to certain conditions and other requirements that might adversely affect our business. Media Regulation Regulation of the media falls within the legislative competence of the German federal states (Bundeslnder). In Hesse, the applicable state media law is the Act on Private Broadcasting in Hesse (Gesetz ber den privaten Rundfunk in Hessen) and the respective bylaws, whereas in North Rhine-Westphalia, the applicable state media law is the State Media Act in North Rhine-Westphalia (Landesmediengesetz Nordrhein-Westfalen) and the respective bylaws. The media laws of all 16 federal states have been partially harmonized with the State Broadcasting Treaty (Rundfunkstaatsvertrag). The State Broadcasting Treaty establishes the framework of the German broadcasting system. In particular, it provides for a regime designed to ensure that a diversity of opinions is secured in the mix of public and commercial radio and television channels and their respective programming. In addition the State Treaty on Youth Protection (Jugendmedienschutzstaatsvertrag) applies. The tenth revision of the State Broadcasting Treaty (Rundfunkstaatsvertrag), which came into effect on September 1, 2008, introduced an extended regulatory regime for providers using platforms with digital transmission methods. The regime affects our ability to decide how to use our digital platform and therefore may impact our business. The subsequent twelfth revision of the State Broadcasting Treaty has, among other things, adjusted some of the provisions of the State Broadcasting Treaty to the requirements of the European Audiovisual Media Services Directive (Directive 89/552/EC as amended by Directive 2007/65/EC). The State Broadcasting Treaty, together with the media laws of each federal state, regulates (i) the establishment and powers of regulatory bodies; (ii) the licensing of commercial broadcasters; (iii) license and notification requirements in connection with the transmission of radio and television programs; and (iv) the allocation and use of transmission capacities and access to digital playout facilities. The Regulatory Bodies Each German state has established its own independent regulatory body, the state media authority (Landesmedienanstalt), for the regulation of the private broadcasting sector, except for the states of Berlin and Brandenburg, which have established a joint regulatory body. In Hesse, the state media authority is the Hessische Landesanstalt fr den privaten Rundfunk (LPR), whereas in North Rhine-Westphalia, it is the Landesanstalt fr Medien (LfM). The state media authorities are primarily responsible for licensing and supervision of commercial broadcasters and the allocation of transmission capacities for radio and television channels. They are also in charge of the regulation of conditional access systems, interfaces, navigators and the bundling of programs. The state media authorities have various powers to enforce compliance with the law. Any decision of the state media authorities can be challenged before the competent administrative courts. Broadcasters have the right to file a complaint with the relevant state media authority in the event that cable network operators refuse to carry their signals. The state media authorities are vested with the power to order the transmission of channels upon receipt of such complaints, provided that the respective broadcasters programs enjoy a must carry status or that the network has sufficient excess capacity. Whether or not the broadcasters, in particular those enjoying a must carry status, are entitled to claim their distribution directly from the cable network operator is unclear. In North Rhine-Westphalia, a bylaw provides that the cable network operator and the broadcasters or other content providers shall enter into an appropriate carriage agreement. In Hesse, it is unclear whether the cable network operators obligation to transport must carry programs is subject to the conclusion of a carriage agreement. In the absence of such a carriage agreement, it might prove difficult for the cable network operator to claim carriage fees. Allocation and Use of Transmission Capacities The State Broadcasting Treaty sets forth the rules for the allocation and use of digital transmission capacities and digital playout facilities for television channels. The allocation and use of analog cable transmission capacities for both radio and television channels and digital transmission for digital radio capacities are primarily governed by the laws of the respective states.

147

Allocation and Use of Analog Transmission Capacities Regulations regarding the analog cable transmission of radio and television channels vary from state to state and cable network operators are generally not free to allocate analog channels in their networks. Rather, the state media authorities make allocation decisions regarding the programs that will be transmitted over the cable networks, in order to ensure a diversity of opinions in the mix of channels and programming. In the analog range, the specific allocation of channels varies from state to state and rules relating to the allocation of radio channels are usually less strict than those relating to television channels. The European Court of Justice recently confirmed that allocation rules for cable networks are in compliance with European law, even if this implies that the network operator no longer has any discretion with respect to the allocation, provided, however, that this does not give rise to unreasonable economic consequences. Pursuant to the Act on Private Broadcasting in Hesse (Gesetz ber den privaten Rundfunk in Hessen), Unitymedia Hessen may allocate up to five analog programs to broadcasters at its own discretion. Unitymedia Hessen currently transmits up to 36 analog channels and the media authority may decide to block cable capacities for analog transmission with the effect that those capacities may not be digitized. Currently, eleven (mainly public) channels must be distributed in analog form without any possibilities to digitize these channels. We may digitize additional analog channels with the consent of the LPR, having proven that, among others, diversity rules are respected. In Hesse, the state media authorities allocate channels to programs using the following criteria:

programs of the respective states public broadcasters and open channel programs; programs of commercial broadcasters licensed in the respective state; programs receivable via terrestrial antenna; general interest programs of commercial broadcasters; special interest programs of commercial broadcasters; and other programs and media services.

The State Media Act in North Rhine-Westphalia (Landesmediengesetz Nordrhein-Westfalen) defines a number of must-carry channels (currently the channels reserved for the public broadcasters and open channels as well as up to 17 additional channels) while the network operator is entitled to allocate the remainder of its analog capacity. In North Rhine-Westphalia the state media authority allocated eight channels of the respective states public broadcasters and open channel programs and 17 additional channels according to the principle of the diversity of opinion in accordance with the following criteria:

priority for programs receivable via terrestrial antenna; up to two of these channels must be allocated to programs distributed at a regional, local or statewide level; for areas close to a federal state border one channel is to be allocated to a program which is terrestrially receivable across the border in that area; one of these channels is reserved for a teleshopping program; the LfM can further allocate two channels to foreign language programs, if the programs are targeted at a group of foreign inhabitants which represent an important part of the total population in the distribution area; and the LfM is entitled to time-share (partagieren) programs or to rotate programs in cycles.

These up to 25 channels must be distributed in analog form without any possibilities to digitize these channels. Further analog channels may only be digitized with the consent of the LfM who shall authorize digitization when diversity rules are respected.

148

Under the must carry regulations currently in force, the number of programs that enjoy must carry status is not fixed in principle and we may be required to carry additional programs in the future. Increasing the number of programs that we must carry on our network would use valuable network capacity that we would otherwise devote to alternative programs or services that may be more attractive or profitable. In addition, we may be at a competitive disadvantage compared to certain of our competitors that are not subject to such extensive must carry obligations, as they may be able to provide programs that are more appealing to end-users. The German federal government and state governments are trying to implement a general switchover from analog to digital distribution for all television distribution platforms. In accordance with the German Telecommunications Act, the Federal Network Agency is entitled to revoke all allocations of frequencies for terrestrial analog television transmission by the end of 2010, and for analog frequency-modulated transmission of radio channels by the end of 2015. Even though it is questionable whether the relevant provisions of the German Telecommunications Act are directly applicable to us, as the operation of cable television networks, in principle, did not require frequency allocations (see Regulatory Telecommunications Regulation Allocation of Frequencies), we may at least be required to further invest in the exchange of some of our headend equipment, as some broadcasters could cease to deliver their signals in analog format. In addition, future legislation or orders of the Federal Network Agency, the state media authorities or the needs of the market may require us to digitize our entire cable network . Allocation and Use of Digital Transmission Capacities In the digital range, the must carry obligations currently apply for the distribution of certain digital channels (up to a maximum of one third of our digital bandwidth dedicated to broadcasting services). Currently this obligation includes the capacity of ARD and ZDF, the German public broadcasters, across three channels plus the capacity of certain commercial broadcasters carrying regional and local programs. The allocation of digital transmission capacities distinguishes between three different categories of channels:

First, each operator of a telecommunications cable network must reserve digital capacity for the transmission of all channels of the respective states public broadcasters, and it must also carry such broadcasters digital program packages. The channels the public broadcasters may produce are enumerated in the State Broadcasting Treaty. Furthermore, each network operator must allocate the necessary transmission capacity to commercial broadcasters, which provide regional program windows according to section 25 of the State Broadcasting Treaty, and transmission capacity for the regional and local television channels of commercial broadcasters licensed to broadcast in the relevant state and open channels (where those exist) (must-carry sector). Second, each cable network operator must allocate transmission capacity equivalent to one third of the total digital transmission capacity of its network on the basis that this mix of channels ensures a diversity of opinions, which allows for a certain degree of discretion (can-carry sector). Cable operators are free to allocate the remainder of the capacity subject to certain legal constraints (free-to-carry sector).

The rules regarding the allocation of digital transmission capacities for radio channels vary from state to state. In Hesse, the regulation of analog radio channels also applies to digital transmission, whereas in the State Media Act in North Rhine-Westphalia, provisions regarding the allocation of digital transmission capacities for radio channels and television channels are identical. Use of Conditional Access Systems The operation of conditional access systems for television services is governed by the State Broadcasting Treaty (Rundfunkstaatsvertrag) and the German Telecommunications Act. The provisions in the State Broadcasting Treaty on conditional access have been implemented by a specific bylaw on open access to digital services and on platform regulation (Satzung ber die Zugangsfreiheit zu digitalen Diensten und zur Plattformregulierung) which has been adopted by the state media authorities. They provide general rules for the use of conditional access systems, interfaces, navigators and the bundling of programs, whereas the German Telecommunications Act contains specific provisions for conditional access systems. We must generally grant a diverse program offering and must not unfairly obstruct or discriminate against broadcasters and other content providers through conditional access systems, interfaces, navigators or the fee structures. We operate our own conditional access systems and smartcards especially for the cable distribution of our digital cable television offerings and a different conditional access system for our arenaSAT platform.

149

Under the German Telecommunications Act, licensing and use of conditional access systems is regulated. We have notified the relevant state media authority and the Federal Network Agency that we operate a conditional access system for our digital cable television and our digital arenaSAT platform. The German Telecommunications Act details the design, licensing and use of conditional access systems. The technical design of such systems must allow cost-effective use and a complete control of the services distributed via these systems on a local or regional level. If the owner of intellectual property rights for the conditional access systems decides to grant licenses to a third-party, any third-party with a legitimate interest has the right to also receive such license on the basis of fair, reasonable and non-discriminatory terms. The obligations could require that we (i) use certain technologies for our conditional access systems, interfaces or navigators, which we would not otherwise use; (ii) design our conditional access systems, interfaces or navigators in a way we would not otherwise design; and (iii) grant access to our playout facilities to program providers in a way and to the extent we would not otherwise grant. In addition, these obligations could result in the use of more expensive conditional access systems, interfaces or navigators and could therefore adversely affect our results of operations. These regulations might also require us to fully separate the platform for the network services by integrating all platform related services into a separate affiliated company. General Antitrust Law In addition to the regulatory regime under the German Telecommunications Act, Unitymedia is also subject to the European Union and German antitrust regulations on the prohibition of the abuse of a market-dominant position as well as the distortion of competition through agreements or collusive behavior by market participants. Under Articles 81 and 82 of the EC Treaty and the implementing European Regulations as well as under the provisions of the German Act Against Restraints of Competition (Gesetz gegen Wettbewerbsbeschrnkungen), if the Federal Cartel Office (Bundeskartellamt) or the European Commission determines that a company has a dominant position in a defined market or distorts competition through agreements or collusive behavior, the competent authority is entitled to prohibit such practices and to impose various punitive measures, including fines or disgorgement of profits generated by such behavior. In addition, third parties may initiate civil proceedings against companies that willfully or negligently violate provisions of the German Act Against Restraints of Competition to obtain compensation for damages suffered, provided that these provisions were intended to protect the interests of such third parties. The Federal Cartel Office has recently initiated regulatory proceedings against us and other German cable network operators and pay TV providers under the provisions on market dominance regarding effects resulting from our set-top box procurement strategy and the encryption technology used therein. See Risk Factors Risk Relating to Our Business The German Federal Cartel Office has initiated regulatory proceedings against us and other German cable network operators and pay TV providers, which may adversely affect our revenues or lead to other disadvantages. Furthermore, we are subject to merger control laws in case of future acquisitions or divestitures of companies or assets. In relevant transactions having an impact on the European market, the European Commission may prohibit such transactions if it finds that such transactions are likely to have a negative impact on the effective competition in the relevant markets. In case the German Federal Cartel Office has jurisdiction, it may prohibit such transactions if they create or strengthen a market-dominant position, unless the detrimental competition effects of the transaction are outweighed by an improvement of the competitive environment in other areas. In one recent decision, the Federal Cartel Office approved the integration of seven companies of Orion Cable GmbH, which are mainly active in the operation of Level 4 cable networks, into KDG despite concerns with respect to the establishment or further strengthening of KDGs market-dominant position in the relevant markets for analog and digital supply of radio signals, signal delivery and supply of signals to end customers. The Federal Cartel Office determined that the negative effects on competition on the relevant markets are outweighed by improvements of market conditions in the area of broadband (DSL) and narrowband connections. Technical Regulation The German Act on Radio Equipment and Telecommunications Terminal Equipment (Gesetz ber Funkanlagen und Telekommunikationsendeinrichtungen) of January 31, 2001 and the German Electromagnetic Interference Act (Gesetz ber elektromagnetische Vertrglichkeit von Betriebsmitteln) of February 2, 2008 contain provisions applicable to the operation of telecommunications networks and equipment. In particular, telecommunications equipment must satisfy health and safety requirements and conform to certain technical standards. As part of the German Electromagnetic Interference Act, which protects the frequencies used by German aircraft security, police and intelligence services, the German government has prohibited the use of certain cable

150

channels in analog mode. We are obliged to digitize two analog channels by December 10, 2010. Moreover, we are required to cease using certain cable frequencies in the event of electromagnetic interference, which may have an adverse effect on the functionality and profitability of our network. On the basis of the Ordinance on the Protection of Security-Related Radio Communication (Sicherheitsfunk-Schutzverordnung) of May 13, 2009, the Federal Network Agency may order further measures to remedy electromagnetic interferences caused by cable networks with security related radio communication. It can, among others, oblige us to further digitize certain channels in order to minimize interferences or to cease using further cable frequencies. Provision of Telemedia Services The Telemedia Act (Telemediengesetz) provides a framework for electronic commerce and other electronic on-demand services. The Act mainly sets forth rules on liability, the applicable law for European-wide telemedia services, as well as information and data protection provisions. Provisions on the content of telemedia services are set forth in the State Broadcasting Treaty and the respective state media laws implementing such treaty. They encompass, among others, further information and data protection provisions, as well as provisions on advertising, sponsoring and the right to correct public statements. Telecommunication services as defined in the German Telecommunications Act and linear broadcasting are exempt from these provisions. Zoning Laws German zoning laws currently restrict the installation of satellite dishes in certain areas. In addition, contracts with residents of multi-dwelling units may, and usually do, prohibit tenants from attaching satellite dishes to their apartments if they are connected to a cable network. However, due to a ruling of the German Federal Constitutional Court, tenants of foreign origin are allowed to install satellite dishes to receive programs in their native language, even if they can receive one program in their native language over cable. On the other hand, the German Federal Supreme Court has, on the basis of the ruling of the Federal Constitutional Court, decided that tenants of foreign origin are not entitled to request the installation of satellite dishes if they can receive five programs in their native language via cable or if they are able to receive additional programs through a decoder or an STB against payment of reasonable monthly fees. In 2001, the European Commission published a communication claiming that the EU rules on free movement of goods and services prohibit national restrictions on the individual reception of satellite television signals. While restrictions on individuals resulting from contracts with housing associations do not directly fall under these rules, the EUs current communication seems to exhibit a determination to remove this perceived barrier to the free movement of goods and services. Likewise, the European Court of Justice has ruled that a Belgian public fee levied on satellite dishes with the aim to restrain the installation of satellite dishes infringed upon EU rules on free movement of services. Although a German local court held that the respective European provisions on the free movement of services were not directly applicable to individuals, this court ruling may not be in conformity with EU law and recent judgments of the European Court of Justice on the direct applicability of EU law. In particular, national laws have to be interpreted in a way that is in conformity with European law. As a result, (i) German law may change in the future, (ii) existing German law may have to be interpreted in such way as to minimize restrictions for the installation of satellite dishes and (iii) private contracts restricting the installation of satellite dishes may have to be interpreted likewise, which may ultimately result in an increase in the number of satellite users and intensify competition with satellite providers.

151

MANAGEMENT Management of the Issuer The managing directors of the Issuer are Dennis Okhuijsen, Anton Tuijten and Charles Bracken. Each of the managing directors, acting jointly with another managing director or a holder of a general power of attorney (Prokurist), is authorized to conduct the day to day business of the Issuer. The following paragraphs set forth biographical information regarding the managing directors of the Issuer. Dennis Okhuijsen joined Liberty Global/UPC in 1996 and has served in various senior finance roles including reporting, corporate finance and investor relations. Currently he is VP, Head of Finance for LGI, responsible for all corporate finance, debt/equity, cash management and risk management. Before joining Liberty Global he served as a Senior Accountant with Arthur Andersen in Chicago and Rotterdam. Mr. Okhuijsen has a Masters Degree in Finance from the Erasmus University Rotterdam. Anton Tuijten is General Counsel and Senior Vice President of Liberty Global Europe. Mr. Tuijten oversees legal strategy, regulatory issues, public policy and corporate communications for Liberty Globals European country operations and chellomedia. His focus areas include mergers and acquisitions and competition law. Mr. Tuijten joined Liberty Global Europe in September 1998 as UPCs Vice President of Legal Services. In May 1999, he was promoted to the position of UPCs General Counsel. Before joining UPC, Mr. Tuijten served as General Counsel and Company Secretary at Unisource, an international telecommunications company. Prior to this, he served as Senior Corporate Lawyer at KPN. Mr. Tuijten is a member of the International Bar Association and the Dutch Association of Business Lawyers. In 2003, Mr. Tuijten was named European General Counsel of the Year by Legal Week Magazine. Mr. Tuijten received a Law degree specialising in business and competition law from Leiden University in the Netherlands in 1986. Charles H.R. Bracken is Co-Chief Financial Officer of Liberty Global with responsibility for Group Treasury, Tax and Financial Planning. Mr. Bracken also holds a directorship for Telenet Group Holding NV, a Liberty Global subsidiary. Mr. Bracken is an executive officer of Liberty Global and sits on the companys Executive Management Committee. Mr. Bracken joined United Pan Europe Communications NV, now known as Liberty Global Europe NV (LGE), in March 1999, and in November 1999 became Chief Financial Officer until February 2004, when he became Co-Chief Financial Officer of its parent company, UnitedGlobalCom, Inc. (UGC). He was appointed to his current position in June 2005 following the combination of Liberty Media International, Inc. and UGC. Prior to joining, Mr. Bracken worked for Goldman Sachs, JP Morgan and the European Bank for Reconstruction and Development (EBRD). From 1994 until 1999, he held a number of positions at Goldman Sachs International in London, including Executive Director, Communications, Media and Technology. While at Goldman Sachs International, Mr. Bracken was responsible for providing merger and corporate finance advice to a number of communications companies, including LGE. Mr. Bracken is a graduate of Cambridge University. Management of Unitymedia GmbH Prior to Completion of the Acquisition The sellers in the Acquisition currently have the power to appoint and remove the managing directors of Unitymedia GmbH. The managing directors are responsible for the daily operations of Unitymedia GmbH. The following table sets forth information regarding the managing directors of Unitymedia GmbH.
Name Age Position

Parm Sandhu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dr. Herbert Leifker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Christopher Winfrey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Joachim Grendel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

41 55 34 44

Chief Executive Officer (CEO) Chief Commercial Officer (CCO) Chief Financial Officer (CFO) Chief Operating Officer (COO)

Parm Sandhu is the Chief Executive Officer of the Company and has been a managing director of Unitymedia Hessen GmbH & Co. KGs general partner, Unitymedia Hessen Verwaltung GmbH and of Unitymedia Management GmbH since 2003. Mr. Sandhu was appointed as a managing director of the Company and Unitymedia NRW GmbH in June 2005, of Arena Sport Rechte und Marketing GmbH in December 2005 and of Unitymedia Services Verwaltung GmbH & Co. KG (now Unitymedia Service GmbH) in May 2007. Mr. Sandhu was previously Finance Director Europe with Liberty Media International where he led numerous transactions including the attempted acquisition of Kabel Deutschland GmbH. Prior to that, Mr. Sandhu worked for six years with Telewest Communications plc in a number of senior finance and strategy roles. Mr. Sandhu trained as an auditor with PricewaterhouseCoopers in London, before spending two years in its transaction support group. Mr. Sandhu graduated from Cambridge University with a BA Honors degree in Mathematics.

152

Mr. Sandhu is an ACA qualified accountant and a member of both the Institute of Chartered Accountants in England and Wales and the Chartered Institute of Marketing. Mr. Sandhu is a board member of ANGA Cable, the national association of German cable operators, with responsibility for international relations and affairs. Dr. Herbert Leifker is the Companys Chief Commercial Officer and was appointed as a managing director of the Company following the acquisition of Tele Columbus Holding GmbH and managing director of Unitymedia Hessen Verwaltung GmbH and Unitymedia NRW GmbH in February 2006, of Unitymedia Management GmbH in March 2006 and of Unitymedia Services Verwaltung GmbH (now Unitymedia Service GmbH) in May 2007. He was previously the Chief Executive Officer of Tele Columbus GmbH & Co. KG, which he developed from 1990 until the merger with Unitymedia and the subsequent sale of the Out-of-Region assets. Dr. Leifker holds a doctorate degree in law and, after completing his studies, started his career in the banking industry. Christopher Winfrey has been Chief Financial Officer and a managing director of the Company since March 2006 and was appointed managing director of Unitymedia Management GmbH, Unitymedia Hessen Verwaltung GmbH and Unitymedia NRW GmbH in March 2006 and of Arena Sport Rechte und Marketing GmbH in April 2008. As the Companys Chief Financial Officer he is responsible for accounting, controlling, treasury, investor relations, corporate finance, procurement and administration functions. He joined the Company from Cablecom GmbH where, as Senior Vice President Corporate Finance and Development, he played a key role in the operational turnaround, triple play rollout, financial restructuring and private equity exit of Cablecom GmbH. He was previously Director of Financial Planning and Analysis of NTL Inc. (NTL Europe division) and a Senior Associate in the private equity group at Communications Equity Associates. Mr. Winfrey graduated from the University of Florida with a Bachelor of Science degree in accounting within the honors program. He also received his Masters of Business Administration (MBA) degree from the University of Florida, with specialization in securities analysis and global business. Joachim Grendel has been the Chief Operating Officer and a managing director of the Company since March 1, 2009. He is responsible for customer operations, which includes all aspects of customer service, information technology and operating process development. Mr. Grendel joined the Company from The Boston Consulting Group where he served for ten years, most recently as the responsible TMT partner and managing director for Eastern Europe and Russia. Prior to that, Mr. Grendel worked for Roland Berger Strategy Consultants and was responsible for product management at Gesellschaft fr Datenfunk. Mr. Grendel graduated from the Ruhr University Bochum with a Masters of Science in mathematics. Management of Unitymedia GmbH Following the Acquisition Following the consummation of the Acquisition, the ultimate authority within Unitymedia GmbH will vest with the Issuer as new sole shareholder. The Issuer is in turn directly controlled by UPC Germany Holding B.V. and indirectly controlled by Liberty Global Europe. All fundamental decisions regarding Unitymedia GmbH are reserved for the decision of the shareholders meeting, including the following:

instructions to the managing directors; appointment and removal of managing directors; granting of discharge from liabilities to the managing directors; determination of annual financial statements and distribution of profits; measures in connection with monitoring and supervising managing directors; amendments of the articles of incorporation; fundamental structural changes, e.g. mergers, a conversion or a splitting of the company; and consent to the conclusion of a domination or profit and loss pooling agreement.

The Issuer may expand the authority of the shareholders meeting. The managing directors will continue to be responsible for the daily operations of Unitymedia GmbH. However, we cannot assure you that we will be able to retain our current managing directors. See Risk Factors Risks Relating to Our Business The loss of any of our key executives or the inability to attract highly skilled and qualified personnel could adversely affect our ability to manage our business. Following the Transactions, Unitymedia Hessen and Unitymedia NRW will continue to be indirect whollyowned subsidiaries of Unitymedia GmbH and be subject to its indirect control.

153

OUR PRINCIPAL SHAREHOLDER Principal Shareholder Following the Transactions Following the Transactions, we will be wholly-owned by UPC Germany Holding BV. UPC Germany Holding BV is a wholly-owned direct subsidiary of Liberty Global Europe, which is a wholly-owned direct subsidiary of LG Europe. LG Europe is in turn wholly owned through a series of intermediate holding companies by LGI. See Summary Summary Corporate and Financing Structure.

154

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS The Company maintains various business relationships with related parties. The following business or legal relationships were concluded, in the view of the Company, on customary market terms. Certain managing directors of Unitymedia GmbH and the board of the directors of Unity Media S.A. received share-based payments. The payments were recorded as non-cash charges in the amount of 0.2 million and 1.3 million, respectively, in the nine month periods ended September 30, 2009 and 2008, and 1.8 million and 1.9 million, respectively, in the financial years ended December 31, 2008 and December 31, 2007.

155

DESCRIPTION OF OTHER INDEBTEDNESS Financing Agreements of the Issuer In addition to the Senior Secured Notes and the Senior Notes offered hereby, the Issuer expects to enter into an escrow and security agreement in respect of each of the Senior Secured Notes and the Senior Notes, at or prior to the closing of the offering of the Notes. On or prior to December 31, 2009, the Issuer expects to enter into a new revolving credit facility and an intercreditor agreement. In connection with the Transactions, the New Revolving Credit Facility (as defined below) will be assumed by Unitymedia Hessen and Unitymedia NRW, and the Issuer will have no further obligations thereunder. Unitymedia GmbH, Unitymedia Hessen and Unitymedia NRW will also become parties to the Unitymedia Intercreditor Agreement (as defined below) as part of the Debt Pushdown. The terms of the Escrow Agreement, the New Revolving Credit Facility and the Intercreditor Agreement are summarized below. The Escrow Agreement On the Closing Date we expect to enter into (i) a Senior Secured Notes Escrow and Security Agreement pursuant to which the Initial Purchasers will deposit the net proceeds of the Senior Secured Notes into escrow accounts held by the escrow agent in the name of the trustee for the benefit of the holders of the Senior Secured Notes and (ii) a Senior Notes Escrow and Security Agreement pursuant to which the Initial Purchasers will deposit the net proceeds of the Senior Notes in an escrow account held by the escrow agent in the name of the trustee for the benefit of the holders of the Senior Notes. The release of escrow proceeds will be subject to the satisfaction of certain conditions, including the closing, promptly upon the release of proceeds, of the Acquisition and, with respect to amounts to be used to repay the Existing Unitymedia Indebtedness (as defined herein), the Debt Pushdown. Consummation of the Acquisition is subject only to regulatory approval. If the Acquisition is not consummated prior to October 31, 2010, the Notes will be subject to a special mandatory redemption. The Special Mandatory Redemption Price will be a price equal to 101% of the aggregate issue price of the Notes plus accrued and unpaid interest from the Issue Date. For a further description of the escrow agreements, see Description of the Senior Notes and Description of the Senior Secured Notes and The Transactions. The New Revolving Credit Facility The Issuer has received a commitment letter for a new revolving credit facility with certain lenders (the RCF Lenders). The description set forth below sets forth the principal terms and conditions contained in the summary of terms attached to the commitment letter and that we expect will be reflected in the new revolving credit facility agreement. On or before December 31, 2009, the Issuer, as borrower, expects to enter into a new senior revolving facility agreement with the RCF Lenders (the New Revolving Credit Facility Agreement), pursuant to which the lenders named therein will agree to provide the Issuer with up to 80 million in additional financing through a new senior secured revolving credit facility (the New Revolving Credit Facility). The Issuer will appoint a facility agent (the Facility Agent) in connection with the New Revolving Credit Facility prior to execution of the New Revolving Credit Facility Agreement. In addition to customary conditions precedent, the RCF Lenders commitment is subject to the following conditions: (i) that until execution of the New Revolving Credit Facility Agreement, the Senior Secured Notes and the Senior Notes have not been subject to a Special Mandatory Redemption, (ii) the consummation of the Notes offered hereby and (iii) the preparation, execution and delivery of the New Revolving Credit Facility Agreement no later than December 31, 2009. In the event that the Issuer acquires Unitymedia GmbH pursuant to the Acquisition, the Issuer will be required to effect the Debt Pushdown and, in connection therewith, will assign its obligations under the New Revolving Credit Facility to Unitymedia Hessen and Unitymedia NRW, each of whom will assume such obligations as borrowers thereunder. Other than with respect to security and guarantees, after giving effect to the Debt Pushdown, the terms of the New Revolving Credit Facility will not be changed. The term borrowers, as used in this Description of Other Indebtedness, refers to the Issuer, as borrower prior to the Debt Pushdown, and Unitymedia Hessen and Unitymedia NRW, as borrowers subsequent to the Debt Pushdown.

156

The final maturity date of the New Revolving Credit Facility will be the earliest of (i) December 31, 2014 and (ii) the date on which the New Revolving Credit Facility has been fully repaid and cancelled. The Initial Purchasers of the Senior Secured Notes offered hereby or affiliates of such Initial Purchasers will be arrangers and lenders under the New Revolving Credit Facility. Limitations on Use of Funds The New Revolving Credit Facility may be used by us for general corporate and working capital purposes of the borrowers and their respective subsidiaries, including the refinancing of existing indebtedness. Conditions to Borrowings A drawdown under the New Revolving Credit Facility cannot be made until, among other things, the Facility Agent has received in form and substance satisfactory to the Facility Agent (acting reasonably) all the documents and evidence required by the New Revolving Credit Facility Agreement, including a Utilization Request. Drawdowns under the New Revolving Credit Facility are subject to further conditions precedent that, among other things, on the date the drawdown is requested and on the drawdown date, (i) no default is continuing or would occur as a result of that drawdown and (ii) certain representations and warranties specified in the New Revolving Credit Facility Agreement are true and correct in all material respects. Repayments The borrowers of the New Revolving Credit Facility will be permitted to make up to a specified number of drawdowns under the New Revolving Credit Facility, which may be made for terms of, at the relevant borrowers election, one, two, three or six months (or any other period longer than 6 months agreed by the borrower and the lenders), but not beyond the final maturity date of the New Revolving Credit Facility. Drawdowns under the New Revolving Credit Facility must be repaid at the end of the term for each drawdown, and repaid amounts may be re-borrowed prior to the final maturity date. Mandatory Prepayment In addition to customary mandatory prepayment events, the New Revolving Credit Facility must be prepaid and cancelled on the occurrence of the UPC Exchange Transaction (as defined in the Senior Secured Notes indenture). For so long as an event of default under the New Revolving Credit Facility has occurred and is continuing, proceeds otherwise required to be applied in prepayment of the Senior Secured Notes shall instead be applied in cancellation and prepayment of the New Revolving Credit Facility in priority to any other indebtedness. Upon the occurrence of a Change of Control (as defined in the Senior Secured Notes indenture), each Lender will have the option to cancel such Lenders commitment and declare such Lenders loans due and payable. Automatic Cancellation The New Revolving Credit Facility will be automatically cancelled and prepaid in full if the Notes or the Senior Secured Notes are subject to a Special Mandatory Redemption. Interest Rates and Fees The interest rate on each loan under the New Revolving Credit Facility for each interest period is the percentage rate per annum, which is equal to the aggregate of the applicable (x) margin (see below), (y) EURIBOR and (z) any mandatory cost (which is the cost of compliance with reserve asset, liquidity, cash margin, special deposit or other like requirements). Interest accrues daily from and including the first day of an interest period and is payable on the last day of each interest period (unless the interest period is longer than six months, in which case interest is payable on the last day of each six-month period) and is calculated on the basis of a 360-day year. The margin for the New Revolving Credit Facility is 3.75 percent per annum. With respect to any available but undrawn amounts under the New Revolving Credit Facility, the borrowers are obligated to pay a commitment fee on such undrawn amounts at 1.25 percent per annum and accruing from the earlier of (a) the execution of the New Revolving Credit Facility Agreement and (b) December 31, 2009. Additionally, the borrowers are also obliged to pay an agency fee in an amount to be agreed.

157

Guarantees Following the Acquisition and prior to the Debt Pushdown, Liberty Global Europe N.V. will guarantee all amounts payable to the finance parties under the New Revolving Credit Facility or to the hedging banks under the hedging agreements relating to the New Revolving Credit Facility. Prior to the Debt Pushdown, the New Revolving Credit Facility will be guaranteed by UPC Germany Holding BV. Upon the consummation of the Debt Pushdown, Unitymedia GmbH, Unitymedia Hessen, Unitymedia NRW, Unitymedia Management GmbH, Unitymedia Hessen Verwaltung and each other subsidiary that becomes a significant subsidiary (as defined in the indenture for the Senior Secured Notes) will be required to provide a senior guarantee of the obligations of each obligor under the New Revolving Credit Facility and related finance documents. Security Prior to the Debt Pushdown, the New Revolving Credit Facility will be secured on a first-ranking basis over the shares of the Issuer. Upon the consummation of the Debt Pushdown, the New Revolving Credit Facility will be secured by the same collateral securing the Senior Secured Notes. Subject to certain exceptions, upon the consummation of the Debt Pushdown, (i) first ranking security will be given over the shares of Unitymedia Hessen, Unitymedia Hessen Verwaltung, Unitymedia NRW, Unitymedia Management GmbH and (ii) security assignment will be given over claims under certain domination and/or profit and loss absorption agreements; and (iii) with respect to each of the Senior Secured Notes Co-Issuers and, to the extent applicable, Unitymedia Management and Unitymedia Hessen Verwaltung, over substantially all assets (including (a) certain cash bank accounts, (b) receivables and insurance claims and (c) substantially all of the other material assets (other than the SLAs)). Pursuant to the terms of an Intercreditor Agreement described below, the proceeds of any enforcement of security or other distressed disposal of secured assets will be applied to repayment of the New Revolving Credit Facility prior to repayment of the Senior Secured Notes. Representations and Warranties The New Revolving Credit Facility will include certain representations and warranties usual for facilities of this type subject to exceptions and appropriate materiality qualifications. Undertakings The New Revolving Credit Facility Agreement will contain certain restrictive covenants which, subject to conforming amendments, reflect the covenants contained in the Senior Secured Notes. The New Revolving Credit Facility Agreement will also require us to observe certain affirmative undertakings subject to materiality and other customary and agreed exceptions. These affirmative undertakings, include, but are not limited to, undertakings related to (i) obtaining and maintaining all necessary consents, filings and authorizations; (ii) corporate existence and compliance with all applicable laws (including telecommunication and cable laws) relevant to the business; (iii) compliance with environment laws/approvals and notification of potential environmental claims; (iv) pari passu ranking of all payment obligations under the New Revolving Credit Facility documentation with other unsecured unsubordinated payment obligations; (v) the maintenance of insurance; (vi) compliance with laws and contracts relating to pension schemes the maintenance of and funding of pension schemes to the extent required by law; (vii) maintenance and protection of intellectual property rights; (viii) no amendments to constitutional documents that may materially adversely affect the share pledges; (ix) bank accounts to be held with banks within security net or subject to sweep into security net; (x) payment of tax prior to any fine/penalty unless being contested in good faith and with adequate resources and no material adverse effect; no change of residence for tax purposes; (xi) the Facility Agent/accountants/other professional advisers to have access to investigate reasonably suspected defaults; (xii) control of main interest of each obligor to be in EU member state where obligor is incorporated and obligor to have no establishment outside that EU member state; (xii) Unitymedia Hessen and Unitymedia NRW to accede as borrowers and guarantors and grant security upon the consummation of the Debt Pushdown and (xiv) maintenance of licenses and authorisations. The New Revolving Credit Facility will also contain a leverage maintenance covenant.

158

Events of Default The New Revolving Credit Facility Agreement will contain certain events of default which, subject to certain exceptions and appropriate materiality qualifications, will be consistent with those in the existing NRW/ Hesse Revolving Credit Facility, the occurrence of which would allow the RCF Lenders to accelerate all outstanding loans and terminate their commitments under the New Revolving Credit Facility Agreement. The Intercreditor Agreement On or before the time we enter into our New Revolving Credit Facility, we expect to enter into an intercreditor agreement. We currently expect the intercreditor agreement to include the following terms. Intercreditor Agreement To establish the relative rights of certain of our creditors under the new financing arrangements the obligors under the Senior Notes, the Senior Secured Notes, the New Revolving Credit Facility and certain counterparties to hedging obligations relating to the foregoing will enter into an intercreditor agreement (the Intercreditor Agreement), with the creditors of the Revolving Credit Facility (the RCF Creditors), the creditors under certain hedging agreements (the Hedging Banks), the Trustee for the Senior Notes (the Senior Notes Trustee) on behalf of the holders of the Senior Notes (the Senior Noteholders), the Trustee for the Senior Secured Notes (the Senior Secured Notes Trustee and together with the Senior Notes Trustee, the Trustee) on behalf of the holders of the Senior Secured Notes (the Senior Secured Noteholders and, together with the Senior Noteholders, the Senior Notes Creditors), certain Investors (upon accession), Credit Suisse, London Branch, as security trustee (the Security Trustee), and Credit Suisse, London Branch, as senior facility agent (the Senior Facility Agent). The Intercreditor Agreement will provide that future indebtedness may be incurred by us (prior to the Debt Pushdown) and Unitymedia Hessen and Unitymedia NRW (following the Debt Pushdown) and our subsidiaries subject to the terms of the Intercreditor Agreement and each finance document then existing. Future Super Priority Debt may, however, only be in the form of a revolving credit facility, working capital facility or hedging indebtedness to the extent permitted by the terms of each indenture. For purposes of the Intercreditor Agreement, the creditors of each class of debt will vote together and a representative trustee or agent of debt within that class of debt (a Representative) may act on the instructions of the majority of creditors of that class of debt (or, in the case of the Super Priority Debt, on the instructions of 66 2 3% of creditors of that class of debt) (a Relevant Majority). For example, in a vote of the creditors of Senior Debt (as defined below) (the Senior Creditors), the Senior Secured Noteholders will vote with the creditors of any future Senior Debt and the Senior Secured Notes Trustee may act on behalf of the Relevant Majority of the Senior Creditors if so instructed. Accordingly, the Intercreditor Agreement will provide for the accession to the agreement of creditors of future indebtedness without the need for consent of the Senior Secured Noteholders. Further, except as provided therein, the Intercreditor Agreement provides that no Obligor (as defined below) or any subsidiary of an Obligor may make payments on the Senior Notes if, two days prior to the date of payment, a default resulting from the failure to pay amounts due in connection with the Senior Secured Notes or the New Revolving Credit Facility is outstanding, or a Stop Notice (as defined below) has been served and is in force. By accepting a Senior Secured Note or a Senior Note, as the case may be, the relevant holder thereof shall be deemed to have agreed to and accepted the terms and conditions of the Intercreditor Agreement. The following description is a summary of certain provisions, among others, that will be contained in the Intercreditor Agreement that relate to the rights and obligations of the Senior Secured Noteholders and the Senior Noteholders. It does not restate the Intercreditor Agreement in its entirety nor does it describe provisions relating to the rights and obligations of holders of other classes of our debt or capital expenditures. As such, we urge you to read the Intercreditor Agreement because it, and not the discussion that follows, defines certain rights of the Senior Secured Noteholders and the Senior Noteholders.

159

Order of Priority Priority of Debts The Intercreditor Agreement will provide for the following order of priority to apply to the satisfaction of the obligations of Unitymedia Hessen, Unitymedia NRW, Unitymedia Management GmbH, Unitymedia Hessen Verwaltung GmbH and any future obligors under indebtedness that is subject to the terms of the Intercreditor Agreement (other than any indebtedness owed by Unitymedia) (each, an Obligor):

first, all money and liabilities now or in the future due, owing or incurred under the New Revolving Credit Facility (including the guarantees thereof) (the RCF Debt) and permitted hedging indebtedness (including the guarantees thereof) (the Hedging Debt and together, with such debt as may finance the foregoing, the Super Priority Debt) and all money and liabilities now or in the future due, owing or incurred under the Senior Secured Notes and the guarantees relating to the Senior Secured Notes (the Senior Secured Notes Guarantees) and all other money and liabilities now or in the future due, owing or incurred that is designated in accordance with the terms of the Intercreditor Agreement as Senior Debt (the Senior Debt and together with the Super Priority Debt, the Senior Secured Debt), without any preference among them; second, the guarantees relating to the Senior Notes (the Senior Notes Guarantees) and all other money and liabilities now or in the future due, owing or incurred that is designated in accordance with the terms of the Intercreditor Agreement as Senior Subordinated Debt (collectively, the Senior Subordinated Debt); third, intercompany debt (which consists of all liabilities now or in the future due, owing or incurred by any Obligor to the Issuer (or, following the Debt-Pushdown, Unitymedia) or any of its subsidiaries (collectively, the Senior Group) (the Intercompany Debt); and fourth, investor debt (which consists of all liabilities now or in the future due, owing or incurred by any Obligor to any investor or any shareholder in the Issuer (or, following the Debt-Pushdown, Unitymedia) or any of its Affiliates that is not a member of the Senior Group under or in connection with the investor debt documents) (the Investor Debt and together with the Intercompany Debt, the Subordinated Debt).

The Intercreditor Agreement will also provide for the following order of priority to apply to the satisfaction of the obligations of Unitymedia:

first, all money and liabilities now or in the future due, owing or incurred under Senior Secured Debt and the obligations of Unitymedia under the Senior Notes without any preference among them; second, intercompany debt (which consists of all liabilities now or in the future due, incurred by Unitymedia; and third, investor debt (which consists of all liabilities now or in the future due, owing or incurred by Unitymedia to any investor or any shareholder in Unitymedia or any of its Affiliates that is not a member of the Senior Group under or in connection with the investor debt documents).

Priority of Security Immediately following the Debt Pushdown, the security granted to secure the Senior Secured Debt and/or the Senior Subordinated Debt (other than the pledge of the capital stock of Unitymedia) (the Security) will rank in right and priority of payment in the following order:

first, all money and liabilities now or in the future due, owing or incurred under the RCF Debt, and the Senior Debt, Hedging Debt and any other Senior Debt, provided that the Super Priority Debt will be repaid (pari passu, without any preference between such debt) prior to the repayment of any Senior Debt (pari passu, without any preference between such debt); and second, the debt under the Senior Notes and any other Senior Subordinated Debt (pari passu, without any preference between such debt).

The share pledge over the shares of Unitymedia to secure the obligations under the Senior Notes will not constitute Security for purposes of the Intercreditor Agreement.

160

Restrictions Subject to certain limited exceptions and subject to the provisions set forth under the captions Permitted Payments; Suspension of Permitted Payments and Limitations on Enforcement, while any Senior Secured Debt is outstanding, the Intercreditor Agreement restricts (to the extent not otherwise (i) permitted by each of the New Revolving Credit Facility, the indenture governing the Senior Secured Notes and the indenture governing the Senior Notes or (ii) consented to by the relevant Representative of each the Super Priority Debt, Senior Debt and, to the extent relevant, the Senior Subordinated Debt), among other things:

the ability of the Obligors and their subsidiaries to create or permit to subsist any security interest over any of their assets for any debt owed to the creditors of Senior Subordinated Debt (the Senior Subordinated Creditors) and the creditors of Subordinated Debt (the Subordinated Creditors); the ability of the Obligors and their subsidiaries to pay, purchase, redeem or acquire any of the Senior Subordinated Debt or Subordinated Debt, or otherwise to provide financial support in relation to such liabilities, except in respect of any Senior Subordinated Debt in connection with any such payment or acquisition of any Senior Subordinated Debt by the Issuer; and the ability of the creditors of the Senior Subordinated Debt and Subordinated Debt to enforce the Senior Subordinated Debt and the Subordinated Debt and the security relating thereto, to demand or receive payments toward the discharge of any Senior Subordinated Debt or Subordinated Debt or to apply money or property toward the discharge of any Senior Subordinated Debt or Subordinated Debt.

In addition, the Intercreditor Agreement provides that the Security and guarantees relating to the Senior Secured Debt and the Senior Subordinated Debt will be released in certain circumstances. Moreover, certain proceeds received by the Senior Creditors, the Senior Subordinated Creditors or the Subordinated Creditors must be turned over to the Security Trustee pursuant to the Intercreditor Agreement for application in accordance with the Intercreditor Agreement. See Turnover. For the avoidance of doubt, the above restrictions will not be applicable with respect to any obligations of Unitymedia under or with respect to the Senior Notes. Limitation of Credit Support Pursuant to the Intercreditor Agreement, the Obligors will be prohibited from granting any security in favor of any Senior Secured Debt unless that security is given in favor of the Security Trustee to hold for the benefit of all other Senior Secured Debt. The Obligors will also be prohibited from granting any security in favor of the Senior Subordinated Debt or the Subordinated Debt except (in respect of the Senior Subordinated Debt) for security that is permitted under the indenture governing the Senior Secured Notes and given in favor of the Security Trustee to hold for the benefit of all other Senior Secured Debt, and other security agreed by the Relevant Majority of the Super Priority Creditors and the Relevant Majority of the Senior Creditors or otherwise required by the relevant debt documents. The Intercreditor Agreement will regulate the ranking of the various pledges granted by Unitymedia and its subsidiaries over their respective equity interests in any entity in which they may from time to time hold an equity interest, in favor of the Security Trustee and the relevant Representatives (as co-creditors) as evidenced on closing by the various pledge agreements. In addition, the Intercreditor Agreement will limit the giving of guarantees in support of Senior Subordinated Debt or the Subordinated Debt, except for guarantees originally provided for, or otherwise required by, the applicable indenture. Permitted Payments; Suspension of Permitted Payments Prior to the discharge date for the Senior Secured Debt, no Obligor may pay, whether in cash or in kind, any amount of Senior Subordinated Debt; unless (i) (if prior to the discharge date of the Super Priority Debt) the Representative representing the Relevant Majority of the Super Priority Debt and (if prior to the discharge date of the Senior Debt) the Representative representing the Relevant Majority of the Senior Debt agree or (ii) each of the following conditions is satisfied: (a) the payment is either (1) a Permitted Payment (as defined below) or (2) is not otherwise prohibited under the terms of the Senior Secured Debt finance documents, (b) on the date falling two days prior to the date of payment, there is no outstanding payment default with respect to the Senior Secured Debt, and (c) no Stop Notice is outstanding. A Stop Notice is in force during the period from the date on which a Representative with respect to any Senior Secured Debt serves a notice (a Stop Notice) on the Issuer and the

161

Senior Notes Trustee that an event of default (other than a payment default) is outstanding under a Super Priority Debt document or Senior Debt document and suspending payment of the Senior Subordinated Debt until the earliest of (i) the date 179 days after the giving of the Stop Notice, (ii) if a Standstill Period (as defined below) is in effect at the time of delivery of the Stop Notice, the date on which that Standstill Period expires, (iii) the date on which the event of default under the relevant Super Priority Debt document or Senior Debt document is cured, remedied, waived or otherwise ceases to be outstanding, (iv) the date on which each Representative that served the Stop Notice cancels such Stop Notice, (v) the date on which the creditors with respect to the Senior Subordinated Debt takes enforcement action in accordance with, and as permitted by, the Intercreditor Agreement, and (vi) the date the Senior Secured Debt is no longer outstanding. The Stop Notice is to be issued within 45 days of receipt of notice of such default and only one such notice may be served within any 360 day period and not more than one Stop Notice may be served in respect of the same event or set of circumstances. The issuance of a Stop Notice is subject to certain other limitations set forth in the Intercreditor Agreement such as timing considerations, administrative considerations and certain other procedural requirements. Notwithstanding the forgoing, the Senior Notes Trustee will be entitled to receive and retain amounts payable for its own account. For purposes of the Intercreditor Agreement, Permitted Payments is defined to include certain customary permitted payments which include scheduled payments of interest; additional amounts payable pursuant to Description of the Senior Notes Withholding Tax; fees, costs, expenses and taxes incurred in respect of the issuance and offering of the Senior Notes or the ordinary day-to-day administration of the Senior Notes; principal amount of the Senior Notes upon or after their originally scheduled maturity; any other amount not exceeding an agreed amount in any 12-month period; note trustee amounts and note security costs; certain permitted defeasance trust payments; funded form the proceeds of issuance of, or exchanged for or converted into certain defined permitted junior securities; any other amounts consented to by the Representatives of each of the Super Priority Debt and Senior Debt. Limitations on Enforcement The Senior Subordinated Creditors and the Subordinated Creditors will not (without the consent of the Representative of the Relevant Majority of the Super Priority Creditors and the Representative of the Relevant Majority of the Senior Creditors or unless otherwise permitted under the Intercreditor Agreement) be permitted, while the Senior Secured Debt is outstanding, to (i) demand payment of any Senior Subordinated Debt or Subordinated Debt, (ii) accelerate any of the Senior Subordinated Debt or Subordinated Debt or otherwise declare any of the Senior Subordinated Debt or Subordinated Debt prematurely due or payable on an event of default or otherwise, (iii) enforce any of the Senior Subordinated Debt or Subordinated Debt by attachment, setoff, execution or otherwise, (iv) (in the case of the Senior Subordinated Creditors) enforce (or give instructions to the Security Trustee to enforce) the Security relating to the Senior Subordinated Debt, (v) petition for (or vote in favor of any resolution for), initiate, support or take any steps with a view to any insolvency or any voluntary arrangement or assignment for the benefit of creditors or any similar proceedings involving an Obligor, (vi) sue or bring or support any legal proceedings against any Obligor (or any of its subsidiaries) or (vii) otherwise exercise any remedy for the recovery of any Senior Subordinated Debt or Subordinated Debt; provided that the following shall not constitute a prohibited enforcement actions (a) the taking of any action necessary to preserve the validity and existence of claims (including the registration of such claims before any court or governmental authority or administrator, (b) the taking of any action against any creditor to challenge the basis on which any sale or disposal is to take place pursuant to powers granted to such persons under any security document; (c) the bringing of proceedings solely for injunctive relief to restrain any actual or punitive breach of the indenture governing the Senior Notes or the Senior Notes and security documents; or (d) legal proceedings or allegations against any person in connection with violations of securities laws or securities or listing regulations or fraud. Despite the limitations on enforcement discussed above, while the Senior Secured Debt is outstanding, the Senior Subordinated Creditors will be permitted under the Intercreditor Agreement to take any of the actions that would otherwise be prohibited, provided that (i) payment of any of the Senior Secured Debt has been accelerated, or liabilities under such debt have been declared prematurely due and payable or payable on demand (and demand has been made), in each case under the relevant debt documents, or the Representative of the Relevant Majority of the Super Priority Creditors or the Representative of the Relevant Majority of the Senior Creditors has taken any enforcement action under the security documentation relating to such debt, (ii) certain insolvency, liquidation or other similar events have occurred with respect to an Obligor (other than an Obligor that is not a borrower or guarantor under any Senior Secured Debt) and such actions are taken with respect to such Obligor, (iii) there is an event of default under the Senior Subordinated Debt for failure to pay principal at its originally

162

scheduled maturity, (iv) the proposed enforcement action has been consented to by the Representative for the Relevant Majority of each of the Super Priority Debt and the Senior Debt or (v) a period (the Standstill Period) of not less than 179 days has elapsed from the date any Representative of the Relevant Majority of either the Super Priority Debt or the Senior Debt received an enforcement notice from a Representative of the Relevant Majority of Senior Subordinated Debt relating to an event of default (other than certain cross-defaults) under the applicable documents relating to such Senior Subordinated Debt and such event of default is outstanding at (and has not been waived prior to) the end of the Standstill Period. The Intercreditor Agreement will require the Security Trustee to give prompt notice to the Representative of the Senior Subordinated Debt if the Security Trustee is instructed by a Representative of the Relevant Majority of the Super Priority Debt or the Representative of the Relevant Majority of the Senior Debt (in each case, acting on behalf of its respective creditors) to enforce the security over the equity interests in any Subsidiary Guarantor that secures the Senior Secured Debt (a Senior Enforcement). During the period from the giving of that notice to the date that the Security Trustee ceases to use all reasonable commercial efforts to carry out that Senior Enforcement as expeditiously as reasonably practicable having regard to the circumstances:

the Security Trustee will not be permitted to enforce any Security over such equity interests in a manner that would adversely affect such Senior Enforcement; and no Senior Subordinated Creditor will be permitted to take, or will be permitted to give any instructions to the Security Trustee to take, any enforcement action prohibited by the preceding bullet;

provided that the foregoing will not prejudice any other rights of the Senior Subordinated Creditors to take any enforcement action against any other Obligor that are permitted under the Intercreditor Agreement. The Intercreditor Agreement will require the Security Trustee to give prompt notice to the Representative of Senior Subordinated Debt of its ceasing to carry out a Senior Enforcement. Enforcement Instructions The Security Trustee may refrain from enforcing the Security unless otherwise instructed:

by, while the Super Priority Debt is outstanding, the Representative of the Super Priority Creditors or the Representative of the Senior Creditors; by, after the Super Priority Debt has been discharged but while any Senior Debt is outstanding, the Representative of the Relevant Majority of the Senior Creditors; or by, after the Senior Secured Debt has been discharged (or if permitted to do so as described above under Limitations on Enforcement), the Representative of the Relevant Majority of the Senior Subordinated Creditors.

The Security Trustee may disregard any instructions from any other person to enforce the Security and may disregard any instructions to enforce any Security if those instructions are inconsistent with the Intercreditor Agreement. The Security Trustee is not obliged to enforce the Security if it is not appropriately indemnified by the relevant creditors. Consultation Subject to the immediately following paragraph, if each of the Super Priority Debt and the Senior Debt are outstanding, before giving any instructions to the Security Trustee to enforce the Security or to accelerate any debt owing to any of the creditors, the Representative for the Super Priority Debt and the Representative of the Senior Creditors shall consult with one another and with the Security Trustee in good faith, with a view to coordinating those instructions, for a period of up to 30 days or such shorter period as the Representative of the Super Priority Debt and the Representative of the Senior Creditors may agree. The Representative of the Super Priority Debt and the Representative of the Senior Creditors shall not be obliged to consult in accordance with the preceding paragraph if: (i) the Security has become enforceable as a result of an insolvency event relating to such obligor against whom such enforcement action has been taken or such debt accelerated;

163

(ii)

the Representative of the Super Priority Debt or the Representative of the Senior Creditors determines in good faith (and notifies the other agent(s) or representative(s) and the Security Trustee) that to enter into such consultations and thereby delay the commencement of enforcement of the Security could reasonably be expected to have an adverse effect on: (a) (b) their ability to enforce any of the Security; or the realization proceeds of any enforcement of the Security in any material respect.

The Security Trustee shall inform the Representative of the Super Priority Debt and the Representative of the Senior Creditors on receiving any instructions under the Intercreditor Agreement to enforce the Security. Manner of Enforcement; Competing Instructions Subject to the immediately following paragraph, any instructions given to the Security Trustee by a person entitled to give those instructions will override any conflicting instructions given by any other parties to the Intercreditor Agreement and the Security Trustee is entitled to rely on and comply with any such instructions. Before the Super Priority Discharge Date, if the instructions given to the Security Trustee by the Representative of the Super Priority Debt and the Representative of the Senior Creditors conflict with one another: (i) the Security Trustee shall promptly notify the Representative of the Super Priority Debt and the Representative of the Senior Creditors; and following such notification, the Representative of the Super Priority Creditors and the Representative of the Senior Creditors will consult with one another in good faith for at least 15 days (the Additional Consultation Period) with a view to resolving the conflict in such instructions, provided that the Additional Consultation Period shall end immediately if: (A) (B) the Security has become enforceable as a result of certain defined insolvency events; and the Representative of the Super Priority Creditors or the Representative of the Senior Creditors determines in good faith (and notifies one another and the Security Trustee) that such consultations and the delay caused by such consultations in the enforcement of the Security could reasonably be expected to have an adverse effect on: (1) their ability to enforce any Security; or (2) the realisation proceeds of any enforcement of the Security in any material respect.

(ii)

If, following the end of the Additional Consultation Period, the Security Trustee has not received consistent instructions from the Representative of the Super Priority Creditors and the Representative of the Senior Creditors: (i) if the Security Trustee has received instructions from either the Representative of the Super Priority Creditors or the Representative of the Senior Creditors to enforce the Security and unless the Security Trustee determines an alternative course of action, the Security Trustee shall enforce the Security in order to best achieve the Security Enforcement Objective (as defined below) (in its absolute discretion); and the Security Trustee may (but shall not be obliged to) follow such instructions as it (in its absolute discretion) determines are in the best interests of achieving the Security Enforcement Objective or, if it determines (in its absolute discretion) that it has received no instructions which are in the best interests of achieving the Security Enforcement Objective, the Security Trustee may (but shall not be obliged to) act as it sees fit, in order to best achieve a maximizing, so far as is consistent with a prompt and expedious enforcement of the Security, the recovery of the Senior Secured Creditors treating all creditors equally (the Security Enforcement Objectives) (in its absolute discretion).

(ii)

In making a determination under the preceding clause (ii), the Security Trustee may retain the services of an internationally recognized reputable and independent restructuring advisor (the Restructuring Advisor). The Restructuring Advisor shall be instructed to advise on the optimal method of enforcing the Security so as to

164

achieve the Security Enforcement Objective. The Issuer (or, following the Debt-Pushdown, Unitymedia) and the Guarantors must jointly and severally indemnify the Security Trustee on demand against the fees and expenses payable by the Security Trustee to any Restructuring Advisor. Notwithstanding any other described above, if there is a proposed enforcement of any Security over all of the shares of Unitymedia Hessen or its subsidiaries or a business of Unitymedia or its subsidiaries, the Security Trustee shall comply with the requirements of the second paragraph described below under the caption Release of Security and the Subsidiary Guarantees. Subordination on Insolvency; Filing of Claims After the occurrence of an insolvency event of default in relation to any Obligor (the Insolvent Obligor), the Senior Subordinated Debt owed by the Insolvent Obligor will be subordinate in right of payment to the Senior Secured Debt owed by such Insolvent Obligor. Moreover, the Intercompany Debt and the Investor Debt and, unless otherwise required by the Representative of the Relevant Majority of the Super Priority Creditors and the Representative of the Relevant Majority of the Senior Creditors, the Intercompany Debt owed by the Insolvent Obligor will be subordinate in right of payment to the Senior Secured Debt and the Senior Subordinated Debt owed by such Insolvent Obligor. The Senior Subordinated Creditors and the Subordinated Creditors each irrevocably authorizes the Security Trustee (acting on the instructions of the Representative of the Relevant Majority of the Super Priority Creditors and the Representative of the Relevant Majority of the Senior Creditors) after the occurrence of certain specified insolvency events in relation to any Obligor to (i) claim, enforce and prove for any Senior Subordinated Debt or Subordinated Debt owed by the Insolvent Obligor, (ii) except as set forth below with respect to the Senior Noteholders, exercise all powers of convening meetings, voting and representation in respect of the Senior Subordinated Debt and Subordinated Debt owed by the Insolvent Obligor and each Representative of Senior Subordinated Debt and each Subordinated Creditor will provide all forms of proxy and of representation requested by the Security Trustee for that purpose, (iii) file claims and proofs, give receipts and take all such proceedings and do all such things as the Security Trustee considers reasonably necessary to recover any Senior Subordinated Debt or Subordinated Debt owed by the Insolvent Obligor and (iv) receive all payments of or in respect of any Senior Subordinated Debt or Subordinated Debt owed by the Insolvent Obligor for application in accordance with the provisions set forth under Application of Proceeds. Notwithstanding the foregoing, nothing shall (i) entitle any creditor or Representative to exercise or require the Senior Notes Trustee or the Senior Noteholders to exercise such power of voting or representation to waive, reduce, discharge, extend the due date for payment of or reschedule any of the Senior Subordinated Debt; or (ii) be deemed to require either the Senior Notes Trustee or the Senior Noteholders to hold a meeting or pass any resolution at such meeting or give any consent pursuant to the terms of the Senior Notes Indenture, or (iii) authorize any party to take any action against Unitymedia on behalf of the Senior Notes Trustee or the Senior Noteholders. If the Security Trustee is not entitled or does not take any of the actions referred to above, the Representatives of the Senior Subordinated Debt and the Subordinated Creditors (i) will each do so promptly when requested by the Security Trustee (acting on the instructions of the Representative of the Relevant Majority of Super Priority Debt and the Representative of the Relevant Majority of Senior Debt) subject, in the case of Senior Subordinated Debt only, to either or both the Super Priority Creditors or the Senior Creditors giving an appropriate indemnity for any costs and expenses which may be reasonably incurred by the Senior Subordinated Creditors and their Representative in doing or taking the actions so requested; and (ii) may each do so to the extent permitted as described under Limitations on Enforcement. Release of Security and Guarantees Except as provided in the immediately following paragraph, if a disposal to a person or persons of any asset (including, without limitation, shares in any subsidiaries of Unitymedia) owned by Unitymedia and its subsidiaries is: (i) permitted by the finance documents for the Super Priority Debt (if prior to the discharge date for the Super Priority Debt), the finance documents for the Senior Debt (if prior to the discharge date for the Senior Debt) and the finance documents for the Senior Subordinated Debt (if prior to the discharge date for the Senior Subordinated Debt);

165

(ii)

being effected at the request of the Representative of the Relevant Majority of the Super Priority Creditors, the Representative of the Relevant Majority of the Senior Creditors or, to the extent that the assets are subject to the shared Security, Representative of the Relevant Majority of the Subordinated Creditors or the Security Trustee acting on behalf of any of them in accordance with the Intercreditor Agreement, in circumstances where the creditors of the Super Priority Debt, the creditors of the Senior Debt and/or, in respect of assets subject to shared Security, the creditors of the Senior Subordinated Debt are entitled to take enforcement action under the Intercreditor Agreement and (unless the Representative of the Relevant Majority of the Super Priority Creditors, the Representative of the Relevant Majority of the Senior Creditors and/or the Representative of the Relevant Majority of the Subordinated Creditors (as applicable) have otherwise agreed) the Security Trustee is satisfied that the disposal is consistent with certain principals relating to the Security Enforcement Objective; or being effected pursuant to enforcement action taken to enforce any Security in accordance with the Intercreditor Agreement (including, without limitation, any disposal of any Security pursuant to a liquidation in connection with an insolvency),

(iii)

the Security Trustee is, to the extent legally possible, irrevocably authorised to and shall execute on behalf of each creditor (including the Senior Secured Noteholders and Senior Noteholders) and each of Unitymedia and/or the Obligors and their subsidiaries, as applicable (and at the cost of Unitymedia and/or the relevant Obligors, as the case maybe): (a) a release of any Security and any other claim (including, without limitation, any guarantees in respect thereof) under the relevant finance documents over that asset; and if that asset comprises all of the shares in the capital of an Obligor or any of its subsidiaries which are the subject of Security, a release of that subsidiary and its subsidiaries from all present and future obligations and liabilities (both actual and contingent and including any liability under any guarantee (including, without limitation, the guarantees) and/or to any other obligor by way of contribution or indemnity) under the relevant finance documents and a release of any Security granted by Unitymedia to the extent it is a pledge of the shares of any Obligor) or any of its subsidiaries (or its direct or indirect parent entity, if applicable) over any of their respective assets,

(b)

provided that (1) in the case of clause (i) above, the proceeds of that disposal are applied in accordance with any requirements under the relevant finance documents relating to mandatory prepayment, redemption and/or cancellation from the proceeds of disposals (in respect of which application the Security Trustee is entitled to rely on a certificate from Unitymedia); and (2) in the case of clauses (ii) and (iii) above, the proceeds of that disposal are applied in accordance with the priority set forth below under the caption Application of Proceeds. In the case of any release of any Security or any obligation or liability under any finance document (including, without limitation, any guarantee) in connection with a disposal falling within clauses (ii) or (iii) of the preceding paragraph above which constitutes a disposal of all of the shares of an Obligor or its subsidiaries or a business of the Obligor or it subsidiaries, the creditors of the Super Priority Debt, the creditors of the Senior Debt (including the Senior Secured Noteholders) and (in the case of assets subject to shared security) the creditors of the Senior Subordinated Debt shall only be obliged to release and only authorise the release set out in clause (a) of the preceding paragraph in respect of the relevant Security and guarantees if the relevant asset is disposed of in the circumstances referred to in clauses (ii) or (iii) of the preceding paragraph and: (A) the proceeds of such disposal received by the Security Trustee are in the form of cash (or substantially all cash); either (I) such disposal is made pursuant to a public auction or (II) in connection with such disposal, a Restructuring Advisor selected by the Security Trustee has delivered an opinion to the Representative of the Relevant Majority of the Super Priority Creditors, the Representative of the Relevant Majority of the Senior Creditors and (in the case of assets subject to the shared Security) the Representative of the Relevant Majority of the Subordinated Creditors that the disposal price of such asset is fair from a financial point of view after taking into account all relevant circumstances;

(B)

166

(C)

on completion of such disposal, the relevant asset and, if such asset comprises all of the shares in the capital of the relevant Obligor or its subsidiaries which are the subject of Security in favor of the Security Trustee, such Obligor and its subsidiaries are simultaneously and unconditionally released from all present and future obligations and liabilities in respect of the debt (or such debt is sold or otherwise disposed of by the creditors of the Super Priority Debt, the creditors of the Senior Debt and/or (applicable) the creditors of the Senior Subordinated Debt to the purchaser of the relevant Obligor or its subsidiaries) and such obligations are not assumed by the purchaser or an affiliate of such purchaser; and the proceeds are applied in accordance with the priority set forth below under the caption Application of Proceeds.

(D)

Each creditor (in the case of either the Senior Secured Notes Trustee or the Senior Notes Trustee, without the need for any further referral to or authority from the holders of the Senior Secured Notes or the Senior Notes (as the case may be), but subject to its costs and expenses being paid or indemnified) and each Obligor will promptly execute any documents as may be necessary to give effect to such releases as the Security Trustee may reasonably require to give effect to these release provisions. Turnover If any Senior Secured Creditor (with respect to proceeds from the enforcement of security only), Senior Subordinated Creditor or Subordinated Creditor receives or recovers a payment in cash or in kind (including by way of set-off or combination of accounts) of any of the Senior Secured Debt, Senior Subordinated Debt or Subordinated Debt which is prohibited by the Intercreditor Agreement or not made in accordance with the provisions described below under Application of Proceeds, the receiving or recovering creditor will promptly notify the Security Trustee. Each such creditor shall hold any amount on trust for each of the creditors with a prior ranking claim and, upon demand by the Security Trustee, pay that amount to the Security Trustee or, if lower, the amount of debt owed to the relevant category of creditor, in each case less the third party costs and expenses (if any) reasonably incurred in receiving or recovering such amount, for application by the Security Trustee in accordance with the order of priority described under Application of Proceeds. Application of Proceeds All amounts from time to time received pursuant to the provisions described under Turnover or otherwise recovered by the Security Trustee (or any other creditors) in connection with the realization or enforcement of all or any part of the Security in favor of the Senior Secured Debt or Senior Subordinated Debt, the sale of any asset of any Obligor pursuant to an insolvency event or, an enforcement action, judicial supervised or sanctioned reorganization or administrative work-out restructuring or otherwise paid to the Security Trustee under the Intercreditor Agreement for application as set forth below shall be held by the Security Trustee on trust and applied in the following order:

first, in payment of the following amounts in the following order of priority: (i) firstly, pari passu and pro rata to the Security Trustee, Senior Notes Trustee and Senior Secured Notes Trustee of any notes trustee amounts payable to the Security Trustee, the Senior Notes Trustee or the Senior Secured Notes Trustee, as the case may be; and (ii) secondly, pari passu and pro rata to each Representative of Super Priority Debt, each Representative of Senior Debt and each Representative of Senior Subordinated Debt (to the extent not included in (i) above) of the fees, costs, expenses and liabilities (and all interest thereon as provided in the relevant finance documents) of each such Representative and any receiver, attorney or agent appointed by such Representative under the security documents or the Intercreditor Agreement (to the extent such security has been given in favor of such obligations); second, in payment of the balance of the costs and expenses of each Super Priority Creditor in connection with such enforcement; third, in payment pari passu and pro rata to the Representative of Super Priority Debt for application towards the balance of the Super Priority Debt; fourth, in payment of the balance of the costs and expenses of each Senior Creditor in connection with such enforcement;

167

fifth, in payment pari passu and pro rata to each Representative of Senior Debt for application towards the balance of the Senior Debt; sixth, in payment of the balance of the costs and expenses of each Senior Subordinated Creditor in connection with such enforcement; seventh, in payment pari passu and pro rata to each Senior Subordinated Creditor for application towards the balance of the Senior Subordinated Debt; and eighth, the payment of the surplus (if any) to the Obligor or other person entitled to it.

Amendment to Intercreditor Agreement Waivers, consents or amendments to or in relation to the Intercreditor Agreement must be agreed by the Representative of the Relevant Majority of the Super Priority Creditors (if prior to the discharge date for the Super Priority Debt), the Representative of the Relevant Majority of the Senior Creditors (if prior to the discharge date for the Senior Debt) and the Representative of the Relevant Majority of the Subordinated Creditors (if prior to the Subordinated Debt), provided that each party acknowledges and agrees that to the extent that an amendment to the Intercreditor Agreement only affects the rights and obligations of one or more parties or class of parties to the Intercreditor Agreement, and could not reasonably be expected to be adverse to the interests of the other parties, only the parties or class of parties affected by such amendment need to agree to the amendments. July 2005 Senior Notes In July 2005, Unitymedia GmbH (then iesy Repository GmbH) issued 235.0 million of 10.125% senior notes due 2015 and $151.0 million of 10.375% senior notes due 2015 (the July 2005 Senior Notes and, together with the February 2005 Senior Notes, the Existing Senior Notes). The July 2005 Senior Notes will mature on February 15, 2015. Interest is payable semi-annually on June 30 and December 31 of each year. Unitymedia GmbH may redeem all or part of the July 2005 Senior Notes prior to February 15, 2010 upon payment of a make whole premium. At any time on or after February 15, 2010 until February 14, 2011, Unitymedia GmbH may redeem the July 2005 Senior Notes in whole or in part by paying the following redemption prices:
Redemption Price Euro Notes Dollar Notes

105.063% NRW/Hesse Revolving Credit Facility

105.188%

Unitymedia Hessen (then iesy Hessen GmbH & Co. KG), Unitymedia NRW (then ish NRW GmbH) and arena (the NRW/Hesse RCF Borrowers) as well as Unitymedia GmbH have entered into a senior revolving facility agreement with certain senior lenders (the NRW/Hesse RCF Lenders) on April 5, 2006 (as amended and restated on August 8, 2006, the NRW/Hesse Revolving Credit Facility Agreement), with, among others, Citibank International plc as agent (the NRW/Hesse Facility Agent), pursuant to which the NRW/Hesse RCF Lenders have agreed to provide the NRW/Hesse RCF Borrowers and certain subsidiaries of Unitymedia Hessen that accede to the NRW/Hesse Revolving Facility Agreement as borrowers with up to 130.0 million in additional financing through a senior secured revolving credit facility (the NRW/Hesse Revolving Credit Facility). As of the date of this Offering Memorandum, the NRW/Hesse Revolving Credit Facility is undrawn. With respect to any available but undrawn amounts under the NRW/Hesse Revolving Credit Facility, the RCF Borrowers are obligated to pay a commitment fee on such undrawn amounts at 0.75 percent per annum. Additionally, the RCF Borrowers are also obliged to pay an arrangement fee, a security trustee fee and an agency fee in the amount agreed pursuant to the relevant fee letters. NRW/Hesse Notes General On April 5, 2006, Unitymedia Hessen (then iesy Hessen GmbH & Co. KG) and Unitymedia NRW (then ish NRW GmbH) issued 1.35 billion senior notes due 2013 that mature on April 15, 2013 (the NRW/Hesse

168

Notes). As of December 31, 2008, we completed open market buybacks of nominal 326 million, of which 75 million par value were cancelled to reduce the amount outstanding to 1,275.0 million. In the nine months ended September 30, 2009, we did not repurchase any further NRW/Hesse Notes in the open market. The NRW/ Hesse Notes bear interest at a rate equal to three month EURIBOR plus 2.875 percent, reset quarterly. Interest is payable quarterly on January 31, April 30, July 31 and October 31 of each year. Unitymedia Hessen and Unitymedia NRW are entitled, at their option, to redeem all or a part of the NRW/Hesse Notes upon not less than 30 nor more than 60 days notice at par plus accrued and unpaid interest to the redemption date. Term Loan Unitymedia Hessen, Unitymedia NRW and arena (the Term Loan Borrowers) entered into a senior term loan facility agreement with certain senior lenders (the Term Lenders) on October 18, 2006 (the Term Loan Facility Agreement), with, among others, Citibank International plc as agent (the Term Loan Facility Agent), pursuant to which the Term Lenders agreed to provide Unitymedia Hessen, Unitymedia NRW and arena with up to 100.0 million in financing through a senior secured term loan facility (the Term Loan Facility). The Term Loan Facility was fully drawn on October 20, 2006 (the Closing Date) by Unitymedia Hessen. As of September 30, 2009, the Term Loan Facility was fully drawn by Unitymedia Hessen. The final maturity date of the Term Loan Facility is the earlier of (i) October 15, 2011 and (ii) the date on which the Term Loan Facility has been fully repaid and cancelled. Existing Intercreditor Agreement To establish the relative rights of certain of their creditors, Unitymedia Hessen (then iesy Hessen GmbH & Co. KG), Unitymedia NRW (then ish NRW GmbH), Unitymedia GmbH and other obligors under the Existing Senior Notes, the NRW/Hesse Revolving Credit Facility and the NRW/Hesse Notes on April 5, 2006 entered into an amendment and restatement of the intercreditor agreement dated February 14, 2005 (the Existing Intercreditor Agreement), with, among others, the creditors of the NRW/Hesse Revolving Credit Facility, the creditors under certain hedging agreements, the trustees for the Existing Senior Notes, certain investors and The Law Debenture Trust Company of New York, as security trustee. The Existing Intercreditor Agreement was further amended on October 18, 2006 in connection with entry into the Term Loan Facility Agreement.

169

DESCRIPTION OF THE SENIOR SECURED NOTES UPC Germany GmbH (Bidco) will issue the Notes (as defined below) under the Indenture (the Indenture), to be dated as of the Issue Date, between, among others, the Issuer, The Bank of New York Mellon, as trustee (the Trustee) and the Security Trustee. You will find the definitions of capitalized terms used in this description under the heading Certain Definitions. The proceeds of the offering of the Notes sold on the Issue Date will be used by the Issuer, together with the proceeds of the Senior Notes issued on the Issue Date and the Equity Contribution, to acquire (the Acquisition) all of the outstanding Capital Stock of Unitymedia GmbH (Unitymedia), to repay in full the Existing Senior Secured Notes, the Existing Senior Notes and the Existing Term Loan and to cover certain costs and expenses as set forth in this offering memorandum under the caption Use of Proceeds. Pending consummation of the Acquisition, the Initial Purchasers will deposit the net proceeds of this offering of the Notes into a Senior Secured Escrow account (the Senior Secured Escrow Account) pursuant to the terms of a Senior Secured Escrow agreement (the Senior Secured Escrow Agreement) between the Trustee and The Bank of New York Mellon as Escrow Agent (the Escrow Agent). The Senior Secured Escrow Agreement, including the conditions to the release of the Senior Secured Escrowed Property, are more fully described below under Escrow of Proceeds; Special Mandatory Redemption. In the event the Acquisition is not consummated on or before October 31, 2010 (or upon the occurrence of certain other events), the Notes will be redeemed at a price equal to 101% of the initial issue price of the Notes plus accrued and unpaid interest and additional amounts, if any from the Issue Date (the Special Mandatory Redemption Price). See Senior Secured Escrow of Proceeds; Special Mandatory Redemption. In the event that, on or before October 31, 2010, the Issuer completes the Acquisition, Unitymedia Hessen GmbH & Co. KG (Unitymedia Hessen) and Unitymedia NRW GmbH (Unitymedia NRW), as co-issuers, will assume, jointly and severally, the obligations of Bidco under the Notes and the Indenture pursuant to a supplemental indenture or accession agreement (the Accession Agreement), and each of the Guarantors will execute and deliver to the Trustee a supplemental indenture providing for the guarantee of payment of the Notes, in each case, no later than the timing set forth under the covenant Certain Covenants Completion of Debt Pushdown. Upon consummation of the Debt Pushdown (as defined below), Unitymedia Hessen and Unitymedia NRW, as co-issuers, will succeed to, and be substituted for, and may exercise every right and power of, Bidco under the Indenture, and upon such substitution, Bidco will be released from its obligations under the Indenture and the Notes. The term Debt Pushdown means, collectively, the following transactions, among others: (1) the assumption by Unitymedia Hessen and Unitymedia NRW, as co-issuers, of all of Bidcos obligations under the Notes and the Indenture pursuant to the Accession Agreement; (2) the registration with the appropriate authorities of a duly authorized and executed domination agreement between (i) Bidco and Unitymedia and (ii) Unitymedia Management GmbH (Unitymedia Management) and Unitymedia Hessen Verwaltung GmbH (Unitymedia Verwaltung); (3) the guarantee by each Guarantor of the Issuers obligations under the Notes and the Indenture pursuant to a supplemental indenture to the Indenture as described below under the caption Ranking of the Notes, Guarantees and Security upon Completion of the Debt Pushdown Subsidiary Guarantees; (4) the granting of the security in respect of the Notes described below under caption Ranking of the Notes, Guarantees and Security upon Completion of the Debt Pushdown Security; (5) to the extent the Revolving Credit Facility was not acceded to by Unitymedia Hessen, Unitymedia NRW and the other borrowers and guarantors thereunder and the granting of the security required thereby prior to the Debt Pushdown, then the accession to the Revolving Credit Facility by Unitymedia Hessen, Unitymedia NRW and the other borrowers and guarantors thereunder; (6) the assumption by Unitymedia of all of Bidcos obligations under the Senior Notes and the Senior Indenture pursuant to a supplemental indenture or accession agreement and the granting of guarantees and security required thereby; (7) the execution and delivery of the Intercreditor Agreement by the parties thereto; and

170

(8) the repayment, redemption or satisfaction and discharge of all outstanding Indebtedness of Unitymedia and its Subsidiaries under the Existing Senior Secured Notes, the Existing Senior Notes and the Existing Term Loan and the termination of the existing revolving credit facility and the corresponding release of all guarantees and security in respect thereof. For purposes of this description, prior to the completion of the Debt Pushdown, references to the Issuer, Issuers, we, our and us refer only to Bidco and not to any of its Subsidiaries. After the consummation of the Debt Pushdown, references to the Issuer or Issuers refer only to Unitymedia Hessen and/or Unitymedia NRW, as the context may require, and not to any Subsidiary of Unitymedia Hessen or Unitymedia NRW, and references to the Company, we, our and us refer only to Unitymedia Hessen GmbH & Co. KG (the Company) and not to any of its Subsidiaries. For the avoidance of doubt, any references to the Issuer or Issuers in the covenants and related definitions shall be references to Unitymedia Hessen and/or Unitymedia NRW, as the context may require, and not to any of their respective Subsidiaries, provided that such covenants will not be applicable until the Acquisition Date. Prior to the consummation of the Debt Pushdown, Bidco will be prohibited from engaging in any business activity or any other activity, other than certain activities related to the Indenture, the Notes and the Acquisition and related transactions. See Limitation on Activities of the Issuer. Prior to the consummation of the Acquisition, we will not control Unitymedia or any of its Subsidiaries, and neither Unitymedia nor any of its Subsidiaries will be subject to the covenants described in this Description of the Senior Secured Notes. The release of the proceeds of the offering of the Notes from the Senior Notes Escrow Account will be subject to certain conditions. See Escrow of Proceeds; Special Mandatory Redemption. Unitymedia and its Subsidiaries will not be subject to the restrictive covenants contained in the Indenture prior to the Acquisition Date and, as such, we cannot assure you that prior to the Acquisition Date Unitymedia will not engage in activities that would otherwise have been prohibited by the Indenture had those covenants been applicable to Unitymedia and its Subsidiaries after the Issue Date and prior to the Acquisition Date. Prior to consummation of the Acquisition, the Issuer will cause all annual and interim period financial reports required to be made available to holders of the Existing Senior Secured Notes and the Existing Senior Notes, to the extent available on Unitymedias website, to be delivered to the Trustee, provided that such reports shall be deemed to be delivered on the date on which Unitymedia or any of its Subsidiaries post such reports on its website. The Indenture is unlimited in aggregate principal amount, but the aggregate principal amount of Notes issued in this offering is limited to 1,430 million in euro-denominated senior secured notes (the Euro Notes) and $845 million in U.S. dollar-denominated senior secured notes (the Dollar Notes and together with the Euro Notes, the Notes). The Issuers may issue an unlimited amount of additional notes having identical terms and conditions to the Notes (the Additional Notes). The Issuers will only be permitted to issue such Additional Notes if, at the time of such issuance, we are in compliance with the covenants contained in the Indenture. Any Additional Notes will be part of the same issue as the Notes we are currently offering and will vote on all matters with the holders of the Notes. Unless expressly stated otherwise, in this Description of the Senior Secured Notes, when we refer to the Notes, the reference includes any Additional Notes. The Euro Notes and Dollar Notes are separate series of Notes but will be treated as a single class of Notes under the Indenture, except as otherwise stated herein. As a result, among other things, holders of each series of Notes will not have separate and independent rights to give notice of a Default or to direct the Trustee to exercise remedies in the event of a Default with respect to the Notes or otherwise. The Issuer will apply to list the Notes on the Official List of the Luxembourg Stock Exchange and to trade on the Euro MTF of the Luxembourg Stock Exchange (the Euro MTF). This Description of the Senior Secured Notes is intended to be a useful overview of the material provisions of the Notes, the Indenture and the Security Documents. As this Description of the Senior Secured Notes is only a summary, you should refer to the Indenture and the Security Documents for a complete description of the obligations of the Issuers and your rights. Copies of the Indenture and the Security Documents are available as set forth under Listing and General Information.

171

General The Notes The Notes will mature on December 1, 2017 and, prior to the consummation of the Debt Pushdown, will be secured on a first-priority basis by the Bidco Share Pledge (which shall also secure the Senior Notes and the Revolving Credit Facility and certain hedging obligation on a equal and ratable basis) and on a first-priority basis by the Senior Secured Escrow Security. See Ranking of the Notes and Security Prior to the Debt Pushdown. Following the Debt Pushdown, the Notes will be guaranteed by the Subsidiaries of the Company and secured by the assets and security interests described below under Ranking of the Notes, Guarantees and Security upon Completion of the Debt Pushdown. The Issuers will issue the Euro Notes in minimum denominations of 50,000 and integral multiples of 1,000 in excess thereof and the Dollar Notes in minimum denominations of $100,000 and integral multiples of $1,000 in excess thereof. Interest Interest on the Euro Notes will accrue at the rate of 8.125% per annum and interest on the Dollar Notes will accrue at the rate of 8.125% per annum and, in each case, will be payable in the currency in which such Notes are denominated semi-annually in arrears on June 1 and December 1, commencing on June 1, 2010. The Issuers will make each interest payment to the holders of record of the Notes on the immediately preceding May 15 and November 15. Interest on the Notes will accrue from the date of original issuance. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. Payments on the Notes Principal, premium, if any, interest, and Additional Amounts, if any, on the Global Notes will be payable, and the Global Notes may be exchanged or transferred, at the corporate trust office or agency of the Trustee in London, England except that, at the option of the Issuers, payment of interest may be made by check mailed to the address of the holders of the Notes as such address appears in the Note register. Payments on the Euro Global Notes will be made to the common depositary as the registered holder of the Euro Global Notes and payments on the Dollar Global Notes will be made to Cede & Co. as the registered holder of the Dollar Global Notes. Upon the issuance of Definitive Notes, and for so long as the Notes are listed on the Luxembourg Stock Exchange and the guidelines of such stock exchange so require, holders of the Notes will be able to receive principal, interest and Additional Amounts on the Notes at the Luxembourg office of the paying agent, subject to the right of the Issuer to mail payments in accordance with the terms of the Indenture. The Issuers will pay interest on the Notes to Persons who are registered holders at the close of business on the record date immediately preceding the interest payment date for such interest. Such holders must surrender their Notes to a Paying Agent to collect principal payments. Paying Agent and Registrar The Issuer will maintain one or more paying agents (each, a Paying Agent) for the Notes in each of (i) the City of London (the Principal Paying Agent), (ii) the Borough of Manhattan, City of New York, and (iii) Luxembourg, for so long as the Notes are listed on the Euro MTF and the rules of the Luxembourg Stock Exchange so require. The Bank of New York Mellon will initially act as Paying Agent and as Registrar for the Notes in Luxembourg. The Issuers may change the Paying Agent or Registrar for the Notes without prior notice to the holders of Notes, and an Issuer may act as Paying Agent or Registrar for the Notes. In the event that a Paying Agent is replaced, the Issuers will provide notice thereof in accordance with the procedures described under Notices. In addition, the Issuers undertake that they will ensure that they maintain a Paying Agent in a Member State of the European Union that is not obliged to withhold or deduct tax pursuant to European Council Directive 2003/48/EC or any other Directive implementing the conclusions of the European Council of Economics and Finance Ministers (ECOFIN) meeting of November 26-27, 2000 or any law implementing or complying with, or introduced in order to conform to, such Directive.

172

Escrow of Proceeds; Special Mandatory Redemption Concurrently with the closing of the offering of the Notes on the Issue Date, the Issuer will enter into the Senior Secured Escrow Agreement with the Trustee and the Escrow Agent, pursuant to which the Initial Purchasers will deposit with the Escrow Agent an amount equal to the net proceeds of the offering of the Notes sold on the Issue Date. Prior to the release of such proceeds from the Senior Secured Escrow Account, such funds will be invested in certain permitted investments including in cash and/or any highly-rated stable net asset value money market fund. The initial funds deposited in the Senior Secured Escrow Account, and all other funds, securities, interest, dividends, distributions and other property and payments credited to the Senior Secured Escrow Account (less any property and/or funds paid in accordance with the Senior Notes Escrow Agreement) are referred to as the Senior Secured Notes Escrowed Property. In order to cause the Escrow Agent to release the Senior Secured Escrowed Property to the Issuer (the Release), the Escrow Agent shall have received from the Issuer, at a time that is on or before October 31, 2010, an Officers Certificate to the effect that: (i) prior to or concurrently with the release of the proceeds of the Notes, the Equity Contribution will be made and the proceeds of the Senior Notes issued on the Issue Date will be released from escrow; those documents, legal opinions and certificates attached as exhibits to the Senior Secured Escrow Agreement that are required to be delivered on the relevant date of Release have been delivered in accordance with the terms of the Senior Secured Escrow Agreement;

(ii)

(iii) (a) the Acquisition will be consummated, promptly upon release of the Senior Secured Escrowed Property, on substantially the same terms as described in the Offering Memorandum under the heading The Transactions and in accordance with the terms of the Share Purchase Agreement and (b) no provision of the Share Purchase Agreement shall have been amended or waived in any manner which would be materially adverse to the holders of the Notes (and for the purposes hereof and for the avoidance of doubt, any material amendment or waiver of clauses (iii), (iv) and (vii) of Section 9.2.1 of the Share Purchase Agreement would be deemed to be materially adverse to the holders of the Notes) without the consent of the holders of a majority in principal amount of the Notes outstanding; (iv) immediately after consummation of the Acquisition, Bidco will own directly or indirectly 100% of the Capital Stock of Unitymedia; (v) either (a) the Debt Pushdown will be consummated on such date or (b) each of the following has occurred or will occur on the day of the Release: (i) an irrevocable notice for the redemption of each of the Existing Senior Secured Notes, Existing Senior Notes and Existing Term Loan has been given under the applicable indenture or facility agreement; (ii) the Revolving Credit Facility has been executed and available for drawdown; and (iii) domination agreements have been executed between (I) Bidco and Unitymedia and (II) Unitymedia Management and Unitymedia Verwaltung; and

(vi) no Default or Event of Default has occurred and is continuing with respect to any matter set forth in clauses (1), (2), (7) or (12) of the definition of Event of Default or with respect to the covenant under the caption Certain Covenants Limitation on Activities, provided, however, if the Debt Pushdown has not and will not occur on the date of the closing of the Acquisition, such certificate shall address only the preceding clauses (i), (ii), (iii), (iv), (v)(b) and (vi) and the Senior Secured Escrowed Property shall only be released in an amount to be used to fund a portion of the purchase price of the Acquisition and related fees and expenses provided that an amount equal to the amount necessary to repay or redeem all Indebtedness (including any premium, prepayment fees, expenses and accrued and unpaid interest) under the Existing Senior Secured Notes, the Existing Senior Notes and the Existing Term Loan outstanding on the date of completion of the Debt Pushdown (net of cash and Cash Equivalents of Unitymedia and its Restricted Subsidiaries) remains subject to the Escrow Agreement and the conditions contained therein until completion of the Debt Pushdown at which time the remaining Senior Secured Escrowed Property will be released upon receipt by the Escrow Agent from the Issuer, within 35 days of the Acquisition Date, of an Officers Certificate stating that each of the conditions contained in the preceding clauses (ii), (iv), (v)(a) and (vi) have been satisfied.

173

The Release shall occur promptly upon the satisfaction of the conditions set forth above. Upon the Release, the Senior Secured Escrow Account under the Senior Secured Escrow Agreement shall be reduced by the amount released on the Acquisition Date with the remainder released upon completion of the Debt Pushdown when the remaining Senior Secured Escrowed Property and interest thereon will be paid out in accordance with the Senior Secured Escrow Agreement. Upon the earlier of (1) the date on which UnitedGlobalCom, Inc. ceases to beneficially own and control 100% of the issued and outstanding Capital Stock of Bidco, (2) the date on which there first occurs a repudiation by Bidco of any of its obligations under the Senior Secured Escrow Agreement or the unenforceability of the Senior Secured Escrow Agreement against Bidco or any of its other creditors for any reason, (3) the date on which any conditions to the Release of the proceeds could not reasonably be deemed to be capable of being satisfied, (4) the date the Share Purchase Agreement terminates and (5) if the Acquisition has not been completed, October 31, 2010 (such date, the Escrow Termination Date), Bidco will redeem all of the Notes (the Special Mandatory Redemption) at the Special Mandatory Redemption Price as defined above, plus accrued but unpaid interest and Additional Amounts, if any, to the Special Mandatory Redemption Date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date). Notice of the Special Mandatory Redemption will be mailed by Bidco, no later than the second Business Day following the Escrow Termination Date, to the Trustee (with an instruction to the Trustee to deliver the same to each holder of the Notes) and the Escrow Agent, and will provide that the Notes shall be redeemed on a date that is no later than the fifth Business Day after such notice is mailed (the Special Mandatory Redemption Date). On the Special Mandatory Redemption Date, the Escrow Agent shall pay to the Principal Paying Agent for payment to each holder the Special Mandatory Redemption Price for such holders Notes and, concurrently with the payment to such holders, deliver any excess Senior Secured Escrowed Property (if any) to the Issuer. If the Special Mandatory Redemption Date is on or after an interest record date and on or before the related interest payment date, the accrued and unpaid interest, if any, will be paid to the Person in whose name the Note is registered at the close of business on such record date and no additional interest will be payable to holders whose Notes will be subject to redemption by the Issuer. In the event the Special Mandatory Redemption Price payable upon such Special Mandatory Redemption exceeds the amount of the Senior Secured Escrowed Property, Liberty has agreed to pay to the Trustee an amount in cash equal to the shortfall (including any accrued and unpaid interest and redemption premium). No provisions of the Senior Secured Escrow Agreement (including, without limitation, those relating to the release of the Senior Secured Escrowed Property) and, to the extent such provisions relate to the Issuers obligation to redeem the Notes in a Special Mandatory Redemption, the Indenture, may be waived or modified in any manner materially adverse to the holders of the Notes without the written consent of holders of at least 90% in aggregate principal amount of Notes affected thereby. Transfer and Exchange The Notes will be issued in the form of several registered notes in global form, without interest coupons, as follows:

Each series of Notes sold within the United States to qualified institutional buyers pursuant to Rule 144A under the Securities Act will initially be represented by a global note in registered form without interest coupons attached (the 144A Global Notes). The 144A Global Notes representing the Dollar Notes (the Dollar 144A Global Note) will, on the Issue Date, be deposited with a custodian for The Depository Trust Company (DTC) and registered in the name of Cede & Co., as nominee of DTC. The 144A Global Notes representing the Euro Notes (the Euro 144A Global Note), will, on the Issue Date, be deposited with and registered in the name of The Bank of New York Depository (Nominees) Limited, as the common depositary, for the accounts of Euroclear Bank S.A./N.V. (Euroclear) and Clearstream Banking, socit anonyme (Clearstream).

174

Each series of Notes sold outside the United States pursuant to Regulation S under the Securities Act will initially be represented by a global note in registered form without interest coupons attached (the Regulation S Global Notes, and together with the 144A Global Notes, the Global Notes). During the 40-day distribution compliance period (as such term is defined in Rule 902 of Regulation S under the Securities Act), the Regulation S Global Notes representing the Dollar Notes (the Dollar Regulation S Global Note, and together with the Dollar 144A Global Note, the Dollar Global Notes) will initially be credited within DTC for the accounts of Euroclear and Clearstream. After the 40-day distribution compliance period ends, investors may also hold their interests in the permanent Dollar Regulation S Global Note through organizations other than Clearstream or Euroclear that are DTC participants. The Regulation S Global Notes representing the Euro Notes (the Euro Regulation S Global Note, and together with the Euro 144A Global Note, the Euro Global Notes) will, on the closing date, be deposited with and registered in the name of The Bank of New York Depository (Nominees) Limited, as the common depositary, for the accounts of Euroclear and Clearstream.

During the 40-day distribution compliance period, book-entry interests in the Regulation S Global Note may be (1) held only through Euroclear and Clearstream or through DTC for the account of Euroclear and Clearstream, and (2) transferred only to non-U.S. persons under Regulation S or qualified institutional buyers under Rule 144A. Ownership of interests in the Global Notes (Book-Entry Interests) will be limited to persons that have accounts with Euroclear, Clearstream or DTC, as applicable, or persons that may hold interests through such participants. Ownership of interests in the Book-Entry Interests and transfers thereof will be subject to the restrictions on transfer and certification requirements summarized below and described more fully under Notice to Investors. In addition, transfers of Book-Entry Interests between participants in Euroclear, participants in Clearstream or participants in DTC will be effected by Euroclear, Clearstream or DTC, as applicable, pursuant to customary procedures and subject to the applicable rules and procedures established by Euroclear, Clearstream or DTC, as applicable, and their respective participants. Book-Entry Interests in the 144A Global Note may be transferred to a person who takes delivery in the form of Book-Entry Interests in the Regulation S Global Note denominated in the same currency only upon delivery by the transferor of a written certification (in the form provided in the indenture) to the effect that such transfer is being made in accordance with Regulation S under the Securities Act. Regulation S Book-Entry Interests may be transferred to a person who takes delivery in the form of 144A Book-Entry Interests only upon delivery by the transferor of a written certification (in the form provided in the Indenture) to the effect that such transfer is being made to a person who the transferor reasonably believes is a qualified institutional buyer within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A or otherwise in accordance with the transfer restrictions described under Notice to Investors and in accordance with any applicable securities law of any other jurisdiction. Any Book-Entry Interest that is transferred as described in the immediately preceding paragraphs will, upon transfer, cease to be a Book-Entry Interest in the Global Note from which it was transferred and will become a Book-Entry Interest in the Global Note to which it was transferred. Accordingly, from and after such transfer, it will become subject to all transfer restrictions, if any, and other procedures applicable to Book-Entry Interests in the Global Note to which it was transferred. If Definitive Registered Notes are issued, they will be issued only in minimum denominations of 50,000 or $100,000 principal amount, as the case may be, and integral multiples of 1,000 in excess thereof or $1,000 in excess thereof, as the case may be, upon receipt by the applicable Registrar of instructions relating thereto and any certificates, opinions and other documentation required by the Indenture. It is expected that such instructions will be based upon directions received by Euroclear, Clearstream or DTC, as applicable, from the participant which owns the relevant Book-Entry Interests. Definitive Registered Notes issued in exchange for a Book-Entry Interest will, except as set forth in the Indenture or as otherwise determined by the Issuers to be in compliance with applicable law, be subject to, and will have a legend with respect to, the restrictions on transfer summarized below and described more fully under Notice to Investors.

175

Subject to the restrictions on transfer referred to above, Euro Notes issued as Definitive Registered Notes may be transferred or exchanged, in whole or in part, in minimum denominations of 50,000 in principal amount and integral multiples of 1,000 in excess thereof and Dollar Notes issued as Definitive Registered Notes may be transferred or exchanged in whole or in part, in minimum denominations of $100,000 in principal amount and integral multiples of $1,000 in excess thereof. In connection with any such transfer or exchange, the Indenture will require the transferring or exchanging holder to, among other things, furnish appropriate endorsements and transfer documents, to furnish information regarding the account of the transferee at Euroclear, Clearstream or DTC, where appropriate, to furnish certain certificates and opinions, and to pay any taxes, duties and governmental charges in connection with such transfer or exchange. Any such transfer or exchange will be made without charge to the holder, other than any taxes, duties and governmental charges payable in connection with such transfer. Notwithstanding the foregoing, the Issuers are not required to register the transfer of any Definitive Note in registered form: (1) (2) for a period of 15 calendar days prior to any date fixed for the redemption of the Notes; for a period of 15 calendar days immediately prior to the date fixed for selection of Notes to be redeemed in part; for a payment period of 15 calendar days prior to the record date with respect to any interest payment date; or that the registered holder of Notes has tendered (and not withdrawn) for repurchase in connection with a Change of Control Offer or an Asset Disposition Offer.

(3)

(4)

Ranking of the Notes and Security Prior to the Debt Pushdown Ranking The Notes will be general senior obligations of the Issuer, initially secured by the Bidco Share Pledge and the Senior Secured Escrow Security (which will be partially released in connection with the use of certain proceeds to fund a portion of the purchase price for the Acquisition). Prior to the Debt Pushdown, the Issuer will not be permitted to Incur any Indebtedness or any other liabilities, except as permitted under Limitation on Activities of Bidco Prior to the Debt Pushdown. Security Bidco Share Pledge The obligations of the Issuer under the Notes initially will be secured by a first-priority pledge of the shares of Capital Stock of Bidco held by UPC Germany Holding B.V. (the Bidco Share Pledge) which shall also secure the Senior Notes, the Revolving Credit Facility and certain Hedging Obligations related thereto on an equal and ratable basis. The Bidco Share Pledge will be unconditionally released and discharged upon the earlier to occur of the following: (1) (2) upon repayment in full of the Notes pursuant to a Special Mandatory Redemption; and upon completion of the Debt Pushdown.

Senior Secured Notes Escrow and Security Agreement Pending consummation of the Acquisition, the Initial Purchasers will deposit the net proceeds from the offering of the Senior Secured Notes into the Senior Secured Escrow Account. The holders of Notes will also benefit from a security interest in the rights of the Issuer under the escrow and security agreement (the Senior Secured Escrow Security). Upon release of the proceeds of the offering of the Notes from the Senior Secured Escrow Account, the escrow and security agreement will automatically terminate.

176

Ranking of the Notes, Note Guarantees and Security upon Completion of the Debt Pushdown General The Notes will, upon completion of the Debt Pushdown:

be general senior obligations of each Issuer; rank pari passu in right of payment with any existing and future Indebtedness of that Issuer that is not subordinated to the Notes (including any Additional Notes); rank senior in right of payment to any existing and future subordinated obligations of that Issuer (including the senior subordinated guarantee given by that Issuer in favor of the Senior Notes); be guaranteed by the Guarantors (as described under Guarantees); have the benefit of security in the form of:

a first-priority pledge of all of the Capital Stock in Unitymedia Management, Unitymedia Verwaltung and the Issuers; security assignments over claims under certain domination and/or profit and loss absorption agreements; first-priority account pledges covering certain cash accounts of the Issuers and, to the extent applicable, Unitymedia Management and Unitymedia Hessen Verwaltung; a security assignment of the receivables and insurance claims of the Issuers and, to the extent applicable, Unitymedia Management and Unitymedia Hessen Verwaltung; and a security transfer of substantially all of the other material assets (other than our SLA Agreements) of the Issuers and, to the extent applicable, Unitymedia Management and Unitymedia Hessen Verwaltung;

the benefit of which security will be subject in an enforcement to the priority liens (the Priority Liens) securing our obligations under the Revolving Credit Facility and certain hedging obligations (as described below under Security); and

be effectively subordinated to any existing and future Indebtedness of that Issuers that is secured by Liens senior to the Liens securing the Notes, or secured by property and assets that do not secure the Notes, to the extent of the value of the property and assets securing such Indebtedness.

As of September 30, 2009, on an as-adjusted basis after giving effect to the Acquisition and the Debt Pushdown, the Company and its consolidated Restricted Subsidiaries would have had outstanding 1,430 million and $845 million aggregate principal amount of Indebtedness and would have had the ability to incur an additional 80 million under the Revolving Credit Facility. Guarantees General No Restricted Subsidiaries of the Issuers will guarantee the Notes as of the completion of the Debt Pushdown, however the Indenture permits Restricted Subsidiaries to accede to the Indenture as a guarantor (each such Subsidiary, a Subsidiary Guarantor). Any Subsidiary Guarantor will, jointly and severally, irrevocably guarantee (the Subsidiary Guarantees), as primary obligors and not merely as sureties, on a senior basis the full and punctual payment when due, whether at Stated Maturity, by acceleration or otherwise, all payment obligations of the Issuers under the Indenture and the Notes, whether for payment of principal of or interest on or in respect of the Notes, fees, expenses, indemnification or otherwise. In addition, Unitymedia, Unitymedia Management and Unitymedia Verwaltung (the Parent Guarantors and together with the Subsidiary Guarantors, the Guarantors) will, jointly and severally, irrevocably guarantee (the Parent Guarantees, and together with the Subsidiary Guarantees, the Note Guarantees), as primary obligors and not merely as sureties, on a senior basis the full and punctual payment when due, whether at Stated Maturity, by acceleration or otherwise, all payment obligations of the Issuers under the Indenture and the Notes, whether for payment of principal of or interest on or in respect of the Notes, fees, expenses, indemnification or otherwise.

177

The Note Guarantee of each Guarantor will be a general obligation of that Guarantor and will:

rank pari passu in right of payment with any existing and future indebtedness of that Guarantor that is not subordinated to such Guarantors Note Guarantee; rank senior in right of payment to any existing and future subordinated obligations of that Guarantor (and if such Note Guarantee is given by a subsidiary of Unitymedia GmbH, senior to the senior subordinated guarantee given by that Guarantor in favor of the Senior Notes and, if such Note Guarantee is given by Unitymedia GmbH, pari passu to the obligations of Unitymedia GmbH under the Senior Notes); have the benefit of security in the form of:

a first-priority pledge of all the Capital Stock of Unitymedia Management GmbH, Unitymedia Hessen Verwaltung GmbH, and the Issuers; security assignments over claims under certain domination and/or profit and loss absorption agreements; account pledges covering the cash accounts of the Issuers and, to the extent applicable, Unitymedia Management and Unitymedia Hessen Verwaltung; a security assignment of the Receivables and insurance claims of the Issuers and, to the extent applicable, Unitymedia Management and Unitymedia Hessen Verwaltung; and a security assignment of substantially all of the other material assets (other than our SLA Agreements) of the Issuers and, to the extent applicable, Unitymedia Management and Unitymedia Hessen Verwaltung, and

be effectively subordinated to any existing and future Indebtedness of that Guarantor that is secured by Liens senior to the Liens securing that Guarantors Note Guarantee or secured with property or assets that do not secure that Guarantors Note Guarantee, to the extent of the value of the assets securing such Indebtedness.

The Issuers, Unitymedia Management GmbH and Unitymedia Hessen Verwaltung GmbH are obligors under the Senior Notes on a senior subordinated basis. The obligations of the Guarantors and the Issuers under the guarantees of the Senior Notes will be contractually limited under the applicable guarantees to reflect limitations under applicable law with respect to maintenance of share capital applicable to the Guarantors, the Issuers and their respective shareholders, directors and general partners. See Risk Factors Risks Relating to the Notes, the Guarantees and the Security. As of September 30, 2009, on an as-adjusted basis after giving effect to the Acquisition and the Debt Pushdown, the Issuers and the Subsidiary Guarantors would have had no outstanding Indebtedness, other than the Notes and the guarantees of the Senior Notes, and they would have been able to borrow up to $80 million under the Revolving Credit Facility. During the nine months ended September 30, 2009, on an as-adjusted basis after giving effect to the Acquisition and the Debt Pushdown, Issuers and the Guarantors represented approximately 76% of our consolidated revenues, approximately 93% of our EBITDA and approximately 98% of our consolidated total assets. Additional Subsidiary Guarantees The Company may from time to time designate a Restricted Subsidiary as an additional guarantor of the Notes (an Additional Guarantor) by causing it to execute and deliver to the Trustee a supplemental indenture in the form attached to the Indenture (and with such documentation relating thereto as the Trustee may reasonably require, including Opinions of Counsel as to the enforceability of its Subsidiary Guarantee), pursuant to which such Restricted Subsidiary will become a Guarantor. Each Additional Guarantor will, jointly and severally, with the Guarantors and each other Additional Guarantor, irrevocably guarantee (each guarantee, an Additional Subsidiary Guarantee), as primary obligor and not merely as surety, on a senior basis the full and punctual payment when due, whether at Stated Maturity, by acceleration or otherwise, of all payment obligations of the Issuers under the Indenture and the Notes, whether for payment of principal of or interest on or in respect of the Notes, fees, expenses, indemnification or otherwise. The obligations of any Additional Guarantor will be contractually limited under its Additional Subsidiary Guarantee to reflect limitations under applicable law, including, among other things, with respect to maintenance of share capital applicable to such Additional Guarantor and its shareholders, directors and general partner. Any Additional Subsidiary Guarantee shall be issued on substantially the same terms as the Subsidiary Guarantees. For purposes of the Indenture and this Description of the Senior Secured Notes, references to the Subsidiary Guarantees include references to any Additional Subsidiary Guarantees and references to the Guarantors include references to any Additional Guarantors.

178

Releases A Note Guarantee shall be released:

in the case of a Subsidiary Guarantee, upon the sale of all or substantially all the Capital Stock of the relevant Subsidiary Guarantor pursuant to an Enforcement Sale as provided for in the Intercreditor Agreement; in the case of a Subsidiary Guarantee, upon the sale or other disposition (including through merger or consolidation but other than pursuant to an Enforcement Sale) in compliance with the Indenture of the Capital Stock of the relevant Subsidiary Guarantor (whether directly or through the disposition of a parent thereof), following which such Subsidiary Guarantor is no longer a Restricted Subsidiary (other than a sale or other disposition to an Issuer or any of its Restricted Subsidiaries); in the case of a Parent Guarantee, pursuant to an Enforcement Sale as provided for in the Intercreditor Agreement; upon the defeasance or discharge of the Notes as provided in Defeasance or Satisfaction and Discharge, in each case in accordance with the terms and conditions of the Indenture; or with respect to an Additional Subsidiary Guarantee given under the covenant captioned Certain Covenants Limitation on Issuances of Guarantees of Indebtedness by Restricted Subsidiaries, upon release of the guarantee that gave rise to the requirement to issue such Additional Subsidiary Guarantee so long as no Event of Default would arise as a result and no other Indebtedness that would give rise to an obligation to give an Additional Subsidiary Guarantee is at that time guaranteed by the relevant Subsidiary Guarantor.

In addition, if a Guarantor is redesignated as an Unrestricted Subsidiary in compliance with the covenant entitled Certain Covenants Limitation on Restricted Payments, the relevant Guarantor will be released from all its obligations under its Subsidiary Guarantee. Notwithstanding any of the foregoing, in all circumstances a Note Guarantee shall only be released if (a) the relevant Guarantor has delivered to the Trustee an Officers Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for in the Indenture relating to such transaction have been complied with and (b) such Guarantor is released from its guarantees of the Revolving Credit Facility and the Senior Notes. The Trustee shall take all necessary actions, including the granting of releases or waivers under the Intercreditor Agreement, to effectuate any release in accordance with these provisions, subject to customary protections and indemnifications. Security General Upon consummation of the Debt Pushdown, first-priority fixed or equivalent security will be given by each of the Issuers and, to the extent applicable, Unitymedia Management and Unitymedia Hessen Verwaltung, over substantially all of its assets and participations that is provided as collateral under the Revolving Credit Facility, including (i) all Capital Stock directly held by it and the shares in Unitymedia Management held by Unitymedia (provided that the Capital Stock in Unitymedia Management, Unitymedia Verwaltung and Unitymedia Hessen will also secure the obligations under the Senior Notes and the guarantees thereof on a junior basis), (ii) intercompany receivables held by it, (iii) certain of its bank accounts, (iv) certain insurance claims, (v) substantially all other material assets (other than our SLA Agreements), and (vi) any receivables under any domination and/or profit and loss absorption agreement. Due to contractual restrictions, we are unable to grant security over our interests in the SLA Agreements. See Ranking of the Notes, Note Guarantees and Security upon Completion of the Debt Pushdown. The assets that are subject to the grants of security interests from time to time are referred to, together with the Share Collateral referred to below, as the Collateral. The Collateral will also secure any Additional Notes. The Collateral will also secure the Revolving Credit Facility and certain Hedging Obligations related thereto and to the Notes and the Senior Notes. The agreements to be entered into between, inter alios, the Security Trustee, the Issuers and the other Grantors pursuant to which security interests in the Collateral are granted to secure the Notes and the Note Guarantees from time to time are referred to as the Security Documents.

179

In addition, prior to the Debt Pushdown, the Capital Stock in Bidco will be pledged to secure the Notes on a first-priority basis which shall also secure the Senior Notes and the Revolving Credit Facility on an equal and ratable basis. Upon completion of the Debt Pushdown, the Capital Stock in the Company, Unitymedia Management, Unitymedia Verwaltung and Unitymedia NRW (collectively, the Share Collateral) will each be pledged to secure the Notes and the Note Guarantees on a first-priority basis. The Capital Stock in Unitymedia will be pledged to secure the Senior Notes on a first-priority basis, and the other Share Collateral (other than with respect to Unitymedia NRW) has been pledged to secure the Senior Notes on a junior-priority basis. Any other additional security interests that may in the future be pledged to secure obligations under the Notes and the Indenture would also constitute Collateral. Subject to certain conditions, including compliance with the covenant described under Certain Covenants Impairment of Security Interest, the Issuers are permitted to pledge the Collateral in connection with future issuances of its Indebtedness, including any Additional Notes, or Indebtedness of Restricted Subsidiaries, in each case permitted under the Indenture and on terms consistent with the relative priority of such Indebtedness. In addition to the release provisions described below, the Security Interest will cease to exist by operation of law or will be released, depending on the type of security interest, upon the defeasance or discharge of the Notes as provided in Defeasance or Satisfaction and Discharge, in each case in accordance with the terms and conditions of the Indenture. The Security Interests over some or all of the Collateral may also be released in circumstances described under Releases. No appraisals of any of the Collateral have been prepared by or on behalf of the Issuer in connection with the issuance of the Notes. There can be no assurance that the proceeds from the sale of the Collateral remaining after sharing with other creditors entitled to share in such proceeds would be sufficient to satisfy the obligations owed to the holders of the Notes. By its nature, some or all of the Collateral will be illiquid and may have no readily ascertainable market value. Accordingly, there can be no assurance that the Collateral will be able to be sold in a short period of time, if at all. In addition, the Intercreditor Agreement places limitations on the ability of the Security Trustee to cause the sale of some of the Collateral, by reference to the interests of other creditors, including the holders of the Senior Notes. These limitations may include requirements that some or all of the Collateral be disposed of only pursuant to public auctions or only at a price confirmed by a valuation. See Description of Other Indebtedness The Intercreditor Agreement. The creditors under the Revolving Credit Facility, the trustee with respect to the Senior Notes, certain counterparties to the Hedging Obligations secured by the Collateral and the Trustee have, and by accepting a Note, each Holder will be deemed to have, irrevocably appointed the Security Trustee to act as its agent and security trustee under the Intercreditor Agreement and the Security Documents). The creditors under the Revolving Credit Facility, the trustee with respect to the Senior Notes, certain counterparties to the Hedging Obligations secured by the Collateral and the Trustee have, and by accepting a Note, each Holder will be deemed to have, irrevocably authorized the Security Trustee to (i) perform the duties and exercise the rights, powers and discretions that are specifically given to it under the Intercreditor Agreement or the Security Documents, together with any other incidental rights, power and discretions; and (ii) execute each Security Document, waiver, modification, amendment, renewal or replacement expressed to be executed by the Security Trustee on its behalf. All Security granted by a German subsidiary of the Issuer will be subject to contractual limitations with respect to maintenance of share capital to the extent there is not an uninterrupted chain of profit and loss pooling agreements or domination agreements in effect between the respective Subsidiary and the Issuer. Priority The relative priority among (a) the lenders under the Revolving Credit Facility, (b) the counterparties under certain Hedging Obligations related to the Revolving Credit Facility, the Notes and the Senior Notes, (c) the holders of the Senior Notes and (d) the Trustee and the holders under the Indenture with respect to the security interest in the Collateral that is created by the Security Documents and secures obligations under the Notes or the Note Guarantees and the Indenture (the Security Interest) is established by the terms of the Intercreditor Agreement, the Indenture, the Security Documents, and the security documents relating to our new Revolving Credit Facility, such Hedging Obligations and the Senior Notes, which provide that: (i) the obligations under the Notes and the Revolving Credit Facility and certain hedging obligations are secured equally and ratably by a first-priority interest in the Collateral but, any liabilities in respect of

180

obligations under the Revolving Credit Facility and such Hedging Obligations will receive priority with respect to any proceeds received upon any enforcement action over any Collateral; and (ii) the obligations under the Senior Notes will be secured by a junior-priority interest in the Share Collateral under the Intercreditor Agreement.

Please see the section entitled Description of Certain Financing Arrangements Intercreditor Agreement. In addition, pursuant to Additional Intercreditor Agreements entered into after the Issue Date in compliance with the Indenture, the Collateral may be pledged to secure other Indebtedness. See Certain Covenants Impairment of Security Interest. Security Documents On the basis of German law restrictions relating to security interests in the form of pledges, the Security Documents providing for such security interests will secure a debt obligation owed to the Security Trustee as a joint and several creditor under the Notes. See Risk Factors Risks Relating to the Notes, the Note Guarantees and the Security It is possible that the Security may not be enforceable. When entering into the Security Documents, the Security Trustee acts in its own name, but for the benefit of the holders from time to time. Under the Intercreditor Agreement, the Security Trustee will also act on behalf of the lenders under the Revolving Credit Facility and the counterparties under certain hedging obligations (who will have the equal and ratable benefit of the same Collateral), the Trustee and holders of the Senior Notes. The Security Trustee will also act on behalf of certain future secured creditors as further described under Sharing. Each Security Document is governed by German law and provides that the rights under such Security Document must be exercised by the Security Trustee. Since the holders are not parties to the Security Documents, holders may not, individually or collectively, take any direct action to enforce any rights in their favor under the Security Documents. The holders may only act by instructing the Trustee to act through the Security Trustee. Our German counsel has advised us that there is some uncertainty under German law (i) as to whether obligations owing to beneficial owners of the Notes that are not identified as registered holders in the Security Documents providing for security interests in the form of pledges will be validly secured and (ii) as to the validity of any security interest created in favor of the Security Trustee to secure the obligations represented by a joint and several creditor obligation. Also, under German law, in the event that the Issuers, Unitymedia or Unitymedia Management enters into insolvency proceedings, the security interests created under the Security Documents or the joint and several creditor obligation could be subject to potential challenges by an insolvency administrator (Insolvenzverwalter) under German rules regarding avoidance of transactions under the German Insolvency Code (Insolvenzordnung). Outside of insolvency proceedings, third-party creditors of the Issuers, Unitymedia or Unitymedia Management may in certain circumstances have an avoidance right under the German Code on Avoidance (Anfechtungsgesetz). If any challenge to the validity of the security interests is successful, the holders may not be able to recover any amounts under the Security Documents. Please see the section entitled Risk Factors Risks Relating to the Notes, the Note Guarantees and the Security. Releases The security interests created by the Security Documents will be released: (a) so long as there is no Default outstanding under the Indenture, in the event of a sale or disposition of assets included in the Collateral, upon the provision of an Officers Certificate and Opinion of Counsel to the Trustee and the Security Trustee to the effect that such sale or disposition is in compliance with the Indenture, including but not limited to the provisions described under Certain Covenants Limitation on Sales of Assets and Subsidiary Stock; or (b) following a Default under the Indenture or a default under any other Indebtedness secured by the Collateral, pursuant to an Enforcement Sale. See Description of Other Indebtedness The Intercreditor Agreement Limitations on Enforcement. In addition, the Security Interests created by the Security Documents will be released in accordance with the Intercreditor Agreement or if the applicable Subsidiary of which such Capital Stock or assets are pledged or assigned is redesignated as an Unrestricted Subsidiary in compliance with the covenant entitled Certain Covenants Limitations on Restricted Payments upon the provision of an Officers Certificate and Opinion of Counsel to the Trustee and the Security Trustee. The Security Interests will be released upon the defeasance or discharge of the Notes as provided in Defeasance or Satisfaction and Discharge, in each case, in accordance with the terms and conditions of the Indenture.

181

Upon certification by the respective Issuers, the Trustee and the Security Trustee shall take all necessary actions, including the granting of releases or waivers under the Intercreditor Agreement, to effectuate any release in accordance with these provisions, subject to customary protections and indemnifications. The Security Trustee and/or Trustee (as applicable) will agree to any release of the Security Interests created by the Security Documents that is in accordance with the Indenture and the Intercreditor Agreement without requiring any consent of the holders. Enforcement of Security Interest The ability of the Security Trustee to enforce the Security Interests is restricted by the terms of the Intercreditor Agreement by reference to the interests of the lenders under the Revolving Facility Agreement, the counterparties to certain hedging obligations and the holders of the Senior Notes. See Description of Other Indebtedness The Intercreditor Agreement. It may also be restricted by similar arrangements in relation to future Indebtedness that is secured by the Collateral in compliance with the Indenture. Similar provisions may be included in any Additional Intercreditor Agreement entered into in compliance with Certain Covenants Additional Intercreditor Agreements. The Intercreditor Agreement contains procedures with respect to the coordination of instructions from representatives of holders of debt secured by the Priority Liens (including the Revolving Credit Facility and certain hedging obligations) (the Priority Representative) with respect to the Security Interests, including a mandatory consultation period. If the instructions given to the Security Trustee by the Priority Representatives conflict with those of the representatives of the majority of the holders of the Notes, and such conflict is not resolved in a mandatory consultation period (that ends under certain circumstances), the Security Trustee will enforce the Security Interests in accordance with certain enforcement principles, which provide for the maximizing, so far as is consistent with prompt and expeditious enforcement of the Security Interests, the recovery of the creditors in respect of the indebtedness secured by the Priority Liens and the Senior Indebtedness. See Description of Other Indebtedness The Intercreditor Agreement. The Indenture will also provide that each holder, by accepting a Note, shall be deemed to have agreed to and accepted the terms and conditions of the Intercreditor Agreement and any Additional Intercreditor Agreement (whether then entered into or entered into in the future pursuant to the provisions described herein). Optional Redemption Optional Redemption on or after December 1, 2012 Except as described below and under Redemption for Taxation Reasons, the Notes are not redeemable until December 1, 2012. On or after December 1, 2012, the Issuers may redeem all, or from time to time a part, of the Notes upon not less than 30 nor more than 60 days notice, at the following redemption prices (expressed as a percentage of principal amount) plus accrued and unpaid interest and Additional Amounts, if any, to the applicable redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the twelve-month period commencing on December 1 of the years set out below:
Redemption Price Year Euro Notes Dollar Notes

2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

108.125% 108.125% 104.063% 104.063% 102.031% 102.031% 100.00% 100.00%

In each case above, any such redemption and notice may, in the Issuers discretion, be subject to satisfaction of one or more conditions precedent. Optional Redemption prior to December 1, 2012 At any time prior to December 1, 2012, the Issuers may also redeem all, or from time to time a part, of the Euro Notes and/or the Dollar Notes upon not less than 30 nor more than 60 days notice, at a price equal to 100% of the principal amount thereof plus the Euro Applicable Premium, in the case of the Euro Notes, or the Dollar

182

Applicable Premiums, in the case of the Dollar Notes, as of, and accrued but unpaid interest and Additional Amounts, if any, to, the applicable redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date). In each case above, any such redemption and notice may, in the Issuers discretion, be subject to satisfaction of one or more conditions precedent. If the optional redemption date is on or after an interest record date and on or before the related interest payment date, the accrued and unpaid interest, if any, will be paid to the Person in whose name the Note is registered at the close of business on such record date and no additional interest will be payable to holders whose Notes will be subject to redemption by the Issuers. Optional Redemption upon Equity Offerings At any time, or from time to time, prior to December 1, 2012, the Issuers may, at their option, use the Net Cash Proceeds of one or more Equity Offerings (except for sales of Capital Stock of a Parent the proceeds of which are contributed as Subordinated Shareholder Loans) to redeem, upon not less than 30 nor more than 60 days notice, up to 35% of the principal amount of the Notes issued under the Indenture (including the principal amount of any Additional Notes) at a redemption price of 108.125% of the principal amount of the Euro Notes and 108.125% of the principal amount of the Dollar Notes, plus accrued and unpaid interest and Additional Amounts, if any, to the date of redemption (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided that: (1) at least 65% of the principal amount of each of the Euro Notes and the Dollar Notes (which includes Additional Notes, if any) issued under the Indenture remains outstanding immediately after any such redemption; and the Issuer makes such redemption not more than 90 days after the consummation of any such Equity Offering.

(2)

In each case above, any such redemption and notice may, in the Issuers discretion, be subject to satisfaction of one or more conditions precedent. If the optional redemption date is on or after an interest record date and on or before the related interest payment date, the accrued and unpaid interest, if any, will be paid to the Person in whose name the Note is registered at the close of business on such record date and no additional interest will be payable to holders whose Notes will be subject to redemption by the Issuers. Special Optional Redemption upon UPC Exchange Transaction At any time on or after the 12-month anniversary of the Issue Date but on or prior to the 36-month anniversary of the Issue Date, the Issuers may, at their option, following completion of a UPC Exchange Transaction, redeem all, but not less than all, of the Notes issued under the Indenture upon not less than 30 nor more than 60 days notice (which notice of redemption shall be given no later than 10 business days following the completion of such UPC Exchange Transaction), at a redemption price (expressed as a percentage of the principal amount thereof) of: (1) (2) 101% (if such redemption is on or before the 24-month anniversary of the Issue Date); or 102% (if such redemption is after the 24-month anniversary of the Issue Date),

in each case, plus accrued and unpaid interest and Additional Amounts, if any, to the date of redemption (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date). In each case above, any such redemption and notice may, in the Issuers discretion, be subject to satisfaction of one or more conditions precedent. If the optional redemption date is on or after an interest record date and on or before the related interest payment date, the accrued and unpaid interest, if any, will be paid to the Person in whose name the Note is registered at the close of business on such record date and no additional interest will be payable to holders whose Notes will be subject to redemption by the Issuers.

183

Selection and Notice In the case of any partial redemption, selection of the Notes for redemption will be made by the Trustee in compliance with the requirements of the principal securities exchange, if any, on which the Notes are listed or, if the Notes are not listed, then on a pro rata basis, by lot or by such other method as the Trustee in its sole discretion will deem to be fair and appropriate, although no Euro Notes of 50,000 or less or Dollar Notes of $100,000 or less can be redeemed in part. The Trustee will not be liable for selections made by it in accordance with this paragraph. If any Note is to be redeemed in part only, the notice of redemption relating to such Note will state the portion of the principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed portion thereof will be issued in the name of the holder thereof upon cancellation of the original Note. For Notes which are represented by Global Notes held on behalf of Euroclear or Clearstream, notices may be given by delivery of the relevant notices to Euroclear or Clearstream for communication to entitled account holders in substitution for the aforesaid mailing. So long as any Notes are listed on the Official List of the Luxembourg Stock Exchange and admitted for trading on the Euro MTF and the rules of the Luxembourg Stock Exchange so require, any such notice to the holders of the relevant Notes shall also be published in a newspaper having a general circulation in Luxembourg and, in connection with any redemption, the Issuer will notify the Luxembourg Stock Exchange of any change in the principal amount of Notes outstanding. Withholding Taxes All payments made by the Issuers or any successors thereto (a Payor) on the Notes will be made without withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature (Taxes) unless the withholding or deduction of such Taxes is then required by law or by the official interpretation or administration thereof. If any deduction or withholding for, or on account of, any Taxes imposed or levied by or on behalf of: (1) (2) (3) The Federal Republic of Germany or any political subdivision or governmental authority thereof or therein having power to tax; any jurisdiction from or through which payment on the Notes is made, or any political subdivision or governmental authority thereof or therein having the power to tax; or any other jurisdiction in which a Payor is organized or otherwise considered to be a resident for tax purposes, or any political subdivision or governmental authority thereof or therein having the power to tax (each of clause (1), (2) and (3), a Relevant Taxing Jurisdiction),

will at any time be required from any payments made with respect to the Notes, including payments of principal, redemption price, interest or premium, the Payor will pay (together with such payments) such additional amounts (the Additional Amounts) as may be necessary in order that the net amounts received in respect of such payments by each holder of the Notes, as the case may be, after such withholding or deduction (including any such deduction or withholding from such Additional Amounts) equal the amounts which would have been received in respect of such payments in the absence of such withholding or deduction; provided, however, that no such Additional Amounts will be payable with respect to: (a) any Taxes that would not have been so imposed but for the existence of any present or former connection between the relevant holder or beneficial owner and the Relevant Taxing Jurisdiction imposing such Taxes (other than the mere ownership or holding of such Note or enforcement of rights thereunder or under the Indenture or the receipt of payments in respect thereof); any Taxes that would not have been so imposed if the holder had made a declaration of non-residence or any other claim or filing for exemption to which it is entitled (provided that (x) such declaration of non-residence or other claim or filing for exemption is required by the applicable law of the Relevant Taxing Jurisdiction as a precondition to exemption from the requirement to deduct or withhold all or a part of any such Taxes and (y) at least 30 days prior to the first payment date with respect to which such declaration of non-residence or other claim or filing for exemption is required under the applicable law of the Relevant Taxing Jurisdiction, the relevant holder at that time has been notified (in accordance with the procedures set forth in the Indenture) by the Payor or any other person through whom payment may be made that a declaration of non-residence or other claim or filing for exemption is required to be made);

(b)

184

(c)

any Note presented for payment (where presentation is required) more than 30 days after the relevant payment is first made available for payment to the holder (except to the extent that the holder would have been entitled to Additional Amounts had the Note been presented during such 30-day period); any Taxes that are payable otherwise than by withholding from a payment of the principal of, premium, if any, or interest on the Notes; any estate, inheritance, gift, sale, transfer, personal property or similar tax, assessment or other governmental charge; any withholding or deduction imposed on a payment to an individual and required to be made pursuant to the European Council Directive 2003/48/EC or any other directive implementing the conclusions of the ECOFIN meeting of November 26-27, 2000 on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, such directive; or any Taxes which could have been avoided by the presentation (where presentation is required) of the relevant Note to another Paying Agent in a member state of the European Union.

(d)

(e)

(f)

(g)

Such Additional Amounts will also not be payable where, had the beneficial owner of the Note been the holder of the Note, it would not have been entitled to payment of Additional Amounts by reason of any of clauses (a) to (g) inclusive above. The Payor will (i) make any required withholding or deduction and (ii) remit the full amount deducted or withheld to the Relevant Taxing Jurisdiction in accordance with applicable law. The Payor will use all reasonable efforts to obtain certified copies of tax receipts evidencing the payment of any Taxes so deducted or withheld from each Relevant Taxing Jurisdiction imposing such Taxes and will provide such certified copies (or, if certified copies are not available despite reasonable efforts of the Payor, other evidence of payment reasonably satisfactory to the Trustee) to each holder. The Payor will attach to each certified copy (or other evidence) a certificate stating (x) that the amount of withholding Taxes evidenced by the certified copy was paid in connection with payments in respect of the principal amount of Notes then outstanding and (y) the amount of such withholding Taxes paid per 1,000 principal amount of the Notes. Copies of such documentation will be available for inspection during ordinary business hours at the office of the Trustee by the holders of the Notes upon request and will be made available at the offices of the Luxembourg Listing Agent if the Notes are then listed on the Luxembourg Stock Exchange. At least 30 days prior to each date on which any payment under or with respect to the Notes is due and payable (unless such obligation to pay Additional Amounts arises shortly before or after the 30th day prior to such date, in which case it shall be promptly thereafter), if the Payor will be obligated to pay Additional Amounts with respect to such payment, the Payor will deliver to the Trustee an Officers Certificate stating the fact that such Additional Amounts will be payable, the amounts so payable and will set forth such other information necessary to enable the Trustee to pay such Additional Amounts to holders on the payment date. Each such Officers Certificate shall be relied upon until receipt of a further Officers Certificate addressing such matters. The Trustee shall be entitled to rely solely on each such Officers Certificate as conclusive proof that such payments are necessary. Wherever mentioned in the Indenture, the Notes or this Description of the Senior Secured Notes, in any context: (1) the payment of principal, (2) purchase prices in connection with a purchase of Notes, (3) interest, or (4) any other amount payable on or with respect to the Notes, such reference shall be deemed to include payment of Additional Amounts as described under this heading to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof. The Payor will pay any present or future stamp, court or documentary taxes or any other excise or property taxes, charges or similar levies which arise in any jurisdiction from the execution, delivery or registration of any Notes or any other document or instrument referred to therein (other than a transfer of the Notes), or the receipt of any payments with respect to the Notes, excluding any such taxes, charges or similar levies imposed by any jurisdiction outside the United Kingdom, Luxembourg, the Federal Republic of Germany or any jurisdiction in which a Paying Agent is located, other than those resulting from, or required to be paid in connection with, the enforcement of the Notes, the Security or any other such document or instrument following the occurrence of any Event of Default with respect to the Notes.

185

The foregoing obligations will survive any termination, defeasance or discharge of the Indenture and will apply mutatis mutandis to any jurisdiction in which any successor to a Payor is organized or any political subdivision or taxing authority or agency thereof or therein. Redemption for Taxation Reasons The Issuers may redeem the Notes in whole, but not in part, at any time upon giving not less than 30 nor more than 60 days notice to the holders of the Notes (which notice will be irrevocable) at a redemption price equal to 100% of the principal amount thereof, together with accrued and unpaid interest, if any, to the date fixed for redemption (a Tax Redemption Date) (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), and Additional Amounts, if any, then due and which will become due on the Tax Redemption Date as a result of the redemption or otherwise, if the Issuers determine that, as a result of: (1) (2) any change in, or amendment to, the law or treaties (or any regulations or rulings promulgated thereunder) of a Relevant Taxing Jurisdiction affecting taxation; or any change in position regarding the application, administration or interpretation of such laws, treaties, regulations or rulings (including a holding, judgment or order by a court of competent jurisdiction) (each of the foregoing in clauses (1) and (2), a Change in Tax Law),

the Issuers are, or on the next interest payment date in respect of the Notes would be, required to pay more than de minimis Additional Amounts, and such obligation cannot be avoided by taking reasonable measures available to it (including, without limitation, by appointing a new or additional paying agent in another jurisdiction). The Change in Tax Law must become effective on or after the date of this offering memorandum. In the case of a successor to an Issuer, the Change in Tax Law must become effective after the date that such entity first makes payment on the Notes. Notice of redemption for taxation reasons will be published in accordance with the procedures described in the Indenture as described under Notices. Notwithstanding the foregoing, no such notice of redemption will be given (a) earlier than 90 days prior to the earliest date on which the Payor would be obliged to make such payment of Additional Amounts and (b) unless at the time such notice is given, such obligation to pay such Additional Amounts remains in effect. Prior to the publication or mailing of any notice of redemption of the Notes pursuant to the foregoing, the Issuers will deliver to the Trustee (a) an Officers Certificate stating that the Issuers are entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to its right so to redeem have been satisfied and that it cannot avoid the obligations to pay Additional Amounts by taking reasonable measures available to it; and (b) an opinion of an independent tax counsel reasonably satisfactory to the Trustee to the effect that the circumstances referred to above exist. The Trustee will accept such Officers Certificate and opinion as sufficient evidence of the existence of satisfaction of the conditions precedent as described above, in which event it will be conclusive and binding on the holders of the Notes. The foregoing provisions will apply mutatis mutandis to any successor to the Issuer after such successor person becomes a party to the Indenture. Redemption at Maturity On December 1, 2017, the Issuers will redeem the Notes that have not been previously redeemed or purchased and cancelled at 100% of their principal amount plus accrued and unpaid interest thereon, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date). Certain Covenants Other than the covenant below under the caption Limitation on Activities of Bidco Prior to the Debt Pushdown, the following covenants will not be applicable until the Acquisition Date. Limitation on Activities of Bidco Prior to the Debt Pushdown Notwithstanding any other provision of the Indenture, prior to the consummation of the Debt Pushdown: (1) Bidco will not engage in any business activity or undertake any other activity, except any activity: (a) relating to the offering, sale, or issuance of the Notes and the Senior Notes issued on the Issue Date, the Incurrence of Indebtedness represented by the Revolving Credit Facility, the Notes and the

186

Senior Notes issued on the Issue Date, lending or otherwise advancing the proceeds thereof to Unitymedia in connection with the Debt Pushdown, the Related Transactions, and any other activities in connection with the foregoing, (b) undertaken with the purpose of, and directly related to, fulfilling any other obligations under the Indenture (including for the avoidance of doubt, any repurchase or purchase, repayment, redemption, prepayment of such Debt, in each case, as permitted by the Indenture), the Revolving Credit Facility, the Senior Notes and related escrow and security agreement, the Senior Indenture, the Senior Secured Escrow Agreement, any other document relating to the Notes and the Senior Secured Notes issued on the Issue Date or relating to the Share Purchase Agreement, (c) undertaken with the purpose of, and directly related to, fulfilling any obligation under the Share Purchase Agreement or facilitating the transactions contemplated thereby or (d) directly related or reasonably incidental to the establishment and/or maintenance of Bidcos corporate existence; (2) Bidco shall not Incur any liabilities other than liabilities related to the Notes issued on the Issue Date, and the Senior Notes issued on the Issue Date and the related escrow and security agreement, the Indenture or the Senior Indenture, the Senior Secured Escrow Agreement, the Revolving Credit Facility, the Share Purchase Agreement, Hedging Obligations and Indebtedness in respect of any Subordinated Shareholder Loan issued to Holdco as part of the Equity Contribution; Bidco shall not (a) transfer or assign any of its assets except pursuant to the Senior Secured Escrow Agreement, the escrow and pledge agreement related to the Senior Notes issued on the Issue Date or the granting of shareholder loans pursuant to the Debt Pushdown or (b) issue any Capital Stock other than to Holdco; Bidco shall not create, Incur or suffer to exist any Lien on any of its assets except pursuant to the Senior Secured Escrow Agreement and the escrow and security agreement related to the Senior Notes issued on the Issue Date, the Revolving Credit Facility and any commitments with respect to the Hedging Obligations in respect of the Notes, the Senior Notes or the Revolving Credit Facility or the Debt Pushdown; Bidco shall not take or omit to take any action that would have the result of impairing the Liens created by the Bidco Share Pledge and the Senior Secured Escrow Security; Bidco shall not make any amendment or waiver of the Share Purchase Agreement in any manner which would be materially adverse to the holders of the Notes (and for the purposes hereof and for the avoidance of doubt, any material amendment or waiver of clauses (iii), (iv) and (vii) of Section 9.2.1 of the Share Purchase Agreement would be deemed to be materially adverse to the holders of the Notes) without the consent of the holders of a majority in principal amount of the Notes Outstanding; and for so long as any Notes are outstanding, Bidco shall not commence or take any action or facilitate a winding-up, liquidation or other analogous proceeding in respect of Bidco.

(4)

(5)

(6) (7)

(8)

For the avoidance of doubt, following consummation of the Debt Pushdown, the foregoing covenant will be of no further force or effect. Completion of Debt Pushdown To the extent the Debt Pushdown has not been completed upon consummation of the Acquisition, each of Bidco, the Issuers and the Guarantors shall take all necessary actions so that the Debt Pushdown shall be fully completed as soon as reasonably practicable after consummation of the Acquisition and in any event within 35 days of completion of the Acquisition. Contemporaneously with the completion of the Debt Pushdown, each Grantor shall take all necessary actions so that a Lien over the Collateral in respect of the Notes as described above under heading Ranking of the Notes, Guarantees and Security upon Completion of the Debt Pushdown Security has been granted to the Security Trustee on behalf of, and for the benefit of, the holders of the Notes pursuant to Security Documents as contemplated by the Indenture and shall (to the extent not already done) execute and deliver, or shall cause the execution and delivery, to the Security Trustee of the relevant assignment and such further or additional Security Documents in such form as the Security Trustee shall reasonably require creating an effective security interest over such Collateral on behalf of the holders of the Notes.

187

Upon completion of the Debt Pushdown, the Issuers shall provide the Trustee legal opinions from legal counsel as to such matters with respect to the Debt Pushdown as provided for in a form of opinion attached as an exhibit to the Senior Secured Escrow Agreement. Each Grantor shall, and shall procure that each of its respective Subsidiaries shall, at its own expense, execute and do all such acts and things and provide such assurances as the Security Trustee may reasonably require (i) for perfecting or protecting the security intended to be afforded by any Security Documents relating to the Collateral; and (ii) if such Security Documents have become enforceable, for facilitating the exercise of all powers, authorities and discretions vested in the Security Trustee or in any receiver of all or any part of the Collateral. Each Grantor shall, and shall procure that each of its respective Subsidiaries shall, execute all transfers, conveyances, assignments and releases of that property whether to the Security Trustee or to its nominees and give all notices, orders and directions which the Security Trustee may reasonably request. Change of Control If a Change of Control shall occur at any time after consummation of the Acquisition and the Debt Pushdown, the Issuers shall, pursuant to the procedures described below and in the Indenture, offer (the Change of Control Offer) to purchase all Notes in whole or in part in denominations of 50,000 and in integral multiples of 1,000 in excess thereof, in the case of the Euro Notes, and in denominations of $100,000 and in integral multiples of $1,000 in excess thereof, in the case of the Dollar Notes, at a purchase price (the Change of Control Purchase Price) in cash in an amount equal to 101% of the principal amount of such Notes, plus any Additional Amounts and accrued and unpaid interest, if any, to the date of purchase (the Change of Control Purchase Date) (subject to the rights of holders of record on relevant record dates to receive interest due on an interest payment date); provided, however, that the Issuers shall not be obliged to repurchase Notes as described under this subsection Change of Control in the event and to the extent that they have unconditionally exercised their right to redeem all of the Notes as described under Optional Redemption or all conditions to such redemption have been satisfied or waived. No such purchase in part shall reduce the principal amount at maturity of the Notes held by any holder to below 50,000, in the case of the Euro Notes, and $100,000, in the case of the Dollar Notes. Unless the Issuers have unconditionally exercised their right to redeem all the Notes as described under Optional Redemption or all conditions to such redemption have been satisfied or waived, within 30 days of any Change of Control, the Issuers shall notify the Trustee thereof and give written notice of such Change of Control to each holder of Notes by first-class mail, postage prepaid, at such holders address appearing in the security register, stating, among other things:

that a Change of Control has occurred and the date of such event; the circumstances and relevant facts regarding such Change of Control (including, but not limited to, applicable information with respect to pro forma historical income, cash flow and capitalization after giving effect to the Change of Control); the purchase price and the purchase date which shall be fixed by the Issuers on a Business Day no earlier than 30 days nor later than 60 days from the date such notice is mailed, or such later date as is necessary to comply with requirements under the Exchange Act; that any Note not tendered will continue to accrue interest and unless the Issuers default in payment of the Change of Control Purchase Price, any Notes accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Purchase Date; and certain other procedures that a holder of Notes must follow to accept a Change of Control Offer or to withdraw such acceptance.

The Issuers shall cause to be published in a leading newspaper having a general circulation in London (which is expected to be the Financial Times) or through the newswire service of Bloomberg (or if Bloomberg does not then operate, any similar agency) and, so long as the Notes are listed on the Luxembourg Stock Exchange and the guidelines of such Stock Exchange so require, in Luxembourg, the notice described above. The ability of the Issuer to repurchase Notes pursuant to a Change of Control Offer may be limited by a number of factors. See Risk Factors Risks Relating to the Notes We may not be able to obtain enough funds necessary to finance an offer to repurchase your Notes upon the occurrence of certain events constituting a change of control (as defined in the Indenture) as required by the Indenture.

188

The Trustee will promptly authenticate and deliver a new note or notes equal in principal amount to any unpurchased portion of Notes surrendered, if any, to the holder of Notes in global form or to each holder of certificated notes; provided that each such new note will be in a principal amount of 50,000 or $100,000 and in integral multiples of 1,000 or $1,000 in excess thereof. The Issuer will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Purchase Date. We will not be required to make a Change of Control Offer following a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by us and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer. Notwithstanding anything to the contrary herein, a Change of Control Offer may be made in advance of a Change of Control, conditional upon such Change of Control, if a definitive agreement is in place for the Change of Control at the time of making of the Change of Control Offer. The term all or substantially all as used in the definition of Change of Control has not been interpreted under New York law (which is the governing law of the Indenture) to represent a specific quantitative test. As a consequence, in the event the holders of the Notes elect to exercise their rights under the Indenture and the Issuer elects to contest such election, there could be no assurance as to how a court interpreting New York law would interpret the phrase. The provisions of the Indenture will not afford holders of the Notes the right to require the Issuers to repurchase the Notes in the event of a highly leveraged transaction or certain transactions with the Issuers management or its Affiliates, including a reorganization, restructuring, merger or similar transaction (including, in certain circumstances, an acquisition of the Issuer by management or its affiliates) involving an Issuer that may adversely affect holders of the Notes, if such transaction is not a transaction defined as a Change of Control. The provisions under the Indenture related to the Issuers obligation to make an offer to repurchase the Notes as a result of a Change of Control may be waived or modified with the written consent of the holders of a majority in principal amount of the Notes prior to the occurrence of a Change of Control. The Issuers will comply with the applicable tender offer rules, including Rule 14e-1 under the Exchange Act, and any other applicable securities laws or regulations in connection with a Change of Control Offer. To the extent that the provisions of any applicable securities laws or regulations conflict with the provisions of this covenant (other than the obligation to make an offer pursuant to this covenant), the Issuers will comply with the securities laws and regulations and will not be deemed to have breached its obligations described in this covenant by virtue thereof. If and for so long as the Notes are listed on the Official List of the Luxembourg Stock Exchange and admitted for trading on the Euro MTF and the rules of the Luxembourg Stock Exchange so require, the Issuer will publish notices relating to the Change of Control Offer in a leading newspaper of general circulation in Luxembourg or, to the extent and in the manner permitted by such rules, post such notices on the official website of the Luxembourg Stock Exchange. Limitation on Indebtedness The Company will not, and will not permit any of its Restricted Subsidiaries to, Incur any Indebtedness (including Acquired Indebtedness); provided, however, that the Issuers and any Subsidiary Guarantors may Incur Indebtedness (including Acquired Indebtedness) if on the date of such Incurrence and after giving effect thereto on a pro forma basis the Consolidated Leverage Ratio for the Company and its Restricted Subsidiaries would not exceed 4.00 to 1.00. The first paragraph of this covenant will not prohibit the Incurrence of the following Indebtedness: (1) (2) Indebtedness of the Company and any of its Restricted Subsidiaries under Credit Facilities in the aggregate principal amount at any one time outstanding not to exceed an amount equal to 80 million; Indebtedness of the Company owing to and held by any Restricted Subsidiary (other than a Receivables Entity) or Indebtedness of a Restricted Subsidiary owing to and held by the Company or any other Restricted Subsidiary (other than a Receivables Entity); provided, however, that: (a) any subsequent issuance or transfer of Capital Stock or any other event which results in any such Indebtedness being beneficially held by a Person other than the Company or a Restricted Subsidiary (other than a Receivables Entity) of the Company; and

189

(b)

any sale or other transfer of any such Indebtedness to a Person other than the Company or a Restricted Subsidiary (other than a Receivables Entity) of the Company,

shall be deemed, in each case, to constitute an Incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be; provided, further, that, if a Restricted Subsidiary that is not a Subsidiary Guarantor owns or holds such Indebtedness and an Issuer, the Company or any Subsidiary Guarantor is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations of the Issuers with respect to the Notes or of the Company or such Guarantor with respect to its Note Guarantee, as the case may be; (3) (a) Indebtedness of the Issuers represented by the Notes (other than any Additional Notes issued after the Issue Date), and (b) Indebtedness of the Guarantors represented by the Note Guarantees, provided that the guarantee of any such Indebtedness is subject to the terms of the Intercreditor Agreement, and (c) Indebtedness represented by the Security Documents, including, with respect to each such Indebtedness parallel debt obligations created under the Intercreditor Agreement and the Security Documents; any Indebtedness (other than the Indebtedness described in clauses (1), (2), (3), (6), (8), (9), (10), (11) and (15)) outstanding on the Issue Date, provided that any Indebtedness outstanding on the Issue Date under the Existing Senior Secured Notes, the Existing Senior Notes and the Existing Term Loan will be repaid in full upon completion of the Debt Pushdown; any Refinancing Indebtedness Incurred in respect of any Indebtedness described in clause (3), clause (4), this clause (5), clause (6), clause (8), clause (15) or clause (16) or Incurred pursuant to the first paragraph of this covenant; Indebtedness of a Restricted Subsidiary Incurred and outstanding on the date on which such Restricted Subsidiary was acquired by the Company (other than Indebtedness Incurred (a) to provide all or any portion of the funds utilized to consummate the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was otherwise acquired by the Company or (b) otherwise in connection with, or in contemplation of, such acquisition); provided, however, that immediately following the consummation of the acquisition of such Restricted Subsidiary by the Company, the Consolidated Leverage Ratio of the Company would not be greater than immediately prior to such acquisition; Indebtedness under Currency Agreements and Interest Rate Agreements; provided, that in the case of Currency Agreements, such Currency Agreements are related to business transactions of the Company or its Restricted Subsidiaries entered into in the ordinary course of business or in the case of Currency Agreements and Interest Rate Agreements, such Currency Agreements and Interest Rate Agreements are entered into for bona fide hedging purposes of the Company or its Restricted Subsidiaries or Unitymedia and its Restricted Subsidiaries to the extent the Indebtedness being hedged is guaranteed by the Company or its Restricted Subsidiaries (as determined in good faith by the Board of Directors or senior management of the Company) and substantially correspond in terms of notional amount, currencies and interest rates, as applicable, to Indebtedness of the Company or its Restricted Subsidiaries or Unitymedia and its Restricted Subsidiaries to the extent the Indebtedness being hedged is guaranteed by the Company or its Restricted Subsidiaries; Indebtedness represented by Capitalized Lease Obligations, mortgage financings or purchase money obligations with respect to assets other than Capital Stock or other Investments, in each case Incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvements of property used in the business of the Company or such Restricted Subsidiary, in an aggregate principal amount not to exceed 50.0 million at any time outstanding; Indebtedness Incurred in respect of (a) workers compensation claims, self-insurance obligations, performance, bid, surety, tax guarantors or other similar bonds and completion guarantees and warranties provided by a Restricted Subsidiary Incurred in the ordinary course of business and (b) letters of credit, bankers acceptances or other similar instruments or obligations issued or relating to liabilities or obligations Incurred in the ordinary course of business;

(4)

(5)

(6)

(7)

(8)

(9)

190

(10) Indebtedness arising from agreements of the Company or a Restricted Subsidiary providing for indemnification, obligations in respect of earnouts or adjustment of purchase price or similar obligations, in each case, Incurred or assumed in connection with the disposition of any business, assets or Capital Stock of a Restricted Subsidiary, provided that the maximum aggregate liability in respect of all such Indebtedness shall at no time exceed the gross proceeds (including the fair market value of non-cash proceeds) actually received by the Company and its Restricted Subsidiaries in connection with such disposition; (11) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business, provided, however, that such Indebtedness is extinguished within five Business Days of Incurrence; (12) guarantees by the Company or any Guarantor of Indebtedness or any other obligation or liability of the Company or any Restricted Subsidiary (other than of any Indebtedness Incurred by such Restricted Subsidiary in violation of this covenant); provided, however, that if the Indebtedness being guaranteed is subordinated in right of payment to the Notes or any Note Guarantee, then such guarantee shall be subordinated substantially to the same extent as the relevant Indebtedness guaranteed; (13) Indebtedness of the Company and its Restricted Subsidiaries in any Qualified Receivables Transaction; (14) Subordinated Shareholder Loans Incurred by the Company; (15) Indebtedness of the Issuers and any Guarantor Incurred pursuant to (a) the guarantees of the Senior Notes issued on the Issue Date, and (b) any guarantees of Indebtedness of Unitymedia or any Parent Guarantor provided that for purposes of this clause (b): (i) on the date of such incurrence and after giving effect thereto on a pro forma basis the Consolidated Leverage Ratio for the Company would not exceed 5.00 to 1.00 (for the avoidance of doubt, outstanding Indebtedness for the purpose of calculating the Consolidated Leverage Ratio shall include any Indebtedness represented by guarantees by the Company or any of its Restricted Subsidiaries of Indebtedness of Unitymedia or any Parent Guarantor) and (ii) such guarantees shall be subordinated to the Notes and the Subsidiary Guarantees pursuant to the Intercreditor Agreement or any Additional Intercreditor Agreement to substantially the same extent, and on substantially the same terms, as the guarantees of the Senior Notes issued on the Issue Date are subordinated on the date the Debt Pushdown is completed pursuant to the terms of the Intercreditor Agreement; (16) any Indebtedness of the Issuers and any Restricted Subsidiary Incurred after the Issue Date and before the Acquisition Date to the extent such Indebtedness is permitted under the Share Purchase Agreement in effect as of the Issue Date; provided that such Indebtedness could not have been Incurred under the first paragraph of this covenant or another clause of this second paragraph of this covenant had this covenant been in effect as of the Issue Date; and (17) in addition to the items referred to in clauses (1) through (16) above, Indebtedness of the Company and any of its Restricted Subsidiaries in an aggregate outstanding principal amount which, when taken together with the principal amount of all other Indebtedness Incurred pursuant to this clause (17) and then outstanding, will not exceed 50.0 million at any time outstanding. For purposes of determining compliance with, and the outstanding principal amount of any particular Indebtedness Incurred pursuant to and in compliance with, this covenant: (1) in the event that Indebtedness meets the criteria of more than one of the types of Indebtedness described in the first and second paragraphs of this covenant, the Company, in its sole discretion, will classify and, from time to time, may reclassify such Indebtedness, in any manner that complies with this covenant and such item of Indebtedness will be treated as having been Incurred pursuant to only one of such clauses of the second paragraph of this covenant or pursuant to the first paragraph of this covenant;

191

(2)

any borrowings under the Revolving Credit Facility may only be Incurred under clause (1) of the second paragraph of this covenant and may not be reclassified; guarantees of, or obligations in respect of letters of credit relating to, Indebtedness which is otherwise included in the determination of a particular amount of Indebtedness shall not be included; if obligations in respect of letters of credit are Incurred pursuant to any Credit Facility and are being treated as Incurred pursuant to clause (1) of the second paragraph above and the letters of credit relate to other Indebtedness, then such other Indebtedness shall not be included; the principal amount of any Disqualified Stock of the Company, or Preferred Stock of a Restricted Subsidiary, will be equal to the greater of the maximum mandatory redemption or repurchase price (not including, in either case, any redemption or repurchase premium) or the liquidation preference thereof; Indebtedness permitted by this covenant need not be permitted solely by reference to one provision permitting such Indebtedness but may be permitted in part by one such provision and in part by one or more other provisions of this covenant permitting such Indebtedness; and the amount of Indebtedness issued at a price that is less than the principal amount thereof will be equal to the amount of the liability in respect thereof determined in accordance with IFRS.

(3)

(4)

(5)

(6)

(7)

Accrual of interest, accrual of dividends, the accretion of accreted value, the payment of interest in the form of additional Indebtedness and the payment of dividends in the form of additional shares of Preferred Stock or Disqualified Stock and increases in the amount of Indebtedness due to a change in accounting principles will not be deemed to be an Incurrence of Indebtedness for purposes of this covenant. The amount of any Indebtedness outstanding as of any date shall be (i) the accreted value thereof in the case of any Indebtedness issued with original issue discount and (ii) the principal amount or liquidation preference thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness. In addition, the Company will not permit any of its Unrestricted Subsidiaries to Incur any Indebtedness or issue any shares of Disqualified Stock, other than Non-Recourse Debt. If at any time an Unrestricted Subsidiary becomes a Restricted Subsidiary, any Indebtedness of such Subsidiary shall be deemed to be Incurred by a Restricted Subsidiary of the Company as of such date (and, if such Indebtedness is not permitted to be Incurred as of such date under this Limitation on Indebtedness covenant, the Company shall be in Default of this covenant). For purposes of determining compliance with any euro-denominated restriction on the Incurrence of Indebtedness, the Euro Equivalent principal amount of Indebtedness denominated in a foreign currency shall be (1) calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was Incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness; provided that if such Indebtedness is Incurred to refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable euro-dominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such euro-dominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced and (2) if and for so long as any such Indebtedness is subject to an agreement intended to protect against fluctuations in currency exchange rates with respect to the currency in which such Indebtedness is denominated covering principal and interest on such Indebtedness, the swapped rate of such Indebtedness as of the date of the applicable swap. Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that the Issuer may Incur pursuant to this covenant shall not be deemed to be exceeded solely as a result of fluctuations in the exchange rate of currencies. The principal amount of any Indebtedness Incurred to refinance other Indebtedness, if Incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such Refinancing Indebtedness is denominated that is in effect on the date of such refinancing. The Company will not Incur, and will not permit any Issuer or any Guarantor to Incur, any Indebtedness that is contractually subordinated in right of payment to any other Indebtedness of the Company or any Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and, if applicable, the Guarantee of the person Incurring such Indebtedness, on substantially identical terms (as determined in good

192

faith by the Board of Directors of the Company); provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Company, any Guarantor or any other Restricted Subsidiary solely by virtue of being unsecured or secured on a junior Lien basis or by virtue of not being Guaranteed; provided further, however, that lenders under any Credit Facility may provide for an ordering of payments under the various tranches of that Credit Facility. Limitation on Restricted Payments The Company will not, and will not permit any of its Restricted Subsidiaries, directly or indirectly: (1) to declare or pay any dividend or make any distribution on or in respect of its Capital Stock (including any payment in connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries) except: (a) dividends or distributions payable in Capital Stock of the Company (other than Disqualified Stock) or Subordinated Shareholder Loans; and dividends or distributions payable to the Company or a Restricted Subsidiary of the Issuer (and if such Restricted Subsidiary is not a Wholly Owned Subsidiary, to its other holders of common Capital Stock on a pro rata basis);

(b)

(2)

to purchase, redeem, retire or otherwise acquire for value any Capital Stock of the Company or any Parent of the Company held by Persons other than the Company or a Restricted Subsidiary of the Company; to purchase, repurchase, redeem, defease or otherwise acquire or retire for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment, any Subordinated Obligations (other than (x) the purchase, repurchase, redemption, defeasance or other acquisition or retirement of Subordinated Obligations purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of purchase, repurchase, redemption, defeasance or other acquisition or retirement or (y) Indebtedness permitted under clause (2) of the second paragraph under the covenant described under Limitation on Indebtedness); or to make any Restricted Investment in any Person; (any such dividend, distribution, purchase, redemption, repurchase, defeasance, other acquisition, retirement or Restricted Investment referred to in clauses (1) through (4) are referred to herein as a Restricted Payment), if at the time the Company or such Restricted Subsidiary makes such Restricted Payment: (a) (b) a Default shall have occurred and be continuing (or would result therefrom); or the Issuers are not able to Incur an additional 1.00 of Indebtedness pursuant to the first paragraph under the covenant described under Limitation on Indebtedness, after giving effect, on a pro forma basis, to such Restricted Payment; or the aggregate amount of such Restricted Payment and all other Restricted Payments declared or made subsequent to the Issue Date and not returned or rescinded would exceed the sum of: (i) 50% of Consolidated Net Income for the period (treated as one accounting period) from the beginning of the first fiscal quarter commencing after the Issue Date to the end of the most recent fiscal quarter ending prior to the date of such Restricted Payment for which financial statements are available (or, in case such Consolidated Net Income is a deficit, minus 100% of such deficit); 100% of the aggregate Net Cash Proceeds and the fair market value, as determined in good faith by the Board of Directors of the Company, of marketable securities received by the Company from the issue or sale of its Capital Stock (other than Disqualified Stock) or Subordinated Shareholder Loans or other capital contributions subsequent to the Issue Date (other than (x) Net Cash Proceeds received from an issuance or sale of

(3)

(4)

(c)

(ii)

193

such Capital Stock to a Restricted Subsidiary of the Company or an employee stock ownership plan, option plan or similar trust to the extent such sale to an employee stock ownership plan or similar trust is financed by loans from or guaranteed by the Company or any Restricted Subsidiary unless such loans have been repaid with cash on or prior to the date of determination or (y) Excluded Contributions); (iii) 100% of the aggregate Net Cash Proceeds and the fair market value, as determined in good faith by the Board of Directors of the Company, of marketable securities received by the Company or any Restricted Subsidiary from the issuance or sale (other than to the Company or a Restricted Subsidiary of the Company) by the Company or any Restricted Subsidiary subsequent to the Issue Date of any Indebtedness that has been converted into or exchanged for Capital Stock of the Company (other than Disqualified Stock) or Subordinated Shareholder Loans; and (iv) the amount equal to the net reduction in Restricted Investments made by the Company or any of its Restricted Subsidiaries resulting from: (A) repurchases, redemptions or other acquisitions or retirements of any such Restricted Investment, proceeds realized upon the sale or other disposition to a Person other than the Company or a Restricted Subsidiary of any such Restricted Investment, repayments of loans or advances or other transfers of assets (including by way of dividend, distribution, interest payments or returns of capital) to the Company or any Restricted Subsidiary; or the redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries (valued, in each case, as provided in the definition of Investment) not to exceed, in the case of any Unrestricted Subsidiary, the amount of Investments previously made by the Company or any Restricted Subsidiary in such Unrestricted Subsidiary,

(B)

which amount in each case under this clause (iv) was included in the calculation of the amount of Restricted Payments; provided, however, that no amount will be included under this clause (iv) to the extent it is already included in Consolidated Net Income. The fair market value of property or assets other than cash covered by the preceding sentence shall be the fair market value thereof as determined in good faith by the Company. The provisions of the preceding paragraph will not prohibit: (1) any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Capital Stock, Disqualified Stock, Subordinated Shareholder Loans or Subordinated Obligations of the Company made by exchange (including any such exchange pursuant to the exercise of a conversion right or privilege in connection with which cash is paid in lieu of the issuance of fractional shares) for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of the Company (other than Disqualified Stock, Capital Stock issued or sold to a Subsidiary or an employee stock ownership plan or similar trust to the extent such sale to an employee stock ownership plan or similar trust is financed by loans from or guaranteed by the Company or any Restricted Subsidiary unless such loans have been repaid with cash on or prior to the date of determination), Subordinated Shareholder Loans or a substantially concurrent capital contribution to the Company; provided, however, that (a) such purchase, repurchase, redemption, defeasance, acquisition or retirement will be excluded in subsequent calculations of the amount of Restricted Payments and (b) the Net Cash Proceeds from such sale or issuance of Capital Stock or Subordinated Shareholder Loans or from such capital contribution will be excluded from clause (c)(ii) of the preceding paragraph; any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Subordinated Obligations of the Company or a Restricted Subsidiary made by exchange for, or out of the proceeds of the substantially concurrent sale of, Subordinated Obligations of the Company or such Restricted Subsidiary that is permitted to be Incurred pursuant to the covenant described under Limitation on Indebtedness and that in each case constitutes Refinancing Indebtedness; provided, however, that such purchase, repurchase, redemption, defeasance, acquisition or retirement will be excluded in subsequent calculations of the amount of Restricted Payments;

(2)

194

(3)

any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Disqualified Stock of the Company or a Restricted Subsidiary made by exchange for or out of the proceeds of the substantially concurrent sale of Disqualified Stock of the Company or such Restricted Subsidiary, as the case may be, that, in each case, is permitted to be Incurred pursuant to the covenant described under Limitation on Indebtedness and that in each case constitutes Refinancing Indebtedness; provided, however, that such purchase, repurchase, redemption, defeasance, acquisition or retirement will be excluded in subsequent calculations of the amount of Restricted Payments; dividends paid within 60 days after the date of declaration if at such date of declaration such dividend would have complied with this provision; provided, however, that such dividends will be included in subsequent calculations of the amount of Restricted Payments; the purchase, repurchase, defeasance, redemption or other acquisition, cancellation or retirement for value of Capital Stock, or options, warrants, equity appreciation rights or other rights to purchase or acquire Capital Stock of the Company or any Restricted Subsidiary of the Company or any parent of the Company held by any existing or former employees or management of the Company or any Subsidiary of the Company or their assigns, estates or heirs, in each case in connection with the repurchase provisions under employee stock option or stock purchase agreements or other agreements to compensate management employees; provided that such redemptions or repurchases pursuant to this clause will not exceed an amount equal to 3.0 million in the aggregate during any calendar year (with any unused amounts in any preceding calendar year being carried over to the succeeding calendar year); provided, however, that the amount of any such repurchase or redemption will be included in subsequent calculations of the amount of Restricted Payments; the declaration and payment of dividends to holders of any class or series of Disqualified Stock, or of any Preferred Stock of a Restricted Subsidiary, Incurred in accordance with the terms of the covenant described under Limitation on Indebtedness above; purchases, repurchases, redemptions, defeasance or other acquisitions or retirements of Capital Stock deemed to occur upon the exercise of stock options, warrants or other convertible securities if such Capital Stock represents a portion of the exercise price thereof; provided, however, that such repurchases will be excluded from subsequent calculations of the amount of Restricted Payments; the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of any Subordinated Obligation (i) at a purchase price not greater than 101% of the principal amount of such Subordinated Obligation in the event of a Change of Control in accordance with provisions similar to the Change of Control covenant or (ii) at a purchase price not greater than 100% of the principal amount thereof in accordance with provisions similar to the Limitation on Sales of Assets and Subsidiary Stock covenant; provided that, prior to or simultaneously with such purchase, repurchase, redemption, defeasance or other acquisition or retirement, the Company has made the Change of Control Offer or Asset Disposition Offer, as applicable, as provided in such covenant with respect to the Notes and has completed the repurchase or redemption of all Notes validly tendered for payment in connection with such Change of Control Offer or Asset Disposition Offer; and provided, further, that such purchase, redemption or other acquisition will be excluded from subsequent calculations of the amount of Restricted Payments; dividends, loans, advances or distributions to any Parent or other payments by the Company or any Restricted Subsidiary in amounts equal to: (i) (ii) the amounts required for any Parent to pay Parent Expenses; the amounts required for any Parent to pay Public Offering Expenses;

(4)

(5)

(6)

(7)

(8)

(9)

(iii) the amounts required for any Parent to pay Related Taxes; and (iv) amounts constituting payments satisfying the requirements of clauses (11) and (12) of the second paragraph of the covenant described under Limitation on Affiliate Transactions,

195

provided, that the Company or any Restricted Subsidiary receives a corporate benefit as the result of any such dividend, loan, advance or distribution or other payment; and provided further that such dividends, loans, advances, distributions or other payments will be excluded from subsequent calculations of the amount of Restricted Payments; (10) Investments in an aggregate amount outstanding at any time not to exceed the aggregate cash amount of Excluded Contributions, or consisting of non-cash Excluded Contributions, or Investments in exchange for or using as consideration Investments previously made under this clause, provided that the amount of such Investments will be excluded from subsequent calculations of the amount of Restricted Payments; (11) payments by the Company, or loans, advances, dividends or distributions to any parent company of the Company to make payments to holders of Capital Stock of the Company or any parent company of the Issuer in lieu of the issuance of fractional shares of such Capital Stock; provided that the net amount of such payments will be excluded from subsequent calculations of the amount of Restricted Payments; (12) so long as no Default or Event of Default of the type specified in clauses (1) or (2) under Events of Default has occurred and is continuing, Restricted Payments to be applied to scheduled cash interest payments on Indebtedness of any Parent to the extent that such Indebtedness is guaranteed by the Company pursuant to a guarantee otherwise permitted to be Incurred under the Indenture; provided, however, that the amount of such payments will be included in subsequent calculations of the amount of Restricted Payments; (13) so long as no Default or Event of Default of the type specified in clauses (1) or (2) under Events of Default has occurred and is continuing, the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of any Capital Stock or Subordinated Shareholder Loans held by, or the making of any dividends, loans, advances or distributions to, any Parent to the extent that, after giving pro forma effect to any such purchase, repurchase, redemption, defeasance, other acquisition or retirement, dividend, loan, advance or distribution, the Consolidated Leverage Ratio for the Company and its Restricted Subsidiaries would not exceed 4.00 to 1.00, provided that the net amount of such payments will be included in subsequent calculations of the amount of Restricted Payments; (14) Restricted Payments in an aggregate amount at any time outstanding, when taken together with all other Restricted Payments made pursuant to this clause (14), not to exceed 25.0 million in the aggregate in any calendar year (with any unused amounts in any preceding calendar year being carried over to the succeeding calendar year); provided that the amount of such Restricted Payments will be included in subsequent calculations of the amount of Restricted Payments; (15) payments permitted by the Intercreditor Agreement or any Additional Intercreditor Agreement for purposes of making corresponding payments on the Senior Notes; (16) payment by the Company to a Parent in an amount not to exceed (a) the sum of the amount of the net proceeds of the Senior Notes Offering, the Senior Secured Notes Offering and the Equity Contribution minus (b) the aggregate amount of all outstanding Indebtedness under the Existing Senior Secured Notes, the Existing Notes and the Existing Term Loan (net of Cash and Cash Equivalents) of Unitymedia and its subsidiaries refinanced in connection with the Debt Pushdown minus (c) the aggregate amount of cash paid to the seller under the Share Purchase Agreement in consideration of the Acquisition; provided, that, in no event shall the amount of payments made pursuant to this clause (16) exceed the amount of cash on the consolidated balance sheet of Unitymedia at the time of the consummation of the Acquisition; and (17) Restricted Payments made in connection with any Related Transaction. The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of such Restricted Payment of the asset(s) or securities proposed to be paid, transferred or issued by the Issuer or such Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment. The fair market value of any cash Restricted Payment shall be its face amount and any non-cash Restricted Payment shall be determined conclusively by the Board of Directors of the Company acting in good faith.

196

Limitation on Liens The Company will not, and will not cause or permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind securing Indebtedness or trade payables upon any of their property or assets, now owned or hereafter acquired, except (1) in the case of any property or asset that does not constitute Collateral, Permitted Liens and (2) in the case of any property or asset that constitutes Collateral, Permitted Collateral Liens. Limitation on Restrictions on Distributions from Restricted Subsidiaries The Company will not, and will not permit any Restricted Subsidiary to, create or otherwise cause or permit to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary to: (1) pay dividends or make any other distributions on its Capital Stock or pay any Indebtedness or other obligations owed to the Company or any Restricted Subsidiary; make any loans or advances to the Company or any Restricted Subsidiary; or transfer any of its property or assets to the Company or any Restricted Subsidiary;

(2) (3)

provided that (x) the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on Common Stock and (y) the subordination of (including but not limited to, the application of any standstill requirements to) loans or advances made to the Company or any Restricted Subsidiary to other Indebtedness Incurred by the Company or any Restricted Subsidiary, shall not be deemed to constitute such an encumbrance or restriction. The preceding provisions will not prohibit: (1) any encumbrance or restriction pursuant to an agreement in effect at or entered into on the date of the Indenture, including, without limitation, the Indenture, any Revolving Credit Facility, the Intercreditor Agreement and the Security Documents, in each case, as in effect on the Issue Date; any encumbrance or restriction pursuant to an agreement or instrument of a Person relating to any Capital Stock or Indebtedness of a Person, Incurred on or before the date on which such Person was acquired by or merged or consolidated with or into the Company or any Restricted Subsidiary, or on which such agreement or instrument is assumed by the Company or any Restricted Subsidiary in connection with an acquisition of assets (other than Capital Stock or Indebtedness Incurred as consideration in, or to provide all or any portion of the funds utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Restricted Subsidiary or was acquired by the Company or was merged or consolidated with or into the Company or any Restricted Subsidiary or in contemplation of such transaction) and outstanding on such date, provided, that any such encumbrance or restriction shall not extend to any assets or property of the Company or any other Restricted Subsidiary other than the assets and property so acquired and provided, further, that for the purposes of this clause, if another Person is the Successor Company, any Subsidiary thereof or agreement or instrument of such person or any such Subsidiary shall be deemed acquired or assumed by the Company or any Restricted Subsidiary when such Person becomes the Successor Company; any encumbrance or restriction pursuant to an agreement or instrument effecting a refunding, replacement or refinancing of Indebtedness Incurred pursuant to, or that otherwise extends, renews, refunds, refinances or replaces, an agreement referred to in clause (1) or (2) of this paragraph or this clause (3) or contained in any amendment, supplement or other modification to an agreement referred to in clause (1) or (2) of this paragraph or this clause (3); provided, however, that the encumbrances and restrictions with respect to such Restricted Subsidiary contained in any such agreement are no less favorable in any material respect to the holders of the Notes than the encumbrances and restrictions contained in such agreements referred to in clauses (1) or (2) of this paragraph (as determined in good faith by the Company);

(2)

(3)

197

(4)

in the case of clause (3) of the first paragraph of this covenant, any encumbrance or restriction: (i) that restricts in a customary manner the subletting, assignment or transfer of any property or asset that is subject to a lease, license or similar contract, or the assignment or transfer of any such lease, license or other contract; contained in Liens permitted under the Indenture securing Indebtedness of the Company or a Restricted Subsidiary to the extent such encumbrances or restrictions restrict the transfer of the property subject to such mortgages, pledges or other security agreements; or

(ii)

(iii) pursuant to customary provisions restricting dispositions of real property interests set forth in any reciprocal easement agreements of the Company or any Restricted Subsidiary; (5) any encumbrance or restriction pursuant to (a) purchase money obligations for property acquired in the ordinary course of business and (b) Capitalized Lease Obligations permitted under the Indenture, in each case that impose encumbrances or restrictions of the nature described in clause (3) of the first paragraph of this covenant on the property so acquired; any Purchase Money Note or other Indebtedness or contractual requirements Incurred with respect to a Qualified Receivables Transaction relating exclusively to a Receivables Entity that, in the good faith determination of the Board of Directors, are necessary to effect such Qualified Receivables Transaction; any encumbrance or restriction with respect to a Restricted Subsidiary (or any of its property or assets) imposed pursuant to an agreement entered into for the direct or indirect sale or disposition of all or substantially all the Capital Stock or assets of such Restricted Subsidiary (or the property or assets that are subject to such restriction) pending the closing of such sale or disposition; customary provisions in leases, joint venture agreements and other agreements and instruments entered into by the Company or any Restricted Subsidiary in the ordinary course of business; encumbrances or restrictions arising or existing by reason of applicable law or any applicable rule, regulation or order, or required by any regulatory authority;

(6)

(7)

(8)

(9)

(10) any encumbrance or restriction on cash or other deposits or net worth imposed by customers under agreements entered into in the ordinary course of business; (11) any encumbrance or restriction pursuant to Currency Agreements or Interest Rate Agreements; and (12) any encumbrance or restriction arising pursuant to an agreement or instrument relating to any Indebtedness permitted to be Incurred subsequent to the Issue Date pursuant to the provisions of the covenant described under Limitation on Indebtedness if (a) the encumbrances and restrictions taken as a whole are not materially less favorable to the holders of the Notes than the encumbrances and restrictions contained in the Revolving Credit Facility and the Intercreditor Agreement, in each case, as in effect on the Issue Date (as determined in good faith by the Company) or (b) such encumbrances and restrictions taken as a whole are not materially more disadvantageous to the holders of the Notes than is customary in comparable financings (as determined in good faith by the Company) and, in each case, either (x) the Company reasonably believes that such encumbrances and restrictions will not materially affect the Companys ability to make principal or interest payments on the Notes as and when they come due or (y) such encumbrances and restrictions applies only if a default occurs in respect of a payment or financial covenant relating to such Indebtedness. Limitation on Sales of Assets and Subsidiary Stock The Company will not, and will not permit any of its Restricted Subsidiaries to, make any Asset Disposition unless: (1) the Company or such Restricted Subsidiary, as the case may be, receives consideration (including by way of relief from, or by any other Person assuming responsibility for, any liabilities, contingent or otherwise) at least equal to the fair market value (such fair market value to be determined on the date

198

of contractually agreeing to such Asset Disposition), as determined in good faith by the Board of Directors of the Company (including as to the value of all non-cash consideration), of the shares and assets subject to such Asset Disposition; (2) unless the Asset Disposition is a Permitted Asset Swap, at least 75% of the consideration from such Asset Disposition (excluding any consideration by way of relief from, or by any other Person assuming responsibility for, any liabilities, contingent or otherwise, other than Indebtedness) received by the Company or such Restricted Subsidiary, as the case may be, is in the form of cash or Cash Equivalents; and an amount equal to 100% of the Net Available Cash from such Asset Disposition is applied by the Company or such Restricted Subsidiary, as the case may be: (a) to the extent the Company or any Restricted Subsidiary, as the case may be, elects (or is required by the terms of any Indebtedness), to prepay, repay or purchase Senior Indebtedness of the Company (including the Notes) or any Subsidiary Guarantor or Indebtedness of a Restricted Subsidiary that is not a Subsidiary Guarantor (in each case other than Indebtedness owed to the Company or an Affiliate of the Company) within 335 days from the later of the date of such Asset Disposition or the receipt of such Net Available Cash; provided, however, that, in connection with any prepayment, repayment or purchase of Bank Indebtedness pursuant to this clause (a), the Company or such Restricted Subsidiary will retire such Bank Indebtedness and will cause the related commitment (if any) to be permanently reduced in an amount equal to the principal amount so prepaid, repaid or purchased; or to the extent the Company or such Restricted Subsidiary elects to invest in or commit to invest in Additional Assets within 335 days from the later of the date of such Asset Disposition or the receipt of such Net Available Cash; provided, however, that any such reinvestment in Additional Assets made pursuant to a definitive agreement or a commitment approved by the Board of Directors of the Company that is executed or approved within such time will satisfy this requirement, so long as such investment is consummated within 6 months of such 335th day;

(3)

(b)

provided that pending the final application of any such Net Available Cash in accordance with clause (a) or clause (b) above, the Company and its Restricted Subsidiaries may temporarily reduce Indebtedness or otherwise invest such Net Available Cash in any manner not prohibited by the Indenture. Any Net Available Cash from Asset Dispositions that is not applied or invested or committed to be applied as provided in the preceding paragraph will be deemed to constitute Excess Proceeds. On the 336th day after an Asset Disposition, if the aggregate amount of Excess Proceeds exceeds 50.0 million, the Issuers will be required to make an offer (Asset Disposition Offer) to all holders of Notes and to the extent required by the terms of other Indebtedness of an Issuer, the Company or any Subsidiary Guarantor that does not constitute Subordinated Obligations, to all holders of such other Indebtedness outstanding with similar provisions requiring such Issuer, the Company or such Subsidiary Guarantor to make an offer to purchase such Indebtedness with the proceeds from any Asset Disposition (Other Asset Disposition Indebtedness), to purchase the maximum principal amount of Notes and any such Other Asset Disposition Indebtedness to which the Asset Disposition Offer applies that may be purchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount of the Notes and Other Asset Disposition Indebtedness plus accrued and unpaid interest to the date of purchase, in accordance with the procedures set forth in the Indenture or the agreements governing the Other Asset Disposition Indebtedness, as applicable, in each case in a principal amount of 50,000 and in integral multiples of 1,000 in excess thereof, in the case of the Euro Notes, and $100,000 and in integral multiples of $1,000 in excess thereof, in the case of the Dollar Notes. To the extent that the aggregate amount of Notes and Other Asset Disposition Indebtedness so validly tendered and not properly withdrawn pursuant to an Asset Disposition Offer is less than the Excess Proceeds, the Company may use any remaining Excess Proceeds for general corporate purposes, subject to other covenants contained in the Indenture. If the aggregate principal amount of Notes surrendered by holders thereof and Other Asset Disposition Indebtedness surrendered by holders or lenders, collectively, exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and Other Asset Disposition Indebtedness to be purchased on a pro rata basis on the basis of the aggregate principal amount of tendered Notes and Other Asset Disposition

199

Indebtedness. For the purposes of calculating the principal amount of any such Indebtedness not denominated in euro, such Indebtedness shall be calculated by converting any such principal amounts into their Euro Equivalent determined as of a date selected by the Issuer that is within the Asset Disposition Offer Period. Upon completion of such Asset Disposition Offer, the amount of Excess Proceeds shall be reset at zero. The Asset Disposition Offer, insofar as it relates to the Notes, will remain open for a period of 20 Business Days following its commencement, except to the extent that a longer period is required by applicable law (the Asset Disposition Offer Period). No later than five Business Days after the termination of the Asset Disposition Offer Period (the Asset Disposition Purchase Date), the Company will purchase the principal amount of Notes and Other Asset Disposition Indebtedness required to be purchased pursuant to this covenant (the Asset Disposition Offer Amount) or, if less than the Asset Disposition Offer Amount has been so validly tendered, all Notes and Other Asset Disposition Indebtedness validly tendered in response to the Asset Disposition Offer. Any Net Available Cash payable in respect of the Notes pursuant to this covenant will be apportioned between the Euro Notes and the Dollar Notes in proportion to the respective aggregate principal amounts of Euro Notes and Dollar Notes validly tendered and not withdrawn, based upon the Euro Equivalent of such principal amount of Dollar Notes determined as of a date selected by the Company that is within the Asset Disposition Offer Period. To the extent that any portion of Net Available Cash payable in respect of the Notes is denominated in a currency other than the currency in which the relevant Notes are denominated, the amount thereof payable in respect of such Notes shall not exceed the net amount of funds in the currency in which such Notes are denominated that is actually received by the Issuer upon converting such portion into such currency. If the Asset Disposition Purchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest will be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest will be payable to holders who tender Notes pursuant to the Asset Disposition Offer. On or before the Asset Disposition Purchase Date, the Issuers will, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Asset Disposition Offer Amount of Notes and Other Asset Disposition Indebtedness or portions of Notes and Other Asset Disposition Indebtedness so validly tendered and not properly withdrawn pursuant to the Asset Disposition Offer, or if less than the Asset Disposition Offer Amount has been validly tendered and not properly withdrawn, all Notes and Other Asset Disposition Indebtedness so validly tendered and not properly withdrawn, in each case in a principal amount of 50,000 and in integral multiples of 1,000 in excess thereof, in the case of the Euro Notes, and $100,000 and in integral multiples of $1,000 in excess thereof, in the case of the Dollar Notes. The Issuers will deliver to the Trustee an Officers Certificate stating that such Notes or portions thereof were accepted for payment by the Issuers in accordance with the terms of this covenant. The Issuers or the Paying Agent, as the case may be, will promptly (but in any case not later than five Business Days after termination of the Asset Disposition Offer Period) mail or deliver to each tendering holder of Notes or holder or lender of Other Asset Disposition Indebtedness, as the case may be, an amount equal to the purchase price of the Notes or Other Asset Disposition Indebtedness so validly tendered and not properly withdrawn by such holder or lender, as the case may be, and accepted by the Issuer for purchase, and the Issuers will promptly issue a new Note, and the Trustee, upon delivery of an Officers Certificate from the Issuers will authenticate and mail or deliver such new Note to such holder, in a principal amount equal to any unpurchased portion of the Note surrendered; provided that each such new Note will be in a principal amount of 50,000 and in integral multiples of 1,000 in excess thereof, in the case of the Euro Notes, and $100,000 and in integral multiples of $1,000 in excess thereof, in the case of the Dollar Notes. In addition, the Issuers will take any and all other actions required by the agreements governing the Other Asset Disposition Indebtedness. Any Note not so accepted will be promptly mailed or delivered by the Issuers to the holder thereof. The Issuers will publicly announce the results of the Asset Disposition Offer on the Asset Disposition Purchase Date. For the purposes of this covenant, the following will be deemed to be cash: (1) the assumption by the transferee of Indebtedness (other than Subordinated Obligations) of any Issuer or any Subsidiary Guarantor or Indebtedness of a Restricted Subsidiary that is not a Subsidiary Guarantor and the release of such Issuer, such Subsidiary Guarantor or such Restricted Subsidiary from all liability on such Indebtedness in connection with such Asset Disposition (in which case the Issuers will, without further action, be deemed to have applied such deemed cash to Indebtedness in accordance with clause (3)(a) above);

200

(2)

securities, notes or other obligations received by the Company or any Restricted Subsidiary of the Company from the transferee that are promptly converted by the Company or such Restricted Subsidiary into cash or Cash Equivalents; Indebtedness of any Restricted Subsidiary that is no longer a Restricted Subsidiary as a result of such Asset Disposition, to the extent that the Company and each other Restricted Subsidiary are released from any guarantee of payment of the principal amount of such Indebtedness in connection with such Asset Disposition; and consideration consisting of Indebtedness of the Company or any Restricted Subsidiary.

(3)

(4)

The Issuers will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to the Indenture. To the extent that the provisions of any securities laws or regulations conflict with provisions of this covenant, the Issuers will comply with the applicable securities laws and regulations and will not be deemed to have breached their obligations under the Indenture by virtue of any conflict. Limitation on Affiliate Transactions The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into or conduct any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of the Company (an Affiliate Transaction) involving aggregate consideration in excess of 5.0 million for such Affiliate Transactions in any fiscal year, unless: (1) the terms of such Affiliate Transaction are no less favorable, taken as a whole, to the Company or such Restricted Subsidiary, as the case may be, than those that could be obtained in a comparable transaction at the time of such transaction in arms-length dealings with a Person who is not such an Affiliate; in the event such Affiliate Transaction involves an aggregate consideration in excess of 10.0 million, the terms of such transaction have been approved by a majority of the members of the Board of Directors of the Company; and in the event such Affiliate Transaction involves an aggregate consideration in excess of 30.0 million, the Company has received a written opinion from an independent investment banking, accounting or appraisal firm of internationally recognized standing (as determined by the Company in good faith, who shall deliver a copy of the same to the Trustee) that such Affiliate Transaction either is fair, from a financial standpoint, to the Company and its Restricted Subsidiaries or is not materially less favorable than those that might reasonably have been obtained in a comparable transaction at such time on an arms length basis from a Person that is not an Affiliate.

(2)

(3)

The preceding paragraph will not apply to: (1) any Restricted Payment permitted to be made pursuant to the covenant described under Limitation on Restricted Payments or any Permitted Investment (except with respect to clause (16)(b) of the definition of Permitted Investment, which will be subject to clause (6) below); any issuance or sale of Capital Stock, options, other equity-related interests or other securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, or entering into, or maintenance of, any employment, consulting, collective bargaining or benefit plan, program, agreement or arrangement, related trust or other similar agreement and other compensation arrangements, options, warrants or other rights to purchase Capital Stock of the Company or any Parent, restricted stock plans, long-term incentive plans, stock appreciation rights plans, participation plans or similar employee benefits or consultant plans (including, without limitation, valuation, health, insurance, deferred compensation, severance, retirement, savings or similar plans, programs or arrangements) and/or indemnities provided on behalf of officers, employees or directors or consultants approved by the Board of Directors of the Company, in each case in the ordinary course of business;

(2)

201

(3)

loans or advances to employees, officers or directors in the ordinary course of business of the Company or any of its Restricted Subsidiaries but in any event not to exceed 10.0 million in the aggregate outstanding at any one time with respect to all loans or advances made since the Issue Date; any transaction between or among the Company and a Restricted Subsidiary or between or among Restricted Subsidiaries and any guarantees issued by the Company or a Restricted Subsidiary for the benefit of the Company or a Restricted Subsidiary, as the case may be, in accordance with Limitation on Indebtedness; transactions with customers, clients, suppliers or purchasers or sellers of goods or services, in each case in the ordinary course of business and otherwise in compliance with the terms of the Indenture, which are fair to the Company or the relevant Restricted Subsidiary in the reasonable determination of the Board of Directors of the Company or the senior management of the Company or the relevant Restricted Subsidiary, as applicable, or are on terms no less favorable than those that could reasonably have been obtained at such time from an unaffiliated party; any transaction in the ordinary course of business between the Company or any Restricted Subsidiary and any Affiliate of the Company controlled by the Company that is a joint venture or similar entity; provided, any transaction described in this clause (6) will both: (a) (b) be subject to the requirements of clause (1) and (2) of the first paragraph of this covenant; and either (i) comply with the provisions of clause (3) of the first paragraph of this covenant (substituting 50.0 million for 30.0 million) or (ii) be substantially identical to a transaction between such Affiliate and a non-Affiliated third party which involves aggregate consideration in an amount substantially identical to the aggregate consideration involved in such substantially identical transaction;

(4)

(5)

(6)

(7)

the payment of reasonable and customary fees paid to, and indemnity provided on behalf of, directors of the Company or any Restricted Subsidiary of the Company; the performance of obligations of the Company or any of its Restricted Subsidiaries under the terms of any agreement to which the Company or any of its Restricted Subsidiaries is a party as of or on the Issue Date, as these agreements may be amended, modified, supplemented, extended or renewed from time to time; provided, however, that any future amendment, modification, supplement, extension or renewal entered into after the Issue Date will be permitted to the extent that its terms are not more disadvantageous to the holders of the Notes than the terms of the agreements in effect on the Issue Date; sales or other transfers or dispositions of accounts receivable and other related assets customarily transferred in an asset securitization transaction involving accounts receivable to a Receivables Entity in a Qualified Receivables Transaction, and acquisitions of Permitted Investments in connection with a Qualified Receivables Transaction;

(8)

(9)

(10) the issuance of Capital Stock or any options, warrants or other rights to acquire Capital Stock (other than Disqualified Stock) of the Company to any Affiliate; (11) the payment to any Permitted Holder of all reasonable out-of-pocket expenses Incurred by any Permitted Holder in connection with its direct or indirect investment in the Company and its Subsidiaries and unpaid amounts accrued for prior periods (but after the Issue Date); (12) the payment to any Parent or Permitted Holder (1) of Management Fees (a) on a bona fide armslength basis in the ordinary course of business or (b) of up to 5.0 million in any calendar year or (2) for financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, including without limitation in connection with acquisitions or divestitures, which payments are approved by a majority of Disinterested Directors; (13) guarantees issued in accordance with the Limitation on Indebtedness covenant;

202

(14) if otherwise permitted under the Indenture, the issuance of Capital Stock (other than Disqualified Stock) or Subordinated Shareholder Loans (including the payment of cash interest thereon; provided that, after giving pro forma effect to any such cash interest payment, the Consolidated Leverage Ratio for the Company and its Restricted Subsidiaries would not exceed 4.00 to 1.00) of the Company to any direct Parent of the Company or any Permitted Holder for cash or marketable securities; (15) any Related Transaction; and (16) arrangements with customers, suppliers, contractors, lessors or sellers of goods or services that are negotiated with an Affiliate, in each case, which are otherwise in compliance with the terms of the Indenture; provided that the terms and conditions of any such transaction or agreement as applicable to the Company and its Restricted Subsidiaries, taken as a whole (a) are fair to the Company and its Restricted Subsidiaries and are on terms not materially less favorable to the Company and its Restricted Subsidiaries than those that could have reasonably been obtained in respect of an analogous transaction or agreement that would not constitute an Affiliate Transaction (in each case, as determined in good faith by the Board of Directors of the Company or the senior management of the Company), (b) the performance by the Company and any of its Restricted Subsidiaries in respect of any such arrangements are for its own behalf and in its own name and (c) the Company and its Restricted Subsidiaries do not assume, and are otherwise not liable for any performance or breach in respect of, any such arrangements by the relevant Affiliate. Limitation on Issuances of Guarantees of Indebtedness by Restricted Subsidiaries No Restricted Subsidiary (other than a Guarantor) shall guarantee or otherwise become obligated under any Indebtedness under the Revolving Credit Facility, the Senior Notes or the Senior Indenture or guarantee any other Indebtedness of an Issuer or a Guarantor in an amount in excess of 5.0 million unless such Restricted Subsidiary is or becomes an Additional Guarantor on the date on which such other guarantee or Indebtedness is Incurred (or as soon as reasonably practicable thereafter) and, if applicable, executes and delivers to the Trustee a supplemental Indenture in the form attached to the Indenture pursuant to which such Restricted Subsidiary will provide an Additional Subsidiary Guarantee (which Additional Subsidiary Guarantee shall be senior to or pari passu with such Restricted Subsidiarys guarantee of such other Indebtedness); provided that, (1) if such Restricted Subsidiary is not a Significant Subsidiary, such Restricted Subsidiary shall only be obligated to become an Additional Guarantor if such Indebtedness is Indebtedness of an Issuer or Public Debt of a Guarantor; an Additional Guarantors Additional Subsidiary Guarantee may be limited in amount to the extent required by fraudulent conveyance, thin capitalization, corporate benefit, financial assistance or other similar laws (but, in such a case (A) each of the Company and its Restricted Subsidiaries will use their reasonable best efforts to overcome the relevant legal limit and will procure that the relevant Restricted Subsidiary undertakes all whitewash or similar procedures which are legally available to eliminate the relevant limit and (B) the relevant guarantee shall be given on an equal and ratable basis with the guarantee of any other Indebtedness giving rise to the obligation to guarantee the Notes); and for so long as it is not permissible under applicable law for a Restricted Subsidiary to become an Additional Guarantor, such Restricted Subsidiary need not become an Additional Guarantor (but, in such a case, each of the Company and its Restricted Subsidiaries will use their reasonable best efforts to overcome the relevant legal prohibition precluding the giving of the guarantee and will procure that the relevant Restricted Subsidiary undertakes all whitewash or similar procedures which are legally available to eliminate the relevant legal prohibition, and shall give such guarantee at such time (and to the extent) that it thereafter becomes permissible).

(2)

(3)

The preceding paragraph shall not apply to: (1) the granting by such Restricted Subsidiary of a Permitted Lien under circumstances which do not otherwise constitute the guarantee of Indebtedness of the Issuer; or (2) the guarantee by any Restricted Subsidiary of Indebtedness that refinances Indebtedness which benefited from a guarantee by any Restricted Subsidiary Incurred in compliance with this covenant immediately prior to such refinancing.

203

Reports Prior to consummation of the Acquisition, pursuant to the terms of the Share Purchase Agreement, the Issuer shall cause all publicly available annual and interim period financial reporting that is posted on Unitymedias website to be delivered to the Trustee (which includes all reports that Unitymedia or any of its Subsidiaries are required to post on its website under the indentures governing the Existing Senior Secured Notes and the Existing Senior Notes). The Company will provide to the Trustee and will post on its website (or make similar disclosure) and shall make available to potential investors: (1) (2) for so long as the Ultimate Parent files an Annual Report on Form 10-K with the SEC, a copy of such Annual Report within 120 days after the end of the Ultimate Parents year end; within 150 days after the end of each fiscal year ending subsequent to the Issue Date, an annual report of Unitymedia, containing the following information: (a) audited combined or consolidated balance sheets of the Unitymedia as of the end of the two most recent fiscal years and audited combined or consolidated income statements and statements of cash flow of Unitymedia for the three most recent fiscal years, in each case prepared in accordance with IFRS, including appropriate footnotes to such financial statements, and a report of the independent public accountants on the financial statements; (b) to the extent relating to such annual periods, an operating and financial review of the audited financial statements, including a discussion of the results of operations, financial condition, and liquidity and capital resources, and a discussion of material commitments and contingencies and critical accounting policies; and (c) a description of the business, management and shareholders of the Unitymedia, all material affiliate transactions and a description of all material contractual arrangements, including material debt instruments; provided, however, that such reports need not (i) contain any segment data other than as required under IFRS or as provided by the Ultimate Parent in its financial reports with respect to the period presented, (ii) include any exhibits, or (iii) include separate financial statements for any Affiliates of the Issuer or any acquired businesses; within 60 days after each of the first three fiscal quarters in each fiscal year, a quarterly report of Unitymedia containing the following information: (a) unaudited consolidated income statements of Unitymedia for such period, prepared in accordance with IFRS, and (b) a financial review of such period (including a comparison against the prior years comparable period), consisting of a discussion of (i) the financial condition and results of operations of Unitymedia on a consolidated basis, and material changes between the current period and the period of the prior year, (ii) material developments in the business of the Unitymedia and its Restricted Subsidiaries, (c) financial developments and trends in the business in which the Unitymedia and its Restricted Subsidiaries is engaged and (d) information with respect to any material acquisition or disposal during the period provided, however, that such reports need not (i) contain any segment data other than as required under IFRS or as provided by the Ultimate Parent in its financial reports with respect to the period presented, (ii) include any exhibits, or (iii) include separate financial statements for any Affiliates of the Company or any acquired businesses; and within 10 days after the occurrence of such event, information with respect to (a) any change in the independent public accountants of the Company or any of its Restricted Subsidiaries, (b) any material acquisition or disposal, and (c) any material development in the business of the Issuer and its Restricted Subsidiaries.

(3)

(4)

If the Company has designated any of its Subsidiaries as Unrestricted Subsidiaries and any such Unrestricted Subsidiary or group of Unrestricted Subsidiaries constitute Significant Subsidiaries of the Company, then the annual and quarterly information required by the first two clauses of this covenant shall include a reasonably detailed presentation, either on the face of the financial statements, in the footnotes thereto or in a separate report delivered therewith, of the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of such Unrestricted Subsidiaries. If the Issuer elects to apply for all purposes of the Indenture, in lieu of IFRS, GAAP pursuant to the definition of IFRS set forth below under Certain Definition then the annual and quarterly information required by the first two clauses of this covenant shall include a reconciliation, either in the footnotes thereto or in a separate report delivered therewith, of such GAAP presentation to the corresponding IFRS presentation of such financial information.

204

To the extent that Unitymedia is the reporting entity and material differences exist between the management, business, assets, shareholding or results of operations or financial condition of the Company and Unitymedia, the annual and quarterly reports shall give a reasonably detailed description of such differences and include an unaudited reconciliation of the Companys financial statements to Unitymedias financial statement; provided, however, that if the total revenues, Consolidated EBITDA or Total Assets of Unitymedia and its Subsidiaries for any applicable period (on either a historical or pro forma basis) would deviate from any such measurement of the Company and its Restricted Subsidiaries by 5% or more, then a separate annual or quarterly report, as the case may be, shall be provided for the Company (in which case no report need be provided for Unitymedia). Contemporaneously with the furnishing of each such report discussed above, a press release with the appropriate internationally recognized wire services in connection with such report will also be filed. The Company will also make available copies of all reports required by clauses (2) through (4) of the first paragraph of this covenant, if and so long as the Notes are listed on the Official List of the Luxembourg Stock Exchange and admitted for trading on the Euro MTF and the rules of the Luxembourg Stock Exchange so require, at the offices of the Paying Agent in Luxembourg or, to the extent and in the manner permitted by such rules, post such reports on the official website of the Luxembourg Stock Exchange. In addition, so long as the Notes remain outstanding and during any period during which the Issuers are not subject to Section 13 or 15(d) of the Exchange Act nor exempt therefrom pursuant to Rule 12g3-2(b) of the Exchange Act, the Issuers shall furnish to the holders of the Notes and to prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. Merger and Consolidation No Parent Guarantor will consolidate with, or merge with or into, or convey, transfer or lease all or substantially all its assets to, any Person, unless: (1) the resulting, surviving or transferee Person (the Successor Company) will be Bidco (in the case of a merger between Bidco and Unitymedia GmbH) or a corporation, partnership, trust or limited liability company organized and existing under the laws of any member of the state of the European Union that is a member of the European Union on the date of the Indenture, or the United States of America, any State of the United States or the District of Columbia and the Successor Company (if not such Parent Guarantor) will expressly assume, by supplemental indenture, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of such Parent Guarantor under the Notes and the Indenture and expressly assumes all obligations of such Parent Guarantor under the Security Documents to which it is a party and the Intercreditor Agreement pursuant to agreements reasonably satisfactory to the Trustee; immediately after giving effect to such transaction (and treating any Indebtedness that becomes an obligation of the Successor Company or any Subsidiary of the Successor Company as a result of such transaction as having been Incurred by the Successor Company or such Subsidiary at the time of such transaction), no Default or Event of Default shall have occurred and be continuing; either (a) immediately after giving effect to such transaction, the Issuers would be able to Incur at least an additional 1.00 of Indebtedness pursuant to the first paragraph of the covenant described under Limitation on Indebtedness or (b) such Person is Bidco (in the case of a merger between Bidco and Unitymedia GmbH); and the Company shall have delivered to the Trustee an Officers Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the Indenture and that the supplemental indenture, the Indenture and the Notes are legal, valid and binding obligations of the Successor Company, enforceable (subject to customary exceptions and exclusions) in accordance with their terms.

(2)

(3)

(4)

No Issuer will consolidate with, or merge with or into, or convey, transfer or lease all or substantially all its assets to, any Person, unless: (1) Successor Company will be a corporation, partnership, trust or limited liability company organized and existing under the laws of any member of the state of the European Union that is a member of the European Union on the date of the Indenture, or the United States of America, any State of the United States or the District of Columbia and the Successor Company (if not such Issuer) will expressly assume, by supplemental indenture, executed and delivered to the Trustee, in form

205

satisfactory to the Trustee, all the obligations of such Issuer under the Notes and the Indenture and expressly assumes all obligations of such Issuer under the Security Documents to which it is a party and the Intercreditor Agreement pursuant to agreements reasonably satisfactory to the Trustee; (2) immediately after giving effect to such transaction (and treating any Indebtedness that becomes an obligation of the Successor Company or any Subsidiary of the Successor Company as a result of such transaction as having been Incurred by the Successor Company or such Subsidiary at the time of such transaction), no Default or Event of Default shall have occurred and be continuing; either (a) immediately after giving effect to such transaction, the Issuers would be able to Incur at least an additional 1.00 of Indebtedness pursuant to the first paragraph of the covenant described under Limitation on Indebtedness or (b) such Person is Unitymedia Management; and such Issuer shall have delivered to the Trustee an Officers Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the Indenture and that the supplemental indenture, the Indenture and the Notes are legal, valid and binding obligations of the Successor Company, enforceable (subject to customary exceptions and exclusions) in accordance with their terms.

(3)

(4)

A Subsidiary Guarantor will not consolidate with, or merge with or into, or convey, transfer or lease all or substantially all its assets to, any Person, other than the Company or another Subsidiary Guarantor (other than in connection with a transaction that does not constitute an Asset Disposition or a transaction that is permitted under Limitation on Sales of Assets and Subsidiary Stock), unless: (1) (2) immediately after giving effect to that transaction, no Default or Event of Default shall have occurred and be continuing; and either: (a) the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation or merger assumes all the obligations of that Guarantor under its Subsidiary Guarantee, the Indenture, the Intercreditor Agreement and the Security Documents to which such Guarantor is a party pursuant to agreements reasonably satisfactory to the Trustee; or the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the Indenture.

(b)

For purposes of this covenant, the sale, lease, conveyance, assignment, transfer, or other disposition of all or substantially all of the properties and assets of one or more Subsidiaries of the Company, which properties and assets, if held by the Company instead of such Subsidiaries, would constitute all or substantially all of the properties and assets of the Company on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company. The Successor Company will succeed to, and be substituted for, and may exercise every right and power of, the Company or a Issuer, as the case may be, under the Indenture, and upon such substitution, the predecessor Company or Issuer will be released from its obligations under the Indenture and the Notes, but, in the case of a lease of all or substantially all its assets, the predecessor Company or Issuer will not be released from the obligation to pay the principal of and interest on the Notes. Although there is a limited body of case law interpreting the phrase substantially all, there is no precise established definition of the phrase under applicable law. Accordingly, in certain circumstances there may be a degree of uncertainty as to whether a particular transaction would involve all or substantially all of the property or assets of a Person. Notwithstanding the clause (3) of the first paragraph of this covenant (which does not apply to transactions referred to in this paragraph), (x) any Restricted Subsidiary (including Unitymedia NRW) may consolidate with, merge into or transfer all or part of its properties and assets to the Company or another Restricted Subsidiary and (y) the Company may merge with an Affiliate incorporated solely for the purpose of reincorporating the Company in another jurisdiction to realize tax benefits; provided that, in the case of a Restricted Subsidiary that merges into the Company, the Company will not be required to comply with clause (4) of the first paragraph of this covenant.

206

Impairment of Security Interests No Grantor shall and the Company shall not, and shall not permit any Restricted Subsidiary to, take or omit to take any action that would have the result of materially impairing the Security Interest with respect to the Collateral (it being understood, subject to the proviso below, that the Incurrence of Permitted Collateral Liens shall under no circumstances be deemed to materially impair the Security Interest with respect to the Collateral) for the benefit of the Trustee and the holders, and the Company shall not, and shall not permit any Restricted Subsidiary to, grant to any Person other than the Security Trustee, for the benefit of the Trustee and the holders and the other beneficiaries described in the Security Documents, any interest whatsoever in any of the Collateral, except that the Company or its Restricted Subsidiaries may Incur Permitted Collateral Liens and the Collateral may be discharged and released in accordance with the Indenture, the Intercreditor Agreement or any Additional Intercreditor Agreement; provided, however, that, except with respect to any discharge or release of Collateral in accordance with the Indenture, the Intercreditor Agreement or any Additional Intercreditor Agreement or in connection with the Incurrence of Liens for the benefit of the Trustee and holders of Notes or otherwise as described in the second to last paragraph under Description of Certain Financing Arrangements Intercreditor Agreement Release of the Security and the Subsidiary Guarantees, no Security Document may be amended, extended, renewed, restated, supplemented or otherwise modified or replaced, unless contemporaneously with any such action, the Company delivers to the Trustee, either (1) a solvency opinion, in form and substance reasonably satisfactory to the Trustee from an Independent Financial Advisor confirming the solvency of the Company and its Subsidiaries, taken as a whole, after giving effect to any transactions related to such amendment, extension, renewal, restatement, supplement, modification or replacement, or (2) an Opinion of Counsel, in form and substance reasonably satisfactory to the Trustee, confirming that, after giving effect to any transactions related to such amendment, extension, renewal, restatement, supplement, modification or replacement, the Lien or Liens created under the Security Documents, as applicable, so amended, extended, renewed, restated, supplemented, modified or replaced, are valid Liens not otherwise subject to any limitation, imperfection or new hardening period, in equity or at law, that such Lien or Liens were not otherwise subject to immediately prior to such amendment, extension, renewal, restatement, supplement, modification or replacement. In the event that the Company complies with the requirements of this covenant, the Trustee shall (subject to customary protections and indemnifications from the Issuer) consent to such amendments without the need for instructions from the holders. Additional Security Interests The Company will, and will cause its Restricted Subsidiaries to, ensure that all bank accounts (subject to materiality thresholds and certain exceptions) of the Company and its Restricted Subsidiaries (whether now existing or hereinafter created) are subject to valid first-ranking Security Interests for the benefit of the Trustee and the Holders of the Notes. Additional Intercreditor Agreements The Indenture will provide that, at the request of the Company, in connection with the Incurrence by the Issuer or any Subsidiary Guarantor of any (a) Indebtedness permitted pursuant to the first paragraph of the covenant described under Certain Covenants Limitation on Indebtedness or clause (1), (7) (in the case of (7), to the extent such Indebtedness is Incurred under an Interest Rate Agreement or Currency Agreement in respect of Indebtedness Incurred under any such other paragraph or clause referred to in the preceding part of this clause (1)), or (16) of the second paragraph of the covenant described under Certain Covenants Limitation on Indebtedness, (b) Indebtedness represented by the Senior Notes and any Indebtedness that is permitted to be Incurred pursuant to clause (15) of the second paragraph of the covenant described under Certain Covenants Limitation on Indebtedness and (c) any Refinancing Indebtedness in respect of Indebtedness referred to in the foregoing clauses (a) and (b), the Issuer, the relevant Guarantors and the Trustee shall enter into with the holders of such Indebtedness (or their duly authorized Representatives) an intercreditor agreement, including a restatement, amendment or other modification of an existing intercreditor agreement (an Additional Intercreditor Agreement), on substantially the same terms as the Intercreditor Agreement (or terms not materially less favorable to the holders), including containing substantially the same terms with respect to the subordination, payment blockage, limitation on enforcement and release of Guarantees, priority and release of the Security Interest or other terms which become customary for similar agreements; provided, further, that such Additional Intercreditor Agreement will not impose any personal obligations on the Trustee or adversely affect the personal rights, duties, liabilities or immunities of the Trustee under the Indenture or the Intercreditor Agreement.

207

The Indenture will also provide that, in relation to the Intercreditor Agreement or an Additional Intercreditor Agreement, the Trustee shall consent on behalf of the holders to the payment, repayment, purchase, repurchase, defeasance, acquisition, retirement or redemption of any obligations subordinated to the Notes thereby; provided, however, that such transaction would comply with the covenant described under Certain Covenants Limitation on Restricted Payments. Suspension of Covenants on Achievement of Investment Grade Status If, during any period after the Issue Date, the Notes have achieved and continue to maintain Investment Grade Status and no Event of Default has occurred and is continuing (such period hereinafter referred to as an Investment Grade Status Period), then the covenants in the Indenture described under Limitation on Indebtedness, Limitation on Restricted Payments, Limitation on Restrictions on Distributions from Restricted Subsidiaries, Limitation on Sales of Assets and Subsidiary Stock, Limitation on Affiliate Transactions, and under Change of Control, the provisions of clause (3) of the first paragraph of the covenant described under Merger and Consolidation and any related default provisions of the Indenture will be suspended and will not, during such Investment Grade Status Period, be applicable to the Issuer and its Restricted Subsidiaries. As a result, during any such Investment Grade Status Period, the Notes will lose the covenant protection initially provided under the Indenture. No action taken during an Investment Grade Status Period or prior to an Investment Grade Status Period in compliance with the covenants then applicable will require reversal or constitute a default under the Notes in the event that suspended covenants are subsequently reinstated or suspended, as the case may be. An Investment Grade Status Period will terminate immediately upon the failure of the Notes to maintain Investment Grade Status. The Company will promptly notify the Trustee in writing of any failure of the Notes to maintain Investment Grade Status. Events of Default Each of the following is an Event of Default under the Indenture: (1) default in any payment of interest or Additional Amounts on any Note when due, which has continued for 30 days; default in the payment of principal of or premium, if any, on any Note when due at its Stated Maturity, upon optional redemption, upon required repurchase, upon a mandatory redemption as set forth above under Senior Secured Escrow of Proceeds; Special Mandatory Redemption or otherwise; failure by any Issuer or any Guarantor to comply with its obligations under Certain Covenants Merger and Consolidation; failure by any Issuer or any Guarantor to comply for 30 days after notice with any of its obligations under the covenants described under Certain Covenants above (in each case, other than a failure to purchase Notes which will constitute an Event of Default under clause (2) above and other than a failure to comply with Certain Covenants Merger and Consolidation or Senior Secured Escrow of Proceeds; Special Mandatory Redemption which are covered by clause (3) above); failure by any Issuer or any Guarantor to comply for 60 days after notice with its other agreements contained in the Notes or the Indenture; default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by an Issuer, a Guarantor or any of the Restricted Subsidiaries (or the payment of which is guaranteed by an Issuer, a Guarantor or any of the Restricted Subsidiaries), other than Indebtedness owed to an Issuer, a Guarantor or a Restricted Subsidiary, whether such Indebtedness or guarantee now exists, or is created after the date of the Indenture, which default: (a) is caused by a failure to pay principal of such Indebtedness at its Stated Maturity prior to the expiration of the grace period provided in such Indebtedness (payment default); or results in the acceleration of such Indebtedness prior to its maturity (the cross acceleration provision);

(2)

(3)

(4)

(5)

(6)

(b)

208

and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a payment default or the maturity of which has been so accelerated, aggregates 25.0 million or more; (7) certain events of bankruptcy, insolvency or reorganization of an Issuer, a Guarantor or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Issuer and its Restricted Subsidiaries), would constitute a Significant Subsidiary (the bankruptcy provisions); failure by an Issuer, a Guarantor or any Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Issuer and its Restricted Subsidiaries), would constitute a Significant Subsidiary, to pay final judgments aggregating in excess of 25.0 million (net of any amounts that a solvent insurance company has acknowledged liability for), which judgments are not paid, discharged or stayed for a period of 60 days (the judgment default provision); any Subsidiary Guarantee of a Significant Subsidiary ceases to be in full force and effect (except in accordance with the terms of the Indenture) or is declared invalid or unenforceable in a judicial proceeding and such Default continues for ten days after the notice specified in the Indenture;

(8)

(9)

(10) any Collateral having a fair market value of in excess of 20.0 million shall, at any time, cease to be in full force and effect other than as a result of its release in accordance with the Indenture and the Security Documents or any security interest created thereunder shall be declared invalid or unenforceable in a judicial proceeding and such Default continues for ten days after the notice specified in the Indenture; (11) failure (a) by Bidco to comply with any term of the Senior Secured Escrow Agreement that is not cured within 10 days to the extent such non-compliance would reasonably be expected to materially and adversely impact the holders of the Notes or (b) to complete the Debt Pushdown within 35 days of the Acquisition Date; or (12) the Senior Secured Escrow Agreement or any other security document or any Lien purported to be granted thereby on the escrow account or the cash or Investments permitted under the Senior Secured Escrow Agreement therein is held in any judicial proceeding to be unenforceable or invalid, in whole or in part, or ceases for any reason (other than pursuant to a release that is delivered or becomes effective as set forth in the Indenture) to be fully enforceable and which creates a valid and enforceable Lien. However, a default under clauses (4), (5), (9), (10) or (11) of this paragraph will not constitute an Event of Default until the Trustee or the holders of 25% in principal amount of the outstanding Notes notify the Company of the default and the Company does not cure such default within the time specified in clauses (4), (5), (9), (10) or (11) of this paragraph after receipt of such notice. If an Event of Default (other than an Event of Default described in clause (7) above) occurs and is continuing, the Trustee by notice to the Company, or the holders of at least 25% in principal amount of the outstanding Notes by notice to the Company and the Trustee, may, and the Trustee at the request of such holders shall, declare the principal of, premium, if any, and accrued and unpaid interest, if any, and Additional Amounts, if any, on all the Notes to be due and payable. Upon such a declaration, such principal, premium and accrued and unpaid interest and Additional Amounts, if any, will be due and payable immediately. In the event of a declaration of acceleration of the Notes because an Event of Default described in clause (6) under Events of Default has occurred and is continuing, the declaration of acceleration of the Notes shall be automatically annulled if the event of default or payment default triggering such Event of Default pursuant to clause (6) shall be remedied or cured by the Company or a Restricted Subsidiary of the Company or waived by the holders of the relevant Indebtedness within 20 days after the declaration of acceleration with respect thereto and if (1) the annulment of the acceleration of the Notes would not conflict with any judgment or decree of a court of competent jurisdiction and (2) all existing Events of Default, except nonpayment of principal, premium or interest and Additional Amounts, if any, on the Notes that became due solely because of the acceleration of the Notes, have been cured or waived. If an Event of Default described in clause (7) above occurs and is continuing, the principal of, premium, if any, and accrued and unpaid interest and Additional Amounts, if any, on all the Notes will become and be immediately due and payable without any declaration or other act on the part of the

209

Trustee or any holders. The holders of a majority in principal amount of the outstanding Notes may waive all past defaults (except with respect to nonpayment of principal, premium, interest or Additional Amounts) and rescind any such acceleration with respect to the Notes and its consequences if (1) rescission would not conflict with any judgment or decree of a court of competent jurisdiction and (2) all existing Events of Default, other than the nonpayment of the principal of, premium, if any, interest and Additional Amounts, if any, on the Notes that have become due solely by such declaration of acceleration, have been cured or waived; and (3) the Company has paid the Trustee its reasonable compensation and reimbursed the Trustee for its reasonable expenses, disbursements and advances. Subject to the provisions of the Indenture relating to the duties of the Trustee, if an Event of Default occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the holders unless such holders have offered to the Trustee indemnity or security satisfactory to the Trustee against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium, if any, interest or Additional Amounts, if any, when due, no holder of Notes may pursue any remedy with respect to the Indenture or the Notes unless: (1) such holder of Notes has previously given the Trustee written notice that an Event of Default is continuing; holders of at least 50% in principal amount of the outstanding Notes have requested the Trustee to pursue the remedy; such holders of Notes have offered the Trustee security or indemnity satisfactory to the Trustee against any loss, liability or expense; the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity; and the holders of a majority in principal amount of the outstanding Notes have not given the Trustee a direction that, in the opinion of the Trustee, is inconsistent with such request within such 60-day period.

(2)

(3)

(4)

(5)

Subject to certain restrictions, the holders of a majority in principal amount of the outstanding Notes are given the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Indenture provides that in the event an Event of Default has occurred and is continuing, the Trustee will be required in the exercise of its powers to use the degree of care that a prudent person would use under the circumstances in the conduct of its own affairs. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other holder of Notes or that would involve the Trustee in personal liability. Prior to taking any action under the Indenture, the Trustee will be entitled to security or indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action. The Indenture provides that if a Default occurs and is continuing and is actually known to the Trustee, the Trustee must give notice of the Default within 90 days after it occurs. Except in the case of a Default in the payment of principal of, premium, if any, interest or Additional Amounts, if any, on any Note, the Trustee may withhold notice if and so long as a committee of trust officers of the Trustee in good faith determines that withholding notice is in the interests of the holders. In addition, the Company is required to deliver to the Trustee, within 90 days after the end of each fiscal year, a certificate indicating whether the signers thereof know of any Default that occurred during the previous year. The Company also is required to deliver to the Trustee, within 30 days after the occurrence thereof, written notice of any events of which it is aware which would constitute certain Defaults, their status and what action the Company is taking or proposing to take in respect thereof. Amendments and Waivers Subject to certain exceptions, the Indenture, the Notes, the Intercreditor Agreement and the Security Documents may be amended or supplemented with the consent of the holders of a majority in principal amount of the Notes then outstanding (including without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes) and, subject to certain exceptions, any past default or compliance with any provisions of the Indenture, the Notes, the Intercreditor Agreement and the Security Documents may be

210

waived with the consent of the holders of a majority in principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes). However, unless consented to by the holders of at least 90% of the aggregate principal amount of then outstanding Notes, an amendment may not: (1) (2) reduce the principal amount of Notes whose holders must consent to an amendment or waiver; reduce the stated rate of or extend the stated time for payment of interest or Additional Amounts on any Note; reduce the principal of or extend the Stated Maturity of any Note; whether through an amendment or waiver of provisions in the covenants, definitions or otherwise (i) reduce the premium payable upon the redemption of any Note or change the time at which any Note may be redeemed as described above under Optional Redemption, (ii) reduce the premium payable upon repurchase of any Note or change the time at which any Note is to be repurchased as described under Certain Covenants Change of Control or Certain Covenants Limitation on Sales of Assets and Subsidiary Stock at any time after the obligation to repurchase has arisen, or (iii) change any provision relating to redemption of the Notes described under Senior Notes Escrow of Proceeds; Special Mandatory Redemption; make any Note payable in money other than that stated in the Note; impair the right of any holder to receive payment of, premium, if any, principal of or interest or Additional Amounts, if any, on such holders Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such holders Notes; release any Guarantor that is a Significant Subsidiary or a Parent Guarantor from any of its obligations (or modify such obligations in any manner adverse to the holders) under any Note Guarantee or the Indenture, as applicable, except in accordance with the terms of the Indenture and the Intercreditor Agreement; release the security interest granted for the benefit of the holders in any Collateral (to the extent any Collateral so released in any transaction or series of transactions has a fair market value in excess of 20.0 million) other than pursuant to the terms of the Security Documents, the Intercreditor Agreement, any applicable Additional Intercreditor Agreement or as otherwise permitted by the Indenture; amend the Senior Notes Escrow Agreement in any manner materially adverse to the holders of the Notes; or

(3) (4)

(5) (6)

(7)

(8)

(9)

(10) make any change in the amendment or waiver provisions described in this sentence. Notwithstanding the foregoing, without the consent of any holder, the Issuers, the Company and the Trustee may amend the Indenture, the Notes, the Intercreditor Agreement and the Security Documents to: (1) (2) cure any ambiguity, omission, defect or inconsistency; provide for the assumption by a Successor Company of the obligations of an Issuer under the Indenture, the Notes, the Intercreditor Agreement and the Security Documents; provide for uncertificated Notes in addition to or in place of certificated Notes; add guarantees with respect to the Notes; secure the Notes; add to the covenants of the Issuers for the benefit of the holders or surrender any right or power conferred upon the Issuers; in the case of the Indenture, make any change that does not adversely affect the rights of any holder;

(3) (4) (5) (6)

(7)

211

(8) (9)

release the Security as provided by the terms of the Indenture; issue Additional Notes;

(10) give effect to Permitted Collateral Liens; (11) evidence and provide for the acceptance and appointment under the Indenture of a successor Trustee pursuant to the requirements thereof; or (12) to the extent necessary to grant a security interest for the benefit of any Person; provided that the granting of such security interest is permitted by the Indenture and the Security Documents. In formulating its opinion on such matters, the Trustee shall be entitled to require and rely on such evidence as it deems appropriate, including an Opinion of Counsel and an Officers Certificate. The consent of the holders is not necessary under the Indenture to approve the particular form of any proposed amendment. It is sufficient if such consent approves the substance of the proposed amendment. A consent to any amendment or waiver under the Indenture by any holder of Notes given in connection with a tender of such holders Notes will not be rendered invalid by such tender. After an amendment under the Indenture becomes effective, the Company is required to mail to the holders a notice briefly describing such amendment. For so long as the Notes are listed on the Luxembourg Stock Exchange and the guidelines of such Stock Exchange so require, the Company will notify the Luxembourg Stock Exchange of any such amendment, supplement and waiver. Defeasance The Issuers at any time may terminate all their obligations under the Notes and the Indenture (legal defeasance), except for certain obligations, including those respecting the defeasance trust and obligations to register the transfer or exchange of the Notes, to replace mutilated, destroyed, lost or stolen Notes and to maintain a registrar and paying agent in respect of the Notes. The Issuers at any time may terminate its obligations under the covenants described under Certain Covenants (other than clauses (1) and (2) under Certain Covenants Merger and Consolidation) and the default provisions relating to such covenants under Events of Default above, the operation of the crossdefault upon a payment default, the cross acceleration provisions, the bankruptcy provisions with respect to Significant Subsidiaries, the judgment default provision described under Events of Default above and the limitations contained in clauses (3) and (4) under Certain Covenants Merger and Consolidation above (covenant defeasance). The Issuers may exercise its legal defeasance option notwithstanding its prior exercise of their covenant defeasance option. If the Issuers exercise their legal defeasance option, payment of the Notes may not be accelerated because of an Event of Default with respect to the Notes. If the Issuers exercise their covenant defeasance option, payment of the Notes may not be accelerated because of an Event of Default specified in clauses (4), (5), (6), (7) (with respect only to Significant Subsidiaries), (8) or (9) under Events of Default above or because of the failure of any Issuer to comply with clauses (3) or (4) under Certain Covenants Merger and Consolidation above. In order to exercise either defeasance option, the Issuers must irrevocably deposit in trust (the defeasance trust) with the Trustee euro, euro-denominated European Government Obligations or a combination thereof (in the case of the Euro Notes) and dollars, dollar-denominated U.S. Government Obligations for the payment of principal, premium, if any, interest and Additional Amounts, if any, on the Notes to redemption or maturity, as the case may be, and must comply with certain other conditions, including, among other things, delivery to the Trustee of an Opinion of Counsel (subject to customary exceptions and exclusions) to the effect that holders of the Notes will not recognize income, gain or loss for United States Federal income tax purposes as a result of such deposit and defeasance and will be subject to United States Federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred. In the case of legal defeasance only, such Opinion of Counsel must be based on a ruling of the Internal Revenue Service or other change in applicable United States Federal income tax law.

212

Satisfaction and Discharge The Indenture, the Security Documents and the rights, duties and obligations of the Trustee and the holders under the Intercreditor Agreement or any Additional Intercreditor Agreement will be discharged and will cease to be of further effect as to all Notes issued thereunder, when: (1) either: (a) all Notes that have been authenticated, except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has been deposited in trust and thereafter repaid to the Issuers, have been delivered to a Paying Agent or Registrar for cancellation; or (i) all Notes that have not been delivered to a Paying Agent or Registrar for cancellation (x) have become due and payable by reason of the mailing of a notice of redemption or otherwise or (y) will become due and payable within one year and (ii) an Issuer or a Guarantor has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the holders, with respect to the Euro Notes, cash, Cash Equivalents European Government Obligations, U.S. Government Obligations or a combination thereof, in each case, denominated in, with respect to the Euro Notes, euros and with respect to Dollar Notes, U.S. dollars, in either case, in amounts as will be sufficient, without consideration of any reinvestment of interest, to pay and discharge the entire Indebtedness on the Notes not delivered to a Paying Agent or Registrar for cancellation for principal, premium and Additional Amounts (if any) and accrued interest to the date of maturity or redemption;

(b)

(2)

no Default or Event of Default has occurred and is continuing on the date of the deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit) and the deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which an Issuer or a Guarantor is a party or by which an Issuer or a Guarantor is bound; the Issuers or the Guarantor(s) have paid or caused to be paid all other amounts payable by it under the Indenture; and the Company has delivered irrevocable instructions to the Trustee under the Indenture to apply the deposited money toward the payment of the Notes at maturity or on the redemption date, as the case may be.

(3)

(4)

In addition, the Issuers must deliver to the Trustee an Officers Certificate and an opinion of counsel, in each case, stating that all conditions precedent to satisfaction and discharge have been satisfied. Currency Indemnity The sole currency of account and payment for all sums payable by the Issuer under the Indenture with respect to Euro Notes is euro and with respect to the Dollar Notes is U.S. dollars. Any amount received or recovered in a currency other than euros or U.S. dollars, as the case may be, in respect of the Notes (whether as a result of, or the enforcement of, a judgment or order of a court of any jurisdiction, in the winding-up or dissolution of the Issuer, any Subsidiary or otherwise) by the holder in respect of any sum expressed to be due to it from the Issuer will constitute a discharge of the Issuer only to the extent of the euro or U.S. dollar amount, as the case may be, which the recipient is able to purchase with the amount so received or recovered in that other currency on the date of that receipt or recovery (or, if it is not possible to make that purchase on that date, on the first date on which it is possible to do so). If that euro or U.S. dollar amount, as the case may be, is less than the euro or U.S. dollar amount, as the case may be, expressed to be due to the recipient under any Note, the Issuer will indemnify the recipient against any loss sustained by it as a result. In any event the Issuer will indemnify the recipient against the cost of making any such purchase. For the purposes of this indemnity, it will be sufficient for the holder to certify that it would have suffered a loss had an actual purchase of euro or U.S. dollars, as the case may be, been made with the amount so received in that other currency on the date of receipt or recovery (or, if a purchase of euro or U.S. dollars, as the case may be, on such date had not been practicable, on the first date on which it would have been practicable). These indemnities constitute a separate and independent obligation from the other obligations of the Issuer, will give rise to a separate and independent cause of action, will apply irrespective of any waiver granted by any holder

213

and will continue in full force and effect despite any other judgment, order, claim or proof for a liquidated amount in respect of any sum due under any Note or any other judgment or order. Listing The Issuers will use all reasonable efforts to have the Notes admitted to trading on the Luxembourg Stock Exchange within a reasonable period after the Issue Date and will maintain such listing as long as the Notes are outstanding; provided, however, that if the Issuers can no longer maintain such listing or it becomes unduly burdensome to make or maintain such listing (for the avoidance of doubt, preparation of financial statements in accordance with IFRS or any accounting standard other than IFRS and any other standard pursuant to which the Issuer then prepares its financial statements shall be deemed unduly burdensome), the Issuers may cease to make or maintain such listing on the Luxembourg Stock Exchange provided that the Issuers will use their reasonable best efforts to obtain and maintain the listing of the Notes on another recognized listing exchange for high yield issuers (which may be a stock exchange that is not regulated by the European Union). No Personal Liability of Directors, Officers, Employees and Stockholders No director, officer, employee, incorporator, member or stockholder of the Company any of its parent companies or any of its Subsidiaries or Affiliates, as such, shall have any liability for any obligations of the Issuers under the Notes or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver and release may not be effective to waive liabilities under the United States federal securities laws and it is the view of the SEC that such a waiver is against public policy. Consent to Jurisdiction and Service of Process The Indenture will provide that the Issuers and each Guarantor will irrevocably appoint CT Corporation System as its agent for service of process in any suit, action or proceeding with respect to the Indenture, the Notes and the Security Documents, as the case may be, brought in any federal or state court located in the Borough of Manhattan in the City of New York and that each of the parties submit to the jurisdiction thereof. If for any reason CT Corporation System is unable to serve in such capacity, the Issuers and such Guarantor shall appoint another agent reasonably satisfactory to the Trustee. Concerning the Trustee The Bank of New York Mellon will be the Trustee, Principal Paying Agent, Registrar and Transfer Agent with regard to the Notes. The Bank of New York Mellon (Luxembourg) S.A. will be appointed Luxembourg Listing Agent with regard to the Notes. Governing Law The Indenture will provide that it and the Notes will be governed by, and construed in accordance with, the laws of the State of New York. Notices Notices to the holders regarding the Notes will be sent by the Issuers through the newswire service of Bloomberg (or if Bloomberg does not operate, any similar agency). For so long as the Notes are listed on the Euro MTF and the rules of the Luxembourg Stock Exchange so require, the Issuer will publish a notice of any change of Paying Agent, Registrar or transfer agent in a newspaper having a general circulation in Luxembourg or, to the extent and in the manner permitted by such rules, posted on the official website of the Luxembourg Stock Exchange. Additionally, in the event the Notes are in the form of Definitive Notes, notices will be sent, by first-class mail, with a copy to the Trustee, to each holder of the Notes at such holders address as it appears on the registration books of the registrar. If publication as provided above is not practicable, notice will be given in such other manner, and shall be deemed to have been given on such date, as the Trustee may approve. If and so long as such Notes are listed on any other securities exchange, notices will also be given in accordance with any applicable requirements of such securities exchange. Notices given by publication will be deemed given on the first date on which publication is made and notices given by first-class mail, postage prepaid, will be deemed given five calendar days after mailing.

214

Certain Definitions Acquired Indebtedness means Indebtedness (i) of a Person or any of its Subsidiaries existing at the time such Person becomes a Restricted Subsidiary or (ii) assumed in connection with the acquisition of assets from such Person, in each case whether or not Incurred by such Person in connection with, or in anticipation or contemplation of, such Person becoming a Restricted Subsidiary or such acquisition. Acquired Indebtedness shall be deemed to have been Incurred, with respect to clause (i) of the preceding sentence, on the date such Person becomes a Restricted Subsidiary and, with respect to clause (ii) of the preceding sentence, on the date of consummation of such acquisition of assets. Acquisition has the meaning specified under the heading The Transactions in this offering memorandum. Acquisition Date means the date on which the Acquisition has been consummated pursuant to the terms of the Share Purchase Agreement. Additional Assets means: (1) any property or assets (other than Indebtedness and Capital Stock) to be used by the Issuer or a Restricted Subsidiary in a Related Business or are otherwise useful in Related Business (it being understood that capital expenditure on property or assets already used in a Related Business or to replace any property or assets that are the subject of such Asset Disposition or any operating expenses Incurred in the day-to-day operations of a Related Business shall be deemed an Investment in Additional Assets); the Capital Stock of a Person that is engaged in a Related Business and becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or a Restricted Subsidiary of the Company; or Capital Stock constituting a minority interest in any Person that at such time is a Restricted Subsidiary of the Company.

(2)

(3)

Affiliate of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, control when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms controlling and controlled have meanings correlative to the foregoing. Asset Disposition means any direct or indirect sale, lease (other than an operating lease entered into in the ordinary course of business), transfer, issuance or other disposition, or a series of related sales, leases (other than an operating lease entered into in the ordinary course of business), transfers, issuances or dispositions that are part of a common plan, of shares of Capital Stock of a Subsidiary (other than directors qualifying shares), property or other assets (each referred to for the purposes of this definition as a disposition) by the Issuer or any of its Restricted Subsidiaries, including any disposition by means of a merger, consolidation or similar transaction. Notwithstanding the preceding, the following items shall not be deemed to be Asset Dispositions: (1) (2) (3) (4) a disposition by a Restricted Subsidiary to the Issuer or by the Issuer or a Restricted Subsidiary (other than a Receivables Entity) to a Restricted Subsidiary; the sale or disposition of cash or of Cash Equivalents or Investment Grade Securities in the ordinary course of business; a disposition of inventory, trading stock, communications capacity or other assets in the ordinary course of business; a disposition of obsolete or worn out equipment or equipment that is no longer useful in the conduct of the business of the Company and its Restricted Subsidiaries and that is disposed of in each case in the ordinary course of business; transactions permitted under Certain Covenants Merger and Consolidation;

(5)

215

(6) (7)

an issuance of Capital Stock by a Restricted Subsidiary of the Company to the Company or to another Restricted Subsidiary; for purposes of Certain Covenants Limitation on Sales of Assets and Subsidiary Stock only, the making of a Permitted Investment or a disposition subject to Certain Covenants Limitation on Restricted Payments; dispositions of assets in a single transaction or series of related transactions with an aggregate fair market value in any calendar year of less than 10.0 million (with unused amounts in any calendar year being carried over to the next succeeding year subject to a maximum of 10.0 million of carried over amounts for any calendar year); dispositions in connection with Permitted Liens;

(8)

(9)

(10) dispositions of receivables in connection with the compromise, settlement or collection thereof in the ordinary course of business or in bankruptcy or similar proceedings and exclusive of factoring or similar arrangements; (11) the licensing or sublicensing of intellectual property or other general intangibles and licenses, sublicenses, leases or subleases of other property; (12) foreclosure, condemnation or similar action with respect to any property or other assets; (13) the sale or discount (with or without recourse, and on customary or commercially reasonable terms) of accounts receivable or notes receivable arising in the ordinary course of business, or the conversion or exchange of accounts receivable for notes receivable; (14) sales of accounts receivable and related assets or an interest therein of the type specified in the definition of Qualified Receivables Transaction to a Receivables Entity; (15) any disposition of Capital Stock, Indebtedness or other securities of an Unrestricted Subsidiary; (16) any surrender or waiver of contract rights or the settlement, release or surrender of contract, tort or other claims of any kind; (17) disposals of assets, rights or revenue not constituting part of the Distribution Business of the Issuer and its Restricted Subsidiaries; (18) disposals of other interests in other entities in an amount not to exceed 5.0 million; and (19) any other disposal of assets comprising in aggregate percentage value of 10% or less of the Total Assets of the Company and its Restricted Subsidiaries as set forth in the consolidated financial statements of the Company as of September 30, 2009. Average Life means, as of the date of determination, with respect to any Indebtedness or Preferred Stock, the quotient obtained by dividing (1) the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment by (2) the sum of all such payments. Bank Indebtedness means any and all amounts, whether outstanding on the Issue Date or Incurred after the Issue Date, payable under or in respect of any Credit Facility (other than any refunding, replacement, restructuring or refinancing thereof) and any related notes, collateral documents, letters of credit and guarantees and any Interest Rate Agreement entered into in connection with any Credit Facility, including principal, premium, if any, interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization at the rate specified therein whether or not a claim for post filing interest is allowed in such proceedings), fees, charges, expenses, reimbursement obligations, guarantees and all other amounts payable thereunder or in respect thereof. Board of Directors means, as to any Person, the board of directors of such Person or any duly authorized committee thereof; provided, any action required to be taken under the Indenture by the Board of Directors of the Company can, in the alternative, at the option of the Company, be taken by the Board of Directors of the Ultimate Parent.

216

Bund Rate means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity as of such date of the Comparable German Bund Issue, assuming a price for the Comparable German Bund Issue (expressed as a percentage of its principal amount) equal to the Comparable German Bund Price for such redemption date, where: (1) Comparable German Bund Issue means the German Bundesanleihe security selected by any Reference German Bund Dealer as having a fixed maturity most nearly equal to the period from such redemption date to December 1, 2012 and that would be utilized at the time of selection and in accordance with customary financial practice, in pricing new issues of euro-denominated corporate debt securities in a principal amount approximately equal to the then outstanding principal amount of the Notes and of a maturity most nearly equal to December 1, 2012; provided, however, that, if the period from such redemption dated to December 1, 2012 is not equal to the fixed maturity of the German Bundesanleihe security selected by such Reference German Bund Dealer, the Bund Rate shall be determined by linear interpolation (calculated to the nearest one-twelfth of a year) from the yields of German Bundesanleihe securities for which such yields are given, except that if the period from such redemption date to December 1, 2012, is less than one year, a fixed maturity of one year shall be used; Comparable German Bund Price means, with respect to any redemption date, the average of all Reference German Bund Dealer Quotations for such date (which, in any event, must include at least two such quotations), after excluding the highest and lowest such Reference German Bund Dealer Quotations, or if the Issuer obtains fewer than four such Reference German Bund Dealer Quotations, the average of all such quotations; Reference German Bund Dealer means any dealer of German Bundesanleihe securities appointed by the Issuer in good faith; and Reference German Bund Dealer Quotations means, with respect to each Reference German Bund Dealer and any redemption date, the average as determined by the Issuer in good faith of the bid and offered prices for the Comparable German Bund Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Issuer by such Reference German Bund Dealer at 3.30 p.m. Frankfurt, Germany, time on the third Business Day preceding the redemption date.

(2)

(3)

(4)

Business Day means each day that is not a Saturday, Sunday or other day on which banking institutions in Luxembourg, Frankfurt, Germany, New York, New York or London, England are authorized or required by law to close. Capital Stock of any Person means any and all shares, interests, rights to purchase, warrants, options, participation or other equivalents of interests in (however designated) equity of such Person, including any Preferred Stock, but excluding any debt securities convertible into such equity. Capitalized Lease Obligation means an obligation that is required to be classified and accounted for as a capitalized lease for financial reporting purposes in accordance with IFRS. The amount of Indebtedness represented by such obligation will be the capitalized amount of such obligation at the time any determination thereof is to be made as determined in accordance with IFRS, and the Stated Maturity thereof will be the date of the last payment of rent or any other amount due under such lease prior to the first date such lease may be terminated without penalty. Cash Equivalents means: (1) securities issued or directly and fully guaranteed or insured by the United States Government or a member state of the European Union as of January 1, 2004 (each a Qualified Country) or any agency or instrumentality thereof (provided that the full faith and credit of such Qualified Country is pledged in support thereof), having maturities of not more than one year from the date of acquisition; marketable general obligations issued by any political subdivision of any Qualified Country or any public instrumentality thereof maturing within one year from the date of acquisition of the United States (provided that the full faith and credit of the Qualified Country is pledged in support thereof) and, at the time of acquisition, having a credit rating of A2 or better from either Standard & Poors Ratings Services or Moodys Investors Service, Inc.;

(2)

217

(3)

certificates of deposit, time deposits, eurodollar time deposits, overnight bank deposits or bankers acceptances having maturities of not more than one year from the date of acquisition thereof issued by any lender party to any Credit Facility or by any bank or trust company (x) the long-term debt of which is rated at the time of acquisition thereof at least A or the equivalent thereof by Standard & Poors Ratings Services, or A or the equivalent thereof by Moodys Investors Service, Inc. (or if at the time neither is issuing comparable ratings, then a comparable rating of another nationally recognized rating agency); repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (1), (2) and (3) entered into with any bank meeting the qualifications specified in clause (3) above; commercial paper rated at the time of acquisition thereof at least A-2 or the equivalent thereof by Standard & Poors Ratings Services or P-2 or the equivalent thereof by Moodys Investors Service, Inc., or carrying an equivalent rating by an internationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of investments, and in any case maturing within one year after the date of acquisition thereof; and interests in any investment company or money market fund which invests 95% or more of its assets in instruments of the type specified in clauses (1) through (5) above.

(4)

(5)

(6)

Change of Control means: (1) UGC (a) ceases to be the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of the Company and (b) ceases, by virtue of any powers conferred by the articles of association or other documents regulating the Company to, directly or indirectly, direct or cause the direction of management and policies of the Company; the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole to any person (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) other than a Permitted Holder; the adoption by the stockholders of any Issuer of a plan or proposal for the liquidation or dissolution of such Issuer, other than a transaction complying with the covenant described under Certain Covenants Merger and Consolidation; or either (a) the consummation of any transaction (including, without limitation, any merger, consolidation, scheme of arrangement or amalgamation), the result of which is that Liberty Global Europe Financing B.V., UPC Holding and/or any of their Subsidiaries becomes the beneficial owner, directly or indirectly, of more than 50% of the Voting Stock of the Company, (b) the direct or indirect sale, lease, transfer, conveyance or other disposition, in one or a series of related transactions, of all or substantially all of the properties or assets of the Company and its Subsidiaries taken as a whole to Liberty Global Europe Financing B.V., UPC Holding and/or any of their Subsidiaries or (c) Unitymedia ceases to own, directly or indirectly, all of the Capital Stock of the Company.

(2)

(3)

(4)

Code means the United States Internal Revenue Code of 1986, as amended. Collateral means any assets in which a security interest has been or will be granted pursuant to any Security Document to secure the Obligations under the Indenture, the Notes or any Guarantee. Common Stock means, with respect to any Person, any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or nonvoting) of such Persons common stock whether or not outstanding on the Issue Date, and includes, without limitation, all series and classes of such common stock. Consolidated EBITDA means, for any period means, without duplication, the Consolidated Net Income for such period, plus the following to the extent deducted in calculating such Consolidated Net Income: (1) (2) Consolidated Interest Expense; Consolidated Income Taxes;

218

(3) (4) (5)

consolidated depreciation expense; consolidated amortization expense; any reasonable expenses, charges or other costs related to any Equity Offering, Permitted Investment, acquisition, recapitalization or the Incurrence of any Indebtedness permitted by the Indenture, in each case, as determined in good faith by an Officer of the Issuer and without duplication of any amounts excluded under clause (3) of the definition of Consolidated Net Income; and other non-cash charges reducing Consolidated Net Income (excluding any such non-cash charge to the extent it represents an accrual of or reserve for cash charges in any future period) less other noncash items of income increasing Consolidated Net Income (excluding any such non-cash item of income to the extent it represents a receipt of cash payments in any future period),

(6)

Notwithstanding the foregoing, the provision for taxes and the depreciation, amortization and non-cash items of a Restricted Subsidiary shall be added to Consolidated Net Income to compute Consolidated EBITDA only to the extent (and in the same proportion, including by reason of minority interests) that the net income or loss of such Restricted Subsidiary was included in calculating Consolidated Net Income and only if a corresponding amount would be permitted at the date of determination to be distributed to the Company by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, governmental rules and regulations applicable to such Restricted Subsidiary or its shareholders (other than any restriction specified in sub-clauses (a) through (e) of clause (2) of the definition of Consolidated Net Income). Consolidated Income Taxes means taxes based on income, profits or capital of any of the Issuer and its Restricted Subsidiaries whether or not paid, estimated, accrued or required to be remitted to any governmental authority taken into account in calculating Consolidated Net Income. Consolidated Interest Expense means, for any period the consolidated net interest income/expense of the Issuer and its Restricted Subsidiaries (in each case, determined on the basis of GAAP), whether paid or accrued, including any such interest and charges consisting of: (1) (2) (3) (4) (5) (6) interest expense attributable to Capitalized Lease Obligations; amortization of debt discount and debt issuance cost; non-cash interest expense; commissions, discounts and other fees and charges owed with respect to financings not included in clause (2) above; costs associated with Hedging Obligations; dividends on other distributions in respect of all Disqualified Stock of the Issuer and all Preferred Stock of any Restricted Subsidiary, to the extent held by Persons other than the Issuer or a Subsidiary of the Issuer; the consolidated interest expense that was capitalized during such period; and interest actually paid by the Issuer on any Restricted Subsidiary, under any Guarantee of Indebtedness or other obligation of any other Person.

(7) (8)

Consolidated Leverage Ratio, as of any date of determination, means the ratio of: (1) the outstanding Indebtedness (other than (x) Subordinated Shareholder Loans and (y) any Indebtedness which is a contingent obligation of the Company or a Restricted Subsidiary; provided that for the purpose of calculating the Consolidated Leverage Ratio for purposes of clause 15(b) of the second paragraph of the covenant under the caption Certain Covenants Limitation on Indebtedness, any guarantee by the Company or any of its Restricted Subsidiaries of Indebtedness of Unitymedia and/or any Parent Guarantor (including, without limitation, any guarantees of the Senior Notes) shall be included in determining any such outstanding Indebtedness) of the Company and its Restricted Subsidiaries on a Consolidated basis, to the Pro forma EBITDA for the period of the most recent two consecutive fiscal quarters for which financial statements have previously been furnished to holders of the Notes pursuant to the covenant described under Certain Covenants Reports, multiplied by 2.0.

(2)

219

Consolidated Net Income means, for any period, net income (loss) of the Issuer and its Restricted Subsidiaries determined on a consolidated basis on the basis of IFRS; provided, however, that there will not be included in such Consolidated Net Income: (1) (A) subject to the limitations contained in clause (3) below, any net income (loss) of any Person (other than the Issuer) if such Person is not a Restricted Subsidiary, except that the Issuers equity in the net income of any such Person for such period will be included in such Consolidated Net Income up to the aggregate amount of cash or Cash Equivalents actually distributed by such Person during such period to the Issuer or a Restricted Subsidiary as a dividend or other distribution or return on investment (subject, in the case of a dividend or other distribution or return on investment to a Restricted Subsidiary, to the limitations contained in clause (2) below); and (B) the Issuers equity in a net loss of any such Person (other than an Unrestricted Subsidiary) for such period will be included in determining such Consolidated Net Income; any net income (loss) of any Restricted Subsidiary if such Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions by such Restricted Subsidiary, directly or indirectly, to the Issuer by operation of the terms of such Restricted Subsidiarys charter or any agreement, instrument, judgment, decree, order, statute or governmental rule or regulation applicable to such Restricted Subsidiary or its shareholders (other than (a) restrictions that have been waived or otherwise released, (b) restrictions pursuant to the Notes or the Indenture, (c) restrictions in effect on the Issue Date with respect to a Restricted Subsidiary (including pursuant to the Notes, the Revolving Credit Facility or the Senior Notes) and other restrictions with respect to any Restricted Subsidiary that, taken as a whole, are not materially less favorable to the Holders than restrictions in effect on the Issue Date and (d) restrictions as in effect on the Issue Date specified in clause (8), or restrictions specified in clause (10), of the second paragraph of the covenant described under Certain Covenants Limitation on Restrictions on Distributions from Restricted Subsidiaries), except that (x) the Issuers equity in the net income of any such Restricted Subsidiary for such period will be included in such Consolidated Net Income up to the aggregate amount of cash or Cash Equivalents actually distributed or that could have been distributed by such Restricted Subsidiary during such period to the Issuer or another Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend to another Restricted Subsidiary, to the limitation contained in this clause) and (y) the Issuers equity in a net loss of any such Restricted Subsidiary for such period will be included in determining such Consolidated Net Income; any net gain (or loss) realized upon the sale or other disposition of any asset or disposed operations of the Issuer or any Restricted Subsidiaries which is not sold or otherwise disposed of in the ordinary course of business (as determined in good faith by the Board of Directors of the Issuer); the cumulative effect of a change in accounting principles; any non-cash compensation charge arising from any grant of stock, stock options or other equity based awards; all deferred financing costs written off and premiums paid in connection with any early extinguishment of Indebtedness and any net gain (loss) from any write-off or forgiveness of Indebtedness; any unrealized gains or losses in respect of Hedging Obligations; any goodwill or other intangible asset impairment charge; the impact of capitalized interest on Subordinated Shareholder Loan; and

(2)

(3)

(4) (5) (6)

(7) (8) (9)

(10) any derivative instruments gains or losses, foreign exchange gains or losses, and gains or losses associated with fair value adjustment on financial instruments. Consolidation means the consolidation of the accounts of each of the Restricted Subsidiaries with those of the Company in accordance with IFRS consistently applied; provided, however, that Consolidation will not include consolidation of the accounts of any Unrestricted Subsidiary, but the interest of the Company or any Restricted Subsidiary in an Unrestricted Subsidiary will be accounted for as an investment. The term Consolidated has a correlative meaning.

220

Credit Facility means, one or more debt facilities or arrangements (including, without limitation, the Revolving Credit Facility) or commercial paper facilities with banks or other institutions or investors providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such institutions or to special purpose entities formed to borrow from such institutions against such receivables), letters of credit or other Indebtedness, in each case, as amended, restated, modified, renewed, refunded, replaced, restructured, refinanced, repaid, increased or extended in whole or in part from time to time (and whether in whole or in part and whether or not with the original administrative agent and lenders or another administrative agent or agents or other banks or institutions or investors and whether provided under the Revolving Credit Facility or one or more other credit or other agreements, indentures, financing agreements or otherwise) and in each case including all agreements, instruments and documents executed and delivered pursuant to or in connection with the foregoing (including but not limited to any notes and letters of credit issued pursuant thereto and any guarantee and collateral agreement, patent and trademark security agreement, mortgages or letter of credit applications and other guarantees, pledges, agreements, security agreements and collateral documents). Without limiting the generality of the foregoing, the term Credit Facility shall include any agreement or instrument (i) changing the maturity of any Indebtedness Incurred thereunder or contemplated thereby, (ii) adding Subsidiaries of the Company as additional borrowers or guarantors thereunder, (iii) increasing the amount of Indebtedness Incurred thereunder or available to be borrowed thereunder or (iv) otherwise altering the terms and conditions thereof. Currency Agreement means, in respect of a Person, any foreign exchange contract, currency swap agreement, futures contract, option contract, derivative or other similar agreement as to which such Person is a party or a beneficiary. Default means any event which is, or after notice or passage of time or both would be, an Event of Default. Disinterested Director means, with respect to any transaction with an Affiliate, a member of the Board of Directors of a Parent of the Company having no material direct or indirect financial interest in or with respect to such transaction with an Affiliate. A member of the Board of Directors of such Parent of the Company shall not be deemed to have such a financial interest by reason of such members holding Capital Stock of the Company or any Parent or any options, warrants or other rights in respect of such Capital Stock. Disqualified Stock means, with respect to any Person, any Capital Stock of such Person which by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event: (1) (2) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise; is convertible or exchangeable for Indebtedness or Disqualified Stock (excluding Capital Stock which is convertible or exchangeable solely at the option of the Company or a Restricted Subsidiary); or is redeemable at the option of the holder of the Capital Stock in whole or in part,

(3)

in each case on or prior to the earlier of the date (a) of the Stated Maturity of the Notes or (b) on which there are no Notes outstanding, provided that only the portion of Capital Stock which so matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date will be deemed to be Disqualified Stock; provided, further that any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Company to repurchase such Capital Stock upon the occurrence of a change of control or asset sale (each defined in a substantially identical manner to the corresponding definitions in the Indenture) shall not constitute Disqualified Stock if the terms of such Capital Stock (and all such securities into which it is convertible or for which it is ratable or exchangeable), provided that the Company may not repurchase or redeem any such Capital Stock (and all such securities into which it is convertible or for which it is ratable or exchangeable) pursuant to such provision prior to compliance by the Issuer with the provisions of the Indenture described under the captions Certain Covenants Change of Control and Certain Covenants Limitation on Sales of Assets and Subsidiary Stock and such repurchase or redemption complies with Certain Covenants Limitation on Restricted Payments. Distribution Business means: (1) the business of upgrading, constructing, creating, developing, acquiring, operating, owning, leasing and maintaining cable television networks (including for avoidance of doubt master

221

antenna television, satellite master antenna television, single and multi-channel microwave single or multi-point distribution systems and direct-to-home satellite systems) for the transmission, reception and/or delivery of multi-channel television and radio programming, telephony and internet and/or data services to the residential markets; or (2) any business which is incidental to or related to and, in either case, material to such business. Dollar Applicable Premium means with respect to a Dollar Note at any redemption date prior to December 1, 2012, the excess of (A) the present value at such redemption date of (1) the redemption price of such Dollar Note on December 1, 2012 (such redemption price being described under Optional Redemption Optional Redemption on or after December 1, 2012 exclusive of any accrued and unpaid interest) plus (2) all required remaining scheduled interest payments due on such Dollar Note through December 1, 2012 (but excluding accrued and unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate plus 50 basis points over (B) the principal amount of such Dollar Note on such redemption date. Enforcement Sale means (1) any sale or disposition (including by way of public auction) of the Collateral pursuant to an enforcement action taken by the Security Trustee in accordance with the provisions of the Intercreditor Agreement, including on behalf of the Senior Indebtedness Incurred under the Revolving Credit Facility, the holders of the Notes or certain hedging counterparties, to the extent such sale or disposition is effected in compliance with the provisions of the Intercreditor Agreement, or (2) any sale or disposition of the Collateral pursuant to the enforcement of security in favor of other Senior Indebtedness of the Company or its Restricted Subsidiaries which complies with the terms of an Additional Intercreditor Agreement (or if there is no such intercreditor agreement, would substantially comply with the requirements of clause (1) hereof). Equity Offering means a sale of (x) Capital Stock of the Company (other than Disqualified Stock), or (y) Capital Stock of a Parent the proceeds of which are contributed as equity share capital to the Company or (z) Subordinated Shareholder Loans. Euro Applicable Premium means with respect to a Euro Note at any redemption date prior to December 1, 2012, the excess of (A) the present value at such redemption date of (1) the redemption price of such Euro Note on December 1, 2012 (such redemption price being described under Optional Redemption Optional Redemption on or after December 1, 2012 exclusive of any accrued and unpaid interest) plus (2) all required remaining scheduled interest payments due on such Euro Note through December 1, 2012 (but excluding accrued and unpaid interest to the redemption date), computed using a discount rate equal to the Bund Rate plus 50 basis points over (B) the principal amount of such Euro Note on such redemption date. Euro Equivalent means, with respect to any monetary amount in a currency other than euro, at any time of determination thereof by the Company or the Trustee, the amount of euro obtained by converting such currency other than euro involved in such computation into euro at the spot rate for the purchase of euro with the applicable currency other than euro as published in The Financial Times in the Currency Rates section (or, if The Financial Times is no longer published, or if such information is no longer available in The Financial Times, such source as may be selected in good faith by the Company) on the date of such determination. European Government Obligations means any security that is (1) a direct obligation of Ireland, Belgium, the Netherlands, France, The Federal Republic of Germany or any other country that is a member of the European Monetary Union on the date of the Indenture, for the payment of which the full faith and credit of such country is pledged or (2) an obligation of a person controlled or supervised by and acting as an agency or instrumentality of any such country the payment of which is unconditionally Guaranteed as a full faith and credit obligation by such country, which, in either case under the preceding clause (1) or (2), is not callable or redeemable at the option of the issuer thereof. Exchange Act means the United States Securities Exchange Act of 1934, as amended. Excluded Contribution means Net Cash Proceeds or property or assets received by the Company as capital contributions to the Company after the Issue Date or from the issuance or sale (other than to a Restricted Subsidiary) of Capital Stock (other than Disqualified Stock) of the Company, in each case to the extent designated as an Excluded Contribution pursuant to an Officers Certificate of the Company. Existing Senior Notes means (i) the 215,000,000 aggregate principal amount of 8 3 4% Senior Notes due 2015 issued by Unitymedia issued pursuant to an indenture dated February 14, 2005 among, inter alia, Unitymedia, the Guarantors as defined therein and The Law Debenture Trust Company of New York as trustee,

222

and (ii) 235,000,000 aggregate principal amount of 10 1 8% Senior Notes due 2015 and the outstanding $151,000,000 aggregate principal amount of 10 3 8% Senior Notes due 2015 issued pursuant to an indenture dated July 19, 2005), among, inter alia, Unitymedia, the Guarantors as defined therein and The Law Debenture Trust Company of New York, as trustee. Existing Senior Secured Notes means the Senior Secured Floating Rate Notes due 2013 of Unitymedia Hessen GmbH & Co. KG and Unitymedia NRW GmbH issued under an indenture, dated as of April 5, 2006, by and among, inter alia, the issuers, the guarantors party thereto, Law Debenture Trust Company of New York, as trustee and security trustee. Existing Term Loan means the 100,000,000 term loan facility made pursuant to a term loan facility agreement dated October 18, 2006 among, inter alia, Unitymedia Hessen, Unitymedia NRW, Arena Sport Rechte und marketing GmbH as borrowers, Unitymedia (as an obligor), the original guarantors party thereto, Goldman Sachs International, as mandated lead arranger and underwriter, Citibank International Plc, as agent, The Law Debenture Trust Company of New York, as security trustee, and the financial institutions party thereto. fair market value unless otherwise specified, wherever such term is used in the Indenture (except as otherwise specifically provided in this Description of the Senior Secured Notes), may be conclusively established by means of an Officers Certificate or a resolution of the Board of Directors of the Issuer setting out such fair market value as determined by such Officer or such Board of Directors in good faith. GAAP means generally accepted accounting principles in the United States as in effect on the Issue Date. Grantor means any Guarantor and any other person that has pledged Collateral to secure the obligations under the Notes and the Note Guarantees. guarantee means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person: (1) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keepwell, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise); or entered into for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided, however, that the term guarantee will not include endorsements for collection or deposit in the ordinary course of business. The term guarantee used as a verb has a corresponding meaning.

(2)

guarantor means the obligor under a guarantee. Guarantor means (1) each of the Parent Guarantors and the Subsidiary Guarantors in its capacity as guarantor of the Notes and (2) each Additional Guarantor in its capacity as an additional guarantor of the Notes. Hedging Obligations of any Person means the obligations of such Person pursuant to any Interest Rate Agreement or Currency Agreement. holder means a Person in whose name a Note is registered on the Registrars books. Holding Company means, in relation to a person, an entity of which that person is a Subsidiary. IFRS means the accounting standards issued by the International Accounting Standards Board and its predecessors as in effect on the Issue Date. Except as otherwise expressly provided in the Indenture, all ratios and calculations based on IFRS contained in the Indenture shall be computed in conformity with IFRS. At any time after the Issue Date, the Issuer may elect to apply for all purposes of the Indenture, in lieu of IFRS, GAAP and, upon such election, references to IFRS herein will be construed to mean GAAP as in effect at the Issue Date; provided that (1) all financial statements and reports to be provided, after such election, pursuant to the Indenture shall be prepared on the basis of GAAP as in effect from time to time (including that, upon first reporting its fiscal year results under GAAP, the Issuer shall restate its financial statements on the basis of GAAP for the fiscal year ending immediately prior to the first fiscal year for which financial statements have been prepared on

223

the basis of GAAP), and (2) from and after such election, all ratios, computations, and other determinations based on IFRS contained in the Indenture shall still be required to be computed in conformity with IFRS. Thereafter, the Issuer may re-elect to apply for all purposes of the Indenture, in lieu of GAAP, IFRS, subject to the foregoing. Incur means issue, create, assume, guarantee, incur or otherwise become liable for; provided, however, that any Indebtedness or Capital Stock of a Person existing at the time such person becomes a Restricted Subsidiary (whether by merger, consolidation, acquisition or otherwise) will be deemed to be Incurred by such Restricted Subsidiary at the time it becomes a Restricted Subsidiary; and the terms Incurred and Incurrence have meanings correlative to the foregoing. Indebtedness means, with respect to any Person on any date of determination (without duplication): (1) (2) (3) (4) (5) money borrowed or raised and debit balances at banks; any bond, note, loan stock, debenture or similar debt instrument; acceptance or documentary credit facilities; receivables sold or discounted (otherwise than on a non-recourse basis and other than in the normal course of business for collections); payments for assets acquired or services supplied deferred for a period of over 180 days (or 360 days if such deferral is in accordance with the terms pursuant to which the relevant assets were or are to be acquired or services were or are to be supplied) after the relevant assets were or are to be acquired or the relevant services were or are to be supplied to the principal of and premium (if any) in respect of indebtedness of such Person for borrowed money; Capitalized Lease Obligations (excluding network and duct leases) of such Person; any other transaction (including without limitation forward sale or purchase agreements) having the commercial effect of a borrowing or raising of money or any of (2) to (6) above; the principal component or liquidation preference of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, with respect to any Restricted Subsidiary, any Preferred Stock (but excluding, in each case, any accrued dividends); and the principal component of Indebtedness of other Persons to the extent guaranteed by such Person,

(6) (7) (8)

(9)

provided that Indebtedness which has been cash-collateralized shall not be included in any calculation of Indebtedness to the extent so cash-collateralized. Notwithstanding the foregoing, Indebtedness shall not include any deposits or prepayments received by the Issuer or a Restricted Subsidiary from a customer or subscriber for its service. The amount of Indebtedness of any Person at any date will be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date. Independent Financial Advisor means an accounting, appraisal or investment banking firm of nationally recognized standing that is, in the good faith judgment of the Company, qualified to perform the task for which it has been engaged. Interest Rate Agreement means, with respect to any Person, any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement or other similar agreement or arrangement as to which such Person is party or a beneficiary. Investment means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of any direct or indirect advance, loan (other than advances or extensions of credit to customers in the ordinary course of business) or other extensions of credit (including by way of guarantee or similar arrangement, but excluding any debt or extension of credit represented by a bank deposit other than a time deposit) or capital contribution to (by means of any transfer of cash or other property to others or any

224

payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by, such Person and all other items that are or would be classified as investments on a balance sheet prepared in accordance with IFRS; provided that none of the following will be deemed to be an Investment: (1) (2) (3) Hedging Obligations entered into in the ordinary course of business and in compliance with the Indenture; endorsements of negotiable instruments and documents in the ordinary course of business; and an acquisition of assets, Capital Stock or other securities by the Company or a Subsidiary for consideration to the extent such consideration consists of Common Stock of the Issuer.

For purposes of the definition of Unrestricted Subsidiary and Certain Covenants Limitation on Restricted Payments, (1) Investment will include the portion (proportionate to the Companys equity interest in a Restricted Subsidiary to be designated as an Unrestricted Subsidiary) of the fair market value of the net assets of such Restricted Subsidiary of the Company at the time that such Restricted Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company will be deemed to continue to have a permanent Investment in an Unrestricted Subsidiary in an amount (if positive) equal to (a) the Companys Investment in such Subsidiary at the time of such redesignation less (b) the portion (proportionate to the Companys equity interest in such Subsidiary) of the fair market value of the net assets (as conclusively determined by the Board of Directors of the Company in good faith) of such Subsidiary at the time that such Subsidiary is so redesignated a Restricted Subsidiary; and any property transferred to or from an Unrestricted Subsidiary will be valued at its fair market value at the time of such transfer, in each case as determined in good faith by the Board of Directors of the Company.

(2)

If the Company or a Restricted Subsidiary transfers, conveys, sells, leases or otherwise disposes of Voting Stock of a Restricted Subsidiary such that such Subsidiary is no longer a Restricted Subsidiary, then the Investment of the Company in such Person shall be deemed to have been made as of the date of such transfer or other disposition in an amount equal to the fair market value (as determined by the Board of Directors of the Issuer in good faith). Investment Grade Securities means: (1) securities issued by the U.S. government or by any agency or instrumentality thereof (other than Cash Equivalents) or directly and fully guaranteed or insured by the U.S. government and in each case with maturities not exceeding two years from the date of the acquisition; securities issued by or a member of the European Union as of January 1, 2004, or any agency or instrumentality thereof (other than Cash Equivalents) or directly and fully guaranteed or insured by a member of the European Union as of January 1, 2004, and in each case with maturities not exceeding two years from the date of the acquisition; debt securities or debt instruments with a rating of A or higher by Standard & Poors Ratings Services or A-2 or higher by Moodys Investors Service, Inc. or the equivalent of such rating by such rating organization, or if no rating of Standard & Poors Ratings Services or Moodys Investors Service, Inc. then exists, the equivalent of such rating by any other nationally recognized securities ratings agency, by excluding any debt securities or instruments constituting loans or advances among the Company and its Subsidiaries; investments in any fund that invests exclusively in investments of the type described in clauses (1) through (3) which fund may also hold immaterial amounts of cash and Cash Equivalents pending investment and/or distribution; and corresponding instruments in countries other than those identified in clauses (1) and (2) above customarily utilized for high quality investments and, in each case, with maturities not exceeding two years from the date of the acquisition.

(2)

(3)

(4)

(5)

225

Investment Grade Status shall occur when the Notes receive both of the following: (1) (2) a rating of Baa3 (or the equivalent) or higher from Moodys Investors Service, Inc. or any of its successors or assigns; and a rating of BBB- (or the equivalent) or higher from Standard & Poors Ratings Services, or any of its successors or assigns,

in each case, with a stable outlook from such rating agency. Issue Date means the date of first issuance of the Notes. Liberty means Liberty Global, Inc., a Delaware corporation, and any successor (by merger, consolidation, transfer, conversion of legal form or otherwise) to all or substantially all of its assets. Lien means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof). Management Fees means any management, consultancy or similar fees payable by the Company or any Restricted Subsidiary. Net Available Cash from an Asset Disposition means cash payments received (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise and net proceeds from the sale or other disposition of any securities received as consideration, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring person of Indebtedness or other obligations relating to the properties or assets that are the subject of such Asset Disposition or received in any other non-cash form) therefrom, in each case net of: (1) all legal, accounting, investment banking, title and recording tax expenses, commissions and other fees and expenses Incurred, and all federal, state, provincial, foreign and local taxes required to be paid or accrued as a liability under IFRS (after taking into account any available tax credits or deductions and any tax sharing agreements), as a consequence of such Asset Disposition; all payments made on any Indebtedness which is secured by any assets subject to such Asset Disposition, in accordance with the terms of any Lien upon such assets, or which must by its terms, or in order to obtain a necessary consent to such Asset Disposition, or by applicable law be repaid out of the proceeds from such Asset Disposition; all distributions and other payments required to be made to minority interest holders in Subsidiaries or joint ventures as a result of such Asset Disposition; and the deduction of appropriate amounts to be provided by the seller as a reserve, in accordance with IFRS, against any liabilities associated with the assets disposed of in such Asset Disposition and retained by the Company or any Restricted Subsidiary after such Asset Disposition.

(2)

(3) (4)

Net Cash Proceeds, with respect to any issuance or sale of Capital Stock, means the cash proceeds of such issuance or sale net of attorneys fees, accountants fees, underwriters or placement agents fees, listing fees, discounts or commissions and brokerage, consultant and other fees and charges actually Incurred in connection with such issuance or sale and net of taxes paid or payable as a result of such issuance or sale (after taking into account any available tax credit or deductions and any tax sharing arrangements). Non-Recourse Debt means Indebtedness of a Person: (1) as to which neither the Company nor any Restricted Subsidiary (a) provides any guarantee or credit support of any kind (including any undertaking, guarantee, indemnity, agreement or instrument that would constitute Indebtedness) or (b) is directly or indirectly liable (as a guarantor or otherwise); no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness of the Company or any Restricted Subsidiary to declare a default under such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and

(2)

226

(3)

the explicit terms of which provide there is no recourse against any of the assets of the Company or its Restricted Subsidiaries.

Officer of any Person means the Chairman of the Board of Directors, the Chief Executive Officer, the Chief Financial Officer, any Managing Director, the Treasurer or the Secretary of such Person. Officers Certificate means a certificate signed by two Officers or by an Officer and either an Assistant Treasurer or an Assistant Secretary of the Company. Opinion of Counsel means a written opinion from legal counsel who is reasonably acceptable to the Trustee. The counsel may be an employee of or counsel to the Company or the Trustee. Parent means the Ultimate Parent, any Subsidiary of the Ultimate Parent of which the Company is a Subsidiary on the Issue Date and any other Person of which the Company at any time is or becomes a Subsidiary after the Issue Date. Parent Expenses means: (1) costs (including all professional fees and expenses) Incurred by any Parent in connection with reporting obligations under or otherwise Incurred in connection with compliance with applicable laws, applicable rules or regulations of any governmental, regulatory or self-regulatory body or stock exchange, the Indenture or any other agreement or instrument relating to Indebtedness of the Company or any Restricted Subsidiary; indemnification obligations of any Parent owing to directors, officers, employees or other Persons under its charter or by-laws or pursuant to written agreements with any such Person with respect to its ownership or the Company or the conduct of the business of the Company and its Restricted Subsidiaries; obligations of any Parent in respect of director and officer insurance (including premiums therefor) with respect to its ownership or the Company or the conduct of the business of the Issuer and its Restricted Subsidiaries; and general corporate overhead expenses, including professional fees and expenses and other operational expenses of any Parent related to the ownership or operation of the business of the Company or any of its Restricted Subsidiaries, including acquisitions by the Company or its Subsidiaries permitted hereunder (whether or not successful),

(2)

(3)

(4)

in each case, to the extent such costs, obligations and/or expenses are not paid by another Subsidiary of such Parent. Pari Passu Indebtedness means Indebtedness of the Company that ranks equally or junior in right of payment with the Notes. Permitted Asset Swap means the concurrent purchase and sale or exchange of related business assets or a combination of related business, cash and Cash Equivalents between the Company or any of its Restricted Subsidiaries and another Person. Permitted Business means any business: (1) that consists of the upgrade, construction, creation, development, marketing, acquisition (to the extent permitted under this Indenture), operation, utilization and maintenance of networks that use existing or future technology for the transmission, reception and delivery of voice, video and/or other data (including networks that transmit, receive and/or deliver services such as multi-channel television and radio, programming, telephony, Internet services and content, high speed data transmission, video, multi-media and related activities); or that supports, is incidental to or is related to any such business; or that comprises being a Holding Company of one or more persons engaged in such business.

(2) (3)

227

Permitted Collateral Liens means: (1) Liens on the Collateral arising by operation of law that are described in one or more of clauses (4), (5) and (10) of the definition of Permitted Liens and that, in each case, would not materially interfere with the ability of the Security Trustee to enforce the Security Interest in the Collateral; Liens on the Collateral to secure (a) any Additional Notes, (b) Senior Indebtedness of the Company or any Guarantor that is permitted to be Incurred under the first paragraph of the covenant described under Certain Covenants Limitation on Indebtedness or clauses (1), (3), or (12) (in the case of (12), to the extent such Guarantee is in respect of Indebtedness otherwise permitted to be secured and specified in this definition of Permitted Collateral Liens) of the second paragraph of the covenant described under Certain Covenants Limitation on Indebtedness, (c) Hedging Obligations Incurred by the Company or any Subsidiary Guarantor for bona fide hedging purposes (as determined in good faith by the Board of Directors or senior management of the Company) in respect of the Notes, Senior Notes, Indebtedness to the extent such Indebtedness is secured with a Permitted Collateral Lien pursuant to clause (2) of this definition of Permitted Collateral Liens, Indebtedness of the type that can be secured by a Permitted Collateral Lien pursuant to clause (3) of this definition of Permitted Collateral Liens below or Indebtedness incurred under clause (17) of the second paragraph of the covenant described under Certain Covenants Limitation on Indebtedness and in the case of each of the foregoing substantially correspond in terms of notional amount, currencies and interest rates, as applicable, to such Notes, Senior Notes and such other Indebtedness and (d) any Refinancing Indebtedness in respect of Indebtedness referred to in the foregoing clauses (a), (b) and (c); provided, however, that (i) such Lien ranks equal to all other Liens on such Collateral securing Senior Indebtedness of such Issuer or such Guarantor, as applicable, if such Indebtedness is Senior Indebtedness of such Issuer or such Subsidiary Guarantor, as applicable (except that Indebtedness incurred under clause (1) of the second paragraph of the covenant described under Certain Covenants Limitations on Indebtedness or Hedging Obligations incurred pursuant to the preceding clause (c) of this definition of Permitted Collateral Liens may receive priority as to enforcement proceeds from such Collateral) and (ii) the holders of Indebtedness referred to in this clause (2) (or their duly authorized Representatives) shall accede to the Intercreditor Agreement (as may be amended to reflect such Senior Indebtedness) or enter into an Additional Intercreditor Agreement, in either case, as permitted above under the caption Certain Covenants Additional Intercreditor Agreement; and Liens on the Collateral constituting a pledge of the Capital Stock of Unitymedia Management, Unitymedia Verwaltung and the Company to secure (a) any Indebtedness of Unitymedia or any Parent Guarantor that is permitted to be guaranteed by the Issuers or any Guarantor pursuant to clause (15) of the second paragraph of the covenant described under Certain Covenants Limitations on Indebtedness, and (b) any Refinancing Indebtedness in respect of Indebtedness referred to in the foregoing clause (a); provided, however, that (i) such Lien ranks junior to all Liens on such Collateral securing the Notes and Guarantees on substantially the same terms as the Liens on such Collateral rank with respect to the Senior Notes and guarantees thereof and (ii) the holders of Indebtedness referred to in this clause (1) (or their duly authorized Representatives) shall accede to the Intercreditor Agreement (as may be amended to reflect such Indebtedness) or enter into an Additional Intercreditor Agreement, in either case, as permitted above under the caption Certain Covenants Additional Intercreditor Agreement.

(2)

(3)

Permitted Holders means, collectively, (1) Liberty, (2) any Affiliate or Related Person of a Permitted Holder described in clause (1) above, and any successor to such Permitted Holder, Affiliate, or Related Person and (3) any Person who is acting as an underwriter in connection with any public or private offering of Capital Stock of the Company, acting in such capacity. Permitted Investment means an Investment by the Company or any Restricted Subsidiary in: (1) (2) the Issuer or a Restricted Subsidiary (other than a Receivables Entity) or a Person which will, upon the making of such Investment, become a Restricted Subsidiary (other than a Receivables Entity); another Person if as a result of such Investment such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all its assets to, the Company or a Restricted Subsidiary (other than a Receivables Entity); cash and Cash Equivalents or Investment Grade Securities; receivables owing to the Company or any Restricted Subsidiary created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided,

(3) (4)

228

however, that such trade terms may include such concessionary trade terms as the Company or any such Restricted Subsidiary deems reasonable under the circumstances; (5) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business; loans or advances to employees made in the ordinary course of business consistent with past practices of the Company or such Restricted Subsidiary; Capital Stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Company or any Restricted Subsidiary, or as a result of foreclosure, perfection or enforcement of any Lien, or in satisfaction of judgments or pursuant to any plan of reorganization or similar arrangement including upon the bankruptcy or insolvency of a debtor; Investments made as a result of the receipt of non-cash consideration from a sale or other disposition of property or assets, including without limitation an Asset Disposition, in each case, that was made in compliance with Certain Covenants Limitation on Sales of Assets and Subsidiary Stock; Investments in existence on, or made pursuant to legally binding commitments in existence on, the Issue Date;

(6)

(7)

(8)

(9)

(10) Currency Agreements and Interest Rate Agreements and related Hedging Obligations, which transactions or obligations are Incurred in compliance with Certain Covenants Limitation on Indebtedness; (11) Investments by the Company or any of its Restricted Subsidiaries, together with all other Investments pursuant to this clause (11), in an aggregate amount at the time of such Investment not to exceed 2.0% of Total Assets at any one time, provided that, if an Investment is made pursuant to this clause in a Person that is not a Restricted Subsidiary and such Person subsequently becomes a Restricted Subsidiary or is subsequently designated a Restricted Subsidiary pursuant to the covenant described under Certain Covenants Limitation on Restricted Payments, such Investment shall thereafter be deemed to have been made pursuant to clause (1) or (2) of the definition of Permitted Investments and not this clause; (12) Investments by the Company or a Restricted Subsidiary in a Receivables Entity or any Investment by a Receivables Entity in any other Person, in each case, in connection with a Qualified Receivables Transaction, provided, however, that any Investment in any such Person is in the form of a Purchase Money Note, or any equity interest or interests in Receivables and related assets generated by the Issuer or a Restricted Subsidiary and transferred to any Person in connection with a Qualified Receivables Transaction or any such Person owning such Receivables; (13) guarantees issued in accordance with Certain Covenants Limitation on Indebtedness; (14) pledges or deposits (x) with respect to leases or utilities provided to third parties in the ordinary course of business or (y) otherwise described in the definition of Permitted Liens or made in connection with Liens permitted under the covenant described under Certain Covenants Limitation on Liens; (15) the Notes; (16) so long as no Default or Event of Default of the type specified in clause (1) or (2) under Events of Default has occurred and is continuing, (a) minority Investments in any Person engaged in a Permitted Business and (b) Investments in joint ventures that conduct a Permitted Business to the extent that, after giving pro forma effect to any such Investment, the Consolidated Leverage Ratio for the Company and its Restricted Subsidiaries would not exceed 4.00 to 1.00; (17) any Investment to the extent made using as consideration Capital Stock of the Company (other than Disqualified Stock), Subordinated Shareholder Loans or Capital Stock of any Parent; and

229

(18) Investments made after the Issue Date and prior to the Acquisition Date to the extent such Investments are not prohibited under the Share Purchase Agreement; provided, that such Investments were not made at the request of, or consented to by, the ultimate Parent or any of its Affiliates. Permitted Liens means: (1) (2) Liens on Receivables and related assets of the type described in the definition of Qualified Receivables Transaction Incurred in connection with a Qualified Receivables Transaction; pledges or deposits by such Person under workmens compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or United States government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import or customs duties or for the payment of rent, in each case Incurred in the ordinary course of business; Liens imposed by law, including carriers, warehousemens, mechanics landlords, materialmens and repairmens or other like Liens, in each case for sums not yet due or being contested in good faith by appropriate proceedings if a reserve or other appropriate provisions, if any, as shall be required by IFRS, shall have been made in respect thereof; Liens for taxes, assessments or other governmental charges not yet subject to penalties for non-payment or which are being contested in good faith by appropriate proceedings provided appropriate reserves required pursuant to IFRS have been made in respect thereof; Liens in favor of issuers of surety or performance bonds or letters of credit or bankers acceptances issued pursuant to the request of and for the account of such Person in the ordinary course of its business; provided, however, that such letters of credit do not constitute Indebtedness; encumbrances, ground leases, easements or reservations of, or rights of others for, licenses, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning, building codes or other restrictions (including, without limitation, minor defects or irregularities in title and similar encumbrances) as to the use of real properties or Liens incidental to the conduct of the business of the Company and its Restricted Subsidiaries or to the ownership of its properties which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of the Company and its Restricted Subsidiaries; Liens securing Hedging Obligations so long as the related Indebtedness is, and is permitted to be under the Indenture, secured by a Lien on the same property securing such Hedging Obligation; leases, licenses, subleases and sublicenses of assets (including, without limitation, real property and intellectual property rights) which do not materially interfere with the ordinary conduct of the business of the Company or any of its Restricted Subsidiaries; Liens arising out of judgments, decrees, orders or awards not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment, decree, order or award have not been finally terminated or the period within which such proceedings may be initiated has not expired;

(3)

(4)

(5)

(6)

(7) (8)

(9)

(10) Liens for the purpose of securing the payment of all or a part of the purchase price of, or Capitalized Lease Obligations, purchase money obligations or other payments Incurred to finance the acquisition, improvement or construction of, assets or property acquired or constructed in the ordinary course of business provided that: (a) the aggregate principal amount of Indebtedness secured by such Liens is otherwise permitted to be Incurred under the Indenture and does not exceed the cost of the assets or property so acquired or constructed; and such Liens are created within 180 days of construction or acquisition of such assets or property and do not encumber any other assets or property of the Company or any Restricted Subsidiary other than such assets or property and assets affixed or appurtenant thereto;

(b)

230

(11) Liens arising solely by virtue of any statutory or common law provisions relating to bankers Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a depositary institution; provided that such deposit account is not intended by the Company or any Restricted Subsidiary to provide collateral to the depository institution; (12) Liens arising from United States Uniform Commercial Code financing statement filings (or similar filings in other applicable jurisdictions) regarding operating leases entered into by the Issuer and its Restricted Subsidiaries in the ordinary course of business; (13) Liens existing on, or provided for under written arrangements existing on, the Issue Date; (14) Liens on property, other assets or shares of stock of a Person at the time such Person becomes a Restricted Subsidiary; provided, however, that such Liens are not created, Incurred or assumed in connection with, or in contemplation of, such other Person becoming a Restricted Subsidiary; provided further, however, that any such Lien may not extend to any other property owned by the Company or any other Restricted Subsidiary; (15) Liens on property at the time the Company or a Restricted Subsidiary acquired the property, including any acquisition by means of a merger or consolidation with or into any Restricted Subsidiary; provided, however, that such Liens are not created, Incurred or assumed in connection with, or in contemplation of, such acquisition; provided further, however, that such Liens may not extend to any other property owned by the Company or such Restricted Subsidiary; (16) Liens securing Indebtedness or other obligations of a Restricted Subsidiary owing to an Issuer, the Company or another Restricted Subsidiary; (17) Permitted Collateral Liens; (18) Liens securing Refinancing Indebtedness Incurred to refinance Indebtedness that was previously so secured, provided that any such Lien is limited to all or part of the same property or assets (plus improvements, accessions, proceeds or dividends or distributions in respect thereof) that secured (or, under the written arrangements under which the original Lien arose, could secure) the Indebtedness being refinanced or is in respect of property that is the security for a Permitted Lien hereunder; (19) Liens securing the Notes or the Subsidiary Guarantees; (20) Liens on Capital Stock or other securities of any Unrestricted Subsidiary that secure Indebtedness or other obligations of such Unrestricted Subsidiary; (21) any interest or title of a lessor under any Capitalized Lease Obligations or operating leases; (22) any encumbrance or restriction (including, but not limited to, put and call arrangements) with respect to Capital Stock of any joint venture or similar arrangement pursuant to any joint venture or similar agreement; (23) Liens over rights under loan agreements relating to, or over notes or similar instruments evidencing, the on-loan of proceeds received by a Restricted Subsidiary from the issuance of Indebtedness, which Liens are created to secure payment of such Indebtedness; and (24) Liens Incurred with respect to obligations that do not exceed 30.0 million at any time outstanding. Person means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company, government or any agency or political subdivision hereof or any other entity. Preferred Stock, as applied to the Capital Stock of any corporation, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such corporation, over shares of Capital Stock of any other class of such corporation.

231

Pro forma EBITDA means, for any period, the Consolidated EBITDA of the Company and its Restricted Subsidiaries, provided, however, that for the purposes of calculating Pro forma EBITDA for such period, if, as of such date of determination: (1) since the beginning of such period the Company or any Restricted Subsidiary will have made any Asset Disposition or disposed of any company, any business, or any group of assets constituting an operating unit of a business (any such disposition, a Sale) or if the transaction giving rise to the need to calculate the Consolidated Leverage Ratio is such a Sale, Pro forma EBITDA for such period will be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the assets which are the subject of such Sale for such period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such period; since the beginning of such period the Company or any Restricted Subsidiary (by merger or otherwise) will have made an Investment in any Person that thereby becomes a Restricted Subsidiary, or otherwise acquires any company, any business, or any group of assets constituting an operating unit of a business (any such Investment or acquisition, a Purchase) including any such Purchase occurring in connection with a transaction causing a calculation to be made hereunder, Consolidated EBITDA for such period will be calculated after giving pro forma effect thereto as if such Purchase occurred on the first day of such period; and since the beginning of such period any Person (that became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period) will have made any Sale or any Purchase that would have required an adjustment pursuant to clause (1) or (2) above if made by the Company or a Restricted Subsidiary since the beginning of such period, Consolidated EBITDA for such period will be calculated after giving pro forma effect thereto as if such Sale or Purchase occurred on the first day of such period.

(2)

(3)

For purposes of this definition and the definition of Consolidated Leverage Ratio, (i) whenever pro forma effect is to be given to any transaction or calculation under this definition, the pro forma calculations will be as determined in good faith by a responsible financial or accounting officer of the Company (including without limitation in respect of anticipated expense and cost reductions) and (ii) in determining the amount of Indebtedness outstanding on any date of determination, pro forma effect shall be given to any Incurrence, repayment, repurchase, defeasance or other acquisition, retirement or discharge of Indebtedness on such date. Public Debt means any Indebtedness consisting of bonds, debentures, notes or other similar debt securities issued in (1) a public offering registered under the Securities Act or (2) a private placement to institutional investors that is underwritten for resale in accordance with Rule 144A or Regulation S under the Securities Act, whether or not it includes registration rights entitling the holders of such debt securities to registration thereof with the SEC for public resale. The term Public Debt (a) shall not include the Notes (or any Additional Notes) and (b) for the avoidance of doubt, shall not be construed to include any Indebtedness issued to institutional investors in a direct placement of such Indebtedness that is not underwritten by an intermediary (it being understood that, without limiting the foregoing, a financing that is distributed to not more than ten Persons (provided that multiple managed accounts and affiliates of any such Persons shall be treated as one Person for the purposes of this definition) shall be deemed not to be underwritten), or any Indebtedness under the Revolving Credit Facility, commercial bank or similar Indebtedness, Capitalized Lease Obligation or recourse transfer of any financial asset or any other type of Indebtedness incurred in a manner not customarily viewed as a securities offering. Public Offering Expenses means expenses Incurred by any Parent in connection with any public offering of Capital Stock or Indebtedness (whether or not successful): (1) where the net proceeds of such offering are intended to be received by or contributed or loaned to the Company or a Restricted Subsidiary; or in a prorated amount of such expenses in proportion to the amount of such net proceeds intended to be so received, contributed or loaned; or otherwise on an interim basis prior to completion of such offering so long as any Parent shall cause the amount of such expenses to be repaid to the Company or the relevant Restricted Subsidiary out of the proceeds of such offering promptly if completed,

(2)

(3)

232

in each case, to the extent such expenses are not paid by another Subsidiary such Parent. Purchase Money Note means a promissory note of a Receivables Entity evidencing the deferred purchase price of Receivables (and related assets) and/or a line of credit, which may be irrevocable, from the Issuer or any Restricted Subsidiary in connection with a Qualified Receivables Transaction with a Receivables Entity, which deferred purchase price or line is repayable from cash available to the Receivables Entity, other than amounts required to be established as reserves pursuant to agreements, amounts paid to investors in respect of interest, principal and other amounts owing to such investors and amounts owing to such investors and amounts paid in connection with the purchase of newly generated Receivables. Qualified Receivables Transaction means any transaction or series of transactions that may be entered into by the Company or any of its Restricted Subsidiaries pursuant to which the Company or any of its Restricted Subsidiaries may sell, convey or otherwise transfer to (1) a Receivables Entity (in the case of a transfer by the Company or any of its Restricted Subsidiaries) and (2) any other Person (in the case of a transfer by a Receivables Entity), or may grant a security interest in, any Receivables (whether now existing or arising in the future) of the Company or any of its Restricted Subsidiaries, and any assets related thereto including, without limitation, all collateral securing such Receivables, all contracts and all guarantees or other obligations in respect of such accounts receivable, the proceeds of such Receivables and other assets which are customarily transferred, or in respect of which security interests are customarily granted, in connection with asset securitization involving Receivables. Receivable means a right to receive payment arising from a sale or lease of goods or the performance of services by a Person pursuant to an arrangement with another Person pursuant to which such other Person is obligated to pay for goods or services under terms that permit the purchase of such goods and services on credit and shall include, in any event, any items of property that would be classified as an account, chattel paper, payment intangible or instrument under the Uniform Commercial Code as in effect in the State of New York and any supporting obligations as so defined. Receivables Entity means a Wholly Owned Subsidiary (or another Person in which the Company or any Restricted Subsidiary makes an Investment and to which the Company or any Restricted Subsidiary transfers Receivables and related assets) which engages in no activities other than in connection with the financing of Receivables and which is designated by the Board of Directors of the Company (as provided below) as a Receivables Entity: (1) no portion of the Indebtedness or any other obligations (contingent or otherwise) of which: (a) is guaranteed by the Company or any Restricted Subsidiary (excluding guarantees of Obligations (other than the principal of, and interest on, Indebtedness) pursuant to Standard Securitization Undertakings); is recourse to or obligates the Company or any Restricted Subsidiary of the Issuer in any way other than pursuant to Standard Securitization Undertakings; or subjects any property or asset of the Company or any Restricted Subsidiary, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings;

(b) (c)

(2)

with which neither the Company nor any Restricted Subsidiary has any material contract, agreement, arrangement or understanding (except in connection with a Purchase Money Note or Qualified Receivables Transaction) other than on terms no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of the Company, other than fees payable in the ordinary course of business in connection with servicing Receivables; and to which neither the Company nor any Restricted Subsidiary has any obligation to maintain or preserve such entitys financial condition or cause such entity to achieve certain levels of operating results.

(3)

Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by promptly filing with the Trustee a certified copy of the resolution of the Board of Directors of the Issuer giving effect to such designation and an Officers Certificate certifying that such designation complied with the foregoing conditions.

233

Refinancing Indebtedness means Indebtedness that is Incurred to refund, refinance, replace, exchange, renew, repay or extend (including pursuant to any defeasance or discharge mechanism) (collectively, refinance, refinances, and refinanced shall have a correlative meaning) any Indebtedness existing on the date of the Indenture or Incurred in compliance with the Indenture (including Indebtedness of the Company that refinances Indebtedness of any Restricted Subsidiary and Indebtedness of any Restricted Subsidiary that refinances Indebtedness of another Restricted Subsidiary) including Indebtedness that refinances Refinancing Indebtedness, provided, however, that: (1) (a) if the Stated Maturity of the Indebtedness being refinanced is earlier than the Stated Maturity of the Notes, the Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being refinanced or (b) if the Stated Maturity of the Indebtedness being refinanced is later than the Stated Maturity of the Notes, the Refinancing Indebtedness has a Stated Maturity later than the Stated Maturity of the Notes; the Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Average Life of the Indebtedness being refinanced; such Refinancing Indebtedness is Incurred in an aggregate principal amount (or if issued with original issue discount, an aggregate issue price) that is equal to or less than the sum of the aggregate principal amount (or if issued with original issue discount, the aggregate accreted value) then outstanding of the Indebtedness being refinanced (plus, without duplication, any additional Indebtedness Incurred to pay interest or premiums required by the instruments governing such existing Indebtedness and costs, expenses and fees Incurred in connection therewith); and in the case of the refinancing of any Subordinated Obligation, such Refinancing Indebtedness is subordinated in right of payment to the Notes on terms at least as favorable to the holders of the Notes as those contained in the documentation governing the Subordinated Obligation being extended, refinanced, renewed, replaced, defeased or refunded.

(2)

(3)

(4)

Related Business means any business that is the same as or related, ancillary or complementary to, any of the businesses of the Company and its Restricted Subsidiaries on the Issue Date. Related Person with respect to any Permitted Holder, means: (1) (2) any controlling equity holder or majority (or more) owned Subsidiary of such Permitted Holder; or in the case of an individual, any spouse, family member or relative of such individual, any trust or partnership for the benefit of one or more of such individual and any such spouse, family member or relative, or the estate, executor, administrator, committee or beneficiaries of any thereof; or any trust, corporation, partnership or other Person for which one or more of the Permitted Holders and other Related Persons of any thereof constitute the beneficiaries, stockholders, partners or owners thereof, or Persons beneficially holding in the aggregate a majority (or more) controlling interest therein.

(3)

Related Taxes means: (1) any taxes, including but not limited to sales, use, transfer, rental, ad valorem, value added, stamp, property, consumption, franchise, license, capital, registration, business, customs, net worth, gross receipts, excise, occupancy, intangibles or similar taxes (other than (x) taxes measured by income and (y) withholding imposed on payments made by any Parent), required to be paid by any Parent by virtue of its: (a) being organized or having Capital Stock outstanding (but not by virtue of owning stock or other equity interests of any corporation or other entity other than the Company or any of the Companys Subsidiaries), or being a holding company parent of the Company or any of the Companys Subsidiaries, or receiving dividends from or other distributions in respect of the Capital Stock of the Company, or any of the Companys Subsidiaries, or

(b) (c)

234

(d) (e)

having guaranteed any obligations of the Company or any Subsidiary of the Company, or having made any payment in respect to any of the items for which the Company is permitted to make payments to any Parent pursuant to Certain Covenants Limitation on Restricted Payments,

in each case, to the extent such taxes are not paid by another Subsidiary such Parent; or (2) any taxes measured by income for which any Parent is liable up to an amount not to exceed with respect to such taxes the amount of any such taxes that the Issuer and its Subsidiaries would have been required to pay on a separate company basis or on a consolidated basis if the Company and its Subsidiaries had paid tax on a consolidated, combined, group, affiliated or unitary basis on behalf of an affiliated group consisting only of the Company and its Subsidiaries and any taxes imposed by way of withholding on payments made by one Parent to another Parent on any financing that is provided, directly or indirectly in relation to the Company and its Subsidiaries (reduced by any taxes measured by income actually paid by the v and its Subsidiaries).

Related Transactions means (1) any payment by Bidco pursuant to the Share Purchase Agreement on the Acquisition Date, as amended or waived (other than any amendment or waiver materially adverse to the holders of the Notes), (2) any intercompany Indebtedness by the Issuer to any member of the Unitymedia Group as part of the Debt Pushdown in order to refinance in full each of the Existing Senior Secured, the Existing Senior Notes and the Existing Term Loan (provided that such intercompany Indebtedness is extinguished upon completion of the Debt Pushdown), (3) the assumption by Unitymedia of all of Bidcos obligations under the Senior Notes and the assumption by Unitymedia Hessen and Unitymedia NRW of all of Bidcos obligations under the Notes (which assumptions may be in repayment of any loans or advances or return of any Investment contemplated in clause (2) above), (4) the other transactions contemplated by the Debt Pushdown as described in this Offering Memorandum, and (5) payment of fees, costs and expenses in connection with the Acquisition and the Debt Pushdown as set forth under the caption The Transactions. Representative means any trustee, agent or representative (if any) for an issue of Senior Indebtedness or the provider of Senior Indebtedness (if provided on a bilateral basis), as the case may be. Restricted Investment means any Investment other than a Permitted Investment. Restricted Subsidiary means any Subsidiary of the Company other than an Unrestricted Subsidiary. Revolving Credit Facility means the senior secured revolving credit facility agreement to be entered into on or before December 31, 2009 as described above under Description of Other Indebtedness Revolving Credit Facility, as amended or supplemented from time to time. Sale/Leaseback Transaction means an arrangement relating to property now owned or hereafter acquired whereby the Issuer or a Restricted Subsidiary transfers such property to a Person and the Company or a Restricted Subsidiary leases it from such Person. SEC means the United States Securities and Exchange Commission. Securities Act means the United States Securities Act of 1933, as amended. Security Documents means, prior to the Debt Pushdown, the Share Pledge of the Capital Stock of Bidco and the Senior Secured Notes Escrow and Security Agreement, and, upon consummation of the Debt Pushdown, Share Pledges or Interest Pledges of Capital Stock of Unitymedia, Unitymedia Management, Unitymedia Hessen, Unitymedia NRW and Unitymedia Verwaltung, various Account Pledge Agreements, various Global Assignment Agreements, and any other agreement or document that proceeds for a Lien over any Collateral for the benefit of the holders of the Notes in each case to the extent delivered in connection with the Revolving Credit Facility, in each case as amended or supplemented from time to time. Security Trustee means Credit Suisse, London Branch or an Affiliate thereof. Senior Indebtedness means, whether outstanding on the Issue Date or thereafter Incurred, all amounts payable by the under or in respect of all other Indebtedness of any Issuer or any Guarantor, including premiums and accrued and unpaid interest (including interest accruing on or after the filing of any petition in bankruptcy or

235

for reorganization relating to such Issuer or such Guarantor at the rate specified in the documentation with respect thereto whether or not a claim for post filing interest is allowed in such proceeding) and fees relating thereto; provided, however, that Senior Indebtedness will not include: (1) (2) (3) (4) (5) any Indebtedness Incurred in violation of the Indenture; any obligation of the Company to any Restricted Subsidiary or any obligation of any Guarantor to the Company or any Restricted Subsidiary; any liability for taxes owed or owing by the Company or any Restricted Subsidiary; any accounts payable or other liability to trade creditors arising in the ordinary course of business (including guarantees thereof or instruments evidencing such liabilities); any Indebtedness, guarantee or obligation of the Company or any Guarantor that is expressly subordinate or junior in right of payment to any other Indebtedness, guarantee or obligation of the Company or such Guarantor, including, without limitation, any Subordinated Obligation; or any Capital Stock.

(6)

Senior Indenture means the indenture governing the Senior Notes to be dated as of the Issue Date, inter alia, among Bidco, and Bank of New York Mellon, as trustee. as amended or supplemented from time to time. Senior Notes means the 665 million aggregate principal amount of 9 5 8% Senior Notes due 2019 issued on the Issue Date. Share Purchase Agreement refers to that certain share purchase agreement dated as of November 13, 2009 by and between Unity Media S.C.A., BidCo and Liberty Global, Inc., as amended or supplemented from time to time as permitted hereunder. SLA Agreements or SLAs means the service level agreements (including the term sheets attached thereto and included therein) with Deutsche Telekom AG and its Affiliates and with Nortel GmbH and its Affiliates in effect on the Issue Date (each, an Existing Service Level Agreement), including agreements for the lease of cable duct and tower space and other premises, the use of fiber optic transmission systems and other infrastructure components and services and the supply of electrical power, as well as any additional or other service level agreements or any replacement, amendment, supplement or waiver of any such service level agreement; provided, however, that any additional or other service level agreement shall be of a type similar to one or more Existing Service Level Agreements and any such service level agreement as replaced, amended, supplemented or waived shall have terms that are similar to an Existing Service Level Agreement or any such additional or other service level agreement. Significant Subsidiary means any Restricted Subsidiary that would be a Significant Subsidiary of the Issuer within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC. Standard Securitization Undertakings means representations, warranties, covenants and indemnities entered into by the Company or any Restricted Subsidiary of the Company which are reasonably customary in securitization of Receivables transactions. Stated Maturity means, with respect to any security, the date specified in such security as the fixed date on which the payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision, but shall not include any contingent obligations to repay, redeem or repurchase any such principal prior to the date originally scheduled for the payment thereof. Subordinated Obligation means, in the case of the Company, any Indebtedness of the Company (whether outstanding on the Issue Date or thereafter Incurred) which is expressly subordinate or junior in right of payment to the Notes pursuant to a written agreement and, in the case of a Guarantor, any Indebtedness of such Guarantor (whether outstanding on the Issue Date or thereafter Incurred) which is expressly subordinate or junior in right of payment to the Subsidiary Guarantee of such Guarantor pursuant to a written agreement. Subordinated Shareholder Loans means Indebtedness of the Company (and any security into which such Indebtedness is convertible or for which it is exchangeable at the option of the holder) issued to and held by any Parent that (either pursuant to its terms or pursuant to an agreement with respect thereto): (1) does not mature or require any amortization, redemption or other repayment of principal or any sinking fund payment prior to the first anniversary of the Stated Maturity of the Notes (other than through conversion or exchange of such Indebtedness into Capital Stock (other than Disqualified Stock) of the Company or any Indebtedness meeting the requirements of this definition); does not require, prior to the first anniversary of the Stated Maturity of the Notes, payment of cash interest, cash withholding amounts or other cash gross-ups, or any similar cash amounts;

(2)

236

(3)

contains no change of control or similar provisions that are effective, and does not accelerate and has no right to declare a default or event of default or take any enforcement action or otherwise require any cash payment prior to the first anniversary of the Stated Maturity or the Notes; does not provide for or require any security interest or encumbrance over any asset of the Company or any of its Restricted Subsidiaries; is subordinated in right of payment to the prior payment in full of the Notes in the event of (a) a total or partial liquidation, dissolution or winding up of the Company, (b) a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property, (c) an assignment for the benefit of creditors or (d) any marshalling of the Companys assets and liabilities; under which the Company may not make any payment or distribution of any kind or character with respect to any obligations on, or relating to, such Subordinated Shareholder Loans if (x) a payment Default on the Notes occurs and is continuing or (y) any other Default under the Indenture occurs and is continuing on the Notes that permits the holders of the Notes to accelerate their maturity and the Company receives notice of such Default from the requisite holders of the Notes, until in each case the earliest of (a) the date on which such Default is cured or waived or (b) 180 days from the date such Default occurs (and only once such notice may be given during any 360 day period); and under which, if the holder of such Subordinated Shareholder Loans receives a payment or distribution with respect to such Subordinated Shareholder Loan (a) other than in accordance with the Indenture or as a result of a mandatory requirement of applicable law or (b) under circumstances described under clauses (5)(a) through (d) above, such holder will forthwith pay all such amounts to the Trustee to be held in trust for application in accordance with the Indenture.

(4) (5)

(6)

(7)

Subsidiary of any Person means (a) any corporation, association or other business entity (other than a partnership, joint venture, limited liability company or similar entity) of which more than 50% of the total ordinary voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof (or persons performing similar functions) or (b) any partnership, joint venture limited liability company or similar entity of which more than 50% of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership interests, as applicable, is, in the case of clauses (a) and (b), at the time owned or controlled, directly or indirectly, by (1) such Person, (2) such Person and one or more Subsidiaries of such Person or (3) one or more Subsidiaries of such Person. Unless otherwise specified herein, each reference to a Subsidiary will refer to a Subsidiary of the Issuer. Total Assets means the consolidated total assets of the Company and its Restricted Subsidiaries as shown on the most recent balance sheet (excluding the footnotes thereto) of the Company. Treasury Rate means the yield to maturity at the time of computation of U.S. Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) which has become publicly available at least two Business Days (but not more than five Business Days) prior to the redemption date (or, if such statistical release is not so published or available, any publicly available source of similar market date selected by the Issuer in good faith)) most nearly equal to the period from the redemption date to December 1, 2012; provided, however, that if the period from the redemption date to December 1, 2012 is not equal to the constant maturity of a U.S. Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by a linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of U.S. Treasury securities for which such yields are given, except that if the period from the redemption date to December 1, 2012 is less than one year, the weekly average yield on actually traded U.S. Treasury securities adjusted to a constant maturity of one year shall be used. UGC means UnitedGlobalCom, Inc., a Delaware corporation, and any successor (by merger, consolidation, transfer, conversion of legal form or otherwise) to all or substantially all of its assets. Ultimate Parent means Liberty. Unitymedia Group means Unitymedia and its Subsidiaries. Unrestricted Subsidiary means: (1) (2) any Subsidiary of the Company that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors of the Issuer in the manner provided below; and any Subsidiary of an Unrestricted Subsidiary.

237

The Board of Directors of the Company may designate any Subsidiary of the Company (including any newly acquired or newly formed Subsidiary or a Person becoming a Subsidiary through merger or consolidation or Investment therein) to be an Unrestricted Subsidiary only if: (1) such Subsidiary or any of its Subsidiaries does not own any Capital Stock or Indebtedness of or have any Investment in, or own or hold any Lien on any property of, any other Subsidiary of the Company which is not a Subsidiary of the Subsidiary to be so designated or otherwise an Unrestricted Subsidiary; all the Indebtedness of such Subsidiary and its Subsidiaries shall, at the date of designation, and will at all times thereafter, consist of Non-Recourse Debt; such designation and the Investment of the Company in such Subsidiary complies with Certain Covenants Limitation on Restricted Payments; and on the date such Subsidiary is designated an Unrestricted Subsidiary, such Subsidiary is not a party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary with terms substantially and materially less favorable to the Company than those that might have been obtained from Persons who are not Affiliates of the Company.

(2)

(3)

(4)

Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by promptly filing with the Trustee a resolution of the Board of Directors of the Company giving effect to such designation and an Officers Certificate certifying that such designation complies with the foregoing conditions. If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary shall be deemed to be Incurred as of such date. The Board of Directors of the Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that immediately after giving effect to such designation, no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof and either (x) the Issuers could Incur at least 1.00 of additional Indebtedness under the first paragraph of the covenant described under the covenant described under Certain Covenants Limitation on Indebtedness or (y) the Consolidated Leverage Ratio would be lower than it was immediately prior to giving effect to such designation, in each case, on a pro forma basis taking into account such designation. UPC Broadband means UPC Broadband Holding B.V., together with its successors. UPC Exchange Transaction means an exchange offer by UPC Broadband pursuant to which one or more series of UPC Qualified Notes are offered in exchange for all outstanding Notes issued under the Indenture; provided, that (i) no Default or Event of Default has occurred and is continuing at the time any such exchange offer is made or would result therefrom, (ii) holders of a majority in aggregate principal amount of the outstanding Notes have elected to participate in such offer, (iii) for each 1,000 in principal amount of Euro Notes tendered and accepted, each holder tendering such Euro Notes will receive 1,000 in principal amount of UPC Qualified Notes, (iv) for each $1,000 in principal amount of Dollar Notes tendered and accepted, each holder tendering such Dollar Notes will receive $1,000 in principal amount of UPC Qualified Notes, (v) the exchange offer complies with Rule 14e-1 under the Exchange Act and any other applicable securities law or regulation, (vi) UPC Holding accepts for exchange all Notes tendered in such exchange offer and issues the relevant UPC Qualified Notes in exchange therefor, (vii) the exchange offer is open to all holders of the notes on substantially similar terms, (viii) the exchange offer is not conditioned upon holders of the Notes consenting to any amendments to the terms of the notes or the Indenture and (ix) in connection therewith, the Issuer and its Restricted Subsidiaries will become direct or indirect Subsidiaries of UPC Broadband. UPC Holding means UPC Holding B.V, together with its successors. UPC Qualified Notes means (a) senior notes issued by UPC Broadband; provided, that (i) such senior notes will be guaranteed and secured to the same extent that other senior indebtedness of UPC Broadband existing on the date of the UPC Exchange Transaction are guaranteed or secured; provided that in any event such senior notes will be secured to the same extent as UPC Broadbands senior Indebtedness existing on the Issue Date, (ii) the Indebtedness incurred under such senior notes is permitted to be Incurred pursuant to the terms and conditions of any other Indebtedness of UPC Holding and its Subsidiaries outstanding upon consummation of the

238

UPC Exchange Transaction, (iii) the terms and conditions of such senior notes (other than with respect to pricing and redemption) and the indenture governing such senior notes shall be substantially similar to, and in any event no less favorable to the holders of Notes than, the terms and conditions contained in the indentures governing the senior notes of UPC Holding outstanding on the date of the UPC Exchange Transaction, (iv) the interest rate applicable to each series of such senior notes shall not be less than the interest rate applicable to the series of Notes for which they are exchanged, (v) all amounts due and owing on such senior notes will be payable in the same currency as the Notes for which they are exchanged, (vi) the redemption provisions of such senior notes will have at least the remaining call protection applicable to the Notes for which they are exchanged and (vii) the Stated Maturity of such senior notes will be no later than the Stated Maturity of the Notes; or (b) UPC SPV Notes. UPC SPV means a special purpose entity formed for the purpose of issuing UPC SPV Notes and uses, or will use, any cash or non-cash proceeds acquired in exchange for such UPC SPV Notes to provide one or more additional facilities under UPC Broadbands Credit Facilities (to the extent permitted thereby, including pursuant to any amendment thereto) and thereupon, will be a lender under such Credit Facilities. UPC SPV Notes means senior notes issued by UPC SPV; provided, that (i) such senior notes will be secured by substantially all assets of the UPC SPV, including all loans made by the UPC SPV to UPC Broadband under UPC Broadbands Credit Facilities or related rights with respect to the Credit Facilities, (ii) the interest rate applicable to each series of such senior notes shall not be less than the interest rate applicable to the series of Notes for which they are exchanged, (iii) all amounts due and owing on such senior notes will be payable in the same currency as the Notes for which they are exchanged, (iv) the redemption provisions of such senior notes will be at least as favorable to holder of the Notes than the redemption provisions applicable to the Notes for which they are exchanged (determined as if such UPC Qualified Notes had been issued on the Issue Date) and (v) the Stated Maturity of such senior notes will be no later than the Stated Maturity of the Notes. U.S. Government Obligations means direct obligations of, or obligations guaranteed by, the United States of America, and the payment for which the United States pledges its full faith and credit. Voting Stock of a corporation means all classes of Capital Stock of such corporation then outstanding and normally entitled to vote in the election of directors. Wholly Owned Subsidiary means a Restricted Subsidiary of the Company, all of the Capital Stock of which (other than directors qualifying shares or shares required by any applicable law or regulation to be held by a Person other than the Company or another Wholly Owned Subsidiary) is owned by the Company or another Wholly Owned Subsidiary.

239

DESCRIPTION OF THE SENIOR NOTES UPC Germany GmbH (Bidco) will issue the Notes (as defined below) under the Indenture (the Indenture), to be dated as of the Issue Date, between, among others, the Issuer, The Bank of New York Mellon, as trustee (the Trustee) and the Security Trustee. You will find the definitions of capitalized terms used in this description under the heading Certain Definitions. The proceeds of the offering of the Notes sold on the Issue Date will be used by the Issuer, together with the proceeds of the Senior Secured Notes issued on the Issue Date and the Equity Contribution, to acquire (the Acquisition) all of the outstanding Capital Stock of Unitymedia GmbH (Unitymedia), to repay in full the Existing Senior Secured Notes, the Existing Senior Notes and the Existing Term Loan and to cover certain costs and expenses as set forth in this offering memorandum under the caption Use of Proceeds. Pending consummation of the Acquisition, the Initial Purchasers will deposit the net proceeds of this offering of the Notes into a Senior Notes Escrow account (the Senior Notes Escrow Account) pursuant to the terms of a Senior Notes Escrow agreement (the Senior Notes Escrow Agreement) between the Trustee and The Bank of New York Mellon, as Escrow Agent (the Escrow Agent). The Senior Notes Escrow Agreement, including the conditions to the release of the Senior Notes Escrowed Property, are more fully described below under Escrow of Proceeds; Special Mandatory Redemption. In the event the Acquisition is not consummated on or before October 31, 2010 (or upon the occurrence of certain other events), the Notes will be redeemed at a price equal to 101% of the initial issue price of the Notes plus accrued and unpaid interest and additional amounts, if any from the Issue Date (the Special Mandatory Redemption Price). See Senior Notes Escrow of Proceeds; Special Mandatory Redemption. In the event that, on or before October 31, 2010, the Issuer completes the Acquisition, Unitymedia will assume the obligations of Bidco under the Notes and the Indenture pursuant to a supplemental indenture or accession agreement (the Accession Agreement) and each of the Guarantors will execute and deliver to the Trustee a supplemental indenture providing for the guarantee of payment of the Notes, in each case, no later than the timing set forth under the covenant Certain Covenants Completion of Debt Pushdown. Upon consummation of the Debt Pushdown (as defined below), Unitymedia will succeed to, and be substituted for, and may exercise every right and power of, Bidco under the Indenture, and upon such substitution, Bidco will be released from its obligations under the Indenture and the Notes. The term Debt Pushdown means, collectively the following transactions, among others: (1) the assumption by Unitymedia of all of Bidcos obligations under the Notes and the Indenture pursuant to the Accession Agreement; (2) the registration with the appropriate authorities of a duly authorized and executed domination agreement between (i) Bidco and Unitymedia and (ii) Unitymedia Management GmbH (Unitymedia Management) and Unitymedia Hessen Verwaltung GmbH (Unitymedia Verwaltung); (3) the guarantee by each Guarantor of the Issuers obligations under the Notes and the Indenture pursuant to a supplemental indenture to the Indenture as described below under the caption Ranking of the Notes, Guarantees and Security upon Completion of the Debt Pushdown Subsidiary Guarantees; (4) the granting of the security in respect of the Notes described below under caption Ranking of the Notes, Guarantees and Security upon Completion of the Debt Pushdown Security; (5) to the extent the Revolving Credit Facility was not acceded to by Unitymedia Hessen GmbH & Co. KG (Unitymedia Hessen), Unitymedia NRW GmbH (Unitymedia NRW) and the other borrowers and guarantors thereunder and the granting of the security required thereby prior to the Debt Pushdown, then the accession to the Revolving Credit Facility by Unitymedia Hessen, Unitymedia NRW and the other borrowers and guarantors thereunder; (6) the assumption by Unitymedia Hessen and Unitymedia NRW of all of Bidcos obligations under the Senior Secured Notes and the Senior Secured Indenture pursuant to a supplemental indenture or accession agreement and the granting of guarantees and security required thereby; (7) the execution and delivery of the Intercreditor Agreement by the parties thereto; and (8) the repayment, redemption or satisfaction and discharge of all outstanding Indebtedness of Unitymedia and its Subsidiaries under the Existing Senior Secured Notes, the Existing Senior Notes and the Existing Term Loan and the termination of the existing revolving credit facility and the corresponding release of all guarantees and security in respect thereof.

240

For purposes of this description, prior to the completion of the Debt Pushdown, references to the Issuer, we, our and us refer only to Bidco and not to any of its Subsidiaries. After the consummation of the Debt Pushdown, references to the Issuer, we, our and us refer only to Unitymedia and not to any of its Subsidiaries. For the avoidance of doubt, any references to the Issuer in the covenants and related definitions shall be references to Unitymedia and not to any of its Subsidiaries, provided that such covenants will not be applicable until the Acquisition Date. Prior to the consummation of the Debt Pushdown, Bidco will be prohibited from engaging in any business activity or any other activity, other than certain activities related to the Indenture, the Notes and the Acquisition and related transactions. See Limitation on Activities of the Issuer. Prior to the consummation of the Acquisition, we will not control Unitymedia or any of its Subsidiaries, and neither Unitymedia nor any of its Subsidiaries will be subject to the covenants described in this Description of the Senior Notes. The release of the proceeds of the offering of the Notes from the Senior Notes Escrow Account will be subject to certain conditions. See Escrow of Proceeds; Special Mandatory Redemption. Unitymedia and its Subsidiaries will not be subject to the restrictive covenants contained in the Indenture prior to the Acquisition Date and, as such, we cannot assure you that prior to the Acquisition Date Unitymedia will not engage in activities that would otherwise have been prohibited by the Indenture had those covenants been applicable to Unitymedia and its Subsidiaries after the Issue Date and prior to the Acquisition Date. Prior to consummation of the Acquisition, the Issuer will cause all annual and interim period financial reports required to be made available to holders of the Existing Senior Secured Notes and the Existing Senior Notes, to the extent available on Unitymedias website to be delivered to the Trustee, provided that such reports shall be deemed to be delivered on the date on which Unitymedia or any of its Subsidiaries post such reports on its website. See The Transactions Description of Share Purchase Agreement. The Indenture is unlimited in aggregate principal amount, but the aggregate principal amount of Notes issued in this offering is limited to 665 million in euro-denominated senior notes (the Notes). The Issuer may issue an unlimited amount of additional notes having identical terms and conditions to the Notes (the Additional Notes). The Issuer will only be permitted to issue such Additional Notes if, at the time of such issuance, we are in compliance with the covenants contained in the Indenture. Any Additional Notes will be part of the same issue as the Notes we are currently offering and will vote on all matters with the holders of the Notes. Unless expressly stated otherwise, in this Description of the Senior Notes, when we refer to the Notes, the reference includes any Additional Notes. The Issuer will apply to list the Notes on the Official List of the Luxembourg Stock Exchange and to trade on the Euro MTF of the Luxembourg Stock Exchange (the Euro MTF). This Description of the Senior Notes is intended to be a useful overview of the material provisions of the Notes, the Indenture and the Security Documents. As this Description of the Senior Notes is only a summary, you should refer to the Indenture and the Security Documents for a complete description of the obligations of the Issuer and your rights. Copies of the Indenture and the Security Documents are available as set forth under Listing and General Information. General The Notes The Notes will mature on December 1, 2019 and, prior to the consummation of the Debt Pushdown, will be secured on a first-priority basis by the Bidco Share Pledge (which shall also secure the Senior Secured Notes and the Revolving Credit Facility and certain hedging obligations on a equal and ratable basis) and on a first-priority basis by the Senior Notes Escrow Security. See Ranking of the Notes and Security Prior to the Debt Pushdown. Following the Debt Pushdown, the Notes will be guaranteed by the Subsidiaries of the Issuer and secured by the assets and security interests described below under Ranking of the Notes, Guarantees and Security upon Completion of the Debt Pushdown. The Issuer will issue the Notes in minimum denominations of 50,000 and integral multiples of 1,000 in excess thereof.

241

Interest Interest on the Notes will accrue at the rate of 9.625% per annum and will be payable semi-annually in arrears on June 1 and December 1, commencing on June 1, 2010. The Issuer will make each interest payment to the holders of record of the Notes on the immediately preceding May 15 and November 15. Interest on the Notes will accrue from the date of original issuance. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. Payments on the Notes Principal, premium, if any, interest, and Additional Amounts, if any, on the Global Notes will be payable, and the Global Notes may be exchanged or transferred, at the corporate trust office or agency of the Trustee in London, England except that, at the option of the Issuer, payment of interest may be made by check mailed to the address of the holders of the Notes as such address appears in the Note register. Payments on the Global Notes will be made to the common depositary as the registered holder of the Global Notes. Upon the issuance of Definitive Notes, and for so long as the Notes are listed on the Luxembourg Stock Exchange and the guidelines of such stock exchange so require, holders of the Notes will be able to receive principal, interest and Additional Amounts on the Notes at the Luxembourg office of the paying agent, subject to the right of the Issuer to mail payments in accordance with the terms of the Indenture. The Issuer will pay interest on the Notes to Persons who are registered holders at the close of business on the record date immediately preceding the interest payment date for such interest. Such holders must surrender their Notes to a Paying Agent to collect principal payments. Paying Agent and Registrar The Issuer will maintain one or more paying agents (each, a Paying Agent) for the Notes in each of (i) the City of London (the Principal Paying Agent), (ii) the Borough of Manhattan, City of New York, and (iii) Luxembourg, for so long as the Notes are listed on the Euro MTF and the rules of the Luxembourg Stock Exchange so require. The Bank of New York Mellon (Luxembourg) S.A. will initially act as Paying Agent and as Registrar for the Notes in Luxembourg. The Issuer may change the Paying Agent or Registrar for the Notes without prior notice to the holders of Notes. For so long as the Notes are listed on the Official List of the Luxembourg Stock Exchange and trading on the Euro MTF and the rules of the Luxembourg Stock Exchange so require, the Issuer will publish a notice of any change of Paying Agent, Registrar or transfer agent in a newspaper having a general circulation in Luxembourg or, to the extent and in the manner permitted by such rules, posted on the official website of the Luxembourg Stock Exchange. In addition, the Issuer undertakes that it will ensure that it maintains a Paying Agent in a Member State of the European Union that is not obliged to withhold or deduct tax pursuant to European Council Directive 2003/48/EC or any other Directive implementing the conclusions of the European Council of Economics and Finance Ministers (ECOFIN) meeting of November 26-27, 2000 or any law implementing or complying with, or introduced in order to conform to, such Directive. Escrow of Proceeds; Special Mandatory Redemption Concurrently with the closing of the offering of the Notes on the Issue Date, the Issuer will enter into the Senior Notes Escrow Agreement with the Trustee and the Escrow Agent, pursuant to which the Initial Purchasers will deposit with the Escrow Agent an amount equal to the net proceeds of the offering of the Notes sold on the Issue Date. Prior to the release of such proceeds from the Senior Notes Escrow Account, such funds will be invested in certain permitted investments, including in cash and/or any highly rated stable net asset value money market fund or other investment fund. The initial funds deposited in the Senior Notes Escrow Account, and all other funds, securities, interest, dividends, distributions and other property and payments credited to the Senior Notes Escrow Account (less any property and/or funds paid in accordance with the Senior Notes Escrow Agreement) are referred to as Senior Notes Escrowed Property. In order to cause the Escrow Agent to release the Senior Notes Escrowed Property to the Issuer (the Release), the Escrow Agent shall have received from the Issuer, at a time that is on or before October 31, 2010, an Officers Certificate to the effect that: (i) prior to or concurrently with the release of the proceeds of the Notes, the Equity Contribution will be made and the proceeds of the Senior Secured Notes issued on the Issue Date will be released from escrow;

242

(ii)

those documents, legal opinions and certificates attached as exhibits to the Senior Notes Escrow Agreement that are required to be delivered on the relevant date of Release have been delivered in accordance with the terms of the Senior Notes Escrow Agreement;

(iii) (a) the Acquisition will be consummated, promptly upon release of the Senior Notes Escrowed Property, on substantially the same terms as described in the Offering Memorandum under the heading The Transactions and in accordance with the terms of the Share Purchase Agreement and (b) no provision of the Share Purchase Agreement shall have been amended or waived in any manner which would be materially adverse to the holders of the Notes (and for the purposes hereof and for the avoidance of doubt, any material amendment or waiver of clauses (iii), (iv) and (vii) of Section 9.2.1 of the Share Purchase Agreement would be deemed to be materially adverse to the holders of the Notes) without the consent of the holders of a majority in principal amount of the Notes outstanding); (iv) immediately after consummation of the Acquisition, Bidco will own directly or indirectly 100% of the Capital Stock of Unitymedia; (v) either (a) the Debt Pushdown will be consummated on such date or (b) each of the following has occurred or will occur on the day of the Release: (i) an irrevocable notice for the redemption of each of the Existing Senior Secured Notes, Existing Senior Notes and Existing Term Loan has been given under the applicable indenture or facility agreement; (ii) the Revolving Credit Facility has been executed and available for drawdown; and (iii) domination agreements have been executed between (I) Bidco and Unitymedia and (II) Unitymedia Management and Unitymedia Verwaltung; and

(vi) no Default or Event of Default has occurred and is continuing with respect to any matter set forth in clauses (1), (2), (7) or (12) of the definition of Event of Default or with respect to the covenant under the caption Certain Covenants Limitation on Activities of Bidco Prior to the Debt Pushdown. The Release shall occur promptly upon the satisfaction of the conditions set forth above. Upon the earlier of (1) the date on which UnitedGlobalCom, Inc. ceases to beneficially own and control 100% of the issued and outstanding Capital Stock of Bidco, (2) the date on which there first occurs a repudiation by Bidco of any of its obligations under the Senior Notes Escrow Agreement or the unenforceability of the Senior Notes Escrow Agreement against Bidco or any of its other creditors for any reason, (3) the date on which any conditions to the Release of the proceeds could not reasonably be deemed to be capable of being satisfied, (4) the date the Share Purchase Agreement terminates and (5) if the Acquisition has not been completed, October 31, 2010 (such date, the Escrow Termination Date), Bidco will redeem all of the Notes (the Special Mandatory Redemption) at the Special Mandatory Redemption Price as defined above, plus accrued but unpaid interest and Additional Amounts, if any, to the Special Mandatory Redemption Date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date). Notice of the Special Mandatory Redemption will be mailed by Bidco, no later than the second Business Day following the Escrow Termination Date, to the Trustee (with an instruction to the Trustee to deliver the same to each holder of the Notes) and the Escrow Agent, and will provide that the Notes shall be on a date that is no later than the fifth Business Day after such notice is mailed (the Special Mandatory Redemption Date). On the Special Mandatory Redemption Date, the Escrow Agent shall pay to the Principal Paying Agent for payment to each holder the Special Mandatory Redemption Price for such holders Notes and, concurrently with the payment to such holders, deliver any excess Senior Notes Escrowed Property (if any) to the Issuer. If the Special Mandatory Redemption Date is on or after an interest record date and on or before the related interest payment date, the accrued and unpaid interest, if any, will be paid to the Person in whose name the Note is registered at the close of business on such record date and no additional interest will be payable to holders whose Notes will be subject to redemption by the Issuer. In the event the Special Mandatory Redemption Price payable upon such Special Mandatory Redemption exceeds the amount of the Senior Notes Escrowed Property, Liberty has agreed to pay to the Trustee an amount in cash equal to the shortfall (including any accrued and unpaid interest and redemption premium). No provisions to the Senior Notes Escrow Agreement (including, without limitation, those relating to the release of the Senior Notes Escrowed Property) and, to the extent such provisions relate to the Issuers obligation to redeem the Notes in a Special Mandatory Redemption, the Indenture may be waived or modified in any manner materially adverse to the holders of the Notes without the written consent of holders of at least 90% in aggregate principal amount of Notes affected thereby.

243

Transfer and Exchange The Notes will be issued in the form of several registered notes in global form, without interest coupons, as follows:

Notes sold within the United States to qualified institutional buyers pursuant to Rule 144A under the Securities Act will initially be represented by a global note in registered form without interest coupons attached (the 144A Global Note) which, on the Issue Date, will be deposited with and registered in the name of The Bank of New York Depository (Nominees) Limited, or the common depositary, for the accounts of Euroclear Bank S.A./N.V. (Euroclear) and Clearstream Banking, socit anonyme (Clearstream). Notes sold outside the United States pursuant to Regulation S under the Securities Act will initially be represented by a global note in registered form without interest coupons attached (the Regulation S Global Note, and together with the 144A Global Notes, the Global Notes) which, on the Issue Date, will be deposited with and registered in the name of The Bank of New York Depository (Nominees) Limited, or the common depositary, for the accounts of Euroclear and Clearstream.

During the 40-day distribution compliance period, book-entry interests in the Regulation S Global Note may be transferred only to non-U.S. persons under Regulation S or qualified institutional buyers under Rule 144A or otherwise in accordance with applicable transfer restrictions and any applicable securities laws of any state of the United States or any other jurisdiction. Ownership of interests in the Global Notes (Book-Entry Interests) will be limited to persons that have accounts with Euroclear or Clearstream, as applicable, or persons that may hold interests through such participants. Ownership of interests in the Book-Entry Interests and transfers thereof will be subject to the restrictions on transfer and certification requirements summarized below and described more fully under Notice to Investors. In addition, transfers of Book-Entry Interests between participants in Euroclear or Clearstream will be effected by Euroclear or Clearstream, as applicable, pursuant to customary procedures and subject to the applicable rules and procedures established by Euroclear or Clearstream, as applicable, and their respective participants. Book-Entry Interests in the 144A Global Note (the Rule 144A Book-Entry Interests) may be transferred to a person who takes delivery in the form of Book-Entry Interests in the Regulation S Global Note (the Regulation S Book-Entry Interests) upon delivery by the transferor of a written certification (in the form provided in the Indenture) to the effect that such transfer is being made in accordance with Regulation S under the Securities Act. Regulation S Book-Entry Interests may be transferred to a person who takes delivery in the form of 144A Book-Entry Interests only upon delivery by the transferor of a written certification (in the form provided in the Indenture) to the effect that such transfer is being made to a person who the transferor reasonably believes is a qualified institutional buyer within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A or otherwise in accordance with the transfer restrictions described under Notice to Investors and in accordance with any applicable securities law of any other jurisdiction. Any Book-Entry Interest that is transferred as described in the immediately preceding paragraphs will, upon transfer, cease to be a Book-Entry Interest in the Global Note from which it was transferred and will become a Book-Entry Interest in the Global Note to which it was transferred. Accordingly, from and after such transfer, it will become subject to all transfer restrictions, if any, and other procedures applicable to Book-Entry Interests in the Global Note to which it was transferred. If Definitive Registered Notes are issued, they will be issued only in minimum denominations of 50,000 principal amount, and integral multiples of 1,000 in excess thereof upon receipt by the applicable Registrar of instructions relating thereto and any certificates, opinions and other documentation required by the Indenture. It is expected that such instructions will be based upon directions received by Euroclear or Clearstream, as applicable, from the participant which owns the relevant Book-Entry Interests. Definitive Registered Notes issued in exchange for a Book-Entry Interest will, except as set forth in the Indenture or as otherwise determined by the Issuer to be in compliance with applicable law, be subject to, and will have a legend with respect to, the restrictions on transfer summarized below and described more fully under Notice to Investors.

244

Subject to the restrictions on transfer referred to above, Notes issued as Definitive Registered Notes may be transferred or exchanged, in whole or in part, in minimum denominations of 50,000 in principal amount and integral multiples of 1,000 in excess thereof. In connection with any such transfer or exchange, the Indenture will require the transferring or exchanging holder to, among other things, furnish appropriate endorsements and transfer documents, to furnish information regarding the account of the transferee at Euroclear or Clearstream, where appropriate, to furnish certain certificates and opinions, and to pay any taxes, duties and governmental charges in connection with such transfer or exchange. Any such transfer or exchange will be made without charge to the holder, other than any taxes, duties and governmental charges payable in connection with such transfer. Notwithstanding the foregoing, the Issuer is not required to register the transfer of any Definitive Note in registered form: (1) (2) for a period of 15 calendar days prior to any date fixed for the redemption of the Notes; for a period of 15 calendar days immediately prior to the date fixed for selection of Notes to be redeemed in part; for a payment period of 15 calendar days prior to the record date with respect to any interest payment date; or that the registered holder of Notes has tendered (and not withdrawn) for repurchase in connection with a Change of Control Offer or an Asset Disposition Offer.

(3)

(4)

Ranking of the Notes and Security Prior to the Debt Pushdown Ranking The Notes will be general senior obligations of the Issuer, initially secured by the Bidco Share Pledge and, until release contemporaneously with completion of the Acquisition, the Senior Notes Escrow Security. Prior to the Debt Pushdown, the Issuer will not be permitted to Incur any Indebtedness or any other liabilities, except as permitted under Limitation on Activities of Bidco Prior to the Debt Pushdown. Security Bidco Share Pledge The obligations of the Issuer under the Notes initially will be secured by a first-priority pledge of the shares of Capital Stock of Bidco held by UPC Germany Holding B.V. (the Bidco Share Pledge) which shall also secure the Senior Secured Notes, the Revolving Credit Facility and certain Hedging Obligations related thereto on an equal and ratable basis. The Bidco Share Pledge will be unconditionally released and discharged upon the earlier to occur of the following: (1) (2) upon repayment in full of the Notes pursuant to a Special Mandatory Redemption; and upon completion of the Debt Pushdown.

Senior Notes Escrow Pledge and Security Agreement Pending consummation of the Acquisition, the Initial Purchasers will deposit the net proceeds from the offering of the Senior Notes into the Senior Notes Escrow Account. The holders of Notes also benefit from a security interest in the rights of the Issuer under the escrow and security agreement (the Senior Notes Escrow Security). The holders of Notes also benefit from a security interest in the rights of the Issuer under the escrow and security agreement. Upon release of the proceeds of the offering of the Notes from the Senior Notes Escrow Account, the escrow and security agreement will automatically terminate.

245

Ranking of the Notes, Subsidiary Guarantees and Security upon Completion of the Debt Pushdown General The Notes will, upon completion of the Debt Pushdown:

be general senior obligations of the Issuer; be guaranteed on a senior subordinated basis by the Guarantors (as described under Subsidiary Guarantees); have the benefit of security in the form of (a) a first-priority pledge of the Capital Stock in Unitymedia, (b) a junior-priority pledge of the Capital Stock in each of Unitymedia Management, Unitymedia Hessen and Unitymedia Verwaltung (which will be junior-priority pursuant to the Intercreditor Agreement and as described below under Security) and (c) security assignment over claims under certain domination and/or profit and loss absorption agreements; be senior in right of payment to any existing and future Subordinated Obligations of the Issuer; rank equally in right of payment with any existing and future Senior Indebtedness of the Issuer; be effectively subordinated to any existing and future secured Indebtedness of the Issuer and its Subsidiaries to the extent of the value of the assets securing such Indebtedness (unless such assets also secure the Notes on an equal and ratable or prior basis); and be effectively subordinated to any existing and future Indebtedness of Subsidiaries of the Issuer that are not Guarantors.

The Issuer conducts all of its operations through its Subsidiaries. To the extent these Subsidiaries are not Guarantors, claims of creditors of such non-guarantor Subsidiaries, including trade creditors and creditors holding indebtedness or guarantees issued by such non-guarantor Subsidiaries, and claims of preferred stockholders of such non-guarantor subsidiaries generally will have priority with respect to the assets and earnings of such non-guarantor subsidiaries over the claims of our creditors, including holders of the Notes. Accordingly, the Notes will be effectively subordinated to creditors (including trade creditors) and preferred stockholders, if any, of such non-guarantor Subsidiaries. Subsidiary Guarantees General Unitymedia Hessen, Unitymedia Verwaltung, Unitymedia NRW, Unitymedia Management and each other Restricted Subsidiary of the Issuer that may become a Guarantor after the Debt Pushdown as provided for in the Indenture (each such Subsidiary, a Guarantor) will, jointly and severally, irrevocably guarantee (the Subsidiary Guarantees), as primary obligors and not merely as sureties, on a senior subordinated basis the full and punctual payment when due, whether at Stated Maturity, by acceleration or otherwise, all payment obligations of the Issuer under the Indenture and the Notes, whether for payment of principal of or interest on or in respect of the Notes, fees, expenses, indemnification or otherwise. The ability to enforce the Subsidiary Guarantees is subject to significant restrictions. See Subsidiary Guarantees Subordination of the Subsidiary Guarantees. In addition, the obligations of the Guarantors will be contractually limited under the Subsidiary Guarantees to reflect limitations under applicable law with respect to maintenance of share capital applicable to the Guarantors and their respective shareholders, directors and general partners. See Risk Factors Risks Relating to the Notes, the Subsidiary Guarantees and the Security. The Subsidiary Guarantees will:

be general senior subordinated obligations of each Guarantor; have the benefit of security in the form of (a) a first-priority pledge of the Capital Stock in Unitymedia, (b) a junior-priority pledge of the Capital Stock in each of Unitymedia Management, Unitymedia Hessen and Unitymedia Verwaltung (which will be junior-priority pursuant to the Intercreditor Agreement and as described below under Security) and (c) security assignment over claims under certain domination and/or profit and loss absorption agreements;

246

be subordinated in right of payment to all existing and future Senior Indebtedness of each Guarantor (including Indebtedness Incurred by the Guarantors under the Revolving Credit Facility, the Senior Secured Notes and certain hedging obligations); rank pari passu in right of payment with all existing and future Senior Subordinated Indebtedness of each Guarantor; be effectively subordinated to all existing and future secured Indebtedness of the Guarantors to the extent of the value of the assets securing such Indebtedness (unless such assets also secure the Subsidiary Guarantees on an equal and ratable or prior basis); and be senior in right of payment to all future Obligations of the Guarantors expressly subordinated to the guarantee of the Secured Notes.

Payment under the Subsidiary Guarantees will be expressly subordinated in right of payment to the payment when due of all Senior Indebtedness of the Guarantors (including Indebtedness Incurred under the Revolving Credit Facility, the Senior Secured Notes, the Senior Secured Indenture and certain hedging obligations). As a result of this subordination, holders of Senior Indebtedness of any Guarantor will be entitled to receive full payment on all obligations owed to them before any kind of payment can be made in respect of the Subsidiary Guarantees to holders. See Ranking and Subsidiary Guarantees Subordination of the Subsidiary Guarantees. As of September 30, 2009, on an as-adjusted basis after giving effect to the Acquisition and the Debt Pushdown, the Guarantors would have had an aggregate principal amount of 1,430 million and $845 million aggregate principal amount of outstanding Indebtedness that was senior to the Subsidiary Guarantees, all of which would have been represented by the Senior Secured Notes. During the nine months ended September 30, 2009, on an as-adjusted basis after giving effect to the Acquisition and the Debt Pushdown, the Issuer and the Guarantors represented approximately 76% of our consolidated revenues and approximately 93% of our EBITDA. Additional Subsidiary Guarantees The Issuer may from time to time designate a Restricted Subsidiary as an additional guarantor of the Notes (an Additional Guarantor) by causing it to execute and deliver to the Trustee a supplemental indenture in the form attached to the Indenture (and with such documentation relating thereto as the Trustee may reasonably require, including Opinions of Counsel as to the enforceability of its Subsidiary Guarantee), pursuant to which such Restricted Subsidiary will become a Guarantor. Each Additional Guarantor will, jointly and severally, with the Guarantors and each other Additional Guarantor, irrevocably guarantee (each guarantee, an Additional Subsidiary Guarantee), as primary obligor and not merely as surety, on a senior subordinated basis the full and punctual payment when due, whether at Stated Maturity, by acceleration or otherwise, of all payment obligations of the Issuer under the Indenture and the Notes, whether for payment of principal of or interest on or in respect of the Notes, fees, expenses, indemnification or otherwise. The ability to enforce an Additional Subsidiary Guarantee will be subject to significant restrictions. See Subsidiary Guarantees Subordination of the Subsidiary Guarantees. In addition, the obligations of any Additional Guarantor will be contractually limited under its Additional Subsidiary Guarantee to reflect limitations under applicable law, including, among other things, with respect to maintenance of share capital applicable to such Additional Guarantor and its shareholders, directors and general partner. Any Additional Subsidiary Guarantee shall be issued on substantially the same terms as the Subsidiary Guarantees. For purposes of the Indenture and this Description of the Senior Notes, references to the Subsidiary Guarantees include references to any Additional Subsidiary Guarantees and references to the Guarantors include references to any Additional Guarantors. Releases A Subsidiary Guarantee shall be released:

upon the sale of all or substantially all the Capital Stock of the relevant Guarantor pursuant to an Enforcement Sale as provided for in the Intercreditor Agreement; upon the sale or other disposition (including through merger or consolidation but other than pursuant to an Enforcement Sale) in compliance with the Indenture of the Capital Stock of the relevant Guarantor

247

(whether directly or through the disposition of a parent thereof), following which such Guarantor is no longer a Restricted Subsidiary (other than a sale or other disposition to the Issuer or any of its Restricted Subsidiaries);

the defeasance or discharge of the Notes as provided in Defeasance or Satisfaction and Discharge, in each case in accordance with the terms and conditions of the Indenture; or with respect to an Additional Subsidiary Guarantee given under the covenant captioned Certain Covenants Limitation on Issuances of Guarantees of Indebtedness by Restricted Subsidiaries, upon release of the guarantee that gave rise to the requirement to issue such Additional Subsidiary Guarantee so long as no Event of Default would arise as a result and no other Indebtedness that would give rise to an obligation to give an Additional Subsidiary Guarantee is at that time guaranteed by the relevant Guarantor.

In addition, if a Guarantor is redesignated as an Unrestricted Subsidiary in compliance with the covenant entitled Certain Covenants Limitation on Restricted Payments, the relevant Guarantor will be released from all its obligations under its Subsidiary Guarantee. Notwithstanding any of the foregoing, in all circumstances a Subsidiary Guarantee shall only be released if (a) the relevant Guarantor has delivered to the Trustee an Officers Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for in the Indenture relating to such transaction have been complied with and (b) such Guarantor is released from its guarantees of the Revolving Credit Facility and the Senior Secured Notes. The Trustee shall take all necessary actions, including the granting of releases or waivers under the Intercreditor Agreement, to effectuate any release in accordance with these provisions, subject to customary protections and indemnifications. Subordination of the Subsidiary Guarantees Subordination on the Basis of the Intercreditor Agreement. Each of the Subsidiary Guarantees is a senior subordinated Guarantee, which means that, pursuant to the terms of the Intercreditor Agreement, each such Subsidiary Guarantee ranks behind, and is expressly subordinated to, all the existing and future Senior Indebtedness of the relevant Guarantor, including any obligations owed by the relevant Guarantor under the Revolving Credit Facility and the Senior Secured Notes. The ability to take enforcement action against the Guarantors under their Subsidiary Guarantees is subject to significant restrictions imposed by the Intercreditor Agreement and the terms of the Subsidiary Guarantees, and potentially any Additional Intercreditor Agreements entered into after the Issue Date. For a description of the restrictions imposed by the Intercreditor Agreement, see Description of Other Indebtedness The Intercreditor Agreement. Because of the foregoing subordination provisions, it is likely that holders of Senior Indebtedness and other creditors (including trade creditors) of a Guarantor would recover disproportionately more than the holders of the Notes recover in any insolvency or similar proceeding relating to such Guarantor. In any such case, there may be insufficient assets, or no assets, remaining to pay the principal of or interest on the Notes. Subordination under German Insolvency Law. In the event of the opening of insolvency proceedings (Insolvenzverfahren) under German law over the assets of the Issuer or any of its Subsidiaries, the insolvency court will generally appoint an insolvency administrator (Insolvenzverwalter). However, any person that has a right for segregation (Aussonderung) does not participate in the insolvency proceedings; the claim for segregation (such as the claim for repossession by the legal and beneficial owner of an asset who has leased such asset to the insolvent debtor) has to be enforced in the course of ordinary court proceedings. The Security Documents grant a right to separate satisfaction (Absonderungsrecht) to the secured parties under such documents with respect to the Security Interest. Creditors with a right to separate satisfaction are creditors who participate in the insolvency proceedings, but at the same time are secured by collateral that constitutes part of the estate. The right to separate satisfaction allows such secured creditors to claim the proceeds generated on the realization of the collateral up to the amount of their secured claim. Any surplus belongs to the estate. To the extent that the realization proceeds do not cover the amount of the secured debt, the secured creditors will participate as normal unsecured insolvency creditors (or as subordinated creditors, as the case may be) in the insolvency proceedings. The actual enforcement of the secured creditors rights, and whether it is the

248

secured creditors or the insolvency administrator who is entitled to foreclose on the collateral, depends upon several aspects. In this regard, it is relevant whether the security relates to property or movables, what type of security interest was granted and whether the insolvency administrator or the secured creditor possesses the collateral. The insolvency administrator is entitled to realize movable assets, if he or she is in possession of such asset, and receivables that the debtor has assigned to secure a claim. For the benefit of the estate, he or she may deduct certain fees from the proceeds of such sale plus applicable VAT, if any. The fees amount to generally 9% of the proceeds of realization according to statutory German insolvency law. The remaining proceeds are to be handed over to the secured creditor up to the amount of its secured claim. If the incurred costs of enforcement prove to be actually substantially higher or lower, then the fees have to be adjusted accordingly. The equity interests that will be pledged under the Share Pledges (as defined below) will not be considered pledged moveable assets. However, it is unclear whether the secured creditor or the insolvency receiver would be entitled to foreclose on the equity interests in the insolvency of the pledgor. If a court were to conclude that the secured creditor would not have the right of foreclosure, the insolvency administrator would be entitled to realize upon the relevant Share Pledge and, as a result, deduct the fees described above. A creditors right to separate satisfaction may not prevent the insolvency administrator from using an asset in its possession that is subject to this right, as long as this asset is needed in order to operate the debtors business. However, the insolvency administrator must compensate the creditor by means of regular payments for any loss of value resulting from such use, and to the extent the creditors security may be impaired. The right to separate satisfaction is independent from the priority of the secured claims. However, with regard to certain subordinated debt (such as claims for repayment of shareholder loans), the security interest must not be realized. Unless the creditors of the insolvent debtor decide to continue the business of the insolvent debtor or adopt an insolvency plan (Insolvenzplan) in compliance with German insolvency law and provide otherwise therein, the insolvency administrator will be required to liquidate the insolvent debtor which includes the realization of all of its assets and to distribute the realization proceeds to cover the following debt in the following order: (1) the costs of the insolvency proceedings (which encompass the court fees for such proceedings and the remuneration of the preliminary insolvency administrator, the insolvency administrator and the members of the creditors committee); other preferred debt (sonstige Masseverbindlichkeiten) which comprises debt Incurred by the insolvency administrator in the course of the insolvency proceedings (including the administration, realization and distribution of the liquidation fund (Masse)), obligations under not fully performed mutual contracts (gegenseitiger nicht vollstndig erfller Vertrag) (sec. 103 German Insolvency Code) where the insolvency administrator has elected performance of such obligations, and claims based on an unlawful enrichment of the insolvency estate; all other debt unless subordinated contractually (see item (9) below) or by law; interest payable for periods after the opening of the insolvency proceedings; the costs of the creditors for their participation in the insolvency proceedings; fines, disciplinary penalties and similar claims; claims established without consideration for the debtor; claims for repayment of shareholder loans or economically similar claims to be treated similar to capital replacing shareholder loans; and claims which have been contractually subordinated to all other claims of any creditior against the debtor by an agreement between the creditor and the debtor in the case of insolvency proceedings.

(2)

(3) (4) (5) (6) (7) (8) (9)

Please see the section entitled Risk Factors Risks Relating to the Notes The insolvency laws Germany and other local insolvency laws may not be as favourable to you as the U.S. bankruptcy laws and may preclude holders of the Notes from recovering payments due on the Notes.

249

Security General Upon consummation of the Debt Pushdown, the obligations of the Issuer under the Notes and the Indenture and the obligations of each Guarantor under its Subsidiary Guarantee and the Indenture will be secured by a firstpriority security interest in the Capital Stock in Unitymedia, a junior priority security interest in Unitymedia Management, Unitymedia Hessen and Unitymedia Verwaltung (collectively, the Collateral) created by pledge agreements (the Share Pledges) and security assignment over claims under certain domination and/or profit and loss absorption agreements entered into among, inter alia, the Issuer, Unitymedia Management and Unitymedia Verwaltung, the Trustee and the Security Trustee, as applicable. See Description of Other Indebtedness The Intercreditor Agreement and Risk Factors Risks Relating to the Notes, the Subsidiary Guarantees and the Security You may not be able to enforce, or recover any amounts due under, the Subsidiary Guarantees or the Security due to subordination provisions, restrictions on enforcement and releases. Subject to certain conditions, including compliance with the covenant described under Certain Covenants Impairment of Security Interest, the Issuer is permitted to pledge the Collateral in connection with future issuances of its Indebtedness, including any Additional Notes, or Indebtedness of its Restricted Subsidiaries, in each case permitted under the Indenture and on terms consistent with the relative priority of such Indebtedness. In addition to the release provisions described below, the Security Interest (as defined below) will cease to exist by operation of law or will be released upon the defeasance or discharge of the Notes as provided in Defeasance or Satisfaction and Discharge, in each case in accordance with the terms and conditions of the Indenture. All Security granted by a German subsidiary of the Issuer will be subject to contractual limitations with respect to maintenance of share capital to the extent there is not an uninterrupted chain of profit and loss pooling agreements or domination agreements in effect between the respective subsidiary and the Issuer. Priority The relative priority among (a) the lenders under the Revolving Credit Facility, (b) the counterparties under certain Hedging Obligations related to the Revolving Credit Facility, the Notes and the Senior Secured Notes, (c) the holders of the Senior Secured Notes and (d) the Trustee and the holders under the Indenture with respect to the security interest in the Collateral that is created by the Security Documents and secures obligations under the Notes or the Subsidiary Guarantees and the Indenture (the Security Interest) is established by the terms of the Intercreditor Agreement, the Indenture, the Security Documents, and the security documents relating to our new Revolving Credit Facility, such Hedging Obligations and the Senior Secured Notes, which provide that: (i) the obligations under the Senior Secured Notes and the Revolving Credit Facility and certain hedging obligations are secured equally and ratably by a first-priority interest in the Collateral but, any liabilities in respect of obligations under the Revolving Credit Facility and such Hedging Obligations will receive priority with respect to any proceeds received upon any enforcement action over any Collateral; and the obligations under the Notes and the Subsidiary Guarantees will be secured by a junior-priority interest in the Collateral (on a contractual basis under the Intercreditor Agreement).

(ii)

Please see the section entitled Description of Certain Financing Arrangements Intercreditor Agreement. In addition, pursuant to Additional Intercreditor Agreements entered into after the consummation of the Debt Pushdown, the Collateral may be pledged to secure other Indebtedness. See Certain Covenants Impairment of Security Interest. Share Pledges Under the Share Pledges (until released as provided for in the Indenture), (i) Bidco will pledge on a firstpriority basis the Capital Stock in Unitymedia, (ii) Unitymedia will pledge on a Junior-priority basis the Capital Stock it holds in Unitymedia Management, Unitymedia Hessen and Unitymedia Verwaltung and (iii) Unitymedia Management will pledge on a Junior-priority basis the Capital Stock it holds in Unitymedia Hessen and Unitymedia Verwaltung, in each case to secure the payment and performance when due of the Issuers and the Guarantors obligations under the Notes, the Subsidiary Guarantees and the Indenture. The Capital Stock

250

of Unitymedia Management, Unitymedia Hessen and Unitymedia Verwaltung will be pledged to secure on a first-priority basis obligations under the Revolving Credit Facility, the Senior Secured Notes and Hedging Obligations related thereto and to the Notes. The Capital Stock of Unitymedia will not be pledged to secure such Senior Debt. On the basis of German law restrictions relating to security interests in the form of pledges, the Share Pledges will secure a debt obligation owed to the Security Trustee as a joint and several creditor under the Notes. See Risk Factors Risks Relating to the Notes The ability of the Security Agent to enforce the collateral is subject to uncertainties under German law. When entering into the Share Pledges, the Security Trustee acts in its own name, but for the benefit of the holders from time to time. Under the Intercreditor Agreement, the Security Trustee will also act on behalf of the creditors under the Senior Secured Notes and the lenders under the Revolving Credit Facility in relation to the security interest in favor of such creditors and lenders. Each Share Pledge is governed by German law and provides that the rights under such Share Pledge must be exercised by the Security Trustee. Since the holders are not parties to the Share Pledges, holders may not, individually or collectively, take any direct action to enforce any rights in their favor under the Share Pledges. The holders may only act by instructing the Trustee to act through the Security Trustee. Our German counsel has advised us that there is some uncertainty under German law (i) as to whether obligations owing to beneficial owners of the Notes that are not identified as registered holders in the Share Pledges will be validly secured and (ii) as to the validity of any security interest created in favor of the Security Trustee to secure the obligations represented by a joint and several creditor obligation. Also, under German law, in the event that the Issuer or Unitymedia Management enters into insolvency proceedings, the security interests created under the Share Pledges or the joint and several creditor obligation could be subject to potential challenges by an insolvency administrator (Insolvenzverwalter) under German rules regarding avoidance of transactions under the German Insolvency Code (Insolvenzordnung). Outside of insolvency proceedings, thirdparty creditors of the Issuer or Unitymedia Management may in certain circumstances have an avoidance right under the German Code on Avoidance (Anfechtungsgesetz). If any challenge to the validity of the security interests is successful, the holders may not be able to recover any amounts under the Share Pledges. Please see the section entitled Risk Factors Risks Relating to the Notes The insolvency laws of Germany and other local insolvency laws may not be as favorable to you as the U.S. bankruptcy laws and may preclude holders of the Notes from recovering payments due on the Notes. The Share Pledges will be released (a) so long as there is no Default outstanding under the Indenture or a default outstanding under any other Indebtedness secured by the Collateral, if (i) upon the sale or disposition (including through merger or consolidation but other than pursuant to an Enforcement Sale) in compliance with the Indenture of the Capital Stock subject the Share Pledge following which the Restricted Subsidiary is the subject of such Share Pledge is no longer a Restricted Subsidiary or (ii) the Restricted Subsidiary whose Capital Stock is the subject of such Share Pledge is redesignated as an Unrestricted Subsidiary in accordance with the Indenture or (b) following a Default under the Indenture or a default under any other Indebtedness secured by the Collateral, pursuant to an Enforcement Sale, in each case in accordance with the terms of the Intercreditor Agreement. See Description of Other Indebtedness The Intercreditor Agreement Limitations on Enforcement. The Security Trustee and the Trustee will agree to any release of the Share Pledges that is in accordance with the Indenture and the Intercreditor Agreement without requiring any holder consent, including, without limitation, with respect to any Liens given under the covenant captioned Certain Covenants Limitation on Liens, upon release of the Lien that gave rise to the requirement for such Capital Stock to become Collateral so long as no Event of Default would arise as a result and no other Indebtedness that would give rise to an obligation to give such a Lien is at that time secured by a Lien over the relevant Collateral. Enforcement of Security Interest The Indenture and the Intercreditor Agreement restrict the ability of the holders or the Trustee to instruct the Security Trustee to enforce the Security Interest and provide for the release of the Security Interest in certain circumstances upon enforcement by the lenders under the Revolving Credit Facility. These limitations are described under Description of Other Indebtedness The Intercreditor Agreement. In general, the rights of the Security Trustee (acting on its own behalf or on behalf of the holders) to take enforcement action under the Security Documents with respect to the Collateral are subject to certain standstill provisions similar to those that apply to the Subsidiary Guarantees and other limitations on enforcement. The Indenture will also provide that each holder, by accepting a Note, shall be deemed to have agreed to and accepted the terms and conditions of the Intercreditor Agreement and any Additional Intercreditor Agreement (whether then entered into or entered into in the future pursuant to the provisions described herein).

251

Optional Redemption Optional Redemption on or after December 1, 2014 Except as described below and under Redemption for Taxation Reasons, the Notes are not redeemable until December 1, 2014. On or after December 1, 2014, the Issuer may redeem all, or from time to time a part, of the Notes upon not less than 30 nor more than 60 days notice, at the following redemption prices (expressed as a percentage of principal amount) plus accrued and unpaid interest and Additional Amounts, if any, to the applicable redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the twelve-month period commencing on December 1 of the years set out below:
Redemption Price

2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2017 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

104.813% 103.208% 101.604% 100.00%

In each case above, any such redemption and notice may, in the Issuers discretion, be subject to satisfaction of one or more conditions precedent. Optional Redemption prior to December 1, 2014 At any time prior to December 1, 2014, the Issuer may also redeem all, or from time to time a part, of the Notes upon not less than 30 nor more than 60 days notice, at a price equal to 100% of the principal amount thereof plus the Applicable Premium as of, and accrued but unpaid interest and Additional Amounts, if any, to, the applicable redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date). In each case above, any such redemption and notice may, in the Issuers discretion, be subject to satisfaction of one or more conditions precedent. If the optional redemption date is on or after an interest record date and on or before the related interest payment date, the accrued and unpaid interest, if any, will be paid to the Person in whose name the Note is registered at the close of business on such record date and no additional interest will be payable to holders whose Notes will be subject to redemption by the Issuer. Optional Redemption upon Equity Offerings At any time, or from time to time, prior to December 1, 2012, the Issuer may, at its option, use the Net Cash Proceeds of one or more Equity Offerings (except for sales of Capital Stock of a Parent the proceeds of which are contributed as Subordinated Shareholder Loans) to redeem, upon not less than 30 nor more than 60 days notice, up to 35% of the principal amount of the Notes issued under the Indenture (including the principal amount of any Additional Notes) at a redemption price of 109.625% of the principal amount of the Notes plus accrued and unpaid interest and Additional Amounts, if any, to the date of redemption (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided that: (1) at least 65% of the principal amount of each of the Notes (which includes Additional Notes, if any) issued under the Indenture remains outstanding immediately after any such redemption; and the Issuer makes such redemption not more than 90 days after the consummation of any such Equity Offering.

(2)

In each case above, any such redemption and notice may, in the Issuers discretion, be subject to satisfaction of one or more conditions precedent. If the optional redemption date is on or after an interest record date and on or before the related interest payment date, the accrued and unpaid interest, if any, will be paid to the Person in whose name the Note is registered at the close of business on such record date and no additional interest will be payable to holders whose Notes will be subject to redemption by the Issuer.

252

Special Optional Redemption upon UPC Exchange Transaction At any time on or after the 12-month anniversary of the Issue Date but on or prior to the 36-month anniversary of the Issue Date, the Issuer may, at its option, following completion of a UPC Exchange Transaction, redeem all, but not less than all, of the Notes issued under the Indenture upon not less than 30 nor more than 60 days notice (which notice of redemption shall be given no later than 10 business days following the completion of such UPC Exchange Transaction), at a redemption price (expressed as a percentage of the principal amount thereof) of: (1) (2) 101% (if such redemption is on or before the 24-month anniversary of the Issue Date); or 102% (if such redemption is after the 24-month anniversary of the Issue Date),

in each case, plus accrued and unpaid interest and Additional Amounts, if any, to the date of redemption (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date). In each case above, any such redemption and notice may, in the Issuers discretion, be subject to satisfaction of one or more conditions precedent. If the optional redemption date is on or after an interest record date and on or before the related interest payment date, the accrued and unpaid interest, if any, will be paid to the Person in whose name the Note is registered at the close of business on such record date and no additional interest will be payable to holders whose Notes will be subject to redemption by the Issuer. Selection and Notice In the case of any partial redemption, selection of the Notes for redemption will be made by the Trustee in compliance with the requirements of the principal securities exchange, if any, on which the Notes are listed or, if the Notes are not listed, then on a pro rata basis, by lot or by such other method as the Trustee in its sole discretion will deem to be fair and appropriate, although no Notes of 50,000 or less can be redeemed in part. The Trustee will not be liable for selections made by it in accordance with this paragraph. If any Note is to be redeemed in part only, the notice of redemption relating to such Note will state the portion of the principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed portion thereof will be issued in the name of the holder thereof upon cancellation of the original Note. For Notes which are represented by Global Notes held on behalf of Euroclear or Clearstream, notices may be given by delivery of the relevant notices to Euroclear or Clearstream for communication to entitled account holders in substitution for the aforesaid mailing. So long as any Notes are listed on the Official List of the Luxembourg Stock Exchange and admitted for trading on the Euro MTF and the rules of the Luxembourg Stock Exchange so require, any such notice to the holders of the relevant Notes shall also be published in a newspaper having a general circulation in Luxembourg and, in connection with any redemption, the Issuer will notify the Luxembourg Stock Exchange of any change in the principal amount of Notes outstanding. Withholding Taxes All payments made by the Issuer or any successor thereto (a Payor) on the Notes will be made without withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature (Taxes) unless the withholding or deduction of such Taxes is then required by law or by the official interpretation or administration thereof. If any deduction or withholding for, or on account of, any Taxes imposed or levied by or on behalf of: (1) The Federal Republic of Germany or any political subdivision or governmental authority thereof or therein having power to tax; any jurisdiction from or through which payment on the Notes is made, or any political subdivision or governmental authority thereof or therein having the power to tax; or any other jurisdiction in which a Payor is organized or otherwise considered to be a resident for tax purposes, or any political subdivision or governmental authority thereof or therein having the power to tax (each of clause (1), (2) and (3), a Relevant Taxing Jurisdiction),

(2)

(3)

253

will at any time be required from any payments made with respect to the Notes, including payments of principal, redemption price, interest or premium, the Payor will pay (together with such payments) such additional amounts (the Additional Amounts) as may be necessary in order that the net amounts received in respect of such payments by each holder of the Notes, as the case may be, after such withholding or deduction (including any such deduction or withholding from such Additional Amounts) equal the amounts which would have been received in respect of such payments in the absence of such withholding or deduction; provided, however, that no such Additional Amounts will be payable with respect to: (a) any Taxes that would not have been so imposed but for the existence of any present or former connection between the relevant holder or beneficial owner and the Relevant Taxing Jurisdiction imposing such Taxes (other than the mere ownership or holding of such Note or enforcement of rights thereunder or under the Indenture or the receipt of payments in respect thereof); any Taxes that would not have been so imposed if the holder had made a declaration of non-residence or any other claim or filing for exemption to which it is entitled (provided that (x) such declaration of non-residence or other claim or filing for exemption is required by the applicable law of the Relevant Taxing Jurisdiction as a precondition to exemption from the requirement to deduct or withhold all or a part of any such Taxes and (y) at least 30 days prior to the first payment date with respect to which such declaration of non-residence or other claim or filing for exemption is required under the applicable law of the Relevant Taxing Jurisdiction, the relevant holder at that time has been notified (in accordance with the procedures set forth in the Indenture) by the Payor or any other person through whom payment may be made that a declaration of non-residence or other claim or filing for exemption is required to be made); any Note presented for payment (where presentation is required) more than 30 days after the relevant payment is first made available for payment to the holder (except to the extent that the holder would have been entitled to Additional Amounts had the Note been presented during such 30-day period); any Taxes that are payable otherwise than by withholding from a payment of the principal of, premium, if any, or interest on the Notes; any estate, inheritance, gift, sale, transfer, personal property or similar tax, assessment or other governmental charge; any withholding or deduction imposed on a payment to an individual and required to be made pursuant to the European Council Directive 2003/48/EC or any other directive implementing the conclusions of the ECOFIN meeting of November 26-27, 2000 on the taxation of savings income or any law implementing or complying with, or introduced in order to conform to, such directive; or any Taxes which could have been avoided by the presentation (where presentation is required) of the relevant Note to another Paying Agent in a member state of the European Union.

(b)

(c)

(d)

(e)

(f)

(g)

Such Additional Amounts will also not be payable where, had the beneficial owner of the Note been the holder of the Note, it would not have been entitled to payment of Additional Amounts by reason of any of clauses (a) to (g) inclusive above. The Payor will (i) make any required withholding or deduction and (ii) remit the full amount deducted or withheld to the Relevant Taxing Jurisdiction in accordance with applicable law. The Payor will use all reasonable efforts to obtain certified copies of tax receipts evidencing the payment of any Taxes so deducted or withheld from each Relevant Taxing Jurisdiction imposing such Taxes and will provide such certified copies (or, if certified copies are not available despite reasonable efforts of the Payor, other evidence of payment reasonably satisfactory to the Trustee) to each holder. The Payor will attach to each certified copy (or other evidence) a certificate stating (x) that the amount of withholding Taxes evidenced by the certified copy was paid in connection with payments in respect of the principal amount of Notes then outstanding and (y) the amount of such withholding Taxes paid per 1,000 principal amount of the Notes. Copies of such documentation will be available for inspection during ordinary business hours at the office of the Trustee by the holders of the Notes upon request and will be made available at the offices of the Luxembourg Paying Agent if the Notes are then listed on the Luxembourg Stock Exchange.

254

At least 30 days prior to each date on which any payment under or with respect to the Notes is due and payable (unless such obligation to pay Additional Amounts arises shortly before or after the 30th day prior to such date, in which case it shall be promptly thereafter), if the Payor will be obligated to pay Additional Amounts with respect to such payment, the Payor will deliver to the Trustee an Officers Certificate stating the fact that such Additional Amounts will be payable, the amounts so payable and will set forth such other information necessary to enable the Trustee to pay such Additional Amounts to holders on the payment date. Each such Officers Certificate shall be relied upon until receipt of a further Officers Certificate addressing such matters. The Trustee shall be entitled to rely solely on each such Officers Certificate as conclusive proof that such payments are necessary. Wherever mentioned in the Indenture, the Notes or this Description of the Senior Notes, in any context: (1) the payment of principal, (2) purchase prices in connection with a purchase of Notes, (3) interest, or (4) any other amount payable on or with respect to the Notes, such reference shall be deemed to include payment of Additional Amounts as described under this heading to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof. The Payor will pay any present or future stamp, court or documentary taxes or any other excise or property taxes, charges or similar levies which arise in any jurisdiction from the execution, delivery or registration of any Notes or any other document or instrument referred to therein (other than a transfer of the Notes), or the receipt of any payments with respect to the Notes, excluding any such taxes, charges or similar levies imposed by any jurisdiction outside the United Kingdom, Luxembourg, the Federal Republic of Germany or any jurisdiction in which a Paying Agent is located, other than those resulting from, or required to be paid in connection with, the enforcement of the Notes, the Security or any other such document or instrument following the occurrence of any Event of Default with respect to the Notes. The foregoing obligations will survive any termination, defeasance or discharge of the Indenture and will apply mutatis mutandis to any jurisdiction in which any successor to a Payor is organized or any political subdivision or taxing authority or agency thereof or therein. Redemption for Taxation Reasons The Issuer may redeem the Notes in whole, but not in part, at any time upon giving not less than 30 nor more than 60 days notice to the holders of the Notes (which notice will be irrevocable) at a redemption price equal to 100% of the principal amount thereof, together with accrued and unpaid interest, if any, to the date fixed for redemption (a Tax Redemption Date) (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), and Additional Amounts, if any, then due and which will become due on the Tax Redemption Date as a result of the redemption or otherwise, if the Issuer determines that, as a result of: (1) (2) any change in, or amendment to, the law or treaties (or any regulations or rulings promulgated thereunder) of a Relevant Taxing Jurisdiction affecting taxation; or any change in position regarding the application, administration or interpretation of such laws, treaties, regulations or rulings (including a holding, judgment or order by a court of competent jurisdiction) (each of the foregoing in clauses (1) and (2), a Change in Tax Law),

the Issuer is, or on the next interest payment date in respect of the Notes would be, required to pay more than de minimis Additional Amounts, and such obligation cannot be avoided by taking reasonable measures available to it (including, without limitation, by appointing a new or additional paying agent in another jurisdiction). The Change in Tax Law must become effective on or after the date of this offering memorandum. In the case of a successor to the Issuer, the Change in Tax Law must become effective after the date that such entity first makes payment on the Notes. Notice of redemption for taxation reasons will be published in accordance with the procedures described in the Indenture as described under Notices. Notwithstanding the foregoing, no such notice of redemption will be given (a) earlier than 90 days prior to the earliest date on which the Payor would be obliged to make such payment of Additional Amounts and (b) unless at the time such notice is given, such obligation to pay such Additional Amounts remains in effect. Prior to the publication or mailing of any notice of redemption of the Notes pursuant to the foregoing, the Issuer will deliver to the Trustee (a) an Officers Certificate stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to its right so to redeem have been satisfied and that it cannot avoid the obligations to pay Additional Amounts by taking reasonable measures available to it; and (b) an opinion of an independent tax counsel reasonably satisfactory to the Trustee to the effect that the circumstances referred to

255

above exist. The Trustee will accept such Officers Certificate and opinion as sufficient evidence of the existence of satisfaction of the conditions precedent as described above, in which event it will be conclusive and binding on the holders of the Notes. The foregoing provisions will apply mutatis mutandis to any successor to the Issuer after such successor person becomes a party to the Indenture. Redemption at Maturity On December 1, 2019, the Issuer will redeem the Notes that have not been previously redeemed or purchased and cancelled at 100% of their principal amount plus accrued and unpaid interest thereon, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date). Certain Covenants Other than the covenant below under the caption Limitation on Activities of Bidco Prior to the Debt Pushdown, the following covenants will not be applicable until the Acquisition Date. Limitation on Activities of Bidco Prior to the Debt Pushdown Notwithstanding any other provision of the Indenture, prior to the consummation of the Debt Pushdown: (1) Bidco will not engage in any business activity or undertake any other activity, except any activity: (a) relating to the offering, sale, or issuance of the Notes and the Senior Secured Notes issued on the Issue Date, the Incurrence of Indebtedness represented by the Revolving Credit Facility, the Notes and the Senior Secured Notes issued on the Issue Date, lending or otherwise advancing the proceeds thereof to Unitymedia in connection the Debt Pushdown, the Related Transactions and any other activities in connection with the foregoing, (b) undertaken with the purpose of, and directly related to, fulfilling any other obligations under the Indenture (including for the avoidance of doubt, any repurchase or purchase, repayment, redemption, prepayment of such Debt, in each case, as permitted by the Indenture), the Revolving Credit Facility, the Senior Secured Notes and related escrow and security agreement, the Senior Secured Indenture, the Senior Notes Escrow Agreement, any other document relating to the Notes and the Senior Secured Notes issued on the Issue Date or relating to the Share Purchase Agreement, (c) undertaken with the purpose of, and directly related to, fulfilling any obligation under the Share purchase Agreement or facilitating the transactions contemplated thereby or (d) directly related or reasonably incidental to the establishment and/or maintenance of Bidcos corporate existence; Bidco shall not Incur any liabilities other than liabilities related to the Notes issued on the Issue Date, and the Senior Secured Notes issued on the Issue Date and the related escrow and security agreement, the Indenture or the Senior Secured Indenture, the Senior Notes Escrow Agreement, the Revolving Credit Facility or the Share Purchase Agreement, Hedging Obligation and Indebtedness in respect of any Subordinated Shareholder Loan issued to Holdco as part of the Equity Contribution; Bidco shall not (a) transfer or assign any of its assets except pursuant to the Senior Notes Escrow Agreement and the escrow and pledge agreement related to the Senior Secured Notes issued on the Issue Date or (b) issue any Capital Stock other than to Holdco; Bidco shall not create, Incur or suffer to exist any Lien on any of its assets except pursuant to the Senior Notes Escrow Agreement and the escrow and security agreement related to the Senior Secured Notes issued on the Issue Date, the Revolving Credit Facility and any commitments with respect to the Hedging Obligations in respect of the Notes, the Senior Secured Notes or the Revolving Credit Facility; Bidco shall not take or omit to take any action that would have the result of impairing the Liens created by the Bidco Share Pledge and the Senior Notes Escrow Security;

(2)

(4)

(5)

(6)

256

(7)

Bidco shall not make any amendment or waiver of the Share Purchase Agreement in any manner which would be materially adverse to the holders of the Notes (and for the purposes hereof and for the avoidance of doubt, any material amendment or waiver of clauses (iii), (iv) and (vii) of Section 9.2.1 of the Share Purchase Agreement would be deemed to be materially adverse to the holders of the Notes) without the consent of the holders of a majority in principal amount of the Notes outstanding; and for so long as any Notes are outstanding, Bidco shall not commence or take any action or facilitate a winding-up, liquidation or other analogous proceeding in respect of Bidco.

(8)

For the avoidance of doubt, following consummation of the Debt Pushdown, the foregoing covenant will be of no further force or effect. Completion of Debt Pushdown To the extent the Debt Pushdown has not been completed upon consummation of the Acquisition, each of Bidco, Unitymedia and the Guarantors shall take all necessary actions so that the Debt Pushdown shall be fully completed as soon as reasonably practicable after consummation of the Acquisition and in any event within 35 days of completion of the Acquisition. Contemporaneously with the completion of the Debt Pushdown, each Grantor shall take all necessary actions so that a Lien over the Collateral in respect of the Notes as described above under heading Ranking of the Notes, Guarantees and Security upon Completion of the Debt Pushdown Security has been granted to the Security Trustee on behalf of, and for the benefit of, the holders of the Notes pursuant to Security Documents as contemplated by the Indenture and shall (to the extent not already done) execute and deliver, or shall cause the execution and delivery, to the Security Trustee of the relevant assignment and such further or additional Security Documents in such form as the Security Trustee shall reasonably require creating an effective security interest over such Collateral on behalf of the holders of the Notes. Upon completion of the Debt Pushdown, the Issuer shall provide the Trustee legal opinions from legal counsel as to such matters with respect to the Debt Pushdown as provided for in a form of opinion attached as an exhibit to the Indenture. Each Grantor shall, and shall procure that each of its respective Subsidiaries shall, at its own expense, execute and do all such acts and things and provide such assurances as the Security Trustee may reasonably require (i) for perfecting or protecting the security intended to be afforded by any Security Documents relating to the Collateral; and (ii) if such Security Documents have become enforceable, for facilitating the exercise of all powers, authorities and discretions vested in the Security Trustee or in any receiver of all or any part of the Collateral. Each Grantor shall, and shall procure that each of its respective Subsidiaries shall, execute all transfers, conveyances, assignments and releases of that property whether to the Security Trustee or to its nominees and give all notices, orders and directions which the Security Trustee may reasonably request. Change of Control If a Change of Control shall occur at any time after consummation of the Acquisition and the Debt Pushdown, the Issuer shall, pursuant to the procedures described below and in the Indenture, offer (the Change of Control Offer) to purchase all Notes in whole or in part in denominations of 50,000 and in integral multiples of 1,000 in excess thereof, in the case of the Notes, at a purchase price (the Change of Control Purchase Price) in cash in an amount equal to 101% of the principal amount of such Notes, plus any Additional Amounts and accrued and unpaid interest, if any, to the date of purchase (the Change of Control Purchase Date) (subject to the rights of holders of record on relevant record dates to receive interest due on an interest payment date); provided, however, that the Issuer shall not be obliged to repurchase Notes as described under this subsection Change of Control in the event and to the extent that it has unconditionally exercised its right to redeem all of the Notes as described under Optional Redemption or all conditions to such redemption have been satisfied or waived. No such purchase in part shall reduce the principal amount at maturity of the Notes held by any holder to below 50,000, in the case of the Notes. Unless the Issuer has unconditionally exercised its right to redeem all the Notes as described under Optional Redemption or all conditions to such redemption have been satisfied or waived, within 30 days of any Change of Control, the Issuer shall notify the Trustee thereof and give written notice of such Change of

257

Control to each holder of Notes by first-class mail, postage prepaid, at such holders address appearing in the security register, stating, among other things:

that a Change of Control has occurred and the date of such event; the circumstances and relevant facts regarding such Change of Control (including, but not limited to, applicable information with respect to pro forma historical income, cash flow and capitalization after giving effect to the Change of Control); the purchase price and the purchase date which shall be fixed by the Issuer on a Business Day no earlier than 30 days nor later than 60 days from the date such notice is mailed, or such later date as is necessary to comply with requirements under the Exchange Act; that any Note not tendered will continue to accrue interest and unless the Issuer defaults in payment of the Change of Control Purchase Price, any Notes accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Purchase Date; and certain other procedures that a holder of Notes must follow to accept a Change of Control Offer or to withdraw such acceptance.

The Issuer shall cause to be published in a leading newspaper having a general circulation in London (which is expected to be the Financial Times) or through the newswire service of Bloomberg (or if Bloomberg does not then operate, any similar agency) and, so long as the Notes are listed on the Luxembourg Stock Exchange and the guidelines of such Stock Exchange so require, in Luxembourg, the notice described above. The ability of the Issuer to repurchase Notes pursuant to a Change of Control Offer may be limited by a number of factors. See Risk Factors Risks Relating to the Notes We may not be able to obtain enough funds necessary to finance an offer to repurchase your Notes upon the occurrence of certain events constituting a change of control (as defined in the Indenture) as required by the Indenture. The Trustee will promptly authenticate and deliver a new note or notes equal in principal amount to any unpurchased portion of Notes surrendered, if any, to the holder of Notes in global form or to each holder of certificated notes; provided that each such new note will be in a principal amount of 50,000 and in integral multiples of 1,000 in excess thereof. The Issuer will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Purchase Date. We will not be required to make a Change of Control Offer following a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by us and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer. Notwithstanding anything to the contrary herein, a Change of Control Offer may be made in advance of a Change of Control, conditional upon such Change of Control, if a definitive agreement is in place for the Change of Control at the time of making of the Change of Control Offer. The term all or substantially all as used in the definition of Change of Control has not been interpreted under New York law (which is the governing law of the Indenture) to represent a specific quantitative test. As a consequence, in the event the holders of the Notes elect to exercise their rights under the Indenture and the Issuer elects to contest such election, there could be no assurance as to how a court interpreting New York law would interpret the phrase. The provisions of the Indenture will not afford holders of the Notes the right to require the Issuer to repurchase the Notes in the event of a highly leveraged transaction or certain transactions with the Issuers management or its Affiliates, including a reorganization, restructuring, merger or similar transaction (including, in certain circumstances, an acquisition of the Issuer by management or its affiliates) involving the Issuer that may adversely affect holders of the Notes, if such transaction is not a transaction defined as a Change of Control. The provisions under the Indenture related to the Issuers obligation to make an offer to repurchase the Notes as a result of a Change of Control may be waived or modified with the written consent of the holders of a majority in principal amount of the Notes prior to the occurrence of a Change of Control. The Issuer will comply with the applicable tender offer rules, including Rule 14e-1 under the Exchange Act, and any other applicable securities laws or regulations in connection with a Change of Control Offer. To the

258

extent that the provisions of any applicable securities laws or regulations conflict with the provisions of this covenant (other than the obligation to make an offer pursuant to this covenant), the Issuer will comply with the securities laws and regulations and will not be deemed to have breached its obligations described in this covenant by virtue thereof. If and for so long as the Notes are listed on the Official List of the Luxembourg Stock Exchange and admitted for trading on the Euro MTF and the rules of the Luxembourg Stock Exchange so require, the Issuer will publish notices relating to the Change of Control Offer in a leading newspaper of general circulation in Luxembourg or, to the extent and in the manner permitted by such rules, post such notices on the official website of the Luxembourg Stock Exchange. Limitation on Indebtedness The Issuer will not, and will not permit any of its Restricted Subsidiaries to, Incur any Indebtedness (including Acquired Indebtedness); provided, however, that: (1) any Guarantor may Incur Indebtedness (including Acquired Indebtedness) if on the date of such Incurrence and after giving effect thereto on a pro forma basis the Consolidated Leverage Ratio for the Restricted Subsidiaries would not exceed 4.00 to 1.00; and (2) the Issuer may Incur Pari Passu Indebtedness (including Acquired Indebtedness constituting Pari Passu Indebtedness) if on the date of such Incurrence and after giving effect thereto on a pro forma basis the Consolidated Leverage Ratio for the Issuer and its Restricted Subsidiaries would not exceed 5.00 to 1.00. The first paragraph of this covenant will not prohibit the Incurrence of the following Indebtedness: (1) Indebtedness of the Issuer and any of its Restricted Subsidiaries under Credit Facilities in the aggregate principal amount at any one time outstanding not to exceed an amount equal to 80 million; Indebtedness of the Issuer owing to and held by any Restricted Subsidiary (other than a Receivables Entity) or Indebtedness of a Restricted Subsidiary owing to and held by the Issuer or any other Restricted Subsidiary (other than a Receivables Entity); provided, however, that: (a) any subsequent issuance or transfer of Capital Stock or any other event which results in any such Indebtedness being beneficially held by a Person other than the Issuer or a Restricted Subsidiary (other than a Receivables Entity) of the Issuer; and any sale or other transfer of any such Indebtedness to a Person other than the Issuer or a Restricted Subsidiary (other than a Receivables Entity) of the Issuer,

(2)

(b)

shall be deemed, in each case, to constitute an Incurrence of such Indebtedness by the Issuer or such Restricted Subsidiary, as the case may be; provided, further, that, if a Restricted Subsidiary that is not a Guarantor owns or holds such Indebtedness and the Issuer or any Guarantor is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations of the Issuer with respect to the Notes or of such Guarantor with respect to its Subsidiary Guarantee, as the case may be; (3) (a) Indebtedness of the Issuer represented by the Notes (other than any Additional Notes issued after the Issue Date), (b) Indebtedness of the Guarantors represented by the Subsidiary Guarantees, (c) Indebtedness of the Restricted Subsidiaries represented by the Senior Secured Notes issued on the Issue Date and the guarantees of the Senior Secured Notes and (d) Indebtedness represented by the Security Documents, including, with respect to each such Indebtedness parallel debt obligations created under the Intercreditor Agreement and the Security Documents; any Indebtedness (other than the Indebtedness described in clauses (1), (2), (3), (6), (8), (9), (10) and (11)) outstanding on the Issue Date, provided that any Indebtedness outstanding on the Issue Date under the Existing Senior Secured Notes, the Existing Senior Notes and the Existing Term Loan will be repaid in full upon completion of the Debt Pushdown;

(4)

259

(5)

any Refinancing Indebtedness Incurred in respect of any Indebtedness described in clause (3), clause (4), this clause (5), clause (6), clause (8) or clause (15) or Incurred pursuant to the first paragraph of this covenant; Indebtedness of a Restricted Subsidiary Incurred and outstanding on the date on which such Restricted Subsidiary was acquired by the Issuer (other than Indebtedness Incurred (a) to provide all or any portion of the funds utilized to consummate the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was otherwise acquired by the Issuer or (b) otherwise in connection with, or in contemplation of, such acquisition); provided, however, that immediately following the consummation of the acquisition of such Restricted Subsidiary by the Issuer, the Consolidated Leverage Ratio of the Issuer would not be greater than immediately prior to such acquisition; Indebtedness under Currency Agreements and Interest Rate Agreements; provided, that in the case of Currency Agreements, such Currency Agreements are related to business transactions of the Issuer or its Restricted Subsidiaries entered into in the ordinary course of business or in the case of Currency Agreements and Interest Rate Agreements, such Currency Agreements and Interest Rate Agreements are entered into for bona fide hedging purposes of the Issuer or its Restricted Subsidiaries (as determined in good faith by the Board of Directors or senior management of the Issuer) and substantially correspond in terms of notional amount, currencies and interest rates, as applicable, to Indebtedness of the Issuer or its Restricted Subsidiaries; Indebtedness represented by Capitalized Lease Obligations, mortgage financings or purchase money obligations with respect to assets other than Capital Stock or other Investments, in each case Incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvements of property used in the business of the Issuer or such Restricted Subsidiary, in an aggregate principal amount not to exceed 50.0 million at any time outstanding; Indebtedness Incurred in respect of (a) workers compensation claims, self-insurance obligations, performance, bid, surety, tax guarantors or other similar bonds and completion guarantees and warranties provided by a Restricted Subsidiary Incurred in the ordinary course of business and (b) letters of credit, bankers acceptances or other similar instruments or obligations issued or relating to liabilities or obligations Incurred in the ordinary course of business;

(6)

(7)

(8)

(9)

(10) Indebtedness arising from agreements of the Issuer or a Restricted Subsidiary providing for indemnification, obligations in respect of earnouts or adjustment of purchase price or similar obligations, in each case, Incurred or assumed in connection with the disposition of any business, assets or Capital Stock of a Restricted Subsidiary, provided that the maximum aggregate liability in respect of all such Indebtedness shall at no time exceed the gross proceeds (including the fair market value of non-cash proceeds) actually received by the Issuer and its Restricted Subsidiaries in connection with such disposition; (11) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business, provided, however, that such Indebtedness is extinguished within five Business Days of Incurrence; (12) guarantees by the Issuer or any Guarantor of Indebtedness or any other obligation or liability of the Issuer or any Restricted Subsidiary (other than of any Indebtedness Incurred by such Restricted Subsidiary in violation of this covenant); provided that if the Indebtedness being guaranteed is subordinated in right of payment to the Notes or any Subsidiary Guarantee, then such guarantee shall be subordinated substantially to the same extent as the relevant Indebtedness guaranteed; (13) Indebtedness of the Issuer and its Restricted Subsidiaries in any Qualified Receivables Transaction; (14) Subordinated Shareholder Loans Incurred by the Issuer; (15) any Indebtedness of the Issuer and any Restricted Subsidiary Incurred after the Issue Date and before the Acquisition Date to the extent such Indebtedness is permitted under the Share Purchase Agreement in effect as of the Issue Date; provided that such Indebtedness could not have been Incurred under the first paragraph of this covenant or another clause of this second paragraph of this covenant had this covenant been in effect as of the Issue Date; and

260

(16) in addition to the items referred to in clauses (1) through (15) above, Indebtedness of the Issuer and any of its Restricted Subsidiaries in an aggregate outstanding principal amount which, when taken together with the principal amount of all other Indebtedness Incurred pursuant to this clause (16) and then outstanding, will not exceed 50.0 million at any time outstanding. For purposes of determining compliance with, and the outstanding principal amount of any particular Indebtedness Incurred pursuant to and in compliance with, this covenant: (1) in the event that Indebtedness meets the criteria of more than one of the types of Indebtedness described in the first and second paragraphs of this covenant, the Issuer, in its sole discretion, will classify and, from time to time, may reclassify such Indebtedness, in any manner that complies with this covenant and such item of Indebtedness will be treated as having been Incurred pursuant to only one of such clauses of the second paragraph of this covenant or pursuant to the first paragraph of this covenant; any borrowings under the Revolving Credit Facility may only be Incurred under clause (1) of the second paragraph of this covenant and may not be reclassified; guarantees of, or obligations in respect of letters of credit relating to, Indebtedness which is otherwise included in the determination of a particular amount of Indebtedness shall not be included; if obligations in respect of letters of credit are Incurred pursuant to any Credit Facility and are being treated as Incurred pursuant to clause (1) of the second paragraph above and the letters of credit relate to other Indebtedness, then such other Indebtedness shall not be included; the principal amount of any Disqualified Stock of the Issuer, or Preferred Stock of a Restricted Subsidiary, will be equal to the greater of the maximum mandatory redemption or repurchase price (not including, in either case, any redemption or repurchase premium) or the liquidation preference thereof; Indebtedness permitted by this covenant need not be permitted solely by reference to one provision permitting such Indebtedness but may be permitted in part by one such provision and in part by one or more other provisions of this covenant permitting such Indebtedness; and the amount of Indebtedness issued at a price that is less than the principal amount thereof will be equal to the amount of the liability in respect thereof determined in accordance with IFRS.

(2)

(3)

(4)

(5)

(6)

(7)

Accrual of interest, accrual of dividends, the accretion of accreted value, the payment of interest in the form of additional Indebtedness and the payment of dividends in the form of additional shares of Preferred Stock or Disqualified Stock and increases in the amount of Indebtedness due to a change in accounting principles will not be deemed to be an Incurrence of Indebtedness for purposes of this covenant. The amount of any Indebtedness outstanding as of any date shall be (i) the accreted value thereof in the case of any Indebtedness issued with original issue discount and (ii) the principal amount or liquidation preference thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness. In addition, the Issuer will not permit any of its Unrestricted Subsidiaries to Incur any Indebtedness or issue any shares of Disqualified Stock, other than Non-Recourse Debt. If at any time an Unrestricted Subsidiary becomes a Restricted Subsidiary, any Indebtedness of such Subsidiary shall be deemed to be Incurred by a Restricted Subsidiary of the Issuer as of such date (and, if such Indebtedness is not permitted to be Incurred as of such date under this Limitation on Indebtedness covenant, the Issuer shall be in Default of this covenant). For purposes of determining compliance with any euro-denominated restriction on the Incurrence of Indebtedness, the Euro Equivalent principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was Incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness; provided that (1) if such Indebtedness is Incurred to refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable euro-dominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such euro-dominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced and (2) if and for so long as any such Indebtedness is

261

subject to an agreement intended to protect against fluctuations in currency exchange rates with respect to the currency in which such Indebtedness is denominated covering principal and interest on such Indebtedness, the swapped rate of such Indebtedness was as of the date of the applicable swap. Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that the Issuer may Incur pursuant to this covenant shall not be deemed to be exceeded solely as a result of fluctuations in the exchange rate of currencies. The principal amount of any Indebtedness Incurred to refinance other Indebtedness, if Incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such Refinancing Indebtedness is denominated that is in effect on the date of such refinancing. Limitation on Restricted Payments The Issuer will not, and will not permit any of its Restricted Subsidiaries, directly or indirectly: (1) to declare or pay any dividend or make any distribution on or in respect of its Capital Stock (including any payment in connection with any merger or consolidation involving the Issuer or any of its Restricted Subsidiaries) except: (a) dividends or distributions payable in Capital Stock of the Issuer (other than Disqualified Stock) or Subordinated Shareholder Loans; and dividends or distributions payable to the Issuer or a Restricted Subsidiary of the Issuer (and if such Restricted Subsidiary is not a Wholly Owned Subsidiary, to its other holders of common Capital Stock on a pro rata basis);

(b)

(2)

to purchase, redeem, retire or otherwise acquire for value any Capital Stock of the Issuer or any Parent of the Issuer held by Persons other than the Issuer or a Restricted Subsidiary of the Issuer; to purchase, repurchase, redeem, defease or otherwise acquire or retire for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment, any Subordinated Obligations (other than (x) the purchase, repurchase, redemption, defeasance or other acquisition or retirement of Subordinated Obligations purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of purchase, repurchase, redemption, defeasance or other acquisition or retirement or (y) Indebtedness permitted under clause (2) of the second paragraph under the covenant described under Limitation on Indebtedness); or to make any Restricted Investment in any Person;

(3)

(4)

(any such dividend, distribution, purchase, redemption, repurchase, defeasance, other acquisition, retirement or Restricted Investment referred to in clauses (1) through (4) are referred to herein as a Restricted Payment), if at the time the Issuer or such Restricted Subsidiary makes such Restricted Payment: (a) (b) a Default shall have occurred and be continuing (or would result therefrom); or the Issuer is not able to Incur an additional 1.00 of Pari Passu Indebtedness pursuant to the first paragraph under the covenant described under Limitation on Indebtedness, after giving effect, on a pro forma basis, to such Restricted Payment; or the aggregate amount of such Restricted Payment and all other Restricted Payments declared or made subsequent to the Issue Date and not returned or rescinded would exceed the sum of: (i) 50% of Consolidated Net Income for the period (treated as one accounting period) from the beginning of the first fiscal quarter commencing after the Issue Date to the end of the most recent fiscal quarter ending prior to the date of such Restricted Payment for which financial statements are available (or, in case such Consolidated Net Income is a deficit, minus 100% of such deficit); 100% of the aggregate Net Cash Proceeds and the fair market value, as determined in good faith by the Board of Directors of the Issuer, of marketable securities received by

(c)

(ii)

262

the Issuer from the issue or sale of its Capital Stock (other than Disqualified Stock) or Subordinated Shareholder Loans or other capital contributions subsequent to the Issue Date (other than (x) Net Cash Proceeds received from an issuance or sale of such Capital Stock to a Restricted Subsidiary of the Issuer or an employee stock ownership plan, option plan or similar trust to the extent such sale to an employee stock ownership plan or similar trust is financed by loans from or guaranteed by the Issuer or any Restricted Subsidiary unless such loans have been repaid with cash on or prior to the date of determination or (y) Excluded Contributions); (iii) 100% of the aggregate Net Cash Proceeds and the fair market value, as determined in good faith by the Board of Directors of the Issuer, of marketable securities received by the Issuer or any Restricted Subsidiary from the issuance or sale (other than to the Issuer or a Restricted Subsidiary of the Issuer) by the Issuer or any Restricted Subsidiary subsequent to the Issue Date of any Indebtedness that has been converted into or exchanged for Capital Stock of the Issuer (other than Disqualified Stock) or Subordinated Shareholder Loans; and (iv) the amount equal to the net reduction in Restricted Investments made by the Issuer or any of its Restricted Subsidiaries resulting from: (A) repurchases, redemptions or other acquisitions or retirements of any such Restricted Investment, proceeds realized upon the sale or other disposition to a Person other than the Issuer or a Restricted Subsidiary of any such Restricted Investment, repayments of loans or advances or other transfers of assets (including by way of dividend, distribution, interest payments or returns of capital) to the Issuer or any Restricted Subsidiary; or the redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries (valued, in each case, as provided in the definition of Investment) not to exceed, in the case of any Unrestricted Subsidiary, the amount of Investments previously made by the Issuer or any Restricted Subsidiary in such Unrestricted Subsidiary, which amount in each case under this clause (iv) was included in the calculation of the amount of Restricted Payments; provided, however, that no amount will be included under this clause (iv) to the extent it is already included in Consolidated Net Income.

(B)

The fair market value of property or assets other than cash covered by the preceding sentence shall be the fair market value thereof as determined in good faith by the Issuer. The provisions of the preceding paragraph will not prohibit: (1) any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Capital Stock, Disqualified Stock, Subordinated Shareholder Loans or Subordinated Obligations of the Issuer made by exchange (including any such exchange pursuant to the exercise of a conversion right or privilege in connection with which cash is paid in lieu of the issuance of fractional shares) for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of the Issuer (other than Disqualified Stock, Capital Stock issued or sold to a Subsidiary or an employee stock ownership plan or similar trust to the extent such sale to an employee stock ownership plan or similar trust is financed by loans from or guaranteed by the Issuer or any Restricted Subsidiary unless such loans have been repaid with cash on or prior to the date of determination), Subordinated Shareholder Loans or a substantially concurrent capital contribution to the Issuer; provided, however, that (a) such purchase, repurchase, redemption, defeasance, acquisition or retirement will be excluded in subsequent calculations of the amount of Restricted Payments and (b) the Net Cash Proceeds from such sale or issuance of Capital Stock or Subordinated Shareholder Loans or from such capital contribution will be excluded from clause (c)(ii) of the preceding paragraph; any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Subordinated Obligations of the Issuer or a Restricted Subsidiary made by exchange for, or out of the proceeds of the substantially concurrent sale of, Subordinated Obligations of the Issuer or such Restricted Subsidiary that is permitted to be Incurred pursuant to the covenant described under Limitation

(2)

263

on Indebtedness and that in each case constitutes Refinancing Indebtedness; provided, however, that such purchase, repurchase, redemption, defeasance, acquisition or retirement will be excluded in subsequent calculations of the amount of Restricted Payments; (3) any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Disqualified Stock of the Issuer or a Restricted Subsidiary made by exchange for or out of the proceeds of the substantially concurrent sale of Disqualified Stock of the Issuer or such Restricted Subsidiary, as the case may be, that, in each case, is permitted to be Incurred pursuant to the covenant described under Limitation on Indebtedness and that in each case constitutes Refinancing Indebtedness; provided, however, that such purchase, repurchase, redemption, defeasance, acquisition or retirement will be excluded in subsequent calculations of the amount of Restricted Payments; dividends paid within 60 days after the date of declaration if at such date of declaration such dividend would have complied with this provision; provided, however, that such dividends will be included in subsequent calculations of the amount of Restricted Payments; the purchase, repurchase, defeasance, redemption or other acquisition, cancellation or retirement for value of Capital Stock, or options, warrants, equity appreciation rights or other rights to purchase or acquire Capital Stock of the Issuer or any Restricted Subsidiary of the Issuer or any parent of the Issuer held by any existing or former employees or management of the Issuer or any Subsidiary of the Issuer or their assigns, estates or heirs, in each case in connection with the repurchase provisions under employee stock option or stock purchase agreements or other agreements to compensate management employees; provided that such redemptions or repurchases pursuant to this clause will not exceed an amount equal to 3.0 million in the aggregate during any calendar year (with any unused amounts in any preceding calendar year being carried over to the succeeding calendar year); provided, however, that the amount of any such repurchase or redemption will be included in subsequent calculations of the amount of Restricted Payments; the declaration and payment of dividends to holders of any class or series of Disqualified Stock, or of any Preferred Stock of a Restricted Subsidiary, Incurred in accordance with the terms of the covenant described under Limitation on Indebtedness above; purchases, repurchases, redemptions, defeasance or other acquisitions or retirements of Capital Stock deemed to occur upon the exercise of stock options, warrants or other convertible securities if such Capital Stock represents a portion of the exercise price thereof; provided, however, that such repurchases will be excluded from subsequent calculations of the amount of Restricted Payments; the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of any Subordinated Obligation (i) at a purchase price not greater than 101% of the principal amount of such Subordinated Obligation in the event of a Change of Control in accordance with provisions similar to the Change of Control covenant or (ii) at a purchase price not greater than 100% of the principal amount thereof in accordance with provisions similar to the Limitation on Sales of Assets and Subsidiary Stock covenant; provided that, prior to or simultaneously with such purchase, repurchase, redemption, defeasance or other acquisition or retirement, the Issuer has made the Change of Control Offer or Asset Disposition Offer, as applicable, as provided in such covenant with respect to the Notes and has completed the repurchase or redemption of all Notes validly tendered for payment in connection with such Change of Control Offer or Asset Disposition Offer; and provided, further, that such purchase, redemption or other acquisition will be excluded from subsequent calculations of the amount of Restricted Payments; dividends, loans, advances or distributions to any Parent or other payments by the Issuer or any Restricted Subsidiary in amounts equal to: (i) (ii) the amounts required for any Parent to pay Parent Expenses; the amounts required for any Parent to pay Public Offering Expenses;

(4)

(5)

(6)

(7)

(8)

(9)

(iii) the amounts required for any Parent to pay Related Taxes; and (iv) amounts constituting payments satisfying the requirements of clauses (11) and (12) of the second paragraph of the covenant described under Limitation on Affiliate Transactions,

264

provided, that the Issuer or any Restricted Subsidiary receives a corporate benefit as the result of any such dividend, loan, advance or distribution or other payment; and provided further that such dividends, loans, advances, distributions or other payments will be excluded from subsequent calculations of the amount of Restricted Payments; (10) Investments in an aggregate amount outstanding at any time not to exceed the aggregate cash amount of Excluded Contributions, or consisting of non-cash Excluded Contributions, or Investments in exchange for or using as consideration Investments previously made under this clause, provided that the amount of such Investments will be excluded from subsequent calculations of the amount of Restricted Payments; (11) payments by the Issuer, or loans, advances, dividends or distributions to any parent company of the Issuer to make payments to holders of Capital Stock of the Issuer or any parent company of the Issuer in lieu of the issuance of fractional shares of such Capital Stock; provided that the net amount of such payments will be excluded from subsequent calculations of the amount of Restricted Payments; (12) so long as no Default or Event of Default of the type specified in clauses (1) or (2) under Events of Default has occurred and is continuing, Restricted Payments to be applied to scheduled cash interest payments on Indebtedness of any Parent to the extent that such Indebtedness is guaranteed by the Issuer pursuant to a guarantee otherwise permitted to be Incurred under the Indenture; provided, however, that the amount of such payments will be included in subsequent calculations of the amount of Restricted Payments; (13) so long as no Default or Event of Default of the type specified in clauses (1) or (2) under Events of Default has occurred and is continuing, the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of any Capital Stock or Subordinated Shareholder Loans held by, or the making of any dividends, loans, advances or distributions to, any Parent to the extent that, after giving pro forma effect to any such purchase, repurchase, redemption, defeasance, other acquisition or retirement, dividend, loan, advance or distribution, the Consolidated Leverage Ratio for the Issuer and its Restricted Subsidiaries would not exceed 5.00 to 1.00, provided that the net amount of such payments will be included in subsequent calculations of the amount of Restricted Payments; (14) Restricted Payments in an aggregate amount at any time outstanding, when taken together with all other Restricted Payments made pursuant to this clause (14), not to exceed 25.0 million in the aggregate in any calendar year (with any unused amounts in any preceding calendar year being carried over to the succeeding calendar year); provided that the amount of such Restricted Payments will be included in subsequent calculations of the amount of Restricted Payments; (15) payments by the Issuer to a Parent in an amount not to exceed (a) the sum of the amount of the net proceeds of the Senior Notes Offering, the Senior Secured Notes Offering and the Equity Contribution minus (b) the aggregate amount of all outstanding Indebtedness under the Existing Senior Secured Notes, the Existing Notes and the Existing Term Loan (net of cash and Cash Equivalents) of Unitymedia and its subsidiaries refinanced in connection with the Debt Pushdown minus (c) the aggregate amount of cash paid to the seller under the Share Purchase Agreement in consideration of the Acquisition; provided that in no event shall the amount of payments made pursuant to this clause (15) exceed the amount of cash on the consolidated balance sheet of Unitymedia GmbH at the time of the consummation of the Acquisition; and (16) Restricted Payments made in connection with any Related Transaction. The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of such Restricted Payment of the asset(s) or securities proposed to be paid, transferred or issued by the Issuer or such Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment. The fair market value of any cash Restricted Payment shall be its face amount and any non-cash Restricted Payment shall be determined conclusively by the Board of Directors of the Issuer acting in good faith. Limitation on Liens The Issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, Incur or suffer to exist any Lien (other than Permitted Liens) upon any of its property or assets (including Capital

265

Stock of Restricted Subsidiaries of the Issuer), whether owned on the date of the Indenture or acquired after that date, which Lien is securing any Indebtedness (such Lien, the Initial Lien), unless contemporaneously with the Incurrence of such Initial Lien effective provision is made to secure the Indebtedness due under the Indenture and the Notes or, in respect of Liens on any Guarantors property or assets, such Guarantors Subsidiary Guarantee, equally and ratably with (or (a) on a junior priority basis if such Indebtedness is Senior Indebtedness of a Guarantor or (b) prior to, in the case of Liens with respect to Subordinated Obligations of a Guarantor, as the case may be) the Indebtedness secured by such Initial Lien for so long as such Indebtedness is so secured. Any such Lien thereby created in favor of the Notes will be automatically and unconditionally released and discharged upon (i) the release and discharge of the Initial Lien to which it relates, (ii) any sale, exchange or transfer to any Person other than the Issuer or any Restricted Subsidiary of the property or assets secured by such Initial Lien, (iii) the full and final payment of all amounts payable by the Issuer under the Notes and the Indenture, or (iv) the defeasance or discharge of the Notes in accordance with the defeasance provisions described under Defeasance. Notwithstanding the foregoing, the Issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, Incur or suffer to exist any Lien on any Collateral (other than Permitted Collateral Liens). Limitation on Restrictions on Distributions from Restricted Subsidiaries The Issuer will not, and will not permit any Restricted Subsidiary to, create or otherwise cause or permit to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary to: (1) (2) (3) pay dividends or make any other distributions on its Capital Stock or pay any Indebtedness or other obligations owed to the Issuer or any Restricted Subsidiary; make any loans or advances to the Issuer or any Restricted Subsidiary; or transfer any of its property or assets to the Issuer or any Restricted Subsidiary;

provided that (x) the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on Common Stock and (y) the subordination of (including but not limited to, the application of any standstill requirements to) loans or advances made to the Issuer or any Restricted Subsidiary to other Indebtedness Incurred by the Issuer or any Restricted Subsidiary, shall not be deemed to constitute such an encumbrance or restriction. The preceding provisions will not prohibit: (1) any encumbrance or restriction pursuant to an agreement in effect at or entered into on the date of the Indenture, including, without limitation, the Indenture, any Revolving Credit Facility, the Intercreditor Agreement and the Security Documents, in each case, as in effect on the Issue Date; any encumbrance or restriction pursuant to an agreement or instrument of a Person relating to any Capital Stock or Indebtedness of a Person, Incurred on or before the date on which such Person was acquired by or merged or consolidated with or into the Issuer or any Restricted Subsidiary, or on which such agreement or instrument is assumed by the Issuer or any Restricted Subsidiary in connection with an acquisition of assets (other than Capital Stock or Indebtedness Incurred as consideration in, or to provide all or any portion of the funds utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Restricted Subsidiary or was acquired by the Issuer or was merged or consolidated with or into the Issuer or any Restricted Subsidiary or in contemplation of such transaction) and outstanding on such date, provided, that any such encumbrance or restriction shall not extend to any assets or property of the Issuer or any other Restricted Subsidiary other than the assets and property so acquired and provided, further, that for the purposes of this clause, if another Person is the Successor Company, any Subsidiary thereof or agreement or instrument of such person or any such Subsidiary shall be deemed acquired or assumed by the Issuer or any Restricted Subsidiary when such Person becomes the Successor Company; any encumbrance or restriction pursuant to an agreement or instrument effecting a refunding, replacement or refinancing of Indebtedness Incurred pursuant to, or that otherwise extends, renews,

(2)

(3)

266

refunds, refinances or replaces, an agreement referred to in clause (1) or (2) of this paragraph or this clause (3) or contained in any amendment, supplement or other modification to an agreement referred to in clause (1) or (2) of this paragraph or this clause (3); provided, however, that the encumbrances and restrictions with respect to such Restricted Subsidiary contained in any such agreement are no less favorable in any material respect to the holders of the Notes than the encumbrances and restrictions contained in such agreements referred to in clauses (1) or (2) of this paragraph (as determined in good faith by the Issuer); (4) in the case of clause (3) of the first paragraph of this covenant, any encumbrance or restriction: (i) that restricts in a customary manner the subletting, assignment or transfer of any property or asset that is subject to a lease, license or similar contract, or the assignment or transfer of any such lease, license or other contract; contained in Liens permitted under the Indenture securing Indebtedness of the Issuer or a Restricted Subsidiary to the extent such encumbrances or restrictions restrict the transfer of the property subject to such mortgages, pledges or other security agreements; or

(ii)

(iii) pursuant to customary provisions restricting dispositions of real property interests set forth in any reciprocal easement agreements of the Issuer or any Restricted Subsidiary; (5) any encumbrance or restriction pursuant to (a) purchase money obligations for property acquired in the ordinary course of business and (b) Capitalized Lease Obligations permitted under the Indenture, in each case that impose encumbrances or restrictions of the nature described in clause (3) of the first paragraph of this covenant on the property so acquired; any Purchase Money Note or other Indebtedness or contractual requirements Incurred with respect to a Qualified Receivables Transaction relating exclusively to a Receivables Entity that, in the good faith determination of the Board of Directors, are necessary to effect such Qualified Receivables Transaction; any encumbrance or restriction with respect to a Restricted Subsidiary (or any of its property or assets) imposed pursuant to an agreement entered into for the direct or indirect sale or disposition of all or substantially all the Capital Stock or assets of such Restricted Subsidiary (or the property or assets that are subject to such restriction) pending the closing of such sale or disposition; customary provisions in leases, joint venture agreements and other agreements and instruments entered into by the Issuer or any Restricted Subsidiary in the ordinary course of business; encumbrances or restrictions arising or existing by reason of applicable law or any applicable rule, regulation or order, or required by any regulatory authority;

(6)

(7)

(8)

(9)

(10) any encumbrance or restriction on cash or other deposits or net worth imposed by customers under agreements entered into in the ordinary course of business; (11) any encumbrance or restriction pursuant to Currency Agreements or Interest Rate Agreements; and (12) any encumbrance or restriction arising pursuant to an agreement or instrument relating to any Indebtedness permitted to be Incurred subsequent to the Issue Date pursuant to the provisions of the covenant described under Limitation on Indebtedness if (a) the encumbrances and restrictions taken as a whole are not materially less favorable to the holders of the Notes than the encumbrances and restrictions contained in the Revolving Credit Facility and the Intercreditor Agreement, in each case, as in effect on the Issue Date (as determined in good faith by the Issuer) or (b) such encumbrances and restrictions taken as a whole are not materially more disadvantageous to the holders of the Notes than is customary in comparable financings (as determined in good faith by the Issuer) and, in each case, either (x) the Issuer reasonably believes that such encumbrances and restrictions will not materially affect the Issuers ability to make principal or interest payments on the Notes as and when they come due or (y) such encumbrances and restrictions applies only if a default occurs in respect of a payment or financial covenant relating to such Indebtedness.

267

Limitation on Sales of Assets and Subsidiary Stock The Issuer will not, and will not permit any of its Restricted Subsidiaries to, make any Asset Disposition unless: (1) the Issuer or such Restricted Subsidiary, as the case may be, receives consideration (including by way of relief from, or by any other Person assuming responsibility for, any liabilities, contingent or otherwise) at least equal to the fair market value (such fair market value to be determined on the date of contractually agreeing to such Asset Disposition), as determined in good faith by the Board of Directors of the Issuer (including as to the value of all non-cash consideration), of the shares and assets subject to such Asset Disposition; unless the Asset Disposition is a Permitted Asset Swap, at least 75% of the consideration from such Asset Disposition (excluding any consideration by way of relief from, or by any other Person assuming responsibility for, any liabilities, contingent or otherwise, other than Indebtedness) received by the Issuer or such Restricted Subsidiary, as the case may be, is in the form of cash or Cash Equivalents; and an amount equal to 100% of the Net Available Cash from such Asset Disposition is applied by the Issuer or such Restricted Subsidiary, as the case may be: (a) to the extent the Issuer or any Restricted Subsidiary, as the case may be, elects (or is required by the terms of any Indebtedness), to prepay, repay or purchase Senior Indebtedness of the Issuer (including the Notes) or any Guarantor or Indebtedness of a Restricted Subsidiary that is not a Guarantor (in each case other than Indebtedness owed to the Issuer or an Affiliate of the Issuer) within 365 days from the later of the date of such Asset Disposition or the receipt of such Net Available Cash; provided, however, that, in connection with any prepayment, repayment or purchase of Bank Indebtedness pursuant to this clause (a), the Issuer or such Restricted Subsidiary will retire such Bank Indebtedness and will cause the related commitment (if any) to be permanently reduced in an amount equal to the principal amount so prepaid, repaid or purchased; or to the extent the Issuer or such Restricted Subsidiary elects to invest in or commit to invest in Additional Assets within 365 days from the later of the date of such Asset Disposition or the receipt of such Net Available Cash; provided, however, that any such reinvestment in Additional Assets made pursuant to a definitive agreement or a commitment approved by the Board of Directors of the Issuer that is executed or approved within such time will satisfy this requirement, so long as such investment is consummated within 6 months of such 365th day;

(2)

(3)

(b)

provided that pending the final application of any such Net Available Cash in accordance with clause (a) or clause (b) above, the Issuer and its Restricted Subsidiaries may temporarily reduce Indebtedness or otherwise invest such Net Available Cash in any manner not prohibited by the Indenture. Any Net Available Cash from Asset Dispositions that is not applied or invested or committed to be applied as provided in the preceding paragraph will be deemed to constitute Excess Proceeds. On the 366th day after an Asset Disposition, if the aggregate amount of Excess Proceeds exceeds 50.0 million, the Issuer will be required to make an offer (Asset Disposition Offer) to all holders of Notes and to the extent required by the terms of other Indebtedness of the Issuer or any Guarantor that does not constitute Subordinated Obligations, to all holders of such other Indebtedness outstanding with similar provisions requiring the Issuer or such Guarantor to make an offer to purchase such Indebtedness with the proceeds from any Asset Disposition (Other Asset Disposition Indebtedness), to purchase the maximum principal amount of Notes and any such Other Asset Disposition Indebtedness to which the Asset Disposition Offer applies that may be purchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount of the Notes and Other Asset Disposition Indebtedness plus accrued and unpaid interest to the date of purchase, in accordance with the procedures set forth in the Indenture or the agreements governing the Other Asset Disposition Indebtedness, as applicable, in each case in a principal amount of 50,000 and in integral multiples of 1,000 in excess thereof. To the extent that the aggregate amount of Notes and Other Asset Disposition Indebtedness so validly tendered and not properly withdrawn pursuant to an Asset Disposition Offer is less than the Excess Proceeds, the

268

Issuer may use any remaining Excess Proceeds for general corporate purposes, subject to other covenants contained in the Indenture. If the aggregate principal amount of Notes surrendered by holders thereof and Other Asset Disposition Indebtedness surrendered by holders or lenders, collectively, exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and Other Asset Disposition Indebtedness to be purchased on a pro rata basis on the basis of the aggregate principal amount of tendered Notes and Other Asset Disposition Indebtedness. For the purposes of calculating the principal amount of any such Indebtedness not denominated in euro, such Indebtedness shall be calculated by converting any such principal amounts into their Euro Equivalent determined as of a date selected by the Issuer that is within the Asset Disposition Offer Period. Upon completion of such Asset Disposition Offer, the amount of Excess Proceeds shall be reset at zero. The Asset Disposition Offer, insofar as it relates to the Notes, will remain open for a period of 20 Business Days following its commencement, except to the extent that a longer period is required by applicable law (the Asset Disposition Offer Period). No later than five Business Days after the termination of the Asset Disposition Offer Period (the Asset Disposition Purchase Date), the Issuer will purchase the principal amount of Notes and Other Asset Disposition Indebtedness required to be purchased pursuant to this covenant (the Asset Disposition Offer Amount) or, if less than the Asset Disposition Offer Amount has been so validly tendered, all Notes and Other Asset Disposition Indebtedness validly tendered in response to the Asset Disposition Offer. Any Net Available Cash payable in respect of the Notes pursuant to this covenant will be apportioned between the Euro Notes and the Dollar Notes in proportion to the respective aggregate principal amounts of Euro Notes and Dollar Notes validly tendered and not withdrawn, based upon the Euro Equivalent of such principal amount of Dollar Notes determined as of a date selected by the Issuer that is within the Asset Disposition Offer Period. To the extent that any portion of Net Available Cash payable in respect of the Notes is denominated in a currency other than the currency in which the relevant Notes are denominated, the amount thereof payable in respect of such Notes shall not exceed the net amount of funds in the currency in which such Notes are denominated that is actually received by the Issuer upon converting such portion into such currency. If the Asset Disposition Purchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest will be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest will be payable to holders who tender Notes pursuant to the Asset Disposition Offer. On or before the Asset Disposition Purchase Date, the Issuer will, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Asset Disposition Offer Amount of Notes and Other Asset Disposition Indebtedness or portions of Notes and Other Asset Disposition Indebtedness so validly tendered and not properly withdrawn pursuant to the Asset Disposition Offer, or if less than the Asset Disposition Offer Amount has been validly tendered and not properly withdrawn, all Notes and Other Asset Disposition Indebtedness so validly tendered and not properly withdrawn, in each case in a principal amount of 50,000 and in integral multiples of 1,000 in excess thereof. The Issuer will deliver to the Trustee an Officers Certificate stating that such Notes or portions thereof were accepted for payment by the Issuer in accordance with the terms of this covenant. The Issuer or the Paying Agent, as the case may be, will promptly (but in any case not later than five Business Days after termination of the Asset Disposition Offer Period) mail or deliver to each tendering holder of Notes or holder or lender of Other Asset Disposition Indebtedness, as the case may be, an amount equal to the purchase price of the Notes or Other Asset Disposition Indebtedness so validly tendered and not properly withdrawn by such holder or lender, as the case may be, and accepted by the Issuer for purchase, and the Issuer will promptly issue a new Note, and the Trustee, upon delivery of an Officers Certificate from the Issuer will authenticate and mail or deliver such new Note to such holder, in a principal amount equal to any unpurchased portion of the Note surrendered; provided that each such new Note will be in a principal amount of 50,000 and in integral multiples of 1,000 in excess thereof. In addition, the Issuer will take any and all other actions required by the agreements governing the Other Asset Disposition Indebtedness. Any Note not so accepted will be promptly mailed or delivered by the Issuer to the holder thereof. The Issuer will publicly announce the results of the Asset Disposition Offer on the Asset Disposition Purchase Date. For the purposes of this covenant, the following will be deemed to be cash: (1) the assumption by the transferee of Indebtedness (other than Subordinated Obligations) of the Issuer or any Guarantor or Indebtedness of a Restricted Subsidiary that is not a Guarantor and the release of the Issuer, Guarantor or such Restricted Subsidiary from all liability on such Indebtedness in

269

connection with such Asset Disposition (in which case the Issuer will, without further action, be deemed to have applied such deemed cash to Indebtedness in accordance with clause (3)(a) above); (2) securities, notes or other obligations received by the Issuer or any Restricted Subsidiary of the Issuer from the transferee that are promptly converted by the Issuer or such Restricted Subsidiary into cash or Cash Equivalents; Indebtedness of any Restricted Subsidiary that is no longer a Restricted Subsidiary as a result of such Asset Disposition, to the extent that the Issuer and each other Restricted Subsidiary are released from any guarantee of payment of the principal amount of such Indebtedness in connection with such Asset Disposition; and consideration consisting of Indebtedness of the Issuer or any Restricted Subsidiary.

(3)

(4)

The Issuer will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to the Indenture. To the extent that the provisions of any securities laws or regulations conflict with provisions of this covenant, the Issuer will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Indenture by virtue of any conflict. Limitation on Affiliate Transactions The Issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into or conduct any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of the Issuer (an Affiliate Transaction) involving aggregate consideration in excess of 5.0 million for such Affiliate Transactions in any fiscal year, unless: (1) the terms of such Affiliate Transaction are no less favorable, taken as a whole, to the Issuer or such Restricted Subsidiary, as the case may be, than those that could be obtained in a comparable transaction at the time of such transaction in arms-length dealings with a Person who is not such an Affiliate; in the event such Affiliate Transaction involves an aggregate consideration in excess of 10.0 million, the terms of such transaction have been approved by a majority of the members of the Board of Directors of the Issuer; and in the event such Affiliate Transaction involves an aggregate consideration in excess of 30.0 million, the Issuer has received a written opinion from an independent investment banking, accounting or appraisal firm of internationally recognized standing (as determined by the Issuer in good faith, who shall deliver a copy of the same to the Trustee) that such Affiliate Transaction either is fair, from a financial standpoint, to the Issuer and its Restricted Subsidiaries or is not materially less favorable than those that might reasonably have been obtained in a comparable transaction at such time on an arms length basis from a Person that is not an Affiliate.

(2)

(3)

The preceding paragraph will not apply to: (1) any Restricted Payment permitted to be made pursuant to the covenant described under Limitation on Restricted Payments or any Permitted Investment (except with respect to clause (16)(b) of the definition of Permitted Investment, which will be subject to clause (6) below); any issuance or sale of Capital Stock, options, other equity-related interests or other securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, or entering into, or maintenance of, any employment, consulting, collective bargaining or benefit plan, program, agreement or arrangement, related trust or other similar agreement and other compensation arrangements, options, warrants or other rights to purchase Capital Stock of the Issuer or any Parent, restricted stock plans, long-term incentive plans, stock appreciation rights plans, participation plans or similar employee benefits or consultant plans (including, without limitation, valuation, health, insurance, deferred compensation, severance, retirement, savings or similar plans, programs or arrangements) and/or indemnities provided on behalf of officers, employees or directors or consultants approved by the Board of Directors of the Issuer, in each case in the ordinary course of business;

(2)

270

(3)

loans or advances to employees, officers or directors in the ordinary course of business of the Issuer or any of its Restricted Subsidiaries but in any event not to exceed 10.0 million in the aggregate outstanding at any one time with respect to all loans or advances made since the Issue Date; any transaction between or among the Issuer and a Restricted Subsidiary or between or among Restricted Subsidiaries and any guarantees issued by the Issuer or a Restricted Subsidiary for the benefit of the Issuer or a Restricted Subsidiary, as the case may be, in accordance with Limitation on Indebtedness; transactions with customers, clients, suppliers or purchasers or sellers of goods or services, in each case in the ordinary course of business and otherwise in compliance with the terms of the Indenture, which are fair to the Issuer or the relevant Restricted Subsidiary in the reasonable determination of the Board of Directors of the Issuer or the senior management of the Issuer or the relevant Restricted Subsidiary, as applicable, or are on terms no less favorable than those that could reasonably have been obtained at such time from an unaffiliated party; any transaction in the ordinary course of business between the Issuer or any Restricted Subsidiary and any Affiliate of the Issuer controlled by the Issuer that is a joint venture or similar entity; provided, any transaction described in this clause (6) will both: (a) (b) be subject to the requirements of clause (1) and (2) of the first paragraph of this covenant; and either (i) comply with the provisions of clause (3) of the first paragraph of this covenant (substituting 50.0 million for 30.0 million) or (ii) be substantially identical to a transaction between such Affiliate and a non-Affiliated third party which involves aggregate consideration in an amount substantially identical to the aggregate consideration involved in such substantially identical transaction;

(4)

(5)

(6)

(7)

the payment of reasonable and customary fees paid to, and indemnity provided on behalf of, directors of the Issuer or any Restricted Subsidiary of the Issuer; the performance of obligations of the Issuer or any of its Restricted Subsidiaries under the terms of any agreement to which the Issuer or any of its Restricted Subsidiaries is a party as of or on the Issue Date, as these agreements may be amended, modified, supplemented, extended or renewed from time to time; provided, however, that any future amendment, modification, supplement, extension or renewal entered into after the Issue Date will be permitted to the extent that its terms are not more disadvantageous to the holders of the Notes than the terms of the agreements in effect on the Issue Date; sales or other transfers or dispositions of accounts receivable and other related assets customarily transferred in an asset securitization transaction involving accounts receivable to a Receivables Entity in a Qualified Receivables Transaction, and acquisitions of Permitted Investments in connection with a Qualified Receivables Transaction;

(8)

(9)

(10) the issuance of Capital Stock or any options, warrants or other rights to acquire Capital Stock (other than Disqualified Stock) of the Issuer to any Affiliate; (11) the payment to any Permitted Holder of all reasonable out-of-pocket expenses Incurred by any Permitted Holder in connection with its direct or indirect investment in the Issuer and its Subsidiaries and unpaid amounts accrued for prior periods (but after the Issue Date); (12) the payment to any Parent or Permitted Holder (1) of Management Fees (a) on a bona fide armslength basis in the ordinary course of business or (b) of up to 5.0 million in any calendar year or (2) for financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, including without limitation in connection with acquisitions or divestitures, which payments are approved by a majority of Disinterested Directors; (13) guarantees issued in accordance with the Limitation on Indebtedness covenant; (14) if otherwise permitted under the Indenture, the issuance of Capital Stock (other than Disqualified Stock) or Subordinated Shareholder Loans (including the payment of cash interest thereon; provided

271

that, after giving pro forma effect to any such cash interest payment, the Consolidated Leverage Ratio for the Issuer and its Restricted Subsidiaries would not exceed 5.00 to 1.00) of the Issuer to any direct Parent of the Issuer or any Permitted Holder for cash or marketable securities; (15) any Related Transaction; and (16) arrangements with customers, suppliers, contractors, lessors or sellers of goods or services that are negotiated with an Affiliate, in each case, which are otherwise in compliance with the terms of the Indenture; provided that the terms and conditions of any such transaction or agreement as applicable to the Issuer and its Restricted Subsidiaries, taken as a whole (a) are fair to the Issuer and its Restricted Subsidiaries and are on terms not materially less favorable to the Issuer and its Restricted Subsidiaries than those that could have reasonably been obtained in respect of an analogous transaction or agreement that would not constitute an Affiliate Transaction (in each case, as determined in good faith by the Board of Directors of the Issuer or the senior management of the Issuer), (b) the performance by the Issuer and any of its Restricted Subsidiaries in respect of any such arrangements are for its own behalf and in its own name and (c) the Issuer and its Restricted Subsidiaries do not assume, and are otherwise not liable for any performance or breach in respect of, any such arrangements by the relevant Affiliate. Limitation on Layering The Issuer will not, directly or indirectly, Incur any Indebtedness that is or purports to be by its terms (or by the terms of any agreement governing such Indebtedness) to be subordinated in right of payment to any other Indebtedness of the Issuer which ranks pari passu with the Notes unless such Indebtedness is also by its terms (or by the terms of any agreement governing such Indebtedness) made expressly subordinate to the Notes to the same extent and in the same manner as such Indebtedness is subordinated to such other Indebtedness of the Issuer. The Issuer will not permit any Guarantor to, and no Guarantor shall, Incur any Indebtedness that is or purports to be by its terms (or by the terms of any agreement governing such Indebtedness) to be subordinated in right of payment to any Senior Indebtedness unless such Indebtedness is pari passu with the Subsidiary Guarantee of such Guarantor or is also by its terms (or by the terms of any agreement governing such Indebtedness) made subordinated in right of payment to the Subsidiary Guarantee of such Guarantor to the same extent and in the same manner as such Indebtedness; provided that the foregoing limitation shall not apply to distinctions between categories of Senior Indebtedness that exist by reason of any Liens or guarantees arising or created in respect of some but not all such Senior Indebtedness; provided, further, that Indebtedness under Credit Facilities that are Senior Indebtedness of a Guarantor may provide for an ordering of payments among the tranches of such Credit Facility. Limitation on Issuances of Guarantees of Indebtedness by Restricted Subsidiaries No Restricted Subsidiary (other than a Guarantor) shall guarantee or otherwise become obligated under any Indebtedness under the Revolving Credit Facility, the Senior Secured Notes, the Senior Secured Indenture or any other Designated Senior Indebtedness or guarantee any other Indebtedness of the Issuer or a Guarantor in an amount in excess of 5.0 million unless such Restricted Subsidiary is or becomes an Additional Guarantor on the date on which such other guarantee or Indebtedness is Incurred (or as soon as reasonably practicable thereafter) and, if applicable, executes and delivers to the Trustee a supplemental Indenture in the form attached to the Indenture pursuant to which such Restricted Subsidiary will provide an Additional Subsidiary Guarantee (which Additional Subsidiary Guarantee shall be subordinated to Senior Indebtedness of such Additional Guarantor and senior to or pari passu with such Restricted Subsidiarys guarantee of such other Indebtedness); provided that, (1) if such Restricted Subsidiary is not a Significant Subsidiary, such Restricted Subsidiary shall only be obligated to become an Additional Guarantor if such Indebtedness is Indebtedness of the Issuer or Public Debt of a Guarantor or if such Restricted Subsidiary is a direct or indirect holder of any Capital Stock of Unitymedia Hessen; an Additional Guarantors Additional Subsidiary Guarantee may be limited in amount to the extent required by fraudulent conveyance, thin capitalization, corporate benefit, financial assistance or other similar laws (but, in such a case (A) each of the Issuer and its Restricted Subsidiaries will use their reasonable best efforts to overcome the relevant legal limit and will procure that the relevant

(2)

272

Restricted Subsidiary undertakes all whitewash or similar procedures which are legally available to eliminate the relevant limit and (B) the relevant guarantee shall be given on an equal and ratable basis with the guarantee of any other Indebtedness giving rise to the obligation to guarantee the Notes); and (3) for so long as it is not permissible under applicable law for a Restricted Subsidiary to become an Additional Guarantor, such Restricted Subsidiary need not become an Additional Guarantor (but, in such a case, each of the Issuer and its Restricted Subsidiaries will use their reasonable best efforts to overcome the relevant legal prohibition precluding the giving of the guarantee and will procure that the relevant Restricted Subsidiary undertakes all whitewash or similar procedures which are legally available to eliminate the relevant legal prohibition, and shall give such guarantee at such time (and to the extent) that it thereafter becomes permissible).

The preceding paragraph shall not apply to: (1) the granting by such Restricted Subsidiary of a Permitted Lien under circumstances which do not otherwise constitute the guarantee of Indebtedness of the Issuer; or (2) the guarantee by any Restricted Subsidiary of Indebtedness that refinances Indebtedness which benefited from a guarantee by any Restricted Subsidiary Incurred in compliance with this covenant immediately prior to such refinancing. Reports Prior to consummation of the Acquisition, pursuant to the terms of the Share Purchase Agreement, the Issuer cause all publicly available annual and interim period financial reporting that is posted on Unitymedias website shall be delivered to the Trustee (which includes all reports that Unitymedia or any of its Subsidiaries are required to post on its website under the indentures governing the Existing Senior Secured Notes and the Existing Senior Notes). The Issuer will provide to the Trustee and will post on its website (or make similar disclosure) and shall make available to potential investors: (1) (2) for so long as the Ultimate Parent files an Annual Report on Form 10-K with the SEC, a copy of such Annual Report within 120 days after the end of the Ultimate Parents year end; within 150 days after the end of each fiscal year ending subsequent to the Issue Date, an annual report of the Issuer, containing the following information: (a) audited combined or consolidated balance sheets of the Issuer as of the end of the two most recent fiscal years and audited combined or consolidated income statements and statements of cash flow of Issuer for the three most recent fiscal years, in each case prepared in accordance with IFRS, including appropriate footnotes to such financial statements, and a report of the independent public accountants on the financial statements; (b) to the extent relating to such annual periods, an operating and financial review of the audited financial statements, including a discussion of the results of operations, financial condition, and liquidity and capital resources, and a discussion of material commitments and contingencies and critical accounting policies; and (c) a description of the business, management and shareholders of the Issuer, all material affiliate transactions and a description of all material contractual arrangements, including material debt instruments; provided, however, that such reports need not (i) contain any segment data other than as required under IFRS or as provided by the Ultimate Parent in its financial reports with respect to the period presented, (ii) include any exhibits, or (iii) include separate financial statements for any Affiliates of the Issuer or any acquired businesses; within 60 days after each of the first three fiscal quarters in each fiscal year, a quarterly report of the Issuer containing the following information: (a) unaudited consolidated income statements of the Issuer for such period, prepared in accordance with IFRS, and (b) a financial review of such period (including a comparison against the prior years comparable period), consisting of a discussion of (i) the financial condition and results of operations of the Issuer on a consolidated basis, and material changes between the current period and the period of the prior year, (ii) material developments in the business of the Issuer and its Restricted Subsidiaries, (c) financial developments and trends in the business in which the Issuer and its Restricted Subsidiaries is engaged and (d) information with respect to any material acquisition or disposal during the period provided, however, that such reports need not (i) contain any segment data other than as required under IFRS or as provided by the Ultimate Parent in its financial reports with respect to the period presented, (ii) include any exhibits, or (iii) include separate financial statements for any Affiliates of the Issuer or any acquired businesses; and

(3)

273

(4)

within 10 days after the occurrence of such event, information with respect to (A) any change in the independent public accountants of the Issuer or any of its Restricted Subsidiaries, (B) any material acquisition or disposal, and (C) any material development in the business of the Issuer and its Restricted Subsidiaries.

If the Issuer has designated any of its Subsidiaries as Unrestricted Subsidiaries and any such Unrestricted Subsidiary or group of Unrestricted Subsidiaries constitute Significant Subsidiaries of the Issuer, then the annual and quarterly information required by the first two clauses of this covenant shall include a reasonably detailed presentation, either on the face of the financial statements, in the footnotes thereto or in a separate report delivered therewith, of the financial condition and results of operations of the Issuer and its Restricted Subsidiaries separate from the financial condition and results of operations of such Unrestricted Subsidiaries. If the Issuer elects to apply for all purposes of the Indenture, in lieu of IFRS, GAAP pursuant to the definition of IFRS set forth below under Certain Definitions then the annual and quarterly information required by the first two clauses of this covenant shall include a reconciliation, either in the footnotes thereto or in a separate report delivered therewith, of such GAAP presentation to the corresponding IFRS presentation of such financial information. To the extent that Unitymedia is the reporting entity and material differences exist between the management, business, assets, shareholding or results of operations or financial condition of the Company and Unitymedia, the annual and quarterly reports shall give a reasonably detailed description of such differences and include an unaudited reconciliation of the Companys financial statements to Unitymedias financial statement; provided, however, that if the total revenues, Consolidated EBITDA or Total Assets of Unitymedia and its Subsidiaries for any applicable period (on either a historical or pro forma basis) would deviate from any such measurement of the Company and its Restricted Subsidiaries by 5% or more, then a separate annual or quarterly report, as the case may be, shall be provided for the Company (in which case no report need be provided for Unitymedia). Contemporaneously with the furnishing of each such report discussed above, a press release with the appropriate internationally recognized wire services in connection with such report will also be filed. The Company will also make available copies of all reports required by clauses (2) through (4) of the first paragraph of this covenant, if and so long as the Notes are listed on the Official List of the Luxembourg Stock Exchange and admitted for trading on the Euro MTF and the rules of the Luxembourg Stock Exchange so require, at the offices of the Paying Agent in Luxembourg or, to the extent and in the manner permitted by such rules, post such reports on the official website of the Luxembourg Stock Exchange. In addition, so long as the Notes remain outstanding and during any period during which the Issuer is not subject to Section 13 or 15(d) of the Exchange Act nor exempt therefrom pursuant to Rule 12g3-2(b) of the Exchange Act, the Issuer shall furnish to the holders of the Notes and to prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. Merger and Consolidation The Issuer will not consolidate with, or merge with or into, or convey, transfer or lease all or substantially all its assets to, any Person, unless: (1) the resulting, surviving or transferee Person (the Successor Company) will be Bidco or a corporation, partnership, trust or limited liability company organized and existing under the laws of any member of the state of the European Union that is a member of the European Union on the date of the Indenture, or the United States of America, any State of the United States or the District of Columbia and the Successor Company (if not the Issuer) will expressly assume, by supplemental indenture, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of the Issuer under the Notes and the Indenture and expressly assumes all obligations of the Issuer under the Security Documents to which it is a party and the Intercreditor Agreement pursuant to agreements reasonably satisfactory to the Trustee; immediately after giving effect to such transaction (and treating any Indebtedness that becomes an obligation of the Successor Company or any Subsidiary of the Successor Company as a result of such transaction as having been Incurred by the Successor Company or such Subsidiary at the time of such transaction), no Default or Event of Default shall have occurred and be continuing;

(2)

274

(3)

either (a) immediately after giving effect to such transaction, the Successor Company would be able to Incur at least an additional 1.00 of Pari Passu Indebtedness pursuant to the first paragraph of the covenant described under Limitation on Indebtedness or (b) such Person is Bidco; and the Issuer shall have delivered to the Trustee an Officers Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the Indenture and that the supplemental indenture, the Indenture and the Notes are legal, valid and binding obligations of the Successor Company, enforceable (subject to customary exceptions and exclusions) in accordance with their terms.

(4)

A Guarantor will not consolidate with, or merge with or into, or convey, transfer or lease all or substantially all its assets to, any Person, other than the Issuer or another Guarantor (other than in connection with a transaction that does not constitute an Asset Disposition or a transaction that is permitted under Limitation on Sales of Assets and Subsidiary Stock), unless: (1) (2) immediately after giving effect to that transaction, no Default or Event of Default shall have occurred and be continuing; and either: (a) the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation or merger assumes all the obligations of that Guarantor under its Subsidiary Guarantee, the Indenture, the Intercreditor Agreement and the Security Documents to which such Guarantor is a party pursuant to agreements reasonably satisfactory to the Trustee; or the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the Indenture.

(b)

For purposes of this covenant, the sale, lease, conveyance, assignment, transfer, or other disposition of all or substantially all of the properties and assets of one or more Subsidiaries of the Issuer, which properties and assets, if held by the Issuer instead of such Subsidiaries, would constitute all or substantially all of the properties and assets of the Issuer on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Issuer. The Successor Company will succeed to, and be substituted for, and may exercise every right and power of, the Issuer under the Indenture, and upon such substitution, the predecessor Issuer will be released from its obligations under the Indenture and the Notes, but, in the case of a lease of all or substantially all its assets, the predecessor Issuer will not be released from the obligation to pay the principal of and interest on the Notes. Although there is a limited body of case law interpreting the phrase substantially all, there is no precise established definition of the phrase under applicable law. Accordingly, in certain circumstances there may be a degree of uncertainty as to whether a particular transaction would involve all or substantially all of the property or assets of a Person. Notwithstanding the clause (3) of the first paragraph of this covenant (which does not apply to transactions referred to in this paragraph), (x) any Restricted Subsidiary may consolidate with, merge into or transfer all or part of its properties and assets to the Issuer or another Restricted Subsidiary and (y) the Issuer may merge with an Affiliate incorporated solely for the purpose of reincorporating the Issuer in another jurisdiction to realize tax benefits; provided that, in the case of a Restricted Subsidiary that merges into the Issuer, the Issuer will not be required to comply with the preceding clause (4). Impairment of Security Interests The Issuer shall not, and shall not permit any Restricted Subsidiary to, take or omit to take any action that would have the result of materially impairing the Security Interest with respect to the Collateral (it being understood, subject to the proviso below, that the Incurrence of Permitted Collateral Liens shall under no circumstances be deemed to materially impair the Security Interest with respect to the Collateral) for the benefit of the Trustee and the holders, and the Issuer shall not, and shall not permit any Restricted Subsidiary to, grant to any Person other than the Security Trustee, for the benefit of the Trustee and the holders and the other beneficiaries described in the Security Documents, any interest whatsoever in any of the Collateral, except that the Issuer or its Restricted Subsidiaries may Incur Permitted Collateral Liens and the Collateral may be

275

discharged and released in accordance with the Indenture, the Intercreditor Agreement or any Additional Intercreditor Agreement; provided, however, that, except with respect to any discharge or release of Collateral in accordance with the Indenture, the Intercreditor Agreement or any Additional Intercreditor Agreement or in connection with the Incurrence of Liens for the benefit of the Trustee and holders of Notes or otherwise as described in the second to last paragraph under Description of Certain Financing Arrangements Intercreditor Agreement Release of the Security and the Subsidiary Guarantees, no Security Document may be amended, extended, renewed, restated, supplemented or otherwise modified or replaced, unless contemporaneously with any such action, the Issuer delivers to the Trustee, either (1) a solvency opinion, in form and substance reasonably satisfactory to the Trustee from an Independent Financial Advisor confirming the solvency of the Issuer and its Subsidiaries, taken as a whole, after giving effect to any transactions related to such amendment, extension, renewal, restatement, supplement, modification or replacement, or (2) an Opinion of Counsel, in form and substance reasonably satisfactory to the Trustee, confirming that, after giving effect to any transactions related to such amendment, extension, renewal, restatement, supplement, modification or replacement, the Lien or Liens created under the Security Documents, as applicable, so amended, extended, renewed, restated, supplemented, modified or replaced, are valid Liens not otherwise subject to any limitation, imperfection or new hardening period, in equity or at law, that such Lien or Liens were not otherwise subject to immediately prior to such amendment, extension, renewal, restatement, supplement, modification or replacement. In the event that the Issuer complies with the requirements of this covenant, the Trustee shall (subject to customary protections and indemnifications from the Issuer) consent to such amendments without the need for instructions from the holders. Additional Intercreditor Agreements The Indenture will provide that, at the request of the Issuer, in connection with the Incurrence by the Issuer or any Guarantor of any (a) Indebtedness permitted pursuant to the first paragraph of the covenant described under Certain Covenants Limitation on Indebtedness or clause (1), (7) (in the case of (7), to the extent such Indebtedness is Incurred under an Interest Rate Agreement or Currency Agreement in respect of Indebtedness Incurred under any such other paragraph or clause referred to in the preceding part of this clause (1)), or (15) (to the extent such Indebtedness is permitted Public Debt or Bank Indebtedness) of the second paragraph of the covenant described under Certain CovenantsLimitation on Indebtedness and (b) any Refinancing Indebtedness in respect of Indebtedness referred to in the foregoing clause (a) (and, in each case, any such Indebtedness shall be Senior Indebtedness, Senior Subordinated Indebtedness or Indebtedness of the Issuer), the Issuer, the relevant Guarantors and the Trustee shall enter into with the holders of such Indebtedness (or their duly authorized Representatives) an intercreditor agreement, including a restatement, amendment or other modification of an existing intercreditor agreement (an Additional Intercreditor Agreement), on substantially the same terms as the Intercreditor Agreement (or terms not materially less favorable to the holders), including containing substantially the same terms with respect to the subordination, payment blockage, limitation on enforcement and release of Guarantees, priority and release of the Security Interest or other terms which become customary for similar agreements; provided that only one Stop Notice can be given by Designated Senior Indebtedness in any 365-day period or in respect of the same event or circumstances regardless of the number of Credit Facilities or other instruments constituting Designated Senior Indebtedness of a Guarantor or the number of intercreditor agreements; provided further that in no event may the total number of days for which a Stop Notice is in effect exceed 179 days in the aggregate during any consecutive 365-day period; provided, further, that such Additional Intercreditor Agreement will not impose any personal obligations on the Trustee or adversely affect the personal rights, duties, liabilities or immunities of the Trustee under the Indenture or the Intercreditor Agreement; provided, further, that only Designated Senior Indebtedness shall be entitled to instruct the Security Agent to enforce the Collateral or initiate a payment blockage. The Indenture will also provide that, in relation to the Intercreditor Agreement or an Additional Intercreditor Agreement, the Trustee shall consent on behalf of the holders to the payment, repayment, purchase, repurchase, defeasance, acquisition, retirement or redemption of any obligations subordinated to the Notes thereby; provided, however, that such transaction would comply with the covenant described under Certain Covenants Limitation on Restricted Payments. Suspension of Covenants on Achievement of Investment Grade Status If, during any period after the Issue Date, the Notes have achieved and continue to maintain Investment Grade Status and no Event of Default has occurred and is continuing (such period hereinafter referred to as an Investment Grade Status Period), then the covenants in the Indenture described under Limitation on Indebtedness, Limitation on Restricted Payments, Limitation on Restrictions on Distributions from Restricted Subsidiaries, Limitation on Sales of Assets and Subsidiary Stock, Limitation on Affiliate

276

Transactions, and under Change of Control, the provisions of clause (3) of the first paragraph of the covenant described under Merger and Consolidation and any related default provisions of the Indenture will be suspended and will not, during such Investment Grade Status Period, be applicable to the Issuer and its Restricted Subsidiaries. As a result, during any such Investment Grade Status Period, the Notes will lose the covenant protection initially provided under the Indenture. No action taken during an Investment Grade Status Period or prior to an Investment Grade Status Period in compliance with the covenants then applicable will require reversal or constitute a default under the Notes in the event that suspended covenants are subsequently reinstated or suspended, as the case may be. An Investment Grade Status Period will terminate immediately upon the failure of the Notes to maintain Investment Grade Status. The Issuer will promptly notify the Trustee in writing of any failure of the Notes to maintain Investment Grade Status. Events of Default Each of the following is an Event of Default under the Indenture: (1) (2) default in any payment of interest or Additional Amounts on any Note when due, which has continued for 30 days; default in the payment of principal of or premium, if any, on any Note when due at its Stated Maturity, upon optional redemption, upon required repurchase, upon a mandatory redemption as set forth above under Senior Secured Escrow of Proceeds; Special Mandatory Redemption or otherwise; failure by the Issuer or any Guarantor to comply with its obligations under Certain Covenants Merger and Consolidation; failure by the Issuer or any Guarantor to comply for 30 days after notice with any of its obligations under the covenants described under Certain Covenants above (in each case, other than a failure to purchase Notes which will constitute an Event of Default under clause (2) above and other than a failure to comply with Certain Covenants Merger and Consolidation or Senior Secured Escrow of Proceeds; Special Mandatory Redemption which are covered respectively by clauses (2) and (3) above); failure by the Issuer or any Guarantor to comply for 60 days after notice with its other agreements contained in the Notes or the Indenture; default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Issuer or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Issuer or any of its Restricted Subsidiaries), other than Indebtedness owed to the Issuer or a Restricted Subsidiary, whether such Indebtedness or guarantee now exists, or is created after the date of the Indenture, which default: (a) (b) is caused by a failure to pay principal of such Indebtedness at its Stated Maturity prior to the expiration of the grace period provided in such Indebtedness (payment default); or results in the acceleration of such Indebtedness prior to its maturity (the cross acceleration provision);

(3) (4)

(5) (6)

and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a payment default or the maturity of which has been so accelerated, aggregates 25.0 million or more; (7) certain events of bankruptcy, insolvency or reorganization of the Issuer, a Guarantor or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Issuer and its Restricted Subsidiaries), would constitute a Significant Subsidiary (the bankruptcy provisions); failure by the Issuer, any Guarantor or any Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Issuer and its Restricted Subsidiaries), would constitute a Significant Subsidiary, to pay final judgments aggregating in excess of 25.0 million (net of any amounts that a solvent insurance company has acknowledged liability for), which judgments are not paid, discharged or stayed for a period of 60 days (the judgment default provision);

(8)

277

(9)

any Subsidiary Guarantee of a Significant Subsidiary ceases to be in full force and effect (except in accordance with the terms of the Indenture) or is declared invalid or unenforceable in a judicial proceeding and such Default continues for ten days after the notice specified in the Indenture;

(10) any Collateral having a fair market value of in excess of 20.0 million shall, at any time, cease to be in full force and effect other than as a result of its release in accordance with the Indenture and the Security Documents or any security interest created thereunder shall be declared invalid or unenforceable in a judicial proceeding and such Default continues for ten days after the notice specified in the Indenture; (11) failure (a) by Bidco to comply with any term of the Senior Notes Escrow Agreement that is not cured within 10 days to the extent such non-compliance would reasonably be expected to materially and adversely impact the holders of the Notes or (b) to complete the Debt Pushdown within 35 days of the Acquisition Date; or (12) the Senior Notes Escrow Agreement or any other security document or any Lien purported to be granted thereby on the escrow account or the cash or Investments permitted under the Senior Notes Escrow Agreement therein is held in any judicial proceeding to be unenforceable or invalid, in whole or in part, or ceases for any reason (other than pursuant to a release that is delivered or becomes effective as set forth in the Indenture) to be fully enforceable and which creates a valid and enforceable Lien. However, a default under clauses (4), (5), (9), (10) or (11) of this paragraph will not constitute an Event of Default until the Trustee or the holders of 25% in principal amount of the outstanding Notes notify the Issuer of the default and the Issuer does not cure such default within the time specified in clauses (4), (5), (9), (10) or (11) of this paragraph after receipt of such notice. If an Event of Default (other than an Event of Default described in clause (7) above) occurs and is continuing, the Trustee by notice to the Issuer, or the holders of at least 25% in principal amount of the outstanding Notes by notice to the Issuer and the Trustee, may, and the Trustee at the request of such holders shall, declare the principal of, premium, if any, and accrued and unpaid interest, if any, and Additional Amounts, if any, on all the Notes to be due and payable. Upon such a declaration, such principal, premium and accrued and unpaid interest and Additional Amounts, if any, will be due and payable immediately. In the event of a declaration of acceleration of the Notes because an Event of Default described in clause (6) under Events of Default has occurred and is continuing, the declaration of acceleration of the Notes shall be automatically annulled if the event of default or payment default triggering such Event of Default pursuant to clause (6) shall be remedied or cured by the Issuer or a Restricted Subsidiary of the Issuer or waived by the holders of the relevant Indebtedness within 20 days after the declaration of acceleration with respect thereto and if (1) the annulment of the acceleration of the Notes would not conflict with any judgment or decree of a court of competent jurisdiction and (2) all existing Events of Default, except nonpayment of principal, premium or interest and Additional Amounts, if any, on the Notes that became due solely because of the acceleration of the Notes, have been cured or waived. If an Event of Default described in clause (7) above occurs and is continuing, the principal of, premium, if any, and accrued and unpaid interest and Additional Amounts, if any, on all the Notes will become and be immediately due and payable without any declaration or other act on the part of the Trustee or any holders. The holders of a majority in principal amount of the outstanding Notes may waive all past defaults (except with respect to nonpayment of principal, premium, interest or Additional Amounts) and rescind any such acceleration with respect to the Notes and its consequences if (1) rescission would not conflict with any judgment or decree of a court of competent jurisdiction and (2) all existing Events of Default, other than the nonpayment of the principal of, premium, if any, interest and Additional Amounts, if any, on the Notes that have become due solely by such declaration of acceleration, have been cured or waived; and (3) the Issuer has paid the Trustee its reasonable compensation and reimbursed the Trustee for its reasonable expenses, disbursements and advances. Subject to the provisions of the Indenture relating to the duties of the Trustee, if an Event of Default occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the holders unless such holders have offered to the Trustee indemnity or security satisfactory to the Trustee against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium, if any, interest or Additional Amounts, if any, when due, no holder of Notes may pursue any remedy with respect to the Indenture or the Notes unless: (1) such holder of Notes has previously given the Trustee written notice that an Event of Default is continuing;

278

(2) (3)

holders of at least 50% in principal amount of the outstanding Notes have requested the Trustee to pursue the remedy; such holders of Notes have offered the Trustee security or indemnity satisfactory to the Trustee against any loss, liability or expense; the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity; and the holders of a majority in principal amount of the outstanding Notes have not given the Trustee a direction that, in the opinion of the Trustee, is inconsistent with such request within such 60-day period.

(4)

(5)

Subject to certain restrictions, the holders of a majority in principal amount of the outstanding Notes are given the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Indenture provides that in the event an Event of Default has occurred and is continuing, the Trustee will be required in the exercise of its powers to use the degree of care that a prudent person would use under the circumstances in the conduct of its own affairs. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other holder of Notes or that would involve the Trustee in personal liability. Prior to taking any action under the Indenture, the Trustee will be entitled to security or indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action. The Indenture provides that if a Default occurs and is continuing and is actually known to the Trustee, the Trustee must give notice of the Default within 90 days after it occurs. Except in the case of a Default in the payment of principal of, premium, if any, interest or Additional Amounts, if any, on any Note, the Trustee may withhold notice if and so long as a committee of trust officers of the Trustee in good faith determines that withholding notice is in the interests of the holders. In addition, the Issuer is required to deliver to the Trustee, within 90 days after the end of each fiscal year, a certificate indicating whether the signers thereof know of any Default that occurred during the previous year. The Issuer also is required to deliver to the Trustee, within 30 days after the occurrence thereof, written notice of any events of which it is aware which would constitute certain Defaults, their status and what action the Issuer is taking or proposing to take in respect thereof. Amendments and Waivers Subject to certain exceptions, the Indenture, the Notes, the Intercreditor Agreement and the Security Documents may be amended or supplemented with the consent of the holders of a majority in principal amount of the Notes then outstanding (including without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes) and, subject to certain exceptions, any past default or compliance with any provisions of the Indenture, the Notes, the Intercreditor Agreement and the Security Documents may be waived with the consent of the holders of a majority in principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes). However, unless consented to by the holders of at least 90% of the aggregate principal amount of then outstanding Notes, an amendment may not: (1) (2) reduce the principal amount of Notes whose holders must consent to an amendment or waiver; reduce the stated rate of or extend the stated time for payment of interest or Additional Amounts on any Note; reduce the principal of or extend the Stated Maturity of any Note; whether through an amendment or waiver of provisions in the covenants, definitions or otherwise (i) reduce the premium payable upon the redemption of any Note or change the time at which any Note may be redeemed as described above under Optional Redemption, (ii) reduce the premium payable upon repurchase of any Note or change the time at which any Note is to be repurchased as described under Certain Covenants Change of Control or Certain Covenants Limitation on Sales of Assets and Subsidiary Stock at any time after the obligation to repurchase has arisen or (iii) change any provisions relating to redemption of the Notes described under Senior Notes Escrow of Proceeds; Special Mandatory Redemption;

(3) (4)

279

(5) (6)

make any Note payable in money other than that stated in the Note; impair the right of any holder to receive payment of, premium, if any, principal of or interest or Additional Amounts, if any, on such holders Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such holders Notes; or release any Guarantor that is a Significant Subsidiary from any of its obligations (or modify such obligations in any manner adverse to the holders) under any Subsidiary Guarantee or the Indenture, as applicable, except in accordance with the terms of the Indenture and the Intercreditor Agreement; release the security interest granted for the benefit of the holders in the Collateral (to the extent any Collateral so released in any transaction or series of transactions has a fair market value in excess of 20.0 million) other than pursuant to the terms of the Security Documents, the Intercreditor Agreement, any applicable Additional Intercreditor Agreement or as otherwise permitted by the Indenture; amend the Senior Notes Escrow Agreement in any manner materially adverse to the holders of the Notes; or

(7)

(8)

(9)

(10) make any change in the amendment or waiver provisions described in this sentence. Notwithstanding the foregoing, without the consent of any holder, the Issuer and the Trustee may amend the Indenture, the Notes, the Intercreditor Agreement and the Security Documents to: (1) (2) cure any ambiguity, omission, defect or inconsistency; provide for the assumption by a Successor Company of the obligations of the Issuer under the Indenture, the Notes, the Intercreditor Agreement and the Security Documents; provide for uncertificated Notes in addition to or in place of certificated Notes; add guarantees with respect to the Notes; secure the Notes; add to the covenants of the Issuer for the benefit of the holders or surrender any right or power conferred upon the Issuer; in the case of the Indenture, make any change that does not adversely affect the rights of any holder; release the Security as provided by the terms of the Indenture; issue Additional Notes;

(3) (4) (5) (6)

(7) (8) (9)

(10) give effect to Permitted Collateral Liens; (11) evidence and provide for the acceptance and appointment under the Indenture of a successor Trustee pursuant to the requirements thereof; or (12) to the extent necessary to grant a security interest for the benefit of any Person; provided that the granting of such security interest is permitted by the Indenture and the Security Documents. In formulating its opinion on such matters, the Trustee shall be entitled to require and rely on such evidence as it deems appropriate, including an Opinion of Counsel and an Officers Certificate. The consent of the holders is not necessary under the Indenture to approve the particular form of any proposed amendment. It is sufficient if such consent approves the substance of the proposed amendment. A consent to any amendment or waiver under the Indenture by any holder of Notes given in connection with a tender of such holders Notes will not be rendered invalid by such tender. After an amendment under the Indenture becomes effective, the Issuer is required to mail to the holders a notice briefly describing such

280

amendment. For so long as the Notes are listed on the Luxembourg Stock Exchange and the guidelines of such Stock Exchange so require, the Issuer will notify the Luxembourg Stock Exchange of any such amendment, supplement and waiver. Defeasance The Issuer at any time may terminate all its obligations under the Notes and the Indenture (legal defeasance), except for certain obligations, including those respecting the defeasance trust and obligations to register the transfer or exchange of the Notes, to replace mutilated, destroyed, lost or stolen Notes and to maintain a registrar and paying agent in respect of the Notes. The Issuer at any time may terminate its obligations under the covenants described under Certain Covenants (other than clauses (1) and (2) under Certain Covenants Merger and Consolidation) and the default provisions relating to such covenants under Events of Default above, the operation of the crossdefault upon a payment default, the cross acceleration provisions, the bankruptcy provisions with respect to Significant Subsidiaries, the judgment default provision described under Events of Default above and the limitations contained in clauses (3) and (4) under Certain Covenants Merger and Consolidation above (covenant defeasance). The Issuer may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option. If the Issuer exercises its legal defeasance option, payment of the Notes may not be accelerated because of an Event of Default with respect to the Notes. If the Issuer exercises its covenant defeasance option, payment of the Notes may not be accelerated because of an Event of Default specified in clauses (4), (5), (6), (7) (with respect only to Significant Subsidiaries), (8) or (9) under Events of Default above or because of the failure of the Issuer to comply with clauses (3) or (4) under Certain Covenants Merger and Consolidation above. In order to exercise either defeasance option, the Issuer must irrevocably deposit in trust (the defeasance trust) with the Trustee euro, euro-denominated European Government Obligations or a combination thereof (in the case of the Euro Notes) and dollars, dollar-denominated U.S. Government Obligations for the payment of principal, premium, if any, interest and Additional Amounts, if any, on the Notes to redemption or maturity, as the case may be, and must comply with certain other conditions, including, among other things, delivery to the Trustee of an Opinion of Counsel (subject to customary exceptions and exclusions) to the effect that holders of the Notes will not recognize income, gain or loss for United States Federal income tax purposes as a result of such deposit and defeasance and will be subject to United States Federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred. In the case of legal defeasance only, such Opinion of Counsel must be based on a ruling of the Internal Revenue Service or other change in applicable United States Federal income tax law. Satisfaction and Discharge The Indenture, the Security Documents and the rights, duties and obligations of the Trustee and the holders under the Intercreditor Agreement or any Additional Intercreditor Agreement will be discharged and will cease to be of further effect as to all Notes issued thereunder, when: (1) either: (a) all Notes that have been authenticated, except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has been deposited in trust and thereafter repaid to the Issuer, have been delivered to a Paying Agent or Registrar for cancellation; or (i) all Notes that have not been delivered to a Paying Agent or Registrar for cancellation (x) have become due and payable by reason of the mailing of a notice of redemption or otherwise or (y) will become due and payable within one year and (ii) the Issuer or a Guarantor has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the holders cash in euros, or euro-denominated Cash Equivalents, European Government Obligations, U.S. Government Obligations or a combination thereof, in either case, in amounts as will be sufficient, without consideration of any reinvestment of interest, to

(b)

281

pay and discharge the entire Indebtedness on the Notes not delivered to a Paying Agent or Registrar for cancellation for principal, premium and Additional Amounts (if any) and accrued interest to the date of maturity or redemption; (2) no Default or Event of Default has occurred and is continuing on the date of the deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit) and the deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which a Issuer or a Guarantor is a party or by which the Issuer or a Guarantor is bound; the Issuer or the Guarantor(s) have paid or caused to be paid all other amounts payable by it under the Indenture; and the Issuer has delivered irrevocable instructions to the Trustee under the Indenture to apply the deposited money toward the payment of the Notes at maturity or on the redemption date, as the case may be.

(3)

(4)

In addition, the Issuer must deliver to the Trustee an Officers Certificate and an opinion of counsel, in each case, stating that all conditions precedent to satisfaction and discharge have been satisfied. Currency Indemnity The sole currency of account and payment for all sums payable by the Issuer under the Indenture with respect to Notes is euro. Any amount received or recovered in a currency other than euros, in respect of the Notes (whether as a result of, or the enforcement of, a judgment or order of a court of any jurisdiction, in the winding-up or dissolution of the Issuer, any Subsidiary or otherwise) by the holder in respect of any sum expressed to be due to it from the Issuer will constitute a discharge of the Issuer only to the extent of the euro which the recipient is able to purchase with the amount so received or recovered in that other currency on the date of that receipt or recovery (or, if it is not possible to make that purchase on that date, on the first date on which it is possible to do so). If that euro is less than the euro expressed to be due to the recipient under any Note, the Issuer will indemnify the recipient against any loss sustained by it as a result. In any event the Issuer will indemnify the recipient against the cost of making any such purchase. For the purposes of this indemnity, it will be sufficient for the holder to certify that it would have suffered a loss had an actual purchase of euro been made with the amount so received in that other currency on the date of receipt or recovery (or, if a purchase of euro on such date had not been practicable, on the first date on which it would have been practicable). These indemnities constitute a separate and independent obligation from the other obligations of the Issuer, will give rise to a separate and independent cause of action, will apply irrespective of any waiver granted by any holder and will continue in full force and effect despite any other judgment, order, claim or proof for a liquidated amount in respect of any sum due under any Note or any other judgment or order. Listing The Issuer will use all reasonable efforts to have the Notes listed on the official list of the Luxembourg Stock Exchange and admitted to trading on the Euro MTF within a reasonable period after the Issue Date and will maintain such listing as long as the Notes are outstanding; provided, however, that Settlement of the Notes is not conditioned upon listing; and provided further, that if the Issuer can no longer maintain such listing or it becomes unduly burdensome to make or maintain such listing, the Issuer may cease to make or maintain such listing on the Luxembourg Stock Exchange provided that the Issuer will use its reasonable best efforts to obtain and maintain the listing of the Notes on another recognized listing exchange for high yield issuers (which may be a stock exchange that is not regulated by the European Union). The legal notice relating to the issuance of the Notes and the Articles of Association of the Issuer will be registered prior to the listing with the Registrar of the District Court in Luxembourg, where such documents are available for inspection and where copies thereof can be obtained upon request. As long as the Notes are listed on the Euro MTF, an agent for making payments on, and transfers of, Notes will be maintained in Luxembourg. No Personal Liability of Directors, Officers, Employees and Stockholders No director, officer, employee, incorporator, member or stockholder of the Issuer any of its parent companies or any of its Subsidiaries or Affiliates, as such, shall have any liability for any obligations of the

282

Issuer under the Notes or the Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver and release may not be effective to waive liabilities under the United States federal securities laws and it is the view of the SEC that such a waiver is against public policy. Consent to Jurisdiction and Service of Process The Indenture will provide that the Issuer and each Guarantor will irrevocably appoint CT Corporation System as its agent for service of process in any suit, action or proceeding with respect to the Indenture, the Notes and the Security Documents, as the case may be, brought in any federal or state court located in the Borough of Manhattan in the City of New York and that each of the parties submit to the jurisdiction thereof. If for any reason CT Corporation System is unable to serve in such capacity, the Issuer and such Guarantor shall appoint another agent reasonably satisfactory to the Trustee. Concerning the Trustee The Bank of New York Mellon will be the Trustee, Principal Paying Agent, Registrar and Transfer Agent with regard to the Notes. The Bank of New York Mellon (Luxembourg) S.A. will be appointed Luxembourg Listing Agent with regard to the Notes. Governing Law The Indenture will provide that it and the Notes will be governed by, and construed in accordance with, the laws of the State of New York. Notices All notices regarding the Notes shall be valid if that notice is given to holders of Notes in writing and mailed to each holder of notes, and, for so long as the notes are listed on the Luxembourg Stock Exchange, if published in a leading daily newspaper of general circulation in Luxembourg or on the website of the Luxembourg Stock Exchange. If publication as provided above is not practicable, notice will be given in such other manner, and shall be deemed to have been given on such date, as the Trustee may approve. If and so long as such Notes are listed on any other securities exchange, notices will also be given in accordance with any applicable requirements of such securities exchange. Notices given by publication will be deemed given on the first date on which publication is made and notices given by first-class mail, postage prepaid, will be deemed given five calendar days after mailing. Certain Definitions Acquired Indebtedness means Indebtedness (i) of a Person or any of its Subsidiaries existing at the time such Person becomes a Restricted Subsidiary or (ii) assumed in connection with the acquisition of assets from such Person, in each case whether or not Incurred by such Person in connection with, or in anticipation or contemplation of, such Person becoming a Restricted Subsidiary or such acquisition. Acquired Indebtedness shall be deemed to have been Incurred, with respect to clause (i) of the preceding sentence, on the date such Person becomes a Restricted Subsidiary and, with respect to clause (ii) of the preceding sentence, on the date of consummation of such acquisition of assets. Acquisition has the meaning specified under the heading The Transactions in this offering memorandum. Acquisition Date means the date on which the Acquisition has been consummated pursuant to the terms of the Share Purchase Agreement. Additional Assets means: (1) any property or assets (other than Indebtedness and Capital Stock) to be used by the Issuer or a Restricted Subsidiary in a Related Business or are otherwise useful in Related Business (it being understood that capital expenditure on property or assets already used in a Related Business or to

283

replace any property or assets that are the subject of such Asset Disposition or any operating expenses Incurred in the day-to-day operations of a Related Business shall be deemed an Investment in Additional Assets); (2) the Capital Stock of a Person that is engaged in a Related Business and becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Issuer or a Restricted Subsidiary of the Issuer; or Capital Stock constituting a minority interest in any Person that at such time is a Restricted Subsidiary of the Issuer.

(3)

Affiliate of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, control when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms controlling and controlled have meanings correlative to the foregoing. Applicable Premium means with respect to a Note at any redemption date prior to December 1, 2014, the excess of (A) the present value at such redemption date of (1) the redemption price of such Euro Note on December 1, 2014 (such redemption price being described under Optional Redemption Optional Redemption on or after December 1, 2014 exclusive of any accrued and unpaid interest) plus (2) all required remaining scheduled interest payments due on such Note through December 1, 2014 (but excluding accrued and unpaid interest to the redemption date), computed using a discount rate equal to the Bund Rate plus 50 basis points over (B) the principal amount of such Note on such redemption date. Asset Disposition means any direct or indirect sale, lease (other than an operating lease entered into in the ordinary course of business), transfer, issuance or other disposition, or a series of related sales, leases (other than an operating lease entered into in the ordinary course of business), transfers, issuances or dispositions that are part of a common plan, of shares of Capital Stock of a Subsidiary (other than directors qualifying shares), property or other assets (each referred to for the purposes of this definition as a disposition) by the Issuer or any of its Restricted Subsidiaries, including any disposition by means of a merger, consolidation or similar transaction. Notwithstanding the preceding, the following items shall not be deemed to be Asset Dispositions: (1) a disposition by a Restricted Subsidiary to the Issuer or by the Issuer or a Restricted Subsidiary (other than a Receivables Entity) to a Restricted Subsidiary; the sale or disposition of cash or of Cash Equivalents or Investment Grade Securities in the ordinary course of business; a disposition of inventory, trading stock, communications capacity or other assets in the ordinary course of business; a disposition of obsolete or worn out equipment or equipment that is no longer useful in the conduct of the business of the Issuer and its Restricted Subsidiaries and that is disposed of in each case in the ordinary course of business; transactions permitted under Certain Covenants Merger and Consolidation; an issuance of Capital Stock by a Restricted Subsidiary of the Issuer to the Issuer or to another Restricted Subsidiary; for purposes of Certain Covenants Limitation on Sales of Assets and Subsidiary Stock only, the making of a Permitted Investment or a disposition subject to Certain Covenants Limitation on Restricted Payments; dispositions of assets in a single transaction or series of related transactions with an aggregate fair market value in any calendar year of less than 10.0 million (with unused amounts in any calendar year being carried over to the next succeeding year subject to a maximum of 10.0 million of carried over amounts for any calendar year);

(2)

(3)

(4)

(5) (6)

(7)

(8)

284

(9)

dispositions in connection with Permitted Liens;

(10) dispositions of receivables in connection with the compromise, settlement or collection thereof in the ordinary course of business or in bankruptcy or similar proceedings and exclusive of factoring or similar arrangements; (11) the licensing or sublicensing of intellectual property or other general intangibles and licenses, sublicenses, leases or subleases of other property; (12) foreclosure, condemnation or similar action with respect to any property or other assets; (13) the sale or discount (with or without recourse, and on customary or commercially reasonable terms) of accounts receivable or notes receivable arising in the ordinary course of business, or the conversion or exchange of accounts receivable for notes receivable; (14) sales of accounts receivable and related assets or an interest therein of the type specified in the definition of Qualified Receivables Transaction to a Receivables Entity; (15) any disposition of Capital Stock, Indebtedness or other securities of an Unrestricted Subsidiary; (16) any surrender or waiver of contract rights or the settlement, release or surrender of contract, tort or other claims of any kind; (17) disposals of assets, rights or revenue not constituting part of the Distribution Business of the Issuer and its Restricted Subsidiaries; (18) disposals of other interests in other entities in an amount not to exceed 5.0 million; and (19) any other disposal of assets comprising in aggregate percentage value of 10% or less of the Total Assets of the Issuer and its Restricted Subsidiaries as set forth in the consolidated financial statements of the Issuer as of September 30, 2009. Average Life means, as of the date of determination, with respect to any Indebtedness or Preferred Stock, the quotient obtained by dividing (1) the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment by (2) the sum of all such payments. Bank Indebtedness means any and all amounts, whether outstanding on the Issue Date or Incurred after the Issue Date, payable under or in respect of any Credit Facility (other than any refunding, replacement, restructuring or refinancing thereof) and any related notes, collateral documents, letters of credit and guarantees and any Interest Rate Agreement entered into in connection with any Credit Facility, including principal, premium, if any, interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization at the rate specified therein whether or not a claim for post filing interest is allowed in such proceedings), fees, charges, expenses, reimbursement obligations, guarantees and all other amounts payable thereunder or in respect thereof. Board of Directors means, as to any Person, the board of directors of such Person or any duly authorized committee thereof; provided, any action required to be taken under the Indenture by the Board of Directors of the Issuer can, in the alternative, at the option of the Issuer, be taken by the Board of Directors of the Ultimate Parent. Bund Rate means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity as of such date of the Comparable German Bund Issue, assuming a price for the Comparable German Bund Issue (expressed as a percentage of its principal amount) equal to the Comparable German Bund Price for such redemption date, where: (1) Comparable German Bund Issue means the German Bundesanleihe security selected by any Reference German Bund Dealer as having a fixed maturity most nearly equal to the period from such redemption date to December 1, 2014 and that would be utilized at the time of selection and in

285

accordance with customary financial practice, in pricing new issues of euro-denominated corporate debt securities in a principal amount approximately equal to the then outstanding principal amount of the Notes and of a maturity most nearly equal to December 1, 2014; provided, however, that, if the period from such redemption dated to December 1, 2014 is not equal to the fixed maturity of the German Bundesanleihe security selected by such Reference German Bund Dealer, the Bund Rate shall be determined by linear interpolation (calculated to the nearest one-twelfth of a year) from the yields of German Bundesanleihe securities for which such yields are given, except that if the period from such redemption date to , 2014, is less than one year, a fixed maturity of one year shall be used; (2) Comparable German Bund Price means, with respect to any redemption date, the average of all Reference German Bund Dealer Quotations for such date (which, in any event, must include at least two such quotations), after excluding the highest and lowest such Reference German Bund Dealer Quotations, or if the Issuer obtains fewer than four such Reference German Bund Dealer Quotations, the average of all such quotations; Reference German Bund Dealer means any dealer of German Bundesanleihe securities appointed by the Issuer in good faith; and Reference German Bund Dealer Quotations means, with respect to each Reference German Bund Dealer and any redemption date, the average as determined by the Issuer in good faith of the bid and offered prices for the Comparable German Bund Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Issuer by such Reference German Bund Dealer at 3.30 p.m. Frankfurt, Germany, time on the third Business Day preceding the redemption date.

(3)

(4)

Business Day means each day that is not a Saturday, Sunday or other day on which banking institutions in Dublin, Ireland, Frankfurt, Germany, New York, New York or London, England are authorized or required by law to close. Capital Stock of any Person means any and all shares, interests, rights to purchase, warrants, options, participation or other equivalents of interests in (however designated) equity of such Person, including any Preferred Stock, but excluding any debt securities convertible into such equity. Capitalized Lease Obligation means an obligation that is required to be classified and accounted for as a capitalized lease for financial reporting purposes in accordance with IFRS. The amount of Indebtedness represented by such obligation will be the capitalized amount of such obligation at the time any determination thereof is to be made as determined in accordance with IFRS, and the Stated Maturity thereof will be the date of the last payment of rent or any other amount due under such lease prior to the first date such lease may be terminated without penalty. Cash Equivalents means: (1) securities issued or directly and fully guaranteed or insured by the United States Government or a member state of the European Union as of January 1, 2004 (each a Qualified Country) or any agency or instrumentality thereof (provided that the full faith and credit of such Qualified Country is pledged in support thereof), having maturities of not more than one year from the date of acquisition; marketable general obligations issued by any political subdivision of any Qualified Country or any public instrumentality thereof maturing within one year from the date of acquisition of the United States (provided that the full faith and credit of the Qualified Country is pledged in support thereof) and, at the time of acquisition, having a credit rating of A2 or better from either Standard & Poors Ratings Services or Moodys Investors Service, Inc.; certificates of deposit, time deposits, eurodollar time deposits, overnight bank deposits or bankers acceptances having maturities of not more than one year from the date of acquisition thereof issued by any lender party to any Credit Facility or by any bank or trust company (x) the long-term debt of which is rated at the time of acquisition thereof at least A or the equivalent thereof by Standard & Poors Ratings Services, or A or the equivalent thereof by Moodys Investors Service, Inc. (or if at the time neither is issuing comparable ratings, then a comparable rating of another nationally recognized rating agency);

(2)

(3)

286

(4)

repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (1), (2) and (3) entered into with any bank meeting the qualifications specified in clause (3) above; commercial paper rated at the time of acquisition thereof at least A-2 or the equivalent thereof by Standard & Poors Ratings Services or P-2 or the equivalent thereof by Moodys Investors Service, Inc., or carrying an equivalent rating by an internationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of investments, and in any case maturing within one year after the date of acquisition thereof; and interests in any investment company or money market fund which invests 95% or more of its assets in instruments of the type specified in clauses (1) through (5) above. UGC (a) ceases to be the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of the Issuer and (b) ceases, by virtue of any powers conferred by the articles of association or other documents regulating the Issuer to, directly or indirectly, direct or cause the direction of management and policies of the Issuer; the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Issuer and its Restricted Subsidiaries taken as a whole to any person (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) other than a Permitted Holder; the adoption by the stockholders of the Issuer of a plan or proposal for the liquidation or dissolution of the Issuer, other than a transaction complying with the covenant described under Certain Covenants Merger and Consolidation; or either (a) the consummation of any transaction (including, without limitation, any merger, consolidation, scheme of arrangement or amalgamation), the result of which is that Liberty Global Europe Financing B.V., UPC Holding and/or any of their Subsidiaries becomes the beneficial owner, directly or indirectly, of more than 50% of the Voting Stock of the Issuer, (b) the direct or indirect sale, lease, transfer, conveyance or other disposition, in one or a series of related transactions, of all or substantially all of the properties or assets of the Issuer and its Subsidiaries taken as a whole to Liberty Global Europe Financing B.V., UPC Holding and/or any of their Subsidiaries or (c) the Issuer ceases to own, directly or indirectly, all of the Capital Stock of Unitymedia Hessen.

(5)

(6)

Change of Control means: (1)

(2)

(3)

(4)

Code means the United States Internal Revenue Code of 1986, as amended. Collateral means any assets in which a security interest has been or will be granted pursuant to any Security Document to secure the Obligations under the Indenture, the Notes or any Subsidiary Guarantee. Common Stock means, with respect to any Person, any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or nonvoting) of such Persons common stock whether or not outstanding on the Issue Date, and includes, without limitation, all series and classes of such common stock. Consolidated EBITDA means, for any period without duplication, the Consolidated Net Income for such period, plus the following to the extent deducted in calculating such Consolidated Net Income: (1) (2) (3) (4) (5) Consolidated Interest Expense; Consolidated Income Taxes; consolidated depreciation expense; consolidated amortization expense; any reasonable expenses, charges or other costs related to any Equity Offering, Permitted Investment, acquisition, recapitalization or the Incurrence of any Indebtedness permitted by the Indenture, in each case, as determined in good faith by an Officer of the Issuer and without duplication of any amounts excluded under clause (3) of the definition of Consolidated Net Income; and other non-cash charges reducing Consolidated Net Income (excluding any such non-cash charge to the extent it represents an accrual of or reserve for cash charges in any future period) less other noncash items of income increasing Consolidated Net Income (excluding any such non-cash item of income to the extent it represents a receipt of cash payments in any future period).

(6)

287

Notwithstanding the foregoing, the provision for taxes and the depreciation, amortization and non-cash items of a Restricted Subsidiary shall be added to Consolidated Net Income to compute Consolidated EBITDA only to the extent (and in the same proportion, including by reason of minority interests) that the net income or loss of such Restricted Subsidiary was included in calculating Consolidated Net Income and only if a corresponding amount would be permitted at the date of determination to be distributed to the Company by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, governmental rules and regulations applicable to such Restricted Subsidiary or its shareholders (other than any restriction specified in sub-clauses (a) through (e) of clause (2) of the definition of Consolidated Net Income). Consolidated Income Taxes means taxes based on income, profits or capital of any of the Issuer and its Restricted Subsidiaries whether or not paid, estimated, accrued or required to be remitted to any governmental authority taken into account in calculating Consolidated Net Income. Consolidated Interest Expense means, for any period the consolidated net interest income/expense of the Issuer and its Restricted Subsidiaries (in each case, determined on the basis of IFRS), whether paid or accrued, including any such interest and charges consisting of: (1) (2) (3) (4) interest expense attributable to Capitalized Lease Obligations; amortization of debt discount and debt issuance cost; non-cash interest expense; commissions, discounts and other fees and charges owed with respect to financings not included in clause (2) above; costs associated with Hedging Obligations; dividends on other distributions in respect of all Disqualified Stock of the Issuer and all Preferred Stock of any Restricted Subsidiary, to the extent held by Persons other than the Issuer or a Subsidiary of the Issuer; the consolidated interest expense that was capitalized during such period; and interest actually paid by the Issuer on any Restricted Subsidiary, under any Guarantee of Indebtedness or other obligation of any other Person.

(5) (6)

(7) (8)

Consolidated Leverage Ratio, as of any date of determination, means the ratio of: (1) the outstanding Indebtedness (other than (x) Subordinated Shareholder Loans, (y) any Indebtedness which is a contingent obligation of the Issuer or a Restricted Subsidiary and (z) for the purposes of determining the Consolidated Leverage Ratio under clause (1) of the first paragraph under Certain Covenants Limitations on Indebtedness, outstanding Indebtedness of the Issuer, including guarantees of such Indebtedness by any Restricted Subsidiary) of the Issuer and its Restricted Subsidiaries on a Consolidated basis, to the Pro forma EBITDA for the period of the most recent two consecutive fiscal quarters for which financial statements have previously been furnished to holders of the Notes pursuant to the covenant described under Certain Covenants Reports, multiplied by 2.0.

(2)

Consolidated Net Income means, for any period, net income (loss) of the Issuer and its Restricted Subsidiaries determined on a consolidated basis on the basis of IFRS; provided, however, that there will not be included in such Consolidated Net Income: (1) (A) subject to the limitations contained in clause (3) below, any net income (loss) of any Person (other than the Issuer) if such Person is not a Restricted Subsidiary, except that the Issuers equity in the net income of any such Person for such period will be included in such Consolidated Net Income up to the aggregate amount of cash or Cash Equivalents actually distributed by such Person

288

during such period to the Issuer or a Restricted Subsidiary as a dividend or other distribution or return on investment (subject, in the case of a dividend or other distribution or return on investment to a Restricted Subsidiary, to the limitations contained in clause (2) below); and (B) the Issuers equity in a net loss of any such Person (other than an Unrestricted Subsidiary) for such period will be included in determining such Consolidated Net Income; (2) any net income (loss) of any Restricted Subsidiary if such Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions by such Restricted Subsidiary, directly or indirectly, to the Issuer by operation of the terms of such Restricted Subsidiarys charter or any agreement, instrument, judgment, decree, order, statute or governmental rule or regulation applicable to such Restricted Subsidiary or its shareholders (other than (a) restrictions that have been waived or otherwise released, (b) restrictions pursuant to the Notes or the Indenture, (c) restrictions in effect on the Issue Date with respect to a Restricted Subsidiary (including pursuant to the Revolving Credit Facility, the Notes or the Senior Secured Notes) and other restrictions with respect to any Restricted Subsidiary that, taken as a whole, are not materially less favorable to the Holders than restrictions in effect on the Issue Date and (d) restrictions as in effect on the Issue Date specified in clause (8), or restrictions specified in clause (10), of the second paragraph of the covenant described under Certain Covenants Limitation on Restrictions on Distributions from Restricted Subsidiaries), except that (x) the Issuers equity in the net income of any such Restricted Subsidiary for such period will be included in such Consolidated Net Income up to the aggregate amount of cash or Cash Equivalents actually distributed or that could have been distributed by such Restricted Subsidiary during such period to the Issuer or another Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend to another Restricted Subsidiary, to the limitation contained in this clause) and (y) the Issuers equity in a net loss of any such Restricted Subsidiary for such period will be included in determining such Consolidated Net Income; any net gain (or loss) realized upon the sale or other disposition of any asset or disposed operations of the Issuer or any Restricted Subsidiaries which is not sold or otherwise disposed of in the ordinary course of business (as determined in good faith by the Board of Directors of the Issuer); the cumulative effect of a change in accounting principles; any non-cash compensation charge arising from any grant of stock, stock options or other equity based awards; all deferred financing costs written off and premiums paid in connection with any early extinguishment of Indebtedness and any net gain (loss) from any write-off or forgiveness of Indebtedness; any unrealized gains or losses in respect of Hedging Obligations; any goodwill or other intangible asset impairment charge; the impact of capitalized interest on Subordinated Shareholder Loan; and any derivative instruments gains or losses, foreign exchange gains or losses, and gains or losses associated with fair value adjustment on financial instruments.

(3)

(4) (5)

(6)

(7) (8) (9) (10)

Consolidation means the consolidation of the accounts of each of the Restricted Subsidiaries with those of the Issuer in accordance with IFRS consistently applied; provided, however, that Consolidation will not include consolidation of the accounts of any Unrestricted Subsidiary, but the interest of the Issuer or any Restricted Subsidiary in an Unrestricted Subsidiary will be accounted for as an investment. The term Consolidated has a correlative meaning. Credit Facility means, one or more debt facilities or arrangements (including, without limitation, the Revolving Credit Facility) or commercial paper facilities with banks or other institutions or investors providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such institutions or to special purpose entities formed to borrow from such institutions against such receivables), letters of credit or other Indebtedness, in each case, as amended, restated, modified, renewed, refunded, replaced, restructured, refinanced, repaid, increased or extended in whole or in part from time to time (and whether in

289

whole or in part and whether or not with the original administrative agent and lenders or another administrative agent or agents or other banks or institutions or investors and whether provided under the Revolving Credit Facility or one or more other credit or other agreements, indentures, financing agreements or otherwise) and in each case including all agreements, instruments and documents executed and delivered pursuant to or in connection with the foregoing (including but not limited to any notes and letters of credit issued pursuant thereto and any guarantee and collateral agreement, patent and trademark security agreement, mortgages or letter of credit applications and other guarantees, pledges, agreements, security agreements and collateral documents). Without limiting the generality of the foregoing, the term Credit Facility shall include any agreement or instrument (i) changing the maturity of any Indebtedness Incurred thereunder or contemplated thereby, (ii) adding Subsidiaries of the Issuer as additional borrowers or guarantors thereunder, (iii) increasing the amount of Indebtedness Incurred thereunder or available to be borrowed thereunder or (iv) otherwise altering the terms and conditions thereof. Currency Agreement means, in respect of a Person, any foreign exchange contract, currency swap agreement, futures contract, option contract, derivative or other similar agreement as to which such Person is a party or a beneficiary. Default means any event which is, or after notice or passage of time or both would be, an Event of Default. Designated Senior Indebtedness means (1) any Senior Indebtedness permitted under the Indenture that has, at the time of designation, an aggregate principal amount outstanding of at least 100.0 million (including the amount of all undrawn commitments and matured and contingent reimbursement obligations pursuant to letters of credit thereunder) and that has been designated by the Issuer in an instrument evidencing such Senior Indebtedness and in an Officers Certificate delivered to the Trustee as Designated Senior Indebtedness for purposes of the Indenture, (2) all Indebtedness arising under the Revolving Credit Facility and (3) all Indebtedness arising under the Senior Secured Indenture and the Senior Secured Notes. Disinterested Director means, with respect to any transaction with an Affiliate, a member of the Board of Directors of a Parent of the Issuer having no material direct or indirect financial interest in or with respect to such transaction with an Affiliate. A member of the Board of Directors of such Parent of the Issuer shall not be deemed to have such a financial interest by reason of such members holding Capital Stock of the Issuer or any Parent or any options, warrants or other rights in respect of such Capital Stock. Disqualified Stock means, with respect to any Person, any Capital Stock of such Person which by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event: (1) (2) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise; is convertible or exchangeable for Indebtedness or Disqualified Stock (excluding Capital Stock which is convertible or exchangeable solely at the option of the Issuer or a Restricted Subsidiary); or is redeemable at the option of the holder of the Capital Stock in whole or in part,

(3)

in each case on or prior to the earlier of the date (a) of the Stated Maturity of the Notes or (b) on which there are no Notes outstanding, provided that only the portion of Capital Stock which so matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date will be deemed to be Disqualified Stock; provided, further that any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Issuer to repurchase such Capital Stock upon the occurrence of a change of control or asset sale (each defined in a substantially identical manner to the corresponding definitions in the Indenture) shall not constitute Disqualified Stock if the terms of such Capital Stock (and all such securities into which it is convertible or for which it is ratable or exchangeable), provided that the Issuer may not repurchase or redeem any such Capital Stock (and all such securities into which it is convertible or for which it is ratable or exchangeable) pursuant to such provision prior to compliance by the Issuer with the provisions of the Indenture described under the captions Certain Covenants Change of Control and Certain Covenants Limitation on Sales of Assets and Subsidiary Stock and such repurchase or redemption complies with Certain Covenants Limitation on Restricted Payments.

290

Distribution Business means: (1) the business of upgrading, constructing, creating, developing, acquiring, operating, owning, leasing and maintaining cable television networks (including for avoidance of doubt master antenna television, satellite master antenna television, single and multi-channel microwave single or multi-point distribution systems and direct-to-home satellite systems) for the transmission, reception and/or delivery of multi-channel television and radio programming, telephony and internet and/or data services to the residential markets; or (2) any business which is incidental to or related to and, in either case, material to such business. Enforcement Sale means (1) any sale or disposition (including by way of public auction) of the Collateral pursuant to an enforcement action taken by the Security Trustee in accordance with the provisions of the Intercreditor Agreement, including on behalf of the Senior Indebtedness Incurred under the Revolving Credit Facility, the holders of the Senior Secured Notes or certain hedging counter parties, to the extent such sale or disposition is effected in compliance with the provisions of the Intercreditor Agreement, or (2) any sale or disposition of the Collateral pursuant to the enforcement of security in favor of other Senior Indebtedness of the Issuer or its Restricted Subsidiaries which complies with the terms of an Additional Intercreditor Agreement (or if there is no such intercreditor agreement, would substantially comply with the requirements of clause (1) hereof). Equity Offering means a sale of (x) Capital Stock of the Issuer (other than Disqualified Stock), or (y) Capital Stock of a Parent the proceeds of which are contributed as equity share capital to the Issuer or (z) Subordinated Shareholder Loans. Euro Equivalent means, with respect to any monetary amount in a currency other than euro, at any time of determination thereof by the Issuer or the Trustee, the amount of euro obtained by converting such currency other than euro involved in such computation into euro at the spot rate for the purchase of euro with the applicable currency other than euro as published in The Financial Times in the Currency Rates section (or, if The Financial Times is no longer published, or if such information is no longer available in The Financial Times, such source as may be selected in good faith by the Issuer) on the date of such determination. European Government Obligations means any security that is (1) a direct obligation of Ireland, Belgium, the Netherlands, France, The Federal Republic of Germany or any other country that is a member of the European Monetary Union on the date of the Indenture, for the payment of which the full faith and credit of such country is pledged or (2) an obligation of a person controlled or supervised by and acting as an agency or instrumentality of any such country the payment of which is unconditionally Guaranteed as a full faith and credit obligation by such country, which, in either case under the preceding clause (1) or (2), is not callable or redeemable at the option of the issuer thereof. Exchange Act means the United States Securities Exchange Act of 1934, as amended. Excluded Contribution means Net Cash Proceeds or property or assets received by the Issuer as capital contributions to the Issuer after the Issue Date or from the issuance or sale (other than to a Restricted Subsidiary) of Capital Stock (other than Disqualified Stock) of the Issuer, in each case to the extent designated as an Excluded Contribution pursuant to an Officers Certificate of the Issuer. Existing Senior Notes means (i) the 215,000,000 aggregate principal amount of 8 3 4% Senior Notes due 2015 issued by Unitymedia issued pursuant to an indenture dated February 14, 2005 among, inter alia, Unitymedia, the Guarantors as defined therein and The Law Debenture Trust Company of New York as trustee, and (ii) 235,000,000 aggregate principal amount of 10 1 8% Senior Notes due 2015 and the outstanding $151,000,000 aggregate principal amount of 10 3 8% Senior Notes due 2015 issued pursuant to an indenture dated July 19, 2005, among, inter alia, Unitymedia, the Guarantors as defined therein and The Law Debenture Trust Company of New York, as trustee. Existing Senior Secured Notes means the Senior Secured Floating Rate Notes due 2013 of Unitymedia Hessen GmbH & Co. KG and Unitymedia NRW GmbH issued under an Indenture, dated as of April 5, 2006, by and among, inter alia, the issuers, the guarantors a party thereto, Law Debenture Trust Company of New York, as trustee and security trustee. Existing Term Loan means the 100,000,000 term loan facility made pursuant to a term loan facility agreement dated October 18, 2006 among, inter alia, Unitymedia Hessen, Unitymedia NRW, Arena Sport Rechte und Marketing Gmbh as borrowers, Unitymedia (as an obligor), the original guarantors party thereto, Goldman Sachs International, as mandated lead arranger and underwriter, Citibank International Plc, as agent. The Law Debenture Trust Company of New York, as security trustee, and the financial institutions party thereto.

291

fair market value unless otherwise specified, wherever such term is used in the Indenture (except as otherwise specifically provided in this Description of the Senior Notes), may be conclusively established by means of an Officers Certificate or a resolution of the Board of Directors of the Issuer setting out such fair market value as determined by such Officer or such Board of Directors in good faith. GAAP means generally accepted accounting principles in the United States as in effect on the Issue Date. Grantor means any Guarantor and any other person that has pledged Collateral to secure the obligations under the Notes and the Subsidiary Guarantees. guarantee means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person: (1) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keepwell, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise); or entered into for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided, however, that the term guarantee will not include endorsements for collection or deposit in the ordinary course of business. The term guarantee used as a verb has a corresponding meaning.

(2)

guarantor means the obligor under a guarantee. Guarantor means (1) each of Unitymedia Hessen, Unitymedia Hessen Verwaltung GmbH, Unitymedia NRW and Unitymedia Management GmbH in its capacity as guarantor of the Notes and (2) each Additional Guarantor in its capacity as an additional guarantor of the Notes. Hedging Obligations of any Person means the obligations of such Person pursuant to any Interest Rate Agreement or Currency Agreement. holder means a Person in whose name a Note is registered on the Registrars books. Holding Company means, in relation to a person, an entity of which that person is a Subsidiary. IFRS means the accounting standards issued by the International Accounting Standards Board and its predecessors as in effect on the Issue Date. Except as otherwise expressly provided in the Indenture, all ratios and calculations based on IFRS contained in the Indenture shall be computed in conformity with IFRS. At any time after the Issue Date, the Issuer may elect to apply for all purposes of the Indenture, in lieu of IFRS, GAAP and, upon such election, references to IFRS herein will be construed to mean GAAP as in effect at the Issue Date; provided that (1) all financial statements and reports to be provided, after such election, pursuant to the Indenture shall be prepared on the basis of GAAP as in effect from time to time (including that, upon first reporting its fiscal year results under GAAP, the Issuer shall restate its financial statements on the basis of GAAP for the fiscal year ending immediately prior to the first fiscal year for which financial statements have been prepared on the basis of GAAP), and (2) from and after such election, all ratios, computations, and other determinations based on IFRS contained in the Indenture shall still be required to be computed in conformity with IFRS. Thereafter, the Issuer may re-elect to apply for all purposes of the Indenture, in lieu of GAAP, IFRS, subject to the foregoing. Incur means issue, create, assume, guarantee, incur or otherwise become liable for; provided, however, that any Indebtedness or Capital Stock of a Person existing at the time such person becomes a Restricted Subsidiary (whether by merger, consolidation, acquisition or otherwise) will be deemed to be Incurred by such Restricted Subsidiary at the time it becomes a Restricted Subsidiary; and the terms Incurred and Incurrence have meanings correlative to the foregoing. Indebtedness means, with respect to any Person on any date of determination (without duplication): (1) (2) money borrowed or raised and debit balances at banks; any bond, note, loan stock, debenture or similar debt instrument;

292

(3) (4)

acceptance or documentary credit facilities; receivables sold or discounted (otherwise than on a non-recourse basis and other than in the normal course of business for collections); payments for assets acquired or services supplied deferred for a period of over 180 days (or 360 days if such deferral is in accordance with the terms pursuant to which the relevant assets were or are to be acquired or services were or are to be supplied) after the relevant assets were or are to be acquired or the relevant services were or are to be supplied to the principal of and premium (if any) in respect of indebtedness of such Person for borrowed money; Capitalized Lease Obligations (excluding network and duct leases) of such Person; any other transaction (including without limitation forward sale or purchase agreements) having the commercial effect of a borrowing or raising of money or any of (2) to (6) above; the principal component or liquidation preference of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, with respect to any Restricted Subsidiary, any Preferred Stock (but excluding, in each case, any accrued dividends); and the principal component of Indebtedness of other Persons to the extent guaranteed by such Person,

(5)

(6) (7)

(8)

(9)

provided that Indebtedness which has been cash-collateralized shall not be included in any calculation of Indebtedness to the extent so cash-collateralized. Notwithstanding the foregoing, Indebtedness shall not include any deposits or prepayments received by the Issuer or a Restricted Subsidiary from a customer or subscriber for its service. The amount of Indebtedness of any Person at any date will be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date. Independent Financial Advisor means an accounting, appraisal or investment banking firm of nationally recognized standing that is, in the good faith judgment of the Issuer, qualified to perform the task for which it has been engaged. Interest Rate Agreement means, with respect to any Person, any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement or other similar agreement or arrangement as to which such Person is party or a beneficiary. Investment means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of any direct or indirect advance, loan (other than advances or extensions of credit to customers in the ordinary course of business) or other extensions of credit (including by way of guarantee or similar arrangement, but excluding any debt or extension of credit represented by a bank deposit other than a time deposit) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by, such Person and all other items that are or would be classified as investments on a balance sheet prepared in accordance with IFRS; provided that none of the following will be deemed to be an Investment: (1) Hedging Obligations entered into in the ordinary course of business and in compliance with the Indenture; endorsements of negotiable instruments and documents in the ordinary course of business; and an acquisition of assets, Capital Stock or other securities by the Issuer or a Subsidiary for consideration to the extent such consideration consists of Common Stock of the Issuer.

(2) (3)

293

For purposes of the definition of Unrestricted Subsidiary and Certain Covenants Limitation on Restricted Payments, (1) Investment will include the portion (proportionate to the Issuers equity interest in a Restricted Subsidiary to be designated as an Unrestricted Subsidiary) of the fair market value of the net assets of such Restricted Subsidiary of the Issuer at the time that such Restricted Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Issuer will be deemed to continue to have a permanent Investment in an Unrestricted Subsidiary in an amount (if positive) equal to (a) the Issuers Investment in such Subsidiary at the time of such redesignation less (b) the portion (proportionate to the Issuers equity interest in such Subsidiary) of the fair market value of the net assets (as conclusively determined by the Board of Directors of the Issuer in good faith) of such Subsidiary at the time that such Subsidiary is so redesignated a Restricted Subsidiary; and any property transferred to or from an Unrestricted Subsidiary will be valued at its fair market value at the time of such transfer, in each case as determined in good faith by the Board of Directors of the Issuer.

(2)

If the Issuer or a Restricted Subsidiary transfers, conveys, sells, leases or otherwise disposes of Voting Stock of a Restricted Subsidiary such that such Subsidiary is no longer a Restricted Subsidiary, then the Investment of the Issuer in such Person shall be deemed to have been made as of the date of such transfer or other disposition in an amount equal to the fair market value (as determined by the Board of Directors of the Issuer in good faith). Investment Grade Securities means: (1) securities issued by the U.S. government or by any agency or instrumentality thereof (other than Cash Equivalents) or directly and fully guaranteed or insured by the U.S. government and in each case with maturities not exceeding two years from the date of the acquisition; securities issued by or a member of the European Union as of January 1, 2004, or any agency or instrumentality thereof (other than Cash Equivalents) or directly and fully guaranteed or insured by a member of the European Union as of January 1, 2004, and in each case with maturities not exceeding two years from the date of the acquisition; debt securities or debt instruments with a rating of A or higher by Standard & Poors Ratings Services or A-2 or higher by Moodys Investors Service, Inc. or the equivalent of such rating by such rating organization, or if no rating of Standard & Poors Ratings Services or Moodys Investors Service, Inc. then exists, the equivalent of such rating by any other nationally recognized securities ratings agency, by excluding any debt securities or instruments constituting loans or advances among the Issuer and its Subsidiaries; investments in any fund that invests exclusively in investments of the type described in clauses (1) through (3) which fund may also hold immaterial amounts of cash and Cash Equivalents pending investment and/or distribution; and corresponding instruments in countries other than those identified in clauses (1) and (2) above customarily utilized for high quality investments and, in each case, with maturities not exceeding two years from the date of the acquisition.

(2)

(3)

(4)

(5)

Investment Grade Status shall occur when the Notes receive both of the following: (1) (2) a rating of Baa3 (or the equivalent) or higher from Moodys Investors Service, Inc. or any of its successors or assigns; and a rating of BBB- (or the equivalent) or higher from Standard & Poors Ratings Services, or any of its successors or assigns,

in each case, with a stable outlook from such rating agency. Issue Date means the date of first issuance of the Notes. Liberty means Liberty Global, Inc., a Delaware corporation, and any successor (by merger, consolidation, transfer, conversion of legal form or otherwise) to all or substantially all of its assets.

294

Lien means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof). Management Fees means any management, consultancy or similar fees payable by the Issuer or any Restricted Subsidiary. Net Available Cash from an Asset Disposition means cash payments received (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise and net proceeds from the sale or other disposition of any securities received as consideration, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring person of Indebtedness or other obligations relating to the properties or assets that are the subject of such Asset Disposition or received in any other non-cash form) therefrom, in each case net of: (1) all legal, accounting, investment banking, title and recording tax expenses, commissions and other fees and expenses Incurred, and all federal, state, provincial, foreign and local taxes required to be paid or accrued as a liability under IFRS (after taking into account any available tax credits or deductions and any tax sharing agreements), as a consequence of such Asset Disposition; all payments made on any Indebtedness which is secured by any assets subject to such Asset Disposition, in accordance with the terms of any Lien upon such assets, or which must by its terms, or in order to obtain a necessary consent to such Asset Disposition, or by applicable law be repaid out of the proceeds from such Asset Disposition; all distributions and other payments required to be made to minority interest holders in Subsidiaries or joint ventures as a result of such Asset Disposition; and the deduction of appropriate amounts to be provided by the seller as a reserve, in accordance with IFRS, against any liabilities associated with the assets disposed of in such Asset Disposition and retained by the Issuer or any Restricted Subsidiary after such Asset Disposition.

(2)

(3)

(4)

Net Cash Proceeds, with respect to any issuance or sale of Capital Stock, means the cash proceeds of such issuance or sale net of attorneys fees, accountants fees, underwriters or placement agents fees, listing fees, discounts or commissions and brokerage, consultant and other fees and charges actually Incurred in connection with such issuance or sale and net of taxes paid or payable as a result of such issuance or sale (after taking into account any available tax credit or deductions and any tax sharing arrangements). Non-Recourse Debt means Indebtedness of a Person: (1) as to which neither the Issuer nor any Restricted Subsidiary (a) provides any guarantee or credit support of any kind (including any undertaking, guarantee, indemnity, agreement or instrument that would constitute Indebtedness) or (b) is directly or indirectly liable (as a guarantor or otherwise); no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness of the Issuer or any Restricted Subsidiary to declare a default under such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and the explicit terms of which provide there is no recourse against any of the assets of the Issuer or its Restricted Subsidiaries.

(2)

(3)

Officer of any Person means the Chairman of the Board of Directors, the Chief Executive Officer, the Chief Financial Officer, any Managing Director, the Treasurer or the Secretary of such Person. Officers Certificate means a certificate signed by two Officers or by an Officer and either an Assistant Treasurer or an Assistant Secretary of the Issuer. Opinion of Counsel means a written opinion from legal counsel who is reasonably acceptable to the Trustee. The counsel may be an employee of or counsel to the Issuer or the Trustee.

295

Parent means the Ultimate Parent, any Subsidiary of the Ultimate Parent of which the Issuer is a Subsidiary on the Issue Date and any other Person of which the Issuer at any time is or becomes a Subsidiary after the Issue Date. Parent Expenses means: (1) costs (including all professional fees and expenses) Incurred by any Parent in connection with reporting obligations under or otherwise Incurred in connection with compliance with applicable laws, applicable rules or regulations of any governmental, regulatory or self-regulatory body or stock exchange, the Indenture or any other agreement or instrument relating to Indebtedness of the Issuer or any Restricted Subsidiary; indemnification obligations of any Parent owing to directors, officers, employees or other Persons under its charter or by-laws or pursuant to written agreements with any such Person with respect to its ownership or the Issuer or the conduct of the business of the Issuer and its Restricted Subsidiaries; obligations of any Parent in respect of director and officer insurance (including premiums therefor) with respect to its ownership or the Issuer or the conduct of the business of the Issuer and its Restricted Subsidiaries; and general corporate overhead expenses, including professional fees and expenses and other operational expenses of any Parent related to the ownership or operation of the business of the Issuer or any of its Restricted Subsidiaries, including acquisitions by the Issuer or its Subsidiaries permitted hereunder (whether or not successful),

(2)

(3)

(4)

in each case, to the extent such costs, obligations and/or expenses are not paid by another Subsidiary of such Parent. Pari Passu Indebtedness means Indebtedness of the Issuer that ranks equally or junior in right of payment with the Notes. Permitted Asset Swap means the concurrent purchase and sale or exchange of related business assets or a combination of related business, cash and Cash Equivalents between the Issuer or any of its Restricted Subsidiaries and another Person. Permitted Business means any business: (1) that consists of the upgrade, construction, creation, development, marketing, acquisition (to the extent permitted under this Indenture), operation, utilization and maintenance of networks that use existing or future technology for the transmission, reception and delivery of voice, video and/or other data (including networks that transmit, receive and/or deliver services such as multi-channel television and radio, programming, telephony, Internet services and content, high speed data transmission, video, multi-media and related activities); or that supports, is incidental to or is related to any such business; or that comprises being a Holding Company of one or more persons engaged in such business.

(2) (3)

Permitted Collateral Liens means (1) Liens on the Collateral arising by operation of law that are described in one or more of clauses (4), (5) and (10) of the definition of Permitted Liens and that, in each case, would not materially interfere with the ability of the Security Trustee to enforce the Security Interest in the Collateral and (2) Liens on the Collateral to secure (a) any Additional Notes, (b) Indebtedness of the Issuer or a Guarantor that is permitted to be Incurred under the first paragraph of the covenant described under Certain Covenants Limitation on Indebtedness or clauses (1), (3), or (12) (in the case of (12), to the extent such Guarantee is in respect of Indebtedness otherwise permitted to be secured and specified in this definition of Permitted Collateral Liens) of the second paragraph of the covenant described under Certain Covenants Limitation on Indebtedness; (c) Hedging Obligations Incurred by the Company or any Subsidiary Guarantor for bona fide hedging purposes (as determined in good faith by the Board of Directors or senior management of the Issuer) in respect of the Notes, the Senior Secured Notes, other Indebtedness (provided that, in each case such Indebtedness could be secured by a Permitted Collateral Lien pursuant to clause (2) of this definition of Permitted Collateral

296

Liens) or Indebtedness incurred under clause (16) of the second paragraph of the covenant described under Certain Covenants Limitation on Indebtedness and in the case of each of the foregoing substantially correspond in terms of notional amount, currencies and interest rates, as applicable, to such Notes, Senior Secured Notes and such other Indebtedness and (d) any Refinancing Indebtedness in respect of Indebtedness referred to in the foregoing clauses (a), (b) or (c); provided, however, that such Lien ranks (a) equal to all other Liens on such Collateral securing Senior Indebtedness of the Issuer or such Guarantor, as applicable, if such Indebtedness is Senior Indebtedness of the Issuer or such Guarantor, as applicable (except that any creditors with respect to the foregoing may provide for an ordering of payments with respect to any proceeds received upon enforcement of such Lien), (b) equal to all other Liens on such Collateral securing Senior Subordinated Indebtedness, if such Indebtedness is Senior Subordinated Indebtedness or (c) junior to the Liens securing the Notes or the Subsidiary Guarantees, provided, further, however, that only Indebtedness represented by obligations under the Notes (including any Additional Notes), the Indenture and any other Pari Passu Indebtedness of the Issuer may be secured by a Lien on the shares of the Issuer. Permitted Holders means, collectively, (1) Liberty, (2) any Affiliate or Related Person of a Permitted Holder described in clause (1) above, and any successor to such Permitted Holder, Affiliate, or Related Person and (3) any Person who is acting as an underwriter in connection with any public or private offering of Capital Stock of the Issuer, acting in such capacity. Permitted Investment means an Investment by the Issuer or any Restricted Subsidiary in: (1) the Issuer or a Restricted Subsidiary (other than a Receivables Entity) or a Person which will, upon the making of such Investment, become a Restricted Subsidiary (other than a Receivables Entity); another Person if as a result of such Investment such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all its assets to, the Issuer or a Restricted Subsidiary (other than a Receivables Entity); cash and Cash Equivalents or Investment Grade Securities; receivables owing to the Issuer or any Restricted Subsidiary created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Issuer or any such Restricted Subsidiary deems reasonable under the circumstances; payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business; loans or advances to employees made in the ordinary course of business consistent with past practices of the Issuer or such Restricted Subsidiary; Capital Stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Issuer or any Restricted Subsidiary, or as a result of foreclosure, perfection or enforcement of any Lien, or in satisfaction of judgments or pursuant to any plan of reorganization or similar arrangement including upon the bankruptcy or insolvency of a debtor; Investments made as a result of the receipt of non-cash consideration from a sale or other disposition of property or assets, including without limitation an Asset Disposition, in each case, that was made in compliance with Certain Covenants Limitation on Sales of Assets and Subsidiary Stock; Investments in existence on, or made pursuant to legally binding commitments in existence on, the Issue Date;

(2)

(3) (4)

(5)

(6)

(7)

(8)

(9)

(10) Currency Agreements and Interest Rate Agreements and related Hedging Obligations, which transactions or obligations are Incurred in compliance with Certain Covenants Limitation on Indebtedness; (11) Investments by the Issuer or any of its Restricted Subsidiaries, together with all other Investments pursuant to this clause (11), in an aggregate amount at the time of such Investment not to exceed 2.0% of Total Assets at any one time, provided that, if an Investment is made pursuant to this clause

297

in a Person that is not a Restricted Subsidiary and such Person subsequently becomes a Restricted Subsidiary or is subsequently designated a Restricted Subsidiary pursuant to the covenant described under Certain Covenants Limitation on Restricted Payments, such Investment shall thereafter be deemed to have been made pursuant to clause (1) or (2) of the definition of Permitted Investments and not this clause; (12) Investments by the Issuer or a Restricted Subsidiary in a Receivables Entity or any Investment by a Receivables Entity in any other Person, in each case, in connection with a Qualified Receivables Transaction, provided, however, that any Investment in any such Person is in the form of a Purchase Money Note, or any equity interest or interests in Receivables and related assets generated by the Issuer or a Restricted Subsidiary and transferred to any Person in connection with a Qualified Receivables Transaction or any such Person owning such Receivables; (13) guarantees issued in accordance with Certain Covenants Limitation on Indebtedness; (14) pledges or deposits (x) with respect to leases or utilities provided to third parties in the ordinary course of business or (y) otherwise described in the definition of Permitted Liens or made in connection with Liens permitted under the covenant described under Certain Covenants Limitation on Liens; (15) the Notes and the Senior Secured Notes; (16) so long as no Default or Event of Default of the type specified in clause (1) or (2) under Events of Default has occurred and is continuing, (a) minority Investments in any Person engaged in a Permitted Business and (b) Investments in joint ventures that conduct a Permitted Business to the extent that, after giving pro forma effect to any such Investment, the Consolidated Leverage Ratio for the Issuer and its Restricted Subsidiaries would not exceed 5.00 to 1.00; (17) any Investment to the extent made using as consideration Capital Stock of the Issuer (other than Disqualified Stock), Subordinated Shareholder Loans or Capital Stock of any Parent; and (18) Investments made after the Issue Date and prior to the Acquisition Date to the extent such Investments are not prohibited under the Share Purchase Agreement; provided that such Investments were not made at the request of, or consented to by, the Ultimate Parent or any of its Affiliates. Permitted Liens means: (A) with respect to any Restricted Subsidiary: (1) Liens securing Indebtedness Incurred under Credit Facilities, to the extent Incurred in compliance with the first paragraph or clause (1) under the second paragraph of the covenant described under Certain Covenants Limitation on Indebtedness; Liens on Receivables and related assets of the type described in the definition of Qualified Receivables Transaction Incurred in connection with a Qualified Receivables Transaction; pledges or deposits by such Person under workmens compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or United States government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import or customs duties or for the payment of rent, in each case Incurred in the ordinary course of business; Liens imposed by law, including carriers, warehousemens, mechanics landlords, materialmens and repairmens or other like Liens, in each case for sums not yet due or being contested in good faith by appropriate proceedings if a reserve or other appropriate provisions, if any, as shall be required by IFRS, shall have been made in respect thereof; Liens for taxes, assessments or other governmental charges not yet subject to penalties for non-payment or which are being contested in good faith by appropriate proceedings provided appropriate reserves required pursuant to IFRS have been made in respect thereof;

(2) (3)

(4)

(5)

298

(6)

Liens in favor of issuers of surety or performance bonds or letters of credit or bankers acceptances issued pursuant to the request of and for the account of such Person in the ordinary course of its business; provided, however, that such letters of credit do not constitute Indebtedness; encumbrances, ground leases, easements or reservations of, or rights of others for, licenses, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning, building codes or other restrictions (including, without limitation, minor defects or irregularities in title and similar encumbrances) as to the use of real properties or Liens incidental to the conduct of the business of the Issuer and its Restricted Subsidiaries or to the ownership of its properties which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of the Issuer and its Restricted Subsidiaries; Liens securing Hedging Obligations so long as the related Indebtedness is, and is permitted to be under the Indenture, secured by a Lien on the same property securing such Hedging Obligation; leases, licenses, subleases and sublicenses of assets (including, without limitation, real property and intellectual property rights) which do not materially interfere with the ordinary conduct of the business of the Issuer or any of its Restricted Subsidiaries;

(7)

(8)

(9)

(10) Liens arising out of judgments, decrees, orders or awards not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment, decree, order or award have not been finally terminated or the period within which such proceedings may be initiated has not expired; (11) Liens for the purpose of securing the payment of all or a part of the purchase price of, or Capitalized Lease Obligations, purchase money obligations or other payments Incurred to finance the acquisition, improvement or construction of, assets or property acquired or constructed in the ordinary course of business provided that: (a) the aggregate principal amount of Indebtedness secured by such Liens is otherwise permitted to be Incurred under the Indenture and does not exceed the cost of the assets or property so acquired or constructed; and such Liens are created within 180 days of construction or acquisition of such assets or property and do not encumber any other assets or property of the Issuer or any Restricted Subsidiary other than such assets or property and assets affixed or appurtenant thereto;

(b)

(12) Liens arising solely by virtue of any statutory or common law provisions relating to bankers Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a depositary institution; provided that such deposit account is not intended by the Issuer or any Restricted Subsidiary to provide collateral to the depository institution; (13) Liens arising from United States Uniform Commercial Code financing statement filings (or similar filings in other applicable jurisdictions) regarding operating leases entered into by the Issuer and its Restricted Subsidiaries in the ordinary course of business; (14) Liens existing on, or provided for under written arrangements existing on, the Issue Date; (15) Liens on property, other assets or shares of stock of a Person at the time such Person becomes a Restricted Subsidiary; provided, however, that such Liens are not created, Incurred or assumed in connection with, or in contemplation of, such other Person becoming a Restricted Subsidiary; provided further, however, that any such Lien may not extend to any other property owned by the Issuer or any other Restricted Subsidiary; (16) Liens on property at the time a Restricted Subsidiary acquired the property, including any acquisition by means of a merger or consolidation with or into any Restricted Subsidiary;

299

provided, however, that such Liens are not created, Incurred or assumed in connection with, or in contemplation of, such acquisition; provided further, however, that such Liens may not extend to any other property owned by any other Restricted Subsidiary; (17) Liens securing Indebtedness or other obligations of a Restricted Subsidiary owing to the Issuer or another Restricted Subsidiary; (18) Permitted Collateral Liens; (19) Liens securing Refinancing Indebtedness Incurred to refinance Indebtedness that was previously so secured, provided that any such Lien is limited to all or part of the same property or assets (plus improvements, accessions, proceeds or dividends or distributions in respect thereof) that secured (or, under the written arrangements under which the original Lien arose, could secure) the Indebtedness being refinanced or is in respect of property that is the security for a Permitted Lien hereunder; (20) Liens securing the Notes or the Subsidiary Guarantees; (21) any interest or title of a lessor under any Capitalized Lease Obligation or operating lease; (22) Liens on Capital Stock or other securities of any Unrestricted Subsidiary that secure Indebtedness or other obligations of such Unrestricted Subsidiary; (23) any encumbrance or restriction (including, but not limited to, put and call arrangements) with respect to Capital Stock of any joint venture or similar arrangement pursuant to any joint venture or similar agreement; (24) Liens over rights under loan agreements relating to, or over notes or similar instruments evidencing, the on-loan of proceeds received by a Restricted Subsidiary from the issuance of Indebtedness, which Liens are created to secure payment of such Indebtedness; (25) Liens Incurred with respect to obligations that do not exceed 30.0 million at any time outstanding; and (26) Liens securing obligations under the Senior Secured Indenture, the Senior Secured Notes and any Additional Notes (as defined under the Senior Secured Indenture) and guarantees thereof. (B) with respect to the Issuer: (1) (2) (3) Liens securing the Notes; Permitted Collateral Liens; Liens securing guarantees of Indebtedness Incurred under Credit Facilities, to the extent the underlying Indebtedness was Incurred in compliance with the first paragraph or clause (1) under the second paragraph of the covenant described under Certain Covenants Limitation on Indebtedness; Liens on property at the time the Issuer acquired the property, including any acquisition by means of a merger or consolidation with or into the Issuer; provided, however, that such Liens are not created, Incurred or assumed in connection with, or in contemplation of, such acquisition; provided further, however, that such Liens may not extend to any other property owned by the Issuer; and Liens of the type described in clauses (3), (4), (5), (6), (7), (8), (9), (10), (11), (12), (17), (19) and, (20), (21), (22) and (24) of clause (A) of this definition of Permitted Liens.

(4)

(5)

Person means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company, government or any agency or political subdivision hereof or any other entity.

300

Preferred Stock, as applied to the Capital Stock of any corporation, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such corporation, over shares of Capital Stock of any other class of such corporation. Pro forma EBITDA means, for any period, the Consolidated EBITDA of the Issuer and its Restricted Subsidiaries, provided, however, that for the purposes of calculating Pro forma EBITDA for such period, if, as of such date of determination: (1) since the beginning of such period the Issuer or any Restricted Subsidiary will have made any Asset Disposition or disposed of any company, any business, or any group of assets constituting an operating unit of a business (any such disposition, a Sale) or if the transaction giving rise to the need to calculate the Consolidated Leverage Ratio is such a Sale, Pro forma EBITDA for such period will be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the assets which are the subject of such Sale for such period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such period; since the beginning of such period the Issuer or any Restricted Subsidiary (by merger or otherwise) will have made an Investment in any Person that thereby becomes a Restricted Subsidiary, or otherwise acquires any company, any business, or any group of assets constituting an operating unit of a business (any such Investment or acquisition, a Purchase) including any such Purchase occurring in connection with a transaction causing a calculation to be made hereunder, Consolidated EBITDA for such period will be calculated after giving pro forma effect thereto as if such Purchase occurred on the first day of such period; and since the beginning of such period any Person (that became a Restricted Subsidiary or was merged with or into the Issuer or any Restricted Subsidiary since the beginning of such period) will have made any Sale or any Purchase that would have required an adjustment pursuant to clause (1) or (2) above if made by the Issuer or a Restricted Subsidiary since the beginning of such period, Consolidated EBITDA for such period will be calculated after giving pro forma effect thereto as if such Sale or Purchase occurred on the first day of such period.

(2)

(3)

For purposes of this definition and the definition of Consolidated Leverage Ratio, (i) whenever pro forma effect is to be given to any transaction or calculation under this definition, the pro forma calculations will be as determined in good faith by a responsible financial or accounting officer of the Issuer (including without limitation in respect of anticipated expense and cost reductions) and (ii) in determining the amount of Indebtedness outstanding on any date of determination, pro forma effect shall be given to any Incurrence, repayment, repurchase, defeasance or other acquisition, retirement or discharge of Indebtedness on such date. Public Debt means any Indebtedness consisting of bonds, debentures, notes or other similar debt securities issued in (1) a public offering registered under the Securities Act or (2) a private placement to institutional investors that is underwritten for resale in accordance with Rule 144A or Regulation S under the Securities Act, whether or not it includes registration rights entitling the holders of such debt securities to registration thereof with the SEC for public resale. The term Public Debt (a) shall not include the Notes (or any Additional Notes) and (b) for the avoidance of doubt, shall not be construed to include any Indebtedness issued to institutional investors in a direct placement of such Indebtedness that is not underwritten by an intermediary (it being understood that, without limiting the foregoing, a financing that is distributed to not more than ten Persons (provided that multiple managed accounts and affiliates of any such Persons shall be treated as one Person for the purposes of this definition) shall be deemed not to be underwritten), or any Indebtedness under the Revolving Credit Facility, commercial bank or similar Indebtedness, Capitalized Lease Obligation or recourse transfer of any financial asset or any other type of Indebtedness incurred in a manner not customarily viewed as a securities offering. Public Offering Expenses means expenses Incurred by any Parent in connection with any public offering of Capital Stock or Indebtedness (whether or not successful): (1) (2) where the net proceeds of such offering are intended to be received by or contributed or loaned to the Issuer or a Restricted Subsidiary; or in a prorated amount of such expenses in proportion to the amount of such net proceeds intended to be so received, contributed or loaned; or

301

(3)

otherwise on an interim basis prior to completion of such offering so long as any Parent shall cause the amount of such expenses to be repaid to the Issuer or the relevant Restricted Subsidiary out of the proceeds of such offering promptly if completed,

in each case, to the extent such expenses are not paid by another Subsidiary such Parent. Purchase Money Note means a promissory note of a Receivables Entity evidencing the deferred purchase price of Receivables (and related assets) and/or a line of credit, which may be irrevocable, from the Issuer or any Restricted Subsidiary in connection with a Qualified Receivables Transaction with a Receivables Entity, which deferred purchase price or line is repayable from cash available to the Receivables Entity, other than amounts required to be established as reserves pursuant to agreements, amounts paid to investors in respect of interest, principal and other amounts owing to such investors and amounts owing to such investors and amounts paid in connection with the purchase of newly generated Receivables. Qualified Receivables Transaction means any transaction or series of transactions that may be entered into by the Issuer or any of its Restricted Subsidiaries pursuant to which the Issuer or any of its Restricted Subsidiaries may sell, convey or otherwise transfer to (1) a Receivables Entity (in the case of a transfer by the Issuer or any of its Restricted Subsidiaries) and (2) any other Person (in the case of a transfer by a Receivables Entity), or may grant a security interest in, any Receivables (whether now existing or arising in the future) of the Issuer or any of its Restricted Subsidiaries, and any assets related thereto including, without limitation, all collateral securing such Receivables, all contracts and all guarantees or other obligations in respect of such accounts receivable, the proceeds of such Receivables and other assets which are customarily transferred, or in respect of which security interests are customarily granted, in connection with asset securitization involving Receivables. Receivable means a right to receive payment arising from a sale or lease of goods or the performance of services by a Person pursuant to an arrangement with another Person pursuant to which such other Person is obligated to pay for goods or services under terms that permit the purchase of such goods and services on credit and shall include, in any event, any items of property that would be classified as an account, chattel paper, payment intangible or instrument under the Uniform Commercial Code as in effect in the State of New York and any supporting obligations as so defined. Receivables Entity means a Wholly Owned Subsidiary (or another Person in which the Issuer or any Restricted Subsidiary makes an Investment and to which the Issuer or any Restricted Subsidiary transfers Receivables and related assets) which engages in no activities other than in connection with the financing of Receivables and which is designated by the Board of Directors of the Issuer (as provided below) as a Receivables Entity: (1) no portion of the Indebtedness or any other obligations (contingent or otherwise) of which: (a) is guaranteed by the Issuer or any Restricted Subsidiary (excluding guarantees of Obligations (other than the principal of, and interest on, Indebtedness) pursuant to Standard Securitization Undertakings); is recourse to or obligates the Issuer or any Restricted Subsidiary of the Issuer in any way other than pursuant to Standard Securitization Undertakings; or subjects any property or asset of the Issuer or any Restricted Subsidiary, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings;

(b)

(c)

(2)

with which neither the Issuer nor any Restricted Subsidiary has any material contract, agreement, arrangement or understanding (except in connection with a Purchase Money Note or Qualified Receivables Transaction) other than on terms no less favorable to the Issuer or such Restricted Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of the Issuer, other than fees payable in the ordinary course of business in connection with servicing Receivables; and to which neither the Issuer nor any Restricted Subsidiary has any obligation to maintain or preserve such entitys financial condition or cause such entity to achieve certain levels of operating results.

(3)

302

Any such designation by the Board of Directors of the Issuer shall be evidenced to the Trustee by promptly filing with the Trustee a certified copy of the resolution of the Board of Directors of the Issuer giving effect to such designation and an Officers Certificate certifying that such designation complied with the foregoing conditions. Refinancing Indebtedness means Indebtedness that is Incurred to refund, refinance, replace, exchange, renew, repay or extend (including pursuant to any defeasance or discharge mechanism) (collectively, refinance, refinances, and refinanced shall have a correlative meaning) any Indebtedness existing on the date of the Indenture or Incurred in compliance with the Indenture (including Indebtedness of the Issuer that refinances Indebtedness of any Restricted Subsidiary and Indebtedness of any Restricted Subsidiary that refinances Indebtedness of another Restricted Subsidiary) including Indebtedness that refinances Refinancing Indebtedness, provided, however, that: (1) (a) if the Stated Maturity of the Indebtedness being refinanced is earlier than the Stated Maturity of the Notes, the Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being refinanced or (b) if the Stated Maturity of the Indebtedness being refinanced is later than the Stated Maturity of the Notes, the Refinancing Indebtedness has a Stated Maturity later than the Stated Maturity of the Notes; the Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Average Life of the Indebtedness being refinanced; such Refinancing Indebtedness is Incurred in an aggregate principal amount (or if issued with original issue discount, an aggregate issue price) that is equal to or less than the sum of the aggregate principal amount (or if issued with original issue discount, the aggregate accreted value) then outstanding of the Indebtedness being refinanced (plus, without duplication, any additional Indebtedness Incurred to pay interest or premiums required by the instruments governing such existing Indebtedness and costs, expenses and fees Incurred in connection therewith); and in the case of the refinancing of any Subordinated Obligation, such Refinancing Indebtedness is subordinated in right of payment to the Notes on terms at least as favorable to the holders of the Notes as those contained in the documentation governing the Subordinated Obligation being extended, refinanced, renewed, replaced, defeased or refunded.

(2)

(3)

(4)

Related Business means any business that is the same as or related, ancillary or complementary to, any of the businesses of the Issuer and its Restricted Subsidiaries on the Issue Date. Related Person with respect to any Permitted Holder, means: (1) (2) any controlling equity holder or majority (or more) owned Subsidiary of such Permitted Holder; or in the case of an individual, any spouse, family member or relative of such individual, any trust or partnership for the benefit of one or more of such individual and any such spouse, family member or relative, or the estate, executor, administrator, committee or beneficiaries of any thereof; or any trust, corporation, partnership or other Person for which one or more of the Permitted Holders and other Related Persons of any thereof constitute the beneficiaries, stockholders, partners or owners thereof, or Persons beneficially holding in the aggregate a majority (or more) controlling interest therein.

(3)

Related Taxes means: (1) any taxes, including but not limited to sales, use, transfer, rental, ad valorem, value added, stamp, property, consumption, franchise, license, capital, registration, business, customs, net worth, gross receipts, excise, occupancy, intangibles or similar taxes (other than (x) taxes measured by income and (y) withholding imposed on payments made by any Parent), required to be paid by any Parent by virtue of its: (a) being organized or having Capital Stock outstanding (but not by virtue of owning stock or other equity interests of any corporation or other entity other than the Issuer or any of the Issuers Subsidiaries), or

303

(b) (c)

being a holding company parent of the Issuer or any of the Issuers Subsidiaries, or receiving dividends from or other distributions in respect of the Capital Stock of the Issuer, or any of the Issuers Subsidiaries, or having guaranteed any obligations of the Issuer or any Subsidiary of the Issuer, or having made any payment in respect to any of the items for which the Issuer is permitted to make payments to any Parent pursuant to Certain Covenants Limitation on Restricted Payments,

(d) (e)

in each case, to the extent such taxes are not paid by another Subsidiary such Parent; or (2) any taxes measured by income for which any Parent is liable up to an amount not to exceed with respect to such taxes the amount of any such taxes that the Issuer and its Subsidiaries would have been required to pay on a separate company basis or on a consolidated basis if the Issuer and its Subsidiaries had paid tax on a consolidated, combined, group, affiliated or unitary basis on behalf of an affiliated group consisting only of the Issuer and its Subsidiaries and any taxes imposed by way of withholding on payments made by one Parent to another Parent on any financing that is provided, directly or indirectly in relation to the Issuer and its Subsidiaries (reduced by any taxes measured by income actually paid by the Issuer and its Subsidiaries).

Related Transactions means (1) any payment by Bidco pursuant to the Share Purchase Agreement on the Acquisition Date, as amended or waived (other than any amendment or waiver which would not be materially adverse to the holders of the Notes), (2) any intercompany Indebtedness by the Issuer to any member of the Unitymedia Group as part of the Debt Pushdown in order to refinance in full each of the Existing Senior Secured, the Existing Senior Notes and the Existing Term Loan (provided that such intercompany Indebtedness is extinguished upon completion of the Debt Pushdown), (3) the assumption by Unitymedia of all of Bidcos obligations under the Notes and the assumption by Unitymedia Hessen and Unitymedia NRW of all of Bidcos obligations under the Senior Secured Notes (which assumptions may be in repayment of any loans or advances or return of any Investment contemplated in clause (2) above), (4) the other transactions contemplated by the Debt Pushdown as described in this Offering Memorandum, and (5) payment of fees, costs and expenses in connection with the Acquisition and the Debt Pushdown as set forth under the caption Use of Proceeds. Representative means any trustee, agent or representative (if any) for an issue of Senior Indebtedness or the provider of Senior Indebtedness (if provided on a bilateral basis), as the case may be. Restricted Investment means any Investment other than a Permitted Investment. Restricted Subsidiary means any Subsidiary of the Issuer other than an Unrestricted Subsidiary. Revolving Credit Facility means the senior secured revolving credit facility agreement to be entered into on or before December 31, 2009 as described these under Description of Other Indebtedness Revolving Credit Facility, as amended or supplemented from time to time. Sale/Leaseback Transaction means an arrangement relating to property now owned or hereafter acquired whereby the Issuer or a Restricted Subsidiary transfers such property to a Person and the Issuer or a Restricted Subsidiary leases it from such Person. SEC means the United States Securities and Exchange Commission. Securities Act means the United States Securities Act of 1933, as amended. Security Documents means, prior to the Debt Pushdown, the junior-ranking Share Pledge of the Capital Stock of Bidco and the Senior Secured Notes Escrow and Security Agreement, and, upon consummation of the Debt Pushdown, Share Pledges or Interest Pledges of Capital Stock of Unitymedia, Unitymedia Management, Unitymedia Hessen and Unitymedia Verwaltung, and any other agreement or Document that provides for a Lien out any Collateral for the benefit of the holders of the Note in each case as amended or supplemented from time to time.

304

Security Trustee means Credit Suisse, London Branch or an Affiliate thereof. Senior Indebtedness means, whether outstanding on the Issue Date or thereafter Incurred, all amounts payable by, under or in respect of all other Indebtedness of the Issuer or any Guarantor, including premiums and accrued and unpaid interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Issuer or such Guarantor at the rate specified in the documentation with respect thereto whether or not a claim for post filing interest is allowed in such proceeding) and fees relating thereto; provided, however, that Senior Indebtedness will not include: (1) (2) (3) (4) (5) any Indebtedness Incurred in violation of the Indenture; any obligation of the Issuer to any Restricted Subsidiary or any obligation of any Guarantor to the Issuer or any Restricted Subsidiary; any liability for taxes owed or owing by the Issuer or any Restricted Subsidiary; any accounts payable or other liability to trade creditors arising in the ordinary course of business (including guarantees thereof or instruments evidencing such liabilities); any Indebtedness, guarantee or obligation of the Issuer or any Guarantor that is expressly subordinate or junior in right of payment to any other Indebtedness, guarantee or obligation of the Issuer or such Guarantor, including, without limitation, any Subordinated Obligation; or any Capital Stock.

(6)

Senior Secured Indenture means the indenture governing the Senior Secured Notes to be dated the Issue Date among, inter alia, Bidco and The Bank of New York Mellon, as trustee, as amended or supplemented from time to time. Senior Secured Notes means the 1,430 million aggregate principal amount of Euro denominated 8 1 8% Senior Secured Notes due 2017 and $845 million aggregate principal amount of U.S. dollar-denominated 8 1 8% Senior Secured Notes due 2017 issued on the Issue Date. Senior Subordinated Indebtedness means, with respect to a Guarantor, the Subsidiary Guarantee issued by such Guarantor and any other Indebtedness of such Guarantor (whether outstanding on the Issue Date or thereafter Incurred) that specifically provides that such Indebtedness is to rank equally with such Subsidiary Guarantee in right of payment and is not subordinated by its terms in right of payment to any Indebtedness or other obligation of such Guarantor which is not Guarantor Senior Indebtedness. Share Purchase Agreement refers to that certain share purchase agreement dated as of November 13, 2009 by and between Unity Media S.C.A., BidCo and Liberty Global, Inc., as amended or supplemented from time to time as permitted hereunder. Significant Subsidiary means any Restricted Subsidiary that would be a Significant Subsidiary of the Issuer within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC. SLA Agreements or SLAs means the service level agreements (including the term sheets attached thereto and included therein) with Deutsche Telekom AG and its Affiliates and with Nortel GmbH and its Affiliates in effect on the Issue Date (each, an Existing Service Level Agreement), including agreements for the lease of cable duct and tower space and other premises, the use of fiber optic transmission systems and other infrastructure components and services and the supply of electrical power, as well as any additional or other service level agreements or any replacement, amendment, supplement or waiver of any such service level agreement; provided, however, that any additional or other service level agreement shall be of a type similar to one or more Existing Service Level Agreements and any such service level agreement as replaced, amended, supplemented or waived shall have terms that are similar to an Existing Service Level Agreement or any such additional or other service level agreement. Standard Securitization Undertakings means representations, warranties, covenants and indemnities entered into by the Issuer or any Restricted Subsidiary of the Issuer which are reasonably customary in securitization of Receivables transactions. Stated Maturity means, with respect to any security, the date specified in such security as the fixed date on which the payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision, but shall not include any contingent obligations to repay, redeem or repurchase any such principal prior to the date originally scheduled for the payment thereof. Subordinated Obligation means, in the case of the Issuer, any Indebtedness of the Issuer (whether outstanding on the Issue Date or thereafter Incurred) which is expressly subordinate or junior in right of payment

305

to the Notes pursuant to a written agreement and, in the case of a Guarantor, any Indebtedness of such Guarantor (whether outstanding on the Issue Date or thereafter Incurred) which is expressly subordinate or junior in right of payment to the Subsidiary Guarantee of such Guarantor pursuant to a written agreement. Subordinated Shareholder Loans means Indebtedness of the Issuer (and any security into which such Indebtedness is convertible or for which it is exchangeable at the option of the holder) issued to and held by any Parent that (either pursuant to its terms or pursuant to an agreement with respect thereto): (1) does not mature or require any amortization, redemption or other repayment of principal or any sinking fund payment prior to the first anniversary of the Stated Maturity of the Notes (other than through conversion or exchange of such Indebtedness into Capital Stock (other than Disqualified Stock) of the Issuer or any Indebtedness meeting the requirements of this definition); does not require, prior to the first anniversary of the Stated Maturity of the Notes, payment of cash interest, cash withholding amounts or other cash gross-ups, or any similar cash amounts; contains no change of control or similar provisions that are effective, and does not accelerate and has no right to declare a default or event of default or take any enforcement action or otherwise require any cash payment prior to the first anniversary of the Stated Maturity or the Notes; does not provide for or require any security interest or encumbrance over any asset of the Issuer or any of its Restricted Subsidiaries; is subordinated in right of payment to the prior payment in full of the Notes in the event of (a) a total or partial liquidation, dissolution or winding up of the Issuer, (b) a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Issuer or its property, (c) an assignment for the benefit of creditors or (d) any marshalling of the Issuers assets and liabilities; under which the Issuer may not make any payment or distribution of any kind or character with respect to any obligations on, or relating to, such Subordinated Shareholder Loans if (x) a payment Default on the Notes occurs and is continuing or (y) any other Default under the Indenture occurs and is continuing on the Notes that permits the holders of the Notes to accelerate their maturity and the Issuer receives notice of such Default from the requisite holders of the Notes, until in each case the earliest of (a) the date on which such Default is cured or waived or (b) 180 days from the date such Default occurs (and only once such notice may be given during any 360 day period); and under which, if the holder of such Subordinated Shareholder Loans receives a payment or distribution with respect to such Subordinated Shareholder Loan (a) other than in accordance with the Indenture or as a result of a mandatory requirement of applicable law or (b) under circumstances described under clauses (5)(a) through (d) above, such holder will forthwith pay all such amounts to the Trustee to be held in trust for application in accordance with the Indenture.

(2)

(3)

(4)

(5)

(6)

(7)

Subsidiary of any Person means (a) any corporation, association or other business entity (other than a partnership, joint venture, limited liability company or similar entity) of which more than 50% of the total ordinary voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof (or persons performing similar functions) or (b) any partnership, joint venture limited liability company or similar entity of which more than 50% of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership interests, as applicable, is, in the case of clauses (a) and (b), at the time owned or controlled, directly or indirectly, by (1) such Person, (2) such Person and one or more Subsidiaries of such Person or (3) one or more Subsidiaries of such Person. Unless otherwise specified herein, each reference to a Subsidiary will refer to a Subsidiary of the Issuer. Total Assets means the consolidated total assets of the Issuer and its Restricted Subsidiaries as shown on the most recent balance sheet (excluding the footnotes thereto) of the Issuer. Treasury Rate means the yield to maturity at the time of computation of U.S. Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) which has become publicly available at least two Business Days (but not more than five Business Days) prior to the redemption date (or, if such statistical release is not so published or available, any publicly available source of similar market date selected by the Issuer in good faith)) most nearly equal to the period from the redemption

306

date to December 1, 2014; provided, however, that if the period from the redemption date to December 1, 2014 is not equal to the constant maturity of a U.S. Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by a linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of U.S. Treasury securities for which such yields are given, except that if the period from the redemption date to December 1, 2014 is less than one year, the weekly average yield on actually traded U.S. Treasury securities adjusted to a constant maturity of one year shall be used. UGC means UnitedGlobalCom, Inc., a Delaware corporation, and any successor (by merger, consolidation, transfer, conversion of legal form or otherwise) to all or substantially all of its assets. Ultimate Parent means Liberty. Unitymedia Group means Unitymedia and its Subsidiaries. Unrestricted Subsidiary means: (1) any Subsidiary of the Issuer that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors of the Issuer in the manner provided below; and any Subsidiary of an Unrestricted Subsidiary.

(2)

The Board of Directors of the Issuer may designate any Subsidiary of the Issuer (including any newly acquired or newly formed Subsidiary or a Person becoming a Subsidiary through merger or consolidation or Investment therein) to be an Unrestricted Subsidiary only if: (1) such Subsidiary or any of its Subsidiaries does not own any Capital Stock or Indebtedness of or have any Investment in, or own or hold any Lien on any property of, any other Subsidiary of the Issuer which is not a Subsidiary of the Subsidiary to be so designated or otherwise an Unrestricted Subsidiary; all the Indebtedness of such Subsidiary and its Subsidiaries shall, at the date of designation, and will at all times thereafter, consist of Non-Recourse Debt; such designation and the Investment of the Issuer in such Subsidiary complies with Certain Covenants Limitation on Restricted Payments; and on the date such Subsidiary is designated an Unrestricted Subsidiary, such Subsidiary is not a party to any agreement, contract, arrangement or understanding with the Issuer or any Restricted Subsidiary with terms substantially and materially less favorable to the Issuer than those that might have been obtained from Persons who are not Affiliates of the Issuer.

(2)

(3)

(4)

Any such designation by the Board of Directors of the Issuer shall be evidenced to the Trustee by promptly filing with the Trustee a resolution of the Board of Directors of the Issuer giving effect to such designation and an Officers Certificate certifying that such designation complies with the foregoing conditions. If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary shall be deemed to be Incurred as of such date. The Board of Directors of the Issuer may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that immediately after giving effect to such designation, no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof and either (x) the Issuer could Incur at least 1.00 of additional Indebtedness under the first paragraph of the covenant described under the covenant described under Certain Covenants Limitation on Indebtedness or (y) the Consolidated Leverage Ratio would be lower than it was immediately prior to giving effect to such designation, in each case, on a pro forma basis taking into account such designation. UPC Broadband means UPC Broadband Holding B.V., together with its successors. UPC Exchange Transaction means an exchange offer by UPC Holding pursuant to which one or more series of UPC Qualified Notes are offered in exchange for all outstanding Notes issued under the Indenture;

307

provided, that (i) no Default or Event of Default has occurred and is continuing at the time any such exchange offer is made or would result therefrom, (ii) holders of a majority in aggregate principal amount of the outstanding Notes have elected to participate in such offer, (iii) for each 1,000 in principal amount of Euro Notes tendered and accepted, each holder tendering such Euro Notes will receive 1,000 in principal amount of UPC Qualified Notes, (iv) the exchange offer complies with Rule 14e-1 under the Exchange Act and any other applicable securities law or regulation, (v) UPC Holding accepts for exchange all Notes tendered in such exchange offer and issues the relevant UPC Qualified Notes in exchange therefor, (vi) the exchange offer is open to all holders of the notes on substantially similar terms, (vii) the exchange offer is not conditioned upon holders of the Notes consenting to any amendments to the terms of the notes or the Indenture and (viii) in connection therewith, the Issuer and its Restricted Subsidiaries will become direct or indirect Subsidiaries of UPC Broadband. UPC Holding means UPC Holding B.V., together with its successors. UPC Qualified Notes means senior notes issued by UPC Holding; provided, that (i) such senior notes will be guaranteed and secured to the same extent that other senior notes of UPC Holding existing on the date of the UPC Exchange Transaction are guaranteed and secured; provided that in any event such senior notes will be secured to the same extent as UPC Holdings senior Indebtedness existing on the Issue Date, (ii) the Indebtedness incurred under such senior notes is permitted to be Incurred pursuant to the terms and conditions of any other Indebtedness of UPC Holding and its Subsidiaries outstanding upon consummation of the UPC Exchange Transaction, (iii) the terms and conditions of such senior notes and the indenture governing such senior notes (other than with respect to pricing and redemption) shall be substantially similar to, and in any event no less favorable to the holders of Notes than, the terms and conditions contained in the indentures governing the senior notes of UPC Holding outstanding on the date of the UPC Exchange Transaction, (iv) the interest rate applicable to each series of such senior notes shall not be less than the interest rate applicable to the series of Notes for which they are exchanged, (v) all amounts due and owing on such senior notes will be payable in the same currency as the Notes for which they are exchanged, (vi) the redemption provisions of such senior notes will have at least the remaining call protection applicable to the Notes for which they are exchanged and (vii) the Stated Maturity of such senior notes will be no later than the Stated Maturity of the Notes. U.S. Government Obligations means direct obligations of, or obligations guaranteed by, the United States of America, and the payment for which the United States pledges its full faith and credit. Voting Stock of a corporation means all classes of Capital Stock of such corporation then outstanding and normally entitled to vote in the election of directors. Wholly Owned Subsidiary means a Restricted Subsidiary of the Issuer, all of the Capital Stock of which (other than directors qualifying shares or shares required by any applicable law or regulation to be held by a Person other than the Issuer or another Wholly Owned Subsidiary) is owned by the Issuer or another Wholly Owned Subsidiary.

308

BOOK-ENTRY, DELIVERY AND FORM General Each series of Notes sold outside the United States pursuant to Regulation S under the U.S. Securities Act will initially be represented by a global note in registered form without interest coupons attached (the Regulation S Global Notes and, together with the 144A Global Notes, the Global Notes). The Regulation S Global Note representing the Euro Senior Secured Notes (the Euro Senior Secured Regulation S Global Note) and the Regulation S Global Note representing the Euro Senior Notes (the Euro Senior Regulation S Global Note) will be deposited, on the closing date, with a common depository and registered in the name of the nominee of the common depository for the accounts of Euroclear and Clearstream. The Regulation S Global Note representing the Dollar Senior Secured Notes (the Dollar Senior Secured Regulation S Global Note) will be deposited upon issuance with the Trustee as custodian for DTC and registered in the name of Cede & Co., as nominee of DTC. Each series of Notes sold within the United States to qualified institutional buyers pursuant to Rule 144A under the U.S. Securities Act will initially be represented by a global note in registered form without interest coupons attached (the 144A Global Notes). The 144A Global Note representing the Euro Senior Secured Notes (the Euro Senior Secured 144A Global Note) and the 144A Global Note representing the Euro Senior Notes (the Euro Senior 144A Global Note and together with the Euro Senior Secured Regulation S Global Note, the Euro Senior Regulation S Global Note and the Euro Senior Secured Global Note, the Euro Global Notes), will be deposited, on the closing date, with a common depository and registered in the name of the nominee of the common depository for the accounts of Euroclear and Clearstream. The 144A Global Note representing the Dollar Senior Secured Notes (the Dollar Senior Secured 144A Global Note and together with the Dollar Senior Secured Regulation S Global Note, the Dollar Global Notes) will be deposited upon issuance with the Trustee as custodian for DTC and registered in the name of Cede & Co., as nominee of DTC. Ownership of interests in the 144A Global Notes (144A Book-Entry Interests) and ownership of interests in the Regulation S Global Notes (the Regulation S Book-Entry Interest, and together with the 144A Book-Entry Interests, the Book-Entry Interests) will be limited to persons that have accounts with DTC, Euroclear and/or Clearstream or persons that may hold interests through such participants. Book-Entry Interests will be shown on, and transfers thereof will be effected only through, records maintained in book-entry form by DTC, Euroclear and Clearstream and their participants. The Book-Entry Interests will not be held in definitive form. Instead, DTC, Euroclear and/or Clearstream will credit on their respective book-entry registration and transfer systems a participants account with the interest beneficially owned by such participant. The laws of some jurisdictions, including certain states of the United States, may require that certain purchasers of securities take physical delivery of such securities in definitive form. The foregoing limitations may impair the ability to own, transfer or pledge Book-Entry Interests. In addition, while the Notes are in global form, holders of Book-Entry Interests will not be considered the owners or holders of Notes for any purpose. So long as the Notes are held in global form, DTC, Euroclear and/or Clearstream, as applicable, (or their respective nominees) will be considered the holders of Global Notes for all purposes under the indentures governing the Notes. As such, participants must rely on the procedures of DTC, Euroclear and/or Clearstream and indirect participants must rely on the procedures of DTC, Euroclear and/or Clearstream and the participants through which they own Book-Entry Interests in order to exercise any rights of holders under the indentures governing the Notes. Neither Unitymedia, nor the Issuer nor the Trustees under the indentures governing the Notes nor any of Unitymedias or the Issuers respective agents will have any responsibility or be liable for any aspect of the records relating to the Book-Entry Interests. Issuance of Definitive Registered Notes Under the terms of the indentures, owners of Book-Entry Interests will receive definitive Notes in registered form (the Definitive Registered Notes): 1. if DTC (with respect to the Dollar Global Notes), or Euroclear and Clearstream (with respect to the Euro Global Notes) notify Unitymedia that it is unwilling or unable to continue to act as depository and a successor depository is not appointed by Unitymedia within 120 days;

309

2.

in whole, but not in part, if Unitymedia, DTC (with respect to the Dollar Global Notes) or Euroclear or Clearstream (with respect to the Euro Global Notes) so request following an event of default under the indentures governing the Notes; or if the owner of a Book-Entry Interest requests such exchange in writing delivered through DTC, Euroclear and/or Clearstream following an Event of Default under the indentures governing the Notes.

3.

Euroclear has advised us that upon request by an owner of a Book-Entry Interest described in the immediately preceding clause (3), its current procedure is to request that we issue or cause to be issued Notes in definitive registered form to all owners of Book-Entry Interests. In such an event, the registrar will issue Definitive Registered Notes, registered in the name or names and issued in any approved denominations, requested by or on behalf of DTC, Euroclear and/or Clearstream, Unitymedia or the Issuer, as applicable (in accordance with their respective customary procedures and based upon directions received from participants reflecting the beneficial ownership of Book-Entry Interests), and such Definitive Registered Notes will bear the restrictive legend referred to in Transfer Restrictions, unless that legend is not required by the indentures or applicable law. To the extent permitted by law, Unitymedia, the Issuer, the Trustee, the Paying Agent and the Registrar shall be entitled to treat the registered holder of any Global Note as the absolute owner thereof and no person will be liable for treating the registered holder as such. Ownership of the Global Notes will be evidenced through registration from time to time at the registered office of the Issuer, and such registration is a means of evidencing title to the Notes. Unitymedia will not impose any fees or other charges in respect of the Notes; however, owners of the BookEntry Interests may incur fees normally payable in respect of the maintenance and operation of accounts in DTC, Euroclear and/or Clearstream, as applicable. Redemption of Global Notes In the event any Global Note, or any portion thereof, is redeemed, DTC, Euroclear and/or Clearstream, as applicable, will distribute the amount received by it in respect of the Global Note so redeemed to the holders of the Book-Entry Interests in such Global Note from the amount received by it in respect of the redemption of such Global Note. The redemption price payable in connection with the redemption of such Book-Entry Interests will be equal to the amount received by DTC, Euroclear or Clearstream, as applicable, in connection with the redemption of such Global Note (or any portion thereof). Unitymedia and the Issuer understand that under existing practices of DTC, Euroclear and Clearstream, if fewer than all of the Notes are to be redeemed at any time, DTC, Euroclear and Clearstream will credit their respective participants accounts on a proportionate basis (with adjustments to prevent fractions) or by lot or on such other basis as they deem fair and appropriate; provided, however, that no Book-Entry Interest of less than 50,000 or $100,000, as applicable, principal amount at maturity, or less, may be redeemed in part. Payments on Global Notes Payments of amounts owing in respect of the Global Notes (including principal, premium, interest, additional interest and additional amounts) will be made by the Issuer to the Principal Paying Agent. The Principal Paying Agent will, in turn, make such payments to the common depository for Euroclear and Clearstream (in the case of the Euro Global Notes) and to DTC or its nominee (in the case of the Dollar Global Notes), which will distribute such payments to participants in accordance with their respective procedures. Under the terms of the indentures governing the Notes, the Issuer and the Trustee will treat the registered holder of the Global Notes (i.e., DTC, Euroclear or Clearstream (or their respective nominees)) as the owner thereof for the purpose of receiving payments and for all other purposes. Consequently, neither the Issuer nor the Trustee or any of their respective agents has or will have any responsibility or liability for:

any aspects of the records of DTC, Euroclear, Clearstream or any participant or indirect participant relating to or payments made on account of a Book-Entry Interest, for any such payments made by DTC, Euroclear, Clearstream or any participant or indirect participant, or for maintaining, supervising or reviewing the records of DTC, Euroclear, Clearstream or any participant or indirect participant relating to or payments made on account of a Book-Entry Interest; or DTC, Euroclear, Clearstream or any participant or indirect participant.

310

Payments by participants to owners of Book-Entry Interests held through participants are the responsibility of such participants, as is now the case with securities held for the accounts of subscribers registered in street name. Currency and Payment for the Global Notes The principal of, premium, if any, and interest on, and all other amounts payable in respect of, the Euro Global Notes, will be paid to holders of interest in such Notes (the Euroclear/Clearstream Holders) through Euroclear and/or Clearstream in euro. The principal of, premium, if any, and interest on, and all other amounts payable in respect of, the Dollar Global Notes will be paid to holders of interest in such Notes (the DTC Holders) through DTC in dollars. Notwithstanding the payment provisions described above, Euroclear/Clearstream Holders may elect to receive payments in respect of the Euro Global Notes in dollars and DTC Holders may elect to receive payments in respect of the Dollar Global Notes in euro. If so elected, a Euroclear/Clearstream Holder may receive payments of amounts payable in respect of its interest in the Euro Global Notes in dollars in accordance with Euroclear or Clearstreams customary procedures, which include, among other things, giving to Euroclear or Clearstream, as appropriate, a notice of such holders election. All costs of conversion resulting from any such election will be borne by such holder. If so elected, a DTC Holder may receive payment of amounts payable in respect of its interest in the Dollar Global Notes in euro in accordance with DTCs customary procedures, which include, among other things, giving to DTC a notice of such holders election to receive payments in euro. All costs of conversion resulting from any such election will be borne by such holder. Action by Owners of Book-Entry Interests DTC, Euroclear and Clearstream have advised the Issuer that they will take any action permitted to be taken by a holder of Notes only at the direction of one or more participants to whose account the Book-Entry Interests in the Global Notes are credited and only in respect of such portion of the aggregate principal amount of Notes as to which such participant or participants has or have given such direction. DTC, Euroclear and Clearstream will not exercise any discretion in the granting of consents, waivers or the taking of any other action in respect of the Global Notes. However, if there is an event of default under the Notes, each of DTC, Euroclear and Clearstream reserves the right to exchange the Global Notes for Definitive Registered Notes in certificated form, and to distribute such Definitive Registered Notes to their respective participants. Transfers Transfers between participants in DTC will be done in accordance with DTC rules and will be settled in immediately available funds. If a holder requires physical delivery of Definitive Registered Notes for any reason, including to sell the Notes to persons in states which require physical delivery of such securities or to pledge such securities, such holder must transfer its interest in the Global Notes in accordance with the normal procedures of DTC and in accordance with the provisions of the indentures. The Global Notes will bear a legend to the effect set forth in Transfer Restrictions. Book-Entry Interests in the Global Notes will be subject to the restrictions on transfer discussed in Transfer Restrictions. 144A Book-Entry Interests may be transferred to a person who takes delivery in the form of Regulation s Book-Entry Interests only upon delivery by the transferor of a written certification (in the form provided in the indentures) to the effect that such transfer is being made in accordance with Regulation S under the U.S. Securities Act. Prior to 40 days after the date of initial issuance of the Notes, ownership of Regulation S Book-Entry Interests will be limited to persons that have accounts with DTC, Euroclear or Clearstream or persons who hold interests through DTC, Euroclear or Clearstream, and any sale or transfer of such interest to U.S. persons shall not be permitted during such periods unless such resale or transfer is made pursuant to Rule 144A. Regulation S Book-Entry Interests may be transferred to a person who takes delivery in the form of 144A Book-Entry Interests only upon delivery by the transferor of a written certification (in the form provided in the indentures) to the effect that such transfer is being made to a person who the transferor reasonably believes is a qualified institutional buyer within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A or otherwise in accordance with the transfer restrictions described under Transfer Restrictions and in accordance with any applicable securities laws of any other jurisdiction.

311

Subject to the foregoing, and as set forth in Transfer Restrictions, Book-Entry Interests may be transferred and exchanged as described under Description of the Senior Secured Notes Transfer and Exchange and Description of the Senior Notes Transfer and Exchange. Any Book-Entry Interest in a Global Note that is transferred to a person who takes delivery in the form of a Book-Entry Interest in the other Global Note of the same denomination and series will, upon transfer, cease to be a Book-Entry Interest in the first-mentioned Global Note and become a Book-Entry Interest in the other Global Note, and accordingly, will thereafter be subject to all transfer restrictions, if any, and other procedures applicable to Book-Entry Interests in such other Global Note for as long as it retains such a Book-Entry Interest. Definitive Registered Notes may be transferred and exchanged for Book-Entry Interests in a Global Note only as described under Description of the Senior Secured Notes Transfer and Exchange and Description of the Senior Notes Transfer and Exchange and, if required, only if the transferor first delivers to the Trustee a written certificate (in the form provided in the indentures) to the effect that such transfer will comply with the appropriate transfer restrictions applicable to such Notes. See Transfer Restrictions. This paragraph refers to transfers and exchanges with respect to Dollar Global Notes only. Transfers involving an exchange of a Regulation S Book-Entry Interest for 144A Book-Entry Interest in a Dollar Global Note will be done by DTC by means of an instruction originating from the Trustee through the DTC Deposit/ Withdrawal Custodian system. Accordingly, in connection with any such transfer, appropriate adjustments will be made to reflect a decrease in the principal amount of the relevant Regulation S Global Note and a corresponding increase in the principal amount of the corresponding 144A Global Note. The policies and practices of DTC may prohibit transfers of unrestricted Book-Entry Interests in the Regulation S Global Note prior to the expiration of the 40 days after the date of initial issuance of the Notes. Information Concerning DTC, Euroclear and Clearstream All Book-Entry Interests will be subject to the operations and procedures of DTC, Euroclear and Clearstream, as applicable. The Issuer provides the following summaries of those operations and procedures solely for the convenience of investors. The operations and procedures of each settlement system are controlled by that settlement system and may be changed at any time. Neither the Issuer nor the Initial Purchasers are responsible for those operations or procedures. DTC advised the Issuer that it is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds and provides asset servicing for issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (that DTCs direct participants deposit with DTC). DTC also facilitates the post-trade settlement among direct participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between direct participants accounts. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (DTCC). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a direct participant, either directly or indirectly. Like DTC, Euroclear and Clearstream hold securities for participating organizations. They also facilitate the clearance and settlement of securities transactions between their respective participants through electronic book-entry changes in the accounts of such participants. Euroclear and Clearstream provide various services to their participants, including the safekeeping, administration, clearance, settlement, lending and borrowing of internationally traded securities. Euroclear and Clearstream interface with domestic securities markets. Euroclear and Clearstream participants are financial institutions such as underwriters, securities brokers and dealers, banks, trust companies and certain other organizations. Indirect access to Euroclear and Clearstream is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Euroclear and Clearstream participant, either directly or indirectly. Because DTC, Euroclear and Clearstream can only act on behalf of participants, who in turn act on behalf of indirect participants and certain banks, the ability of an owner of a beneficial interest to pledge such interest to persons or entities that do not participate in the DTC, Euroclear or Clearstream systems, or otherwise take actions

312

in respect of such interest, may be limited by the lack of a definite certificate for that interest. The laws of some jurisdictions require that certain persons take physical delivery of securities in definitive form. Consequently, the ability to transfer beneficial interests to such person may be limited. In addition, owners of beneficial interests through the DTC, Euroclear or Clearstream systems will receive distributions attributable to the 144A Global Notes only through DTC, Euroclear or Clearstream participants. Secondary Market Trading, Global Clearance and Settlement under the Book-Entry System Application has been made to the Luxembourg Stock Exchange for the Notes represented by the Global Notes to be admitted to listing and to trading on the Euro MTF Market and to trading in DTCs Same-Day Funds Settlement System, and any permitted secondary market trading activity in such Notes will, therefore, be required by DTC, Euroclear and Clearstream to be settled in immediately available funds. The Issuer and Unitymedia expect that secondary trading in any certificated Notes will also be settled in immediately available funds. Subject to compliance with the transfer restrictions applicable to the Global Notes, cross-market transfers between participants in DTC, on the one hand, and Euroclear or Clearstream participants, on the other hand, will be done through DTC in accordance with DTCs rules on behalf of each of Euroclear or Clearstream by its common depository; however, such cross-market transactions will require delivery of instructions to Euroclear or Clearstream by the counterparty in such system in accordance with the rules and regulations and within the established deadlines of such system (Brussels time). Euroclear or Clearstream will, if the transaction meets its settlement requirements, deliver instructions to the common depository to take action to effect final settlement on its behalf by delivering or receiving interests in the Global Notes by DTC, and making and receiving payment in accordance with normal procedures for same-day funds settlement application to DTC. Euroclear participants and Clearstream participants may not deliver instructions directly to the common depository. Because of the time zone differences, the securities account of a Euroclear or Clearstream participant purchasing an interest in a Global Note from a participant in DTC will be credited, and any such crediting will be reported to the relevant Euroclear or Clearstream participant, during the securities settlement processing day (which must be a business day for Euroclear and Clearstream) immediately following the settlement date of DTC. Cash received in Euroclear and Clearstream as a result of a sale of an interest in a Global Note by or through a Euroclear or Clearstream participant to a participant in DTC will be received with value on the settlement date of DTC but will be available in the relevant Euroclear or Clearstream cash account only as of the business day for Euroclear or Clearstream following DTCs settlement date. Although DTC, Euroclear and Clearstream currently follow the foregoing procedures in order to facilitate transfers of interests in the Global Notes among participants in DTC, Euroclear or Clearstream, as the case may be, they are under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued or modified at any time. None of Unitymedia, the Issuer, any guarantor, the Trustee or the Principal Paying Agent will have any responsibility for the performance by DTC, Euroclear or Clearstream or their respective participants or indirect participants, of their respective obligations under the rules and procedures governing their operations. Initial Settlement Initial settlement for the Notes will be made in euro and dollars. Book-Entry Interests owned through DTC, Euroclear or Clearstream accounts will follow the settlement procedures applicable to conventional Eurobonds in registered form. Book-Entry Interests will be credited to the securities custody accounts of DTC, Euroclear and Clearstream holders on the business day following the settlement date against payment for value on the settlement date. Secondary Market Trading The Book-Entry Interests will trade through participants of DTC and Euroclear or Clearstream and will settle in same-day funds. Since the purchase determines the place of delivery, it is important to establish at the time of trading of any Book-Entry Interests where both the purchasers and the sellers accounts are located to ensure that settlement can be made on the desired value date.

313

TRANSFER RESTRICTIONS The Notes are subject to restrictions on transfer as summarized below. By purchasing Notes, you will be deemed to have made the following acknowledgements, representations to and agreements with us and the Initial Purchasers: (1) You understand and acknowledge that:

the Notes have not been registered under the U.S. Securities Act or any other applicable securities laws; the Notes are being offered for resale in transactions that do not require registration under the U.S. Securities Act or any other securities laws; and unless so registered, the Notes may not be offered, sold or otherwise transferred except under an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act or any other applicable securities laws, and in each case in compliance with the conditions for transfer set forth in paragraph (4) below.

(2) You represent that you are not an affiliate (as defined in Rule 144 under the U.S. Securities Act) of ours, that you are not acting on our behalf and that either:

you are a qualified institutional buyer (as defined in Rule 144A under the U.S. Securities Act) and are purchasing Notes for your own account or for the account of another qualified institutional buyer, and you are aware that the Initial Purchasers are selling the Notes to you in reliance on Rule 144A; or you are not a U.S. person (as defined in Regulation S under the U.S. Securities Act) or purchasing for the account or benefit of a U.S. person, other than a distributor, and you are purchasing Notes in an offshore transaction in accordance with Regulation S.

(3) You acknowledge that neither we nor the Initial Purchasers nor any person representing us or the Initial Purchasers has made any representation to you with respect to us or the offering of the Notes, other than the information contained in this offering memorandum. You represent that you are relying only on this offering memorandum in making your investment decision with respect to the Notes. You agree that you have had access to such financial and other information concerning us and the Notes as you have deemed necessary in connection with your decision to purchase Notes, including an opportunity to ask questions of and request information from us. (4) You represent that you are purchasing Notes for your own account, or for one or more investor accounts for which you are acting as a fiduciary or agent, in each case not with a view to, or for offer or sale in connection with, any distribution of the Notes in violation of the U.S. Securities Act. You agree on your own behalf and on behalf of any investor account for which you are purchasing Notes, and each subsequent holder of the Notes by its acceptance of the Notes will agree, that until the end of the resale restriction period (as defined below), the Notes may be offered, sold or otherwise transferred only:

to the Issuer; under a registration statement that has been declared effective under the U.S. Securities Act; for so long as the Notes are eligible for resale under Rule 144A, to a person the seller reasonably believes is a qualified institutional buyer that is purchasing for its own account or for the account of another qualified institutional buyer and to whom notice is given that the transfer is being made in reliance on Rule 144A; through offers and sales that occur outside the United States to a non-U.S. person within the meaning of Regulation S; or under any other available exemption from the registration requirements of the U.S. Securities Act;

subject in each of the above cases to any requirement of law that the disposition of the sellers property or the property of an investor account or accounts be at all times within the seller or accounts control and in compliance with applicable state and other securities laws.

314

You also acknowledge that:

the above restrictions on resale will apply from the closing date until the date that is one year (in the case of Notes issued under Rule 144A under the Securities Act) or 40 days (in the case of Notes issued under Regulation S under the Securities Act) after the later of the closing date and the last date that we or any of our affiliates was the owner of the Notes or any predecessor of the Notes (the Resale Restriction Period), and will not apply after the applicable Resale Restriction Period ends; we and the trustee reserve the right to require in connection with any offer, sale or other transfer of Notes under the fourth or fifth bullet point above the delivery of an opinion of counsel, certifications and/or other information satisfactory to us and the trustee; and each Global Note will contain a legend substantially to the following effect:

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), OR OTHER SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION PURSUANT TO RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (2) AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE RESALE RESTRICTION TERMINATION DATE) THAT IS IN THE CASE OF RULE 144A NOTES: ONE YEAR AND IN THE CASE OF REGULATION S NOTES: 40 DAYS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUERS AND THE TRUSTEES RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. BY ACCEPTING THIS NOTE (OR AN INTEREST IN THE NOTES REPRESENTED HEREBY), EACH BENEFICIAL OWNER HEREOF IS DEEMED TO REPRESENT AND WARRANT (I) EITHER (A) IT IS NOT (AND FOR SO LONG AS IT HOLDS THIS NOTE OR AN INTEREST HEREIN WILL NOT BE), AND IS NOT ACTING ON BEHALF OF (AND FOR SO LONG AS IT HOLDS THIS NOTE OR AN INTEREST HEREIN WILL NOT BE ACTING ON BEHALF OF) AN EMPLOYEE BENEFIT PLAN, AS DEFINED IN SECTION 3(3) OF THE UNITED STATES EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (ERISA), THAT IS SUBJECT TO THE PROVISIONS OF PART 4 OF SUBTITLE B OF TITLE I OF ERISA, A PLAN TO WHICH SECTION 4975 OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED (CODE) APPLIES, OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF SUCH AN EMPLOYEE BENEFIT PLANS OR PLANS INVESTMENT IN SUCH ENTITY (EACH, A BENEFIT PLAN INVESTOR), OR A GOVERNMENTAL, CHURCH OR NON-U.S. PLAN WHICH IS

315

SUBJECT TO ANY FEDERAL, STATE, LOCAL, NON-U.S. OR OTHER LAWS OR REGULATIONS THAT ARE SUBSTANTIALLY SIMILAR TO THE FIDUCIARY RESPONSIBILITY OR THE PROHIBITED TRANSACTION PROVISIONS OF ERISA AND/OR SECTION 4975 OF THE CODE (SIMILAR LAWS), AND NO PART OF THE ASSETS BEING USED BY IT TO ACQUIRE OR HOLD SUCH NOTE OR ANY INTEREST HEREIN CONSTITUTES THE ASSETS OF ANY SUCH BENEFIT PLAN INVESTOR OR SUCH A GOVERNMENTAL, CHURCH OR NON-U.S. PLAN, OR (B) THE ACQUISITION, HOLDING AND DISPOSITION OF THIS NOTE OR AN INTEREST HEREIN DOES NOT AND WILL NOT RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA AND/OR SECTION 4975 OF THE CODE (OR, IN THE CASE OF A GOVERNMENTAL, CHURCH OR NON-U.S. PLAN, A VIOLATION OF ANY SIMILAR LAWS); AND (II) IT WILL NOT SELL OR OTHERWISE TRANSFER THIS NOTE OR ANY INTEREST HEREIN OTHERWISE THAN TO AN ACQUIRER OR TRANSFEREE THAT IS DEEMED TO REPRESENT AND AGREE WITH RESPECT TO ITS ACQUISITION, HOLDING AND DISPOSITION OF THIS NOTE TO THE SAME EFFECT AS THE ACQUIRERS REPRESENTATION AND AGREEMENT SET FORTH IN THIS SENTENCE. The following legend shall also be included in the case of the Senior Secured Notes: THE FOLLOWING INFORMATION IS SUPPLIED SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES. THIS NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT (OID) WITHIN THE MEANING OF SECTION 1273 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE CODE), AND THIS LEGEND IS REQUIRED BY SECTION 1275(c) OF THE CODE: Holders may obtain information regarding the amount of any OID, the issue price, the issue date, and the yield to maturity relating to the Notes by contacting the Treasurer, UPC Holding BV, Boeing Avenue 53, Schiphol-Rijk 1119PE, The Netherlands Tel +31 (0)20 778 2964 (5) You acknowledge that the registrar will not be required to accept for registration of transfer any Notes acquired by you, except upon presentation of evidence satisfactory to us and the registrar that the restrictions set forth herein have been complied with. (6) You acknowledge that we, the Initial Purchasers and others, will rely upon the truth and accuracy of the above acknowledgments, representations and agreements. You agree that if any of the acknowledgments, representations or agreements you are deemed to have made by your purchase of Notes is no longer accurate, you will promptly notify us and the Initial Purchasers. If you are purchasing any Notes as a fiduciary or agent for one or more investor accounts, you represent that you have sole investment discretion with respect to each of those accounts and that you have full power to make the above acknowledgments, representations and agreements on behalf of each account. (7) You agree that you will give to each person to whom you transfer these Notes notice of any restrictions on the transfer of the Notes. European Economic Area In relation to each member state of the EEA which has implemented the Prospectus Directive (each, a Relevant Member State), the Initial Purchasers have represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the Relevant Implementation Date), it has not made and will not make an offer of the Notes which are the subject of the offering contemplated by this offering memorandum to the public in that Relevant Member State other than: (a) to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities; (b) to any legal entity which has two or more of (i) an average of at least 250 employees during the last financial year; (ii) a total balance sheet of more than 43,000,000; and (iii) an annual net turnover of more than 50,000,000, as shown in its last annual or consolidated accounts; or (c) in any other circumstances falling within Article 3(2) of the Prospectus Directive,

316

provided that no such offer of the Notes shall require the Issuer or the Initial Purchasers to publish a prospectus pursuant to Article 3 of the Prospectus Directive. For the purposes of this provision, the expression an offer of Notes to the public in relation to the Notes in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe the Notes, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State and the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

317

CERTAIN TAX CONSIDERATIONS The following is a summary based on present law of certain German and U.S. federal income tax considerations for prospective purchasers of the Notes. It addresses only purchasers that buy in the original offering at the original offering price and, in the case of a U.S. Holder (as defined below), that hold the Notes as capital assets and use the U.S. dollar as their functional currency and, in the case of German-resident Noteholders, that use the Euro as their functional currency. The discussion does not consider the circumstances of particular purchasers subject to special tax regimes, such as banks, insurance companies, dealers, tax exempt organizations or persons holding the Notes as part of a hedge, straddle, conversion, integrated or constructive sale transaction. This summary is based upon the law as in effect and as applied on the date of this offering memorandum and is subject to any change in law, court rulings or administrative practice that may take effect after such date even with retrospective effect. The discussion is a general summary only; it is not a substitute for tax advice. EACH PROSPECTIVE PURCHASER SHOULD SEEK ADVICE FROM AN INDEPENDENT TAX ADVISOR ABOUT THE TAX CONSEQUENCES UNDER ITS OWN PARTICULAR CIRCUMSTANCES OF INVESTING IN OFFERED SECURITIES UNDER THE LAWS OF GERMANY, THE UNITED STATES AND ITS CONSTITUENT JURISDICTIONS AND ANY OTHER JURISDICTION WHERE THE PURCHASER MAY BE SUBJECT TO TAXATION. As used here, Noteholder means a beneficial owner of a Note. German Tax Considerations Prospective purchasers of Notes are advised to consult their own tax advisors for the tax consequences of the purchase, the ownership and the disposition of Notes, including the effect of any state or local taxes under the tax laws of the Federal Republic of Germany as well as of any other country of which they are residents. German Tax Resident Private Noteholders General Interest, including any Additional Amounts, received by German resident private Noteholders (i.e. private individuals whose residence or habitual abode is located in Germany), is generally subject to income tax at a flat rate of 25 percent (plus 5.5 percent solidarity surcharge thereon and, if applicable, church tax). The flat tax regime also applies to capital gains, including any Additional Amounts, from the sale or redemption of the Notes held by German resident private Noteholders. Losses from the sale or redemption of the Notes can only be offset against other investment income within the meaning of the flat tax regime. In the event that an off-set is not possible in the assessment period in which the losses have been realized, such losses will be carried forward into future assessment periods only and can be off-set against investment income generated in future assessment periods. Capital gains and losses are determined by the difference between the sales/redemption proceeds after the deduction of expenses directly connected to the sale/redemption and the acquisition costs of the Notes. Withholding Tax For German resident private Noteholders, the flat tax liability on interest on the Notes is generally levied by way of withholding tax, provided that the Notes are held in custody with a German custodian, who is required to deduct the withholding tax from such interest payments (the Disbursing Agent). Disbursing Agents are German resident credit institutions, financial services institutions (including German permanent establishments of foreign institutions), securities trading companies or securities trading banks. The applicable withholding tax rate is 25 percent (plus 5.5 percent solidarity surcharge thereon and, if applicable, church tax). The withholding tax regime should also apply to any gains from the sale or redemption of Notes realized by private Noteholders holding the Notes in custody with a Disbursing Agent. For private Noteholders, the withholding tax is generally definitive (i.e. in principle there will be no further income tax liability on investment income from which withholding tax was deducted and the Noteholder is not required to declare such income in its tax return). In the case of investment income which is not subject to the

318

withholding tax regime, a special flat tax assessment procedure applies, i.e. the Noteholder has to declare the income in its tax return and is taxed at the flat tax rate in accordance with the flat tax principles outlined above. This applies mutatis mutandis in the case that church tax (although due) is not levied by way of the withholding tax. Finally, the special flat tax assessment procedure applies upon request of the Noteholder, provided that further pre-requisites are met. Private Noteholders having a lower personal income tax rate may, upon application, also include the investment income in their general income tax return to achieve a lower tax rate. Taxes withheld in excess of the assessed tax liability will be refunded. German resident private Noteholders are entitled to lump-sum deduction from income from capital investments in the amount of 801 (1,602 for married couples filing tax returns jointly) per annum, whereby higher expenses directly attributable to a capital investment are not deductible. German Tax Resident Business Noteholders Interest, including any Additional Amounts, received by German resident business Noteholders and capital gains from the sale or redemption of the Notes are subject to income tax or corporate income tax, as the case may be, as well as solidarity surcharge (and in the case of individuals, if applicable, church tax). In addition, trade tax is levied to such income, if the Notes are held as assets of a German business. Losses should as a rule be tax deductible. The withholding tax regime outlined above should apply mutatis mutandis to business Noteholders. However, German corporate Noteholders and other Noteholders holding the Notes as assets of a German business should in essence not be subject to the withholding tax on gains from the sale or redemption of the Notes (i.e. for these Noteholders only interest, including any Additional Amounts, but not gains from the sale or redemption of the Notes are subject to the withholding tax regime). The Noteholder is obliged to include the respective income and related (business) expenses in the annual income tax return. Any withholding tax imposed is credited against the Noteholders (corporate) income tax liability (and the solidarity surcharge as well as, if applicable, church tax) in the course of the tax assessment procedure, i.e. the withholding tax is not definitive. Any potential surplus of the withholding tax will be refunded. The trade tax liability depends on the trade tax factor determined by the municipality where the Noteholder maintains his/her permanent establishment. Foreign Tax Resident Noteholders Foreign resident Noteholders should not be taxable in Germany with interest, including any Additional Amounts, on and the gains from the sale or redemption of the Notes and no German withholding tax should be withheld from such income. This should hold true, even if the Notes are held in custody with a German custodian. Exceptions apply where the Notes are held as business assets of a German permanent establishment or the income otherwise qualifies as income from German sources for tax purposes. Treatment under the Investment Tax Act The Issuers take the view that the special provisions of the Investment Tax Act (Investmentsteuergesetz) are not applicable to the Notes. EU Savings Tax Directive Under the EU Council Directive on the taxation of savings income in the form of interest payments (2003/48/EC) each Member State of the EU is required to provide the tax authorities of another Member State with details of interest payments or other similar income paid by a person within its jurisdiction to an individual resident in such other Member State. Austria, Belgium and Luxembourg may instead apply a withholding system for a transitional period in relation to such payments, deducting tax at rates rising over time to 35 percent. The directive has been implemented in Germany by the decree on the taxation of interest income (Zinsinformationsverordnung) which applies from July 1, 2005, onwards. U.S. Federal Income Taxation of the Notes Pursuant to Internal Revenue Service Circular 230, we hereby inform you that the description set forth herein with respect to U.S. federal tax issues was not intended or written to be used, and such description cannot be used, by any taxpayer for the purpose of avoiding any penalties that may be imposed on the taxpayer under the U.S. Internal Revenue Code of 1986 as amended (the Code). Such description was written in connection with the marketing of the Notes. Taxpayers should seek advice based on the taxpayers particular circumstances from an independent tax advisor.

319

The following is a description of the principal U.S. federal income tax consequences of the acquisition, ownership, and disposition of the Notes by a U.S. Holder thereof (as defined below). This description only applies to Notes held as capital assets and does not address, except as set forth below, aspects of U.S. federal income taxation that may be applicable to holders that are subject to special tax rules, such as:

financial institutions; insurance companies; real estate investment trusts; regulated investment companies; grantor trusts; tax-exempt organizations; persons that will own the Notes through partnerships or other pass through entities; dealers or traders in securities or currencies; U.S. Holders that have a functional currency other than the U.S. dollar; certain former citizens and long-term residents of the United States; or U.S. Holders that will hold a Note as part of a position in a straddle or as part of a hedging, conversion or integrated transaction for U.S. federal income tax purposes.

Moreover, this description does not address the U.S. federal estate and gift tax or alternative minimum tax consequences of the acquisition, ownership, and disposition of the Notes and does not address the U.S. federal income tax treatment of holders that do not acquire the Notes as part of the initial distribution at their issue price (generally, the first price to the public at which a substantial amount of Notes is sold for money) and assumes that the Notes will be treated as debt for U.S. federal income tax purposes. Each prospective purchaser should consult its own tax advisor with respect to the U.S. federal, state, local and non-U.S. tax consequences of acquiring, holding and disposing of the Notes. This description is based on the Code, U.S. Treasury Regulations promulgated thereunder, administrative pronouncements and judicial decisions, each as available and in effect on the date hereof. All of the foregoing are subject to change, possibly with retroactive effect, or differing interpretations which could affect the tax consequences described herein. For purposes of this description, a U.S. Holder is a beneficial owner of the Notes who for U.S. federal income tax purposes is:

a citizen or individual resident of the United States; a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) organized in or under the laws of the United States or any State thereof, including the District of Columbia; an estate the income of which is subject to U.S. federal income taxation regardless of its source; or a trust (1) that validly elects to be treated as a U.S. person for U.S. federal income tax purposes or (2)(a) the administration over which a U.S. court can exercise primary supervision and (b) all of the substantial decisions of which one or more U.S. persons have the authority to control.

If a partnership (or any other entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds the Notes, the tax treatment of the partnership and a partner in such partnership generally will depend on the status of the partner and the activities of the partnership. Such partner or partnership should consult its own tax advisor as to its consequences.

320

The Senior Secured Notes will be treated as issued with original issue discount for U.S. federal income tax purposes (OID) (as defined below) and, where relevant, are referred to for purposes of this section as the OID Notes. The Senior Notes will not be treated as issued with OID. Redemptions In certain circumstances (see Description of the Senior Secured Notes and Description of the Senior Notes) we may be obligated to make payments in excess of stated interest and the adjusted issue price of the Notes. We intend to take the position that the Notes should not be treated as contingent payment debt instruments because of these additional payments. This position is based in part on assumptions regarding the likelihood, as of the date of issuance of the Notes, that such additional amounts will have to be paid. Assuming such position is respected, any amounts paid to a U.S. Holder pursuant to any such redemption or repurchase would be taxable as described below in Sale, Exchange, or Disposition and any payments of Additional Amounts should be taxable as additional ordinary income when received or accrued, in accordance with such holders method of accounting for U.S. federal income tax purposes. In all such instances, our position is binding on a U.S. Holder unless such holder discloses its contrary position in the manner required by applicable U.S. Treasury Regulations. The IRS, however, may take a position contrary to our position, which could affect the timing and character of a U.S. Holders income and the timing of our deductions with respect to the Notes. U.S. Holders should consult their tax advisors regarding the potential application to the Notes of the contingent payment debt instrument rules and the consequences thereof. This discussion assumes that the Notes are not treated as contingent payment debt instruments. Payments of Interest Stated interest paid on the Notes will generally be treated as qualified stated interest and generally will be taxable to a U.S. Holder as ordinary interest income at the time it is received or accrued, depending on the U.S. Holders method of accounting for U.S. federal income tax purposes, as detailed below. Interest (including OID as discussed below) included in a U.S. Holders gross income with respect to the Notes will be treated as foreign source income for U.S. federal income tax purposes. The limitation on non-U.S. taxes eligible for the U.S. foreign tax credit is calculated separately with respect to specific baskets of income. For this purpose, interest (including OID) should generally constitute passive category income, or in the case of certain U.S. Holders, general category income. U.S. Holders should consult their own tax advisors regarding the availability of foreign tax credits. In the case of Euro Notes, any qualified stated interest paid in euro will be included in a U.S. Holders gross income in an amount equal to the U.S. dollar value of the euro, including the amount of any withholding tax thereon, regardless of whether the euros are converted into U.S. dollars. Generally, a U.S. Holder of Euro Notes that uses the cash method of tax accounting will determine such U.S. dollar value using the spot rate of exchange on the date of receipt. A cash method U.S. Holder generally will not realize foreign currency gain or loss on the receipt of the interest payment but may have foreign currency gain or loss attributable to the actual disposition of the euros received. Generally, a U.S. Holder of Euro Notes that uses the accrual method of tax accounting will determine the U.S. dollar value of accrued interest income using the average rate of exchange for the accrual period (or, with respect to an accrual period that spans two taxable years, at the average rate for the partial period within the U.S. Holders taxable year). Alternatively, an accrual basis U.S. Holder of Euro Notes may make an election (which must be applied consistently to all debt instruments from year to year and cannot be changed without the consent of the IRS) to translate accrued interest income at the spot rate of exchange on the last day of the accrual period (or the last day of the taxable year in the case of a partial accrual period) or the spot rate on the date of receipt, if that date is within five business days of the last day of the accrual period. A U.S. Holder of Euro Notes that uses the accrual method of accounting for tax purposes will recognize foreign currency gain or loss on the receipt of an interest payment if the exchange rate in effect on the date payment is received differs from the rate applicable to an accrual of that interest. The amount of foreign currency gain or loss to be recognized by such U.S. Holder will be an amount equal to the difference between the U.S. dollar value of the euro interest payment (determined on the basis of the spot rate on the date the interest income is received) in respect of the accrual period and the U.S. dollar value of the interest income that has accrued during the accrual period (as determined above). This foreign currency gain or loss will be ordinary income or loss and generally will not be treated as an adjustment to interest income or expense. Foreign currency gain or loss generally will be U.S. source provided that the residence of a taxpayer is considered to be the United States for purposes of the rules regarding foreign currency gain or loss. Original Issue Discount An obligation generally is treated as having been issued with OID for U.S. federal income tax purposes if its stated redemption price at maturity exceeds its issue price by more than a statutory de minimis amount. The

321

stated redemption price at maturity of a note is the sum of all payments required to be made on the note other than qualified stated interest payments. The term qualified stated interest generally means stated interest that is unconditionally payable in cash or property (other than debt instruments of the issuer), or that is treated as constructively received, at least annually at a single fixed rate. You generally will be required to include OID in income before you receive the associated cash payment, regardless of your accounting method for tax purposes. The amount of the OID you should include in income is the sum of the daily portions of the OID for an OID Note for each day during the taxable year (or portion of the taxable year) in which you held the OID Note. The daily portion is determined by allocating the OID for each day of the accrual period. An accrual period may be of any length and the accrual periods may even vary in length over the term of such Note, provided that each accrual period is no longer than one year and each scheduled payment of principal or interest occurs either on the first day of an accrual period or on the final day of an accrual period. The amount of OID allocable to an accrual period is equal to the difference between (1) the product of the adjusted issue price of the OID Note at the beginning of the accrual period and its yield to maturity (computed generally on a constant yield method and compounded at the end of each accrual period, taking into account the length of the particular accrual period) and (2) the amount of any qualified stated interest allocable to the accrual period. The adjusted issue price of an OID Note at the beginning of any accrual period is the sum of the issue price of the OID Note plus the amount of OID allocable to all prior accrual periods reduced by any payments you received on such Note that were not qualified stated interest. Under these rules, you will generally have to include in income increasingly greater amounts of OID in successive accrual periods. OID allocable to a final accrual period is the difference between the amount payable at maturity (other than a payment of qualified stated interest) and the adjusted issue price at the beginning of the final accrual period. Under the OID U.S. Treasury Regulations, a holder of a note with OID may elect to include in gross income all interest that accrues on the note using the constant yield method. Once made with respect to the OID Note, the election cannot be revoked without the consent of the IRS. If you are a holder considering an election under these rules you should consult your tax advisor. U.S. Holders may obtain information regarding the amount of OID, the issue price, the issue date and yield to maturity of the OID Notes by contacting the Treasurer, UPC Holding BV, Boeing Avenue 53, Schiphol-Rijk, 1119PE, The Netherlands, +31 (0)20 778 2964 The rules regarding OID are complex. U.S. Holders are urged to consult their own tax advisors regarding the application of these rules to their particular situation. OID on a Euro Note that is an OID Note will be determined for any accrual period in euros and then translated into U.S. dollars in the same manner as stated interest accrued by an accrual basis U.S. Holder. Upon receipt of an amount attributable to OID (whether in connection with a payment of interest or the sale or disposition of such Note), a U.S. Holder of a Euro Note that is an OID Note will recognize foreign currency gain or loss in an amount determined in the same manner as interest income received by a holder on the accrual basis, as described above. U.S. Holders of OID Notes denominated in euros should note that because the cash payment in respect of accrued OID on such Note will not be made until maturity or other disposition of that Euro Note, a greater possibility exists for fluctuations in foreign currency exchange rates (and the required recognition of exchange gain or loss) than is the case for non-U.S. currency instruments issued without OID. Holders are urged to consult their own tax advisors regarding the interplay between the application of the OID and foreign currency exchange gain or loss rules. Sale, Exchange or Disposition Your adjusted tax basis in your Note generally will be its U.S. dollar cost increased by the amount of any OID previously included in income and decreased by payments other than qualified stated interest made with respect to the Note. If you purchase your Euro Note with euros, the U.S. dollar cost of your Euro Note will generally be the U.S. dollar value of the purchase price on the date of purchase. However, if you are a cash basis taxpayer, or an accrual basis taxpayer if you so elect, and your Euro Note is traded on an established securities market, as defined in the applicable U.S. Treasury Regulations, the U.S. dollar cost of your Euro Note will be the U.S. dollar value of the purchase price on the settlement date of your purchase. You will generally recognize gain or loss on the sale or retirement of your Note equal to the difference, if any, between the amount you realize on the sale, exchange, redemption, retirement, or other disposition of a Note (less any accrued but unpaid interest not previously included in income, which will be subject to tax in the manner described above under Payments of Interest) and your adjusted tax basis in your Note. You generally will recognize capital gain or loss when you sell or dispose of your Note, except, in the case of Euro

322

Notes, to the extent attributable to changes in exchange rates as described below. Long-term capital gain of a non-corporate U.S. Holder is generally taxed at preferential rates. The ability of a U.S. Holder to offset capital losses against ordinary income is limited. Any gain or loss you recognize on the sale or other disposition of a Note generally will be treated as income from sources within the United States or loss allocable to income from sources within the United States. If your Note is sold or retired for an amount in euros or any other non-U.S. currency, the amount you realize will be the U.S. dollar value of such amount on the date of disposition, in the case of an accrual basis taxpayer, or the date the payment is received, in the case of a cash basis taxpayer. In the case of Euro Notes that are traded on an established securities market, as defined in the applicable U.S. Treasury Regulations, a cash basis taxpayer, or an accrual basis taxpayer that so elects, will determine the amount realized based on the U.S. dollar value of the euro or such other non-U.S. currency, as the case may be, on the settlement date of the sale. In the case of Euro Notes, you must treat any portion of the gain or loss that you recognize on the sale or disposition of a Euro Note as ordinary income or loss to the extent attributable to changes in exchange rates during the period in which you hold such Notes. However, you take exchange gain or loss into account only to the extent of the total gain or loss you realize on the transaction. Exchange of Amounts in Other than U.S. Dollars If you receive euros as interest on a Euro Note or on the sale or disposition of a Note, your tax basis in the euros will equal its U.S. dollar value when the interest is received or at the time of the sale or disposition. If you purchased a note with previously owned non-U.S. currency you will recognize gain or loss in an amount equal to the difference, if any, between your tax basis in such currency and the spot rate on the date of purchase. Any such gain or loss generally will be treated as ordinary income or loss from sources within the United States. Reportable Transaction Reporting Under certain U.S. Treasury Regulations, U.S. Holders that participate in reportable transactions (as defined in the regulations) must attach to their U.S. federal income tax returns a disclosure statement on Form 8886. U.S. Holders should consult their own tax advisors as to the possible obligation to file Form 8886 with respect to the ownership or disposition of the Notes, or any related transaction, including without limitation, the disposition of any non-U.S. currency received as interest or as proceeds from the sale or other disposition of the Notes. The Debt Pushdown It is not entirely clear how the consummation of the Debt Pushdown (including the assumption (or other transfer) of our obligations under the Notes by a Unitymedia entity) as generally described in this offering memorandum will be treated for U.S. federal income tax purposes as it depends, in part, on the facts and circumstances existing at the time of the Debt Pushdown. It is possible that the Debt Pushdown may be treated as a taxable exchange for U.S. federal income tax purposes. If the Debt Pushdown is treated as a taxable transaction for U.S. federal income tax purposes, you will be treated as having exchanged your Notes for a corresponding principal amount of notes issued by the Unitymedia entity assuming such Notes (the Unitymedia Notes). You will recognize gain or loss upon such exchange equal to the difference between your adjusted tax basis in your Notes and the issue price of your Unitymedia Notes received in such exchange. The determination of the issue price of the Unitymedia Notes will depend on whether either the Unitymedia Notes or the Notes are publicly traded for U.S. federal income tax purposes. If either the Notes or the Unitymedia Notes are traded on an established securities market for purposes of the OID provisions of the Code, the issue price of the Unitymedia Notes would equal the fair market value of the publicly traded notes as of the date the Unitymedia Notes are issued. If neither the Notes nor the Unitymedia Notes are so traded, the issue price of the Unitymedia Notes would equal the stated principal amount of such notes. Any gain or loss recognized as a result of such deemed exchange will be governed by rules described above under Sale, Exchange, or Disposition. If the Debt Pushdown is a taxable transaction for U.S. federal income tax purposes, your holding period in the Unitymedia Notes will commence upon the date of the Debt Pushdown, and the deemed issue price of the Unitymedia Notes will be used to calculate gain or loss on any subsequent sale or other disposition of the Unitymedia Notes in the manner described above under Sale, Exchange or Disposition.

323

If the issue price of the Unitymedia Notes is less than their stated redemption price at maturity by more than a de minimis amount, the Unitymedia Notes will be treated as though they were issued with OID and the tax consequences described above relating to OID on the OID Notes will apply to any OID on the Unitymedia Notes. If the issue price of the Unitymedia Notes is greater than their stated redemption price at maturity, the Unitymedia Notes will be treated as though they were issued with amortizable bond premium. You may elect to amortize such premium (as an offset to interest income), using a constant-yield method, over the remaining term of the Unitymedia Notes. Such election, once made, generally applies to all bonds held or subsequently acquired by you on or after the first taxable year to which the election applies and may not be revoked without the consent of the IRS. Your basis in a Unitymedia Note will be reduced by any premium amortization deductions. If you do not elect to amortize amortizable bond premium, the amount of amortizable bond premium will be included in your tax basis when the Unitymedia Notes are sold, exchanged or retired. Further Issuances The Issuer may have further issuances of Notes as described under Description of the Senior Secured Notes and Description of the Senior Notes. Such notes, even if they are treated for non-tax purposes as part of the same series as the Notes, in some cases may be treated as a separate series for U.S. federal income tax purposes. In such case, such notes may be considered to have been issued with OID (including, in the case of OID Notes, a different amount of OID than the OID Notes.). These differences may affect the market value of the Notes if such further issuance is not otherwise distinguishable from the Notes. U.S. Backup Withholding Tax and Information Reporting Backup withholding and information reporting requirements apply to certain payments of principal of, and interest on, an obligation and to proceeds of the sale or redemption of an obligation, to certain non-corporate holders of Notes that are U.S. persons. The payor will be required to withhold backup withholding tax on payments made within the United States on a Note to a holder of a Note that is a U.S. person, other than an exempt recipient, such as a corporation, if the holder fails to furnish its correct taxpayer identification number or otherwise fails to comply with, or establish an exemption from, the backup withholding requirements. Payments within the United States of principal and interest to a holder of a Note that is not a U.S. person will not be subject to backup withholding tax and information reporting requirements if an appropriate certification is timely provided by the holder to the payor and the payor does not have actual knowledge or a reason to know that the certificate is incorrect. Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against a holders U.S. federal income tax liability. A holder may obtain a refund of any excess amounts withhold under the backup withholding rules by filing the appropriate claim for a refund with the IRS and furnishing any required information in a timely manner. The above description is not intended to constitute a complete analysis of all tax consequences relating to the ownership of the Notes. Prospective purchasers of the Notes should consult their own tax advisors concerning the tax consequences of their particular situations.

324

CERTAIN EMPLOYEE BENEFIT PLAN CONSIDERATIONS The U.S. Employee Retirement Income Security Act of 1974, as amended (ERISA), imposes certain fiduciary standards and certain other requirements on employee benefit plans subject to ERISA, including entities such as collective investment funds, certain insurance company separate accounts, certain insurance company general accounts, and entities whose underlying assets are treated as being subject to ERISA (collectively, ERISA Plans), and on those persons who are fiduciaries with respect to ERISA Plans. Investments by ERISA Plans are subject to ERISAs general fiduciary requirements, including the requirement of investment prudence and diversification and the requirement that an ERISA Plans investments be made in accordance with the documents governing the ERISA Plan. The prudence of a particular investment should be determined by the responsible fiduciary of an ERISA Plan by taking into account the ERISA Plans particular circumstances and all of the facts and circumstances of the investment, including, but not limited to, the matters discussed above under Risk Factors and the fact that in the future there may be no market in which such fiduciary will be able to sell or otherwise dispose of the Notes or any interest therein. Section 406 of ERISA and Section 4975 of the U.S. Internal Revenue Code of 1986, as amended (the Code), prohibit certain transactions involving the assets of an ERISA Plan, as well as those plans that are not subject to ERISA but which are subject to Section 4975 of the Code, such as individual retirement accounts and Keogh plans (together with ERISA Plans, Plans), and certain persons (referred to as parties in interest under ERISA or disqualified persons under the Code) having certain relationships to Plans, unless a statutory or administrative exemption is applicable to the transaction. A party in interest or disqualified person who engages in a prohibited transaction may be subject to excise taxes or other liabilities under ERISA and the Code, and the transaction may have to be rescinded. Governmental plans, certain church plans and certain non-U.S. plans, while not subject to the fiduciary responsibility or prohibited transaction provisions of ERISA or the provisions of Section 4975 of the Code, may nevertheless be subject to federal, state, local, non-U.S. or other laws or regulations (such as the prohibited transaction rules of Section 503 of the Code) that are substantially similar to the foregoing provisions of ERISA or the Code (Similar Laws). Each of the Issuer, the Initial Purchasers, the Trustee and certain other parties, or their respective affiliates, may be the sponsor of, or Fiduciary to, one or more Plans. Because such parties may receive certain benefits in connection with the sale of the Notes to such Plans, the purchase of such Notes using the assets of a Plan over which any of such parties is the sponsor or a Fiduciary might be deemed to be a violation of the prohibited transaction rules of ERISA and/or Section 4975 of the Code for which no exemption may be available. Accordingly, the Notes may not be purchased using the assets of any Plan if any of the Issuer, UPC Holding, the Initial Purchasers, the Trustee or their respective affiliates is the sponsor of or Fiduciary to, such Plan. In addition, if the Notes are acquired by a Plan with respect to which the Issuer, the Initial Purchasers, the Trustee, any holder of Notes or any of their respective affiliates is a party in interest or a disqualified person, other than a sponsor of, or Fiduciary to, such Plan, such transaction could be deemed to be a direct or indirect prohibited transaction within the meaning of Section 406 of ERISA and/or Section 4975 of the Code. In addition, if a party in interest or disqualified person with respect to a Plan owns or acquires a 50 percent or more beneficial interest in the Issuer, the acquisition or holding of the Notes by or on behalf of such Plan could be considered to constitute an indirect prohibited transaction. Moreover, the acquisition or holding of the Notes or other indebtedness issued by the Issuer by or on behalf of a party in interest or disqualified person with respect to a Plan that owns or acquires an equity interest in the Issuer also could give rise to an indirect prohibited transaction. Certain exemptions from the prohibited transaction provisions of ERISA and Section 4975 of the Code could be applicable, however, to a Plans acquisition of a Note depending in part upon the type of Fiduciary making the decision to acquire a Note and the circumstances under which such decision is made. Included among these exemptions are Prohibited Transaction Class Exemption (PTE) 90-1, regarding investments by insurance company pooled separate accounts; PTE 91-38, regarding investments by bank collective investment funds; PTE 84-14 (amended effective August 23, 2005), regarding transactions effected by a qualified professional asset manager; PTE 96-23, regarding investments by certain in-house asset managers; and PTE 95-60, regarding investments by insurance company general accounts. In addition to the class exemptions listed above, Section 408(b)(17) of ERISA and Section 4975(d)(20) of the Code provide a statutory prohibited transaction exemption for transactions between a Plan and a person or entity that is a party in interest to such Plan solely by reason of providing services to the Plan (other than a party in interest that is a fiduciary, or its affiliate, that has or exercises discretionary authority or control or renders investment advice with respect to the assets of the Plan involved in the transaction), provided that the Plan receives no less, and pays no more than adequate

325

consideration (within the meaning of Section 408(b)(17) of ERISA and Section 4975(f)(10) of the Code) in connection with the transaction. Even if the conditions specified in one or more of these exemptions are met, the scope of the relief provided by these exemptions might not cover all acts which might be construed as prohibited transactions. EACH ACQUIRER AND EACH TRANSFEREE OF A NOTE OR ANY INTEREST THEREIN WILL BE DEEMED TO REPRESENT, WARRANT AND AGREE AT THE TIME OF ITS ACQUISITION AND THROUGHOUT THE PERIOD THAT IT HOLDS SUCH NOTES OR ANY INTEREST THEREIN, (1) EITHER (A) IT IS NOT, AND IS NOT ACTING ON BEHALF OF, A BENEFIT PLAN INVESTOR OR A GOVERNMENTAL, CHURCH OR NON-U.S. PLAN WHICH IS SUBJECT TO ANY SIMILAR LAWS, AND NO PART OF THE ASSETS TO BE USED BY IT TO ACQUIRE OR HOLD SUCH NOTES OR ANY INTEREST THEREIN CONSTITUTES THE ASSETS OF ANY BENEFIT PLAN INVESTOR OR SUCH A GOVERNMENTAL, CHURCH OR NON-U.S. PLAN, OR (B) ITS ACQUISITION, HOLDING AND DISPOSITION OF SUCH NOTES OR ANY INTEREST THEREIN DOES NOT AND WILL NOT CONSTITUTE OR OTHERWISE RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA AND/OR SECTION 4975 OF THE CODE (OR, IN THE CASE OF A GOVERNMENTAL, CHURCH, OR NON-U.S. PLAN, A NON-EXEMPT VIOLATION OF ANY SIMILAR LAWS); (2) NEITHER THE ISSUER NOR ANY OF ITS AFFILIATES IS A FIDUCIARY (WITHIN THE MEANING OF SECTION 3(21) OF ERISA OR, WITH RESPECT TO A GOVERNMENTAL, CHURCH OR NON-U.S. PLAN, ANY DEFINITION OF FIDUCIARY UNDER SIMILAR LAWS) WITH RESPECT TO THE PURCHASER OR HOLDER IN CONNECTION WITH ANY PURCHASE OR HOLDING OF THE NOTES, OR AS A RESULT OF ANY EXERCISE BY THE ISSUER OR ANY OF ITS AFFILIATES OF ANY RIGHTS IN CONNECTION WITH THE NOTES, AND NO ADVICE PROVIDED BY THE ISSUER OR ANY OF ITS AFFILIATES HAS FORMED A PRIMARY BASIS FOR ANY INVESTMENT DECISION BY OR ON BEHALF OF THE PURCHASER AND HOLDER IN CONNECTION WITH THE NOTES AND THE TRANSACTIONS CONTEMPLATED WITH RESPECT TO THE NOTES; AND (3) IT WILL NOT SELL OR OTHERWISE TRANSFER SUCH NOTES OR ANY INTEREST THEREIN OTHERWISE THAN TO AN ACQUIRER OR TRANSFEREE THAT IS DEEMED TO MAKE THESE SAME REPRESENTATIONS, WARRANTIES AND AGREEMENTS WITH RESPECT TO ITS ACQUISITION, HOLDING AND DISPOSITION OF SUCH NOTE. THE ISSUER, THE INITIAL PURCHASERS AND THE TRUSTEE, AND THEIR RESPECTIVE AFFILIATES, SHALL BE ENTITLED TO CONCLUSIVELY RELY UPON THE TRUTH AND ACCURACY OF THE FOREGOING REPRESENTATIONS, WARRANTIES AND AGREEMENTS BY ACQUIRERS AND TRANSFEREES OF ANY NOTES WITHOUT FURTHER INQUIRY. THE ACQUIRER AND ANY FIDUCIARY CAUSING IT TO ACQUIRE AN INTEREST IN ANY NOTES AGREES TO INDEMNIFY AND HOLD HARMLESS THE ISSUER, THE INITIAL PURCHASERS AND THE TRUSTEE, AND THEIR RESPECTIVE AFFILIATES, FROM AND AGAINST ANY COST, DAMAGE OR LOSS INCURRED BY ANY OF THEM AS A RESULT OF ANY OF THE FOREGOING REPRESENTATIONS AND AGREEMENTS BEING OR BECOMING FALSE. ANY PURPORTED ACQUISITION OR TRANSFER OF ANY NOTE OR BENEFICIAL INTEREST THEREIN TO AN ACQUIRER OR TRANSFEREE THAT DOES NOT COMPLY WITH THE REQUIREMENTS DESCRIBED HEREIN SHALL BE NULL AND VOID AB INITIO. It should be noted that an insurance companys general account may be deemed to include assets of Plans under certain circumstances, e.g., where a Plan purchases an annuity contract issued by such an insurance company, based on the reasoning of the United States Supreme Court in John Hancock Mutual Life Ins. Co. v. Harris Trust and Savings Bank, 510 U.S. 86 (1993). An insurance company considering the purchase of Notes with assets of its general account should consider such purchase and the insurance companys ability to make the representations described above in light of John Hancock Mutual Life Ins. Co. v. Harris Trust and Savings Bank, Section 401(c) of ERISA and a regulation promulgated by the U.S. Department of Labor under that Section of ERISA, 29 C.F.R. Section 2550.401c-1. A fiduciary of an ERISA Plan or other employee benefit plan that is subject to Similar Laws, prior to investing in the Notes or any interest therein, should take into account, among other considerations, whether the fiduciary has the authority to make the investment; the composition of the plans portfolio with respect to diversification by type of asset; the plans funding objectives; the tax effects of the investment; and whether, under the general fiduciary standards of ERISA or other applicable laws, including investment prudence and diversification, an investment in the Notes or any interest therein is appropriate for the plan, taking into account

326

the plans particular circumstances and all of the facts and circumstances of the investment, including such matters as the overall investment policy of the plan and the composition of the plans investment portfolio. The sale of any Note or any interest therein to a Plan or a governmental, church or non-U.S. plan that is subject to any Similar Laws is in no respect a representation by the Issuer, the Initial Purchasers or the Trustee, or any of their respective affiliates, that such an investment meets all relevant legal requirements with respect to investments by such plans generally or any particular such plan; that the prohibited transaction exemptions described above, or any other prohibited transaction exemption, would apply to such an investment by such plan in general or any particular such plan; or that such an investment is appropriate for such plan generally or any particular such plan. The discussion of ERISA and Section 4975 of the Code contained in this offering memorandum, is, of necessity, general, and does not purport to be complete. Moreover, the provisions of ERISA and Section 4975 of the Code are subject to extensive and continuing administrative and judicial interpretation and review. Therefore, the matters discussed above may be affected by future regulations, rulings and court decisions, some of which may have retroactive application and effect. Any Plan or employee benefit plan not subject to ERISA or Section 4975 of the Code, and any fiduciary thereof, proposing to invest in the Notes or any interest therein should consult with its legal advisors regarding the applicability of the fiduciary responsibility and prohibited transaction provisions of ERISA, Section 4975 of the Code and any Similar Laws, to such investment, and to confirm that such investment will not constitute or result in a non-exempt prohibited transaction or any other violation of any applicable requirement of ERISA, Section 4975 of the Code or Similar Laws.

327

PLAN OF DISTRIBUTION Subject to the terms and conditions of the purchase agreement between us and the Initial Purchasers dated November 17, 2009, the Issuer has agreed to sell to the Initial Purchasers, and the Initial Purchasers have agreed to purchase from the Issuer, the entire principal amount of the Notes. The obligations of the Initial Purchasers under the purchase agreement, including their agreement to purchase Notes from the Issuer, are several and not joint. The purchase agreement provides that the Initial Purchasers will purchase all the Notes if any of them are purchased and the Issuer will sell the respective principal amount of Notes set forth opposite their names in the table below. The following table sets forth the amount of Senior Secured Notes ( equivalent) to be purchased by each Initial Purchaser in the offering.
Initial Purchaser1 Principal Amount of Senior Secured Notes Euro Notes Dollar Notes

Credit Suisse Securities (Europe) Limited. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deutsche Bank AG, London Branch Goldman Sachs International J.P. Morgan Securities Ltd. Total
1 2
.................................... ...........................................

429,000,000 375,375,000 250,250,000 375,375,000 1,430,000,000

$253,500,000 $221,812,500 $147,875,000 $221,812,5002 $845,000,000

.............................................

...................................................................

Sales may be made through affiliates of the Initial Purchasers noted in the table above. J.P. Morgan Securities Inc. is acting as an Initial Purchaser with respect to the Dollar Senior Secured Notes.

The following table sets forth the amount of Senior Notes to be purchased by each initial purchaser in the offering.
Initial Purchaser1 Principal Amount of Senior Notes .............................................

Credit Suisse Securities (Europe) Limited

199,500,000 174,562,500 116,375,000 174,562,500 665,000,000

Deutsche Bank AG, London Branch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Goldman Sachs International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . J.P. Morgan Securities Ltd.
...........................................................

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1 Sales may be made through affiliates of the initial purchasers noted in the table above.

The Initial Purchasers initially propose to offer the Notes for resale at the issue price that appears on the cover of this offering memorandum. After the initial offering, the Initial Purchasers may change the offering price and any other selling terms. The Initial Purchasers may offer and sell Notes through certain of their affiliates. In the purchase agreement, the Issuer has agreed that:

The Issuer will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, or file with the SEC a registration statement under the U.S. Securities Act relating to any debt securities issued by the Issuer and having a maturity of more than one year from the date of issue for a period of 30 days after the closing date without the prior written consent of the Initial Purchasers. The Issuer will not at any time offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any securities under circumstances where such offer, sale, pledge, contract or disposition would cause the exemption afforded by Rule 144A or the safe harbour of Regulation S to cease to be applicable to the offer and sale of the Notes.

United States Each purchaser of Notes offered by this offering memorandum, in making its purchase, will be deemed to have made the acknowledgements, representations and agreements as described under Transfer Restrictions.

328

The Notes have not been and will not be registered under the U.S. Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except to qualified institutional buyers in reliance on Rule 144A under the U.S. Securities Act and to persons in offshore transactions in compliance with Regulation S under the U.S. Securities Act. In addition, with respect to the Notes initially sold outside the United States in compliance with Regulation S, until 40 days after the later of (i) the commencement of this offering and (ii) the issue date of the Notes, an offer or sale of Notes within the United States by a dealer (whether or not participating in the offering) may violate the registration requirements of the U.S. Securities Act if such offer or sale is made otherwise than in accordance with Rule 144A or another exemption from registration under the U.S. Securities Act. For a description of certain further restrictions on resale or transfer of the Notes, see Transfer Restrictions. The Notes may not be offered to the public within any jurisdiction. By accepting delivery of this offering memorandum, you agree not to offer, sell, resell, transfer or deliver, directly or indirectly, any Note to the public. United Kingdom In the purchase agreement, each Initial Purchaser has also represented and agreed that:

it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Notes in, from or otherwise involving the United Kingdom; and it has only communicated or caused to be communicated and it will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA) received by it in connection with the issue or sale of any Notes in circumstances in which section 21(1) of the FSMA does not apply to such Initial Purchaser.

Each Initial Purchaser has also agreed in the purchase agreement that it will (to the best of its knowledge and belief) comply with all applicable securities laws and regulations in force in any jurisdiction in which it purchases, offers, sells or delivers Notes or possesses or distributes this offering memorandum, and will obtain any consent, approval or permission required by it for the purchase, offer, sale or delivery by it of Notes under the laws and regulations in force in any jurisdiction to which it is subject. This offering memorandum is directed solely at persons who (i) are outside the United Kingdom or (ii) are investment professionals, as such term is defined in Article 19(1) of the Financial Promotion Order (iii) are persons falling within Article 49(2)(a) to (d) of The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (all such persons together being referred to as relevant persons). This offering memorandum must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this offering memorandum relates is available only to relevant persons and will be engaged in only with relevant persons. European Economic Area In relation to each Relevant Member State, each Initial Purchaser has represented and agreed that with effect from and including the Relevant Implementation Date, it has not made and will not make an offer of Notes to the public in that Relevant Member State prior to the publication of an offering memorandum in relation to the Notes which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of Notes to the public in that Relevant Member State at any time: (a) to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities; to any legal entity which has two or more of (i) an average of at least 250 employees during the last financial year; (ii) a total balance sheet of more than 43,000,000; and (iii) an annual net turnover of more than 50,000,000, as shown in its last annual or consolidated accounts; or in any other circumstances falling within Article 3(2) of the Prospectus Directive,

(b)

(c)

provided that no such offer of Notes shall require the Issuer or any initial purchaser to publish a prospectus pursuant to Article 3 of the Prospectus Directive.

329

For the purposes of this provision, the expression an offer of Notes to the public in relation to any Notes in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe the Notes, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State and the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State. General There is currently no established trading market for the Notes. In addition, the Notes are subject to certain restrictions on resale and transfer as described under Transfer Restrictions. The Issuer will apply for the Notes to be admitted to listing and to trading on the Euro MTF Market of the Luxembourg Stock Exchange. The Initial Purchasers have advised the Issuer that they intend to make a market in the Notes, but they are not obligated to do so. The Initial Purchasers may discontinue any market making in the Notes at any time in their sole discretion. In addition, such market making activities will be subject to the limits imposed by the U.S. Securities Act and the U.S. Exchange Act. Accordingly, the Issuer cannot assure you that a liquid trading market will develop for the Notes, that you will be able to sell your Notes at a particular time or that the prices that you receive when you sell will be favorable. You should be aware that the laws and practices of certain countries require investors to pay stamp taxes and other charges in connection with purchases of securities. In connection with the offering of the Notes, the Initial Purchasers may engage in overallotment, stabilizing transactions and syndicate covering transactions. Overallotment involves sales in excess of the offering size, which creates a short position for the Initial Purchasers. Stabilizing transactions involve bids to purchase the Notes in the open market for the purpose of pegging, fixing or maintaining the price of the Notes. Syndicate covering transactions involve purchases of the Notes in the open market after the distribution has been completed in order to cover short positions. Stabilizing transactions and syndicate covering transactions may cause the price of the Notes to be higher than it would otherwise be in the absence of those transactions. If the Initial Purchasers engage in stabilizing or syndicate covering transactions, they may discontinue them at any time. The Initial Purchasers and their affiliates perform various financial advisory roles, including investment banking, consulting, commercial banking and other financial services from time to time for the Issuer and its affiliates. Goldman Sachs International and its affiliates are acting as advisors to us in connection with the Acquisition. Certain Initial Purchasers and certain affiliates of the Initial Purchaser have entered into a commitment letter with the Issuer in respect to the New Revolving Credit Facility.

330

LEGAL MATTERS Certain legal matters in connection with this offering will be passed upon for us by Ropes & Gray LLP, New York, New York, as to matters of United States federal and New York law, and by Freshfield Bruckhaus Deringer LLP, Germany, as to matters of German law. Certain legal matters in connection with this offering will be passed upon for the Initial Purchasers by Latham & Watkins (London) LLP, London, England, as to matters of United States federal and New York law and by Latham & Watkins LLP, Germany, as to matters of German law. Latham & Watkins LLP represents affiliates of LGI from time to time with respect to certain legal matters, and represents Unitymedia and its affiliates from time to time with respect to certain legal matters, including in connection with the Acquisition.

331

ENFORCEMENT OF JUDGMENTS We have been advised by our German counsel, Freshfields Bruckhaus Deringer LLP, that there is doubt as to the enforceability in Germany of civil liabilities based on the securities laws of the United States, either in an original action or in an action to enforce a judgment obtained in U.S. courts. The United States and Germany currently do not have a treaty providing for the reciprocal recognition and enforcement of judgments, other than arbitration awards, in civil and commercial matters. Under applicable legal rules, a final judgment for payment given by any court in the United States, whether or not predicated solely upon U.S. securities laws, will not be directly enforceable in Germany per se. However, under current practice, a final judgment by a U.S. court may be given binding effect within the territory of Germany, unless the German court finds that, inter alia, the recognition of the U.S. judgment leads to a result manifestly irreconcilable with material principles of German law or that proper legal procedures have not been observed. German courts usually deny the recognition and enforcement of punitive damages. Moreover, a German court may reduce the amount of damages granted by a U.S. court and recognize damages only to the extent that they are necessary to compensate actual losses or damages. German civil procedure differs substantially from U.S. civil procedure in a number of respects. Insofar as the production of evidence is concerned, U.S. law and the laws of several other jurisdictions based on common law provide for pre-trial discovery, a process by which parties to the proceedings may prior to trial compel the production of documents by adverse or third parties and the deposition of witnesses. Evidence obtained in this manner may be decisive in the outcome of any proceeding. No such pre-trial discovery process exists under German law.

332

INDEPENDENT AUDITORS The consolidated financial statements of Unitymedia GmbH and its subsidiaries as of December 31, 2008, 2007 and 2006, have been audited by PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprfungsgesellschaft, Olof-Palme-Strasse 35, 60439 Frankfurt am Main, Germany, independent accountants, as stated in their reports appearing herein.

333

LISTING AND GENERAL INFORMATION Listing Application has been made for the Notes to be admitted to listing on the Official List of the Luxembourg Stock Exchange and to trading on the Euro MTF Market. Notice of any optional redemption, change of control or any change in the rate of interest payable on the Notes will be published in a Luxembourg newspaper of general circulation. Copies of the following documents may be obtained or inspected in physical form during usual business hours on any weekday (Saturdays, Sundays and public holidays excepted) at the registered offices of the Issuer and the Luxembourg Listing, Transfer Agent and Paying Agent so long as the Notes are listed on the Luxembourg Stock Exchange and the rules of such exchange require: (1) (2) the organizational documents of the Issuer; the September 30, 2009 unaudited condensed consolidated interim financial statements and the December 31, 2008 consolidated financial statements of Unitymedia GmbH and its consolidated subsidiaries; the indentures governing the Notes; and the purchase agreement.

(3) (4)

The Issuer will maintain a paying and transfer agent in Luxembourg for so long as any of the Notes are listed on the Luxembourg Stock Exchange. The Issuer reserves the right to vary such appointment and will publish notice of such change of appointment in a newspaper having a general circulation in Luxembourg. So long as the Notes are listed on the Luxembourg Stock Exchange and so long as the rules of such stock exchange require, the Issuer will maintain a paying and transfer agent in Luxembourg. Pursuant to Part 1, point 703 of the Rules and Regulations of the Luxembourg Stock Exchange, the Notes will be freely transferable on the Luxembourg Stock Exchange and therefore, no transaction involving the Notes made on the Luxembourg Stock Exchange may be cancelled. Clearing Information The Euro Senior Secured Notes, Dollar Senior Secured Notes and Senior Notes sold pursuant to Regulation S in this offering have been accepted for clearance through the facilities of Clearstream and Euroclear under the common codes 046849221, 046862406 and 046846605 respectively. The Euro Senior Secured Notes, Dollar Senior Secured Notes and Senior Notes sold pursuant to Rule 144A in this offering have been accepted for clearance through the facilities of Clearstream and Euroclear under the common codes 046860349, 046862465 and 046860306 respectively. The international securities identification numbers (ISIN) for the Euro Senior Secured Notes, Dollar Senior Secured Notes and Senior Notes sold pursuant to Regulation S are XS0468492219, USD85668AA50 and XS0468466056, respectively. The international securities identification numbers (ISIN) for the Euro Senior Secured Notes, Dollar Senior Secured Notes and Senior Notes sold pursuant to Rule 144A are XS0468603492, US90320RAA23 and XS0468603062, respectively. Legal Information The Issuer is a limited liability company (Gesellschaft mit beschrnkter Haftung) and was incorporated under the laws of Germany on October 15, 2009. Following registration of its name change, the principal office of the Issuer will be at Alsterarkaden 27, 20354 Hamburg, Germany, telephone number + 31 (0)20 778 9872. The Issuer is registered with the commercial registry of the local court (Amtsgericht) of Hamburg under number HRB 111352. The shareholder of the Issuer has, by means of a shareholder resolution, instructed the managing directors of the Issuer to issue the debt. Under German law, the managing directors of a limited liability company are free to issue notes and other instruments (unless otherwise stipulated in the articles of association). The articles of association of the Issuer are silent as to the issuance of notes. The Issuers fiscal year ends on December 31.

334

The creation and issuance of the Notes has been authorized by resolutions of the management board and the shareholders of the Issuer dated on or about November 11, 2009. Copies of the annual and quarterly reports required to be delivered under the covenant described under Description of the Senior Secured Notes Certain Covenants Reports and Description of the Senior Notes Certain Covenants Reports will be available free of charge at the offices of the Paying Agent in Luxembourg. We will deposit copies of this offering memorandum and the indentures with the paying agent in Luxembourg. Copies of these documents will be available free of charge at the offices of the Paying Agent in Luxembourg. This offering memorandum constitutes a prospectus for purposes of the Luxembourg Law dated July 10, 2005. Except as disclosed in this offering memorandum, there has been no material adverse change in the financial condition of the Issuer since the date of its last audited financial statements. There is currently no material litigation pending against the Issuer other than that described in this offering memorandum. The Issuer accepts responsibility for the information contained in this offering memorandum. The Issuer declares that, having taken all reasonable care to ensure that such is the case, the information contained in this offering memorandum is, to the best of its knowledge, in accordance with the facts and contains no omission likely to affect its import. The Issuer is a holding company with no operations of its own. The language of this offering memorandum is English. Certain legislative references and technical terms have been cited in their original language in order that the correct technical meaning may be ascribed to them under applicable laws.

335

GLOSSARY ADSL or ADSL2+ An asymmetric digital subscriber line is a system for high-speed data transmission over existing telephone cables. In the ADSL system, the telephone cable is effectively divided into three bands: the downstream band from the service provider to the end customer; the upstream band from the end customer to the service provider; and a voice band through which (using a splitter) telephone calls (analog or via ISDN) can be made). ADSL2+ extends the capacity of the underlying ADSL system by further utilizing the frequency spectrum and extending transfer speeds for the downstream band to up to 25 Mb/s. Coaxial cable that typically starts at the main amplifier station or a fiber node and extends into a certain destination. Amplifiers installed along the route ensure continuous signal levels. Analog point-to point microwave transmission system, which allows wireless transport of the complete broadcast cable television signal over distances of up to approximately 50 kilometers (one-way system only), which has been replaced by alternative broadband fiber transport systems. Comes from the word analogous, which means similar to in telephone transmission, the signal being transmitted (voice, video or image) is analogous to the original signal. The transmission capacity of a communication line or transmission link at any given time. The bandwidth is generally indicated in bits per second. A two-way HFC broadband network technology. The upgraded portion of our network utilizes this technology. Primary extension lines that originate at the A lines and establish connections to local extension lines (or C lines). B lines are also intermitted by amplifier points to boost signal levels. Broadband regional network. A signaling method that includes a relatively wide range of frequencies, that can be divided into channels or frequency bins, and by which various data components are sent at the same time in order to increase the rate of transmission. The wider the bandwidth, the more information it can carry within a certain period of time. Coaxial cables extending from the B lines to the cable service area. C lines are passive only (without any amplifier points) and connect directly to the D lines. Telecommunications hardware, such as set-top boxes, DSL or other broadband routers, VoIP base stations, telephone headsets, etc., which is located at the home or business of a customer. Coaxial cables that connect from the splitter in the C line to the point of interface in a basement, thereby enabling the building to access a cable operators products and services. The use of a binary code to represent information in telecommunications recording and computing. Analog signals, such

A line

AMTV

Analog

Bandwidth

Bi-directional HFC

B line

BRN Broadband

C line

Customer premise equipment or CPE

D line

Digital

G-1

as voice or music, are encoded digitally by sampling the voice or music analog signals many times a second and assigning a number to each sample. Recording or transmitting information digitally has two major benefits: First, digital signals can be reproduced more precisely so digital transmission is cleaner than analog transmission and the electronic circuitry necessary to handle digital is becoming cheaper and more powerful; and second, digital signals require less transmission capacity than analog signals. DSL Digital Subscriber Line is a generic name for a range of digital technologies relating to the transmission of Internet and data signals from the telecommunications service providers central office to the end customers premises over the standard copper wire used for voice services. Digital terrestrial video broadcast, or digital broadcasting of television signals over terrestrial antennas and other earthbound circuits without any use of satellite. Digital video recorder is a device that allows end users to digitally record television programming for later playback. Network architecture that uses optical fiber to reach the end users street or home in order to deliver broadband services. Transmission of content for which television viewers are not required to pay a fee for receiving transmissions. A master facility for receiving television signals for processing and distribution over a cable television system. Calculated based on an estimate, by our management, of the number of homes and other units such as apartments (including housing associations) that can be connected to our network and to which we can offer cable television and other services by connecting to our C lines. Public property investors, public property owners, property management firms and financial investors who own or manage multidwelling units, typically with 300 or more units. Hybrid fiber-coaxial is a technology used by the cable television industry to provide a variety of services, including analog television, digital television (both standard and high definition), VoD, telephony and high-speed data access using a combination of fiber optics and traditional coaxial cable. Internet Protocol is a protocol used for communicating data across a packet-switched network. It is used for transmitting data over the Internet and other similar networks. The data is broken down into data packets, each data packet is assigned an individual address, then the data packets are transmitted independently and finally reassembled at the destination. The interconnection of administratively separate IP networks providing for the exchange of traffic between the customers of each network. Internet Protocol Television is the transmission of television content using IP over a network infrastructure, such as a broadband connection.

DVB-T

DVR Fiber-to-the-street/home Free-to-air Headend Homes passed

Housing associations

HFC

IP

IP peering

IPTV

G-2

Kb/s

Kilobits per second; a unit of data transfer rate equal to 1,000 bits per second. The portion of the cable television network that produces content, transmits the signal to the earth-satellite station or a terrestrial transmitter, and the up-link to the satellite. The portion of the cable television network consisting of (i) the downlink from the satellite or the terrestrial transmitter, (ii) the satellite reception equipment, (iii) the signal distribution from the satellite reception equipment to the master headends and the headends, (iv) the master headend and headend functions and (v) the distribution of the signals from the headends to the hubs. The portion of the cable television network that distributes the signal through fiber and/or co-axial cable from the headends to the home hand-over points. This portion of the network is commonly referred to as the networks trunk or the network backbone. The portion of the cable television network that distributes the signal from the Level 3 hand-over point to the wall socket inside the customers home. Level 4 infrastructure primarily consists of the in-house wiring. The headends of the cable networks, which comprise Level 2 operations, are typically owned and operated by Level 3 operators, though Level 4 operators have started to develop their own Level 2/3 networks where economically viable. The local loop is the physical link between the first demarcation point of the customers premises and the delivery point into the network of the provider renting the local loop. The local loop is referred to as the last mile. Megabits per second; a unit of data transfer rate equal to 1,000,000 bits per second. The bandwidths of broadband networks are often indicated in Mb/s. Megahertz (or one million hertz) is the basic measure of frequency and represents one million cycles per second. Our wholesale Multimedia Anschluss or MMA offer is a service tailored for housing associations to purchase bulk Internet access at 128 Kb/s to enable their properties with Internet access. MMA-equipped apartments can upgrade to any of our digital television, broadband and flat rate telephony services. Multi Protocol Label Switching is a data-carrying mechanism that belongs to the family of packet-switched networks. MPLS enables class of service (CoS) tagging and prioritization of network traffic and is especially important to ensure the performance of low-latency applications such as VoIP. The area considered by our management to contain homes passed. The network operations center, which we operate in Kerpen, Germany. IPTV services that are delivered over the top of an existing broadband network. The number of RGUs or subscribers for a product as a percentage of homes passed for the product indicated.

Level 1

Level 2

Level 3

Level 4

Local loop infrastructure

Mb/s

MHz

MMA

MPLS

Network coverage area NOC

OTT-TV

Penetration rate

G-3

Public switched telephone network

The communication system for public telephony services. Originally it was a network of fixed-line analog telephone systems; it has been nearly fully digitized and includes fixed telephony services, fax and data services as well as mobile services. It is based on switching technology. Refers to each subscriber receiving analog or digital cable television, Digital TV Pay, Internet access or telephony services over our network. Thus, one subscriber who receives all four services would be counted as four RGUs. Small and Medium Enterprises, which accounts with multi-dwelling units of six to 300 homes. Set-top box, the hardware required by the end customer to view digital television programming. The end-users receiving our products through our network. Offering of digital television, broadband Internet and telephony services packaged in a bundle. Universal Mobile Telecommunications System, a third generation or 3G mobile technology that delivers broadband information at speeds up to 2 Mb/s. The portion of our network coverage area that has been upgraded to a bi-directional standard with a 862 MHz capacity. In order to calculate the percentage of our network that has been upgraded we divide the number of homes passed by the upgraded portion of the network by the total number of homes passed. Video on Demand is the transmission of digital video data on demand, by either streaming data or allowing data to be downloaded. The data is transmitted to the end customer via a broadband connection. Very high speed DSL. Voice over IP, or the transmission of voice calls via Internet Protocol.

RGU

SME

STB

Subscribers Triple play

UMTS

Upgraded portion

VoD

VDSL VoIP

G-4

INDEX TO FINANCIAL INFORMATION

Page Number

UNITYMEDIA GMBH COLOGNE Unaudited Interim Condensed Consolidated Financial Statements for the nine months and for the three months ended September 30, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interim Consolidated Income Statement for the nine months ended September 30, 2009 . . . . . . . . . . . . . . . . Interim Consolidated Statement of Comprehensive Income for the nine months ended September 30, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interim Consolidated Income Statement for the three months ended September 30, 2009 . . . . . . . . . . . . . . . . Interim Consolidated Statement of Comprehensive Income for the three months ended September 30, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interim Consolidated Balance Sheet as of September 30, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interim Consolidated Statement of Cash Flows for the nine months ended September 30, 2009 . . . . . . . . . Interim Consolidated Statement of Changes in Equity for the nine months ended September 30, 2009 . . . Notes to the Interim Consolidated Financial Statements for the nine months ended September 30, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Audited Consolidated Financial Statements December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Income Statement for the year ended December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Balance Sheet as of December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statement of Cash Flows for the year ended December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statement of Changes in Equity for the year ended December 31, 2008 . . . . . . . . . . . . . . . . . . . Notes to the Consolidated Financial Statements for the year ended December 31, 2008 . . . . . . . . . . . . . . . . . Auditors Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Audited Consolidated Financial Statements December 31, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Income Statement for the year ended December 31, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Balance Sheet as of December 31, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statement of Cash Flows for the year ended December 31, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statement of Changes in Equity for the year ended December 31, 2007 . . . . . . . . . . . . . . . . . . . Notes to the Consolidated Financial Statements for the year ended December 31, 2007 . . . . . . . . . . . . . . . . . Auditors Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Audited Consolidated IFRS Financial Statements December 31, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Income Statement for the year ended December 31, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Balance Sheet as of December 31, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statement of Cash Flows for the year ended December 31, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . Consolidated Statement of Changes in Equity for the year ended December 31, 2006 . . . . . . . . . . . . . . . . . . . Notes to the Consolidated Financial Statements for the year ended December 31, 2006 . . . . . . . . . . . . . . . . . Auditors Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2 F-4 F-4 F-5 F-5 F-6 F-7 F-8 F-9 F-22 F-23 F-24 F-25 F-26 F-31 F-81 F-82 F-83 F-84 F-85 F-86 F-91 F-133 F-134 F-135 F-136 F-137 F-138 F-143 F-188

F-1

UNITYMEDIA GMBH COLOGNE Unaudited Interim Condensed Consolidated Financial Statements for the nine months and for the three months ended September 30, 2009

F-2

TABLE OF CONTENTS Interim Consolidated Income Statement for the nine months ended September 30, 2009 . . . . . . . . . . . . . . . . . . . Interim Consolidated Statement of Comprehensive Income for the nine months ended September 30, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interim Consolidated Income Statement for the three months ended September 30, 2009 . . . . . . . . . . . . . . . . . . . Interim Consolidated Statement of Comprehensive Income for the three months ended September 30, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interim Consolidated Balance Sheet as of September 30, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interim Consolidated Statement of Cash Flows for the nine months ended September 30, 2009 . . . . . . . . . . . . . Interim Consolidated Statement of Changes in Equity for the nine months ended September 30, 2009 . . . . . . Notes to the Interim Consolidated Financial Statements for the nine months ended September 30, 2009 . . . . . F-4 F-4 F-5 F-5 F-6 F-7 F-8 F-9

F-3

UNITYMEDIA GMBH, COLOGNE INTERIM CONSOLIDATED INCOME STATEMENT FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009
Nine months ended September 30, Notes 2009 (in 000) 2008

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Own work capitalized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost of materials and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Personnel expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Profit for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

819,723 15,497 27,420 862,640 (118,584) (80,025) (323,921) 340,110 (213,917) 126,193 19,946 (98,139) 48,000 23,695 71,695

845,798 13,146 24,274 883,218 (107,657) (75,633) (374,499) 325,429 (184,259) 141,170 67,290 (113,524) 94,936 (22,189) 72,747

2 3 4 5 6

INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009
Nine months ended September 30, 2009 (in 000) 2008

Profit for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other comprehensive income Fair value gains from available for sale financial assets, net of tax . . . . . . . . . . . . . . . . . . . . . . . Cash flow hedges, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other comprehensive income for the period, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total comprehensive income for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

71,695 22,659 (16,113) 6,546 78,241

72,747 32,472 912 33,384 106,131

The accompanying notes on pages F-12 F-21 are an integral part of these interim consolidated financial statements.

F-4

UNITYMEDIA GMBH, COLOGNE INTERIM CONSOLIDATED INCOME STATEMENT FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2009
Three months ended September 30, Notes 2009 (in 000) 2008

Net Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Own work capitalized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost of materials and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Personnel expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Profit for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

219,955 5,216 6,771 231,942 (41,154) (26,881) (49,397) 114,510 (73,168) 41,342 9,271 (31,932) 18,681 42,059 60,740

274,760 4,712 8,874 288,346 (36,585) (26,497) (116,069) 109,195 (60,982) 48,213 5,249 (33,323) 20,139 (3,777) 16,362

2 3 4 5 6

INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2009
Three months ended September 30, 2009 (in 000) 2008

Profit for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other comprehensive income Fair value gains from available for sale financial assets, net of tax . . . . . . . . . . . . . . . . . . . . . . Cash flow hedges, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other comprehensive income for the period, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total comprehensive income for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

60,740 10,246 (954) 9,292 70,032

16,362 0 930 930 17,292

The accompanying notes on pages F-12 F-21 are an integral part of these interim consolidated financial statements.

F-5

UNITYMEDIA GMBH, COLOGNE INTERIM CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 2009
Notes Sep 30, 2009 Dec 31, 2008

(in 000)

ASSETS Current assets Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Available for sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trade accounts receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current tax receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepaid expenses and accrued revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non current assets Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Goodwill and other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total non current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . LIABILITIES Current liabilities Bonds and bank liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Short term provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non current liabilities Bonds and bank liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pensions and other long term employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total non current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shareholder's equity Subscribed capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total shareholder's equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TOTAL LIABILITIES AND EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7 8

159,615 66,730 30,691 14,559 13,229 14,402 8,050 307,276 932,952 1,208,577 18,778 7,315 17,363 68,785 2,253,770 2,561,046

214,936 0 77,819 21,599 9,460 10,972 9,210 343,996 905,461 1,264,429 929 3,651 18,276 24,480 2,217,226 2,561,222

9 10

10

21,256 161,427 50,095 33,116 77,562 48,027 391,483

72,644 179,125 51,100 31,563 127,836 36,660 498,928 1,649,756 8,543 26,613 10,577 44,364 1,739,853 12,682 427,129 (6,506) (110,864) 322,441 2,561,222

10 10

1,649,324 8,983 54,967 11,689 43,774 1,768,737 12,682 427,273 40 (39,169) 400,826 2,561,046

The accompanying notes on pages F-12 F-21 are an integral part of these interim consolidated financial statements.

F-6

UNITYMEDIA GMBH, COLOGNE INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009
Nine months ended September 30, Notes 2009 (in 000) 2008

Cash flow from operating activities Profit before interest and taxes (EBIT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other non-cash (income) / expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Losses (profits) from disposals of property, plant and equipment . . . . . . . . . . . . . . . . . (Increase)/decrease of inventories, trade receivables and other assets not related to investing or financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Increase (decrease) of accruals, trade payables and other liabilities not related to investing or financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes received (paid) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial expenses paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Proceeds from disposal of Available for sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . Cash flow from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash flow from investing activities Proceeds from disposal of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . Proceeds from disposal of Available for sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . Investments into Available for sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investments in tangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investments in intangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investments in the acquisition of subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash flow from investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash flow from financing activities Repayment of finance lease obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Revolver (Revolver repayment) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash repayments of loans or short or long term borrowings . . . . . . . . . . . . . . . . . . . . . . Cash flow from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash and cash equivalents at the end of the period Change in cash and cash equivalents from cash relevant transactions . . . . . . . . . . . . . Cash and cash equivalents at the beginning of the period . . . . . . . . . . . . . . . . . . . . . . . . Cash and cash equivalents at the end of the period . . . . . . . . . . . . . . . . . . . . . . . . . . .

126,193 213,917 (67,756) 1,262 47,775 4,869 (15,773) 4,557 (110,026) 0 205,018 0 0 (43,708) (152,031) (33,976) 0 (229,715) (624) (30,000) 0 (30,624) (55,321) 214,936 159,615

141,170 184,259 (66,302) 0 44,788 (31,926) (22,412) 5,910 (123,531) 244,032 375,988 29 42,052 0 (131,118) (19,979) (48,507) (157,523) 0 0 (218,185) (218,185) 280 227,058 227,338

13

13

13 7

13 13

The accompanying notes on pages F-12 F-21 are an integral part of these interim consolidated financial statements.

F-7

UNITYMEDIA GMBH, COLOGNE INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009
Attributable to Equity Holders of Unitymedia GmbH Note Subscribed Capital K Capital Reserves K Cash-flow Hedge Reserve K Available for sale assets Reserve K Retained Earnings K Equity attributable to equity holders K Minorities Total Equity K

December 31, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Comprehensive income Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transaction with owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additions relating to share-based-payments . . . . . . . . . . . . . . . . . . Total Transactions with owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September 30, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Comprehensive income Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transaction with owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additions relating to share-based-payments . . . . . . . . . . . . . . . . . . Total Transactions with owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Comprehensive income Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transaction with owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additions relating to share-based-payments . . . . . . . . . . . . . . . . . . Total Transactions with owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September 30, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12,682 0 0 0 0 0 0 12,682 0 0 0 0 0 0 12,682 0 0 0 0 0 0 12,682

425,294 0 0 0 0 1,289 1,289 426,583 0 0 0 0 546 546 427,129 0 0 0 0 144 144 427,273

5,956 0 912 912 0 0 0 6,868 0 -13,374 -13,374 0 0 0 -6,506 0 -16,113 -16,113 0 0 0 -22,619

-32,472 0 32,472 32,472 0 0 0 0 0 0 0 0 0 0 0 0 22,659 22,659 0 0 0 22,659

-196,945 72,747 0 72,747 0 0 0 -124,198 13,334 0 13,334 0 0 0 -110,864 71,695 0 71,695 0 0 0 -39,169

214,515 72,747 33,384 106,131 0 1,289 1,289 321,935 13,334 -13,374 -40 0 546 546 322,441 71,695 6,546 78,241 0 144 144 400,826

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

214,515 72,747 33,384 106,131 0 1,289 1,289 321,935 13,334 -13,374 -40 0 546 546 322,441 71,695 6,546 78,241 0 144 144 400,826

F-8

The accompanying notes on pages F-12 F-21 are an integral part of these interim consolidated financial statements.

UNITYMEDIA GMBH, COLOGNE Notes to the Interim Consolidated Financial Statements for the Nine Months Ended September 30, 2009 A General
............................................................................................. .................................................................................

F-12 F-12 F-14 F-14 F-14 F-14 F-14 F-15 F-15 F-15 F-15 F-16 F-16 F-16 F-16 F-17 F-17 F-17 F-17 F-18 F-18 F-18 F-19 F-20

B Accounting Policies

C Explanations of the Income Statement and the Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.1 Revenue (note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.2 Other expenses (note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.3 Depreciation and amortization expenses (note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.4 Financial income (note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.5 Financial expenses (note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.6 Income Taxes (note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.7 Available for sale securities (note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.8 Trade accounts receivables (note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.9 Goodwill and other intangible assets (note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.10 Bonds, bank liabilities and derivative financial instruments (note 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . C.10.1 Bonds and bank liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.10.2 Derivative financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D Other explanations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D.1 Contingent assets, liabilities and financial obligations (note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D.1.1 Contingent assets and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D.1.2 Other financial obligations and contractual financial obligations . . . . . . . . . . . . . . . . . . . . . . . D.1.3 Finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D.1.4 Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D.2 Related party disclosures (note 12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D.3 Explanations regarding the cash flow statement (note 13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D.4 Segment reporting (note 14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-9

LIST OF ABBREVIATIONS

Apollo

..................................

Apollo Management V, L.P., New York, NY/U.S.A.

arena . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Arena Sport Rechte und Marketing GmbH, Cologne arensaSAT

.............................. .............................

satellite operations of arena BC Partners Limited, London, United Kingdom See Unitymedia Earnings before interest and tax Earnings before interest, tax, depreciation and amortization Earnings before tax

BC Partners Company EBIT

...............................

................................... ................................

EBITDA EBT

....................................

EU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . European Union EUR

.................................... .................................

Euro currency European Inter Bank Offered Rate International Accounting Standards

Euribor IAS

.....................................

IFRIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . International Financial Reporting Interpretation Committee IFRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . International Financial Reporting Standards K
...................................... ........................... ......................

Thousand EUR Unitymedias Internet, Telephony and Digital TV Pay business 1,350,000,000 senior secured floating rate notes due 2013 issued by Unitymedia Hessen and Unitymedia NRW Premiere AG, Unterfhring The offering by Unitymedia of the Notes and the entering into of the 230.0 million senior credit facilities consisting of a 200.0 million term loan facility and a 30.0 million revolving credit facility

New Services

NRW/Hesse Notes

Premiere

................................ .............................

Refinancing

Unitymedia, we, us, our, the Companyand other similar terms . . .

Unitymedia GmbH, Cologne (formerly Unity Media GmbH or iesy Repository GmbH, respectively) and its consolidated subsidiaries, except where the context otherwise requires

Unitymedia GmbH . . . . . . . . . . . . . . . . . . . . . . Unitymedia GmbH, Cologne (formerly Unity Media GmbH) Unitymedia Group Unitymedia Hessen
...................... .....................

Unitymedia GmbH, Cologne and its subsidiaries Unitymedia Hessen GmbH & Co. KG (formerly iesy Hessen GmbH & Co. KG), Cologne 235 million 10 1 8% senior notes of the Company due 2015 and $151 million 10 3 8% senior notes of the Company due 2015

Unitymedia New Senior Notes

..........

F-10

Unitymedia Notes . . . . . . . . . . . . . . . . . . . . . . . The Unitymedia Senior Notes and Unitymedia New Senior Notes Unitymedia S.A.
........................ ......................

Unity Media Management S.A., Luxembourg Unity Media S.C.A., Luxembourg

Unitymedia S.C.A.

Unitymedia Senior Notes . . . . . . . . . . . . . . . . 215 million 8 3 4% senior notes of the Company due 2015 that were offered by Unitymedia as part of the Refinancing in February 2005 USD
....................................

United States Dollar

F-11

UNITYMEDIA GMBH, COLOGNE Notes to the Interim Consolidated Financial Statements for the Nine Months Ended September 30, 2009 A General The Unitymedia group is the second largest cable operator in Germany operating in the German states of Hesse and North Rhine-Westphalia. The group provides basic and premium cable television services, as well as internet access and telephony services to its customers. In addition to this core business, the groups subsidiary arena operates a digital pay TV satellite platform, arenaSAT. Unitymedias headoffice is located in Cologne, Germany. The address is Aachener Strae 746-750, Cologne. The interim condensed consolidated financial statements of Unitymedia for the first nine months of 2009 have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union. The Company has issued the Senior Notes on the official market and the NRW/Hesse notes on the alternative securities market of the Irish Stock Exchange. The interim condensed consolidated financial statements comprise the interim consolidated balance sheet, the interim consolidated income statement, the interim consolidated statement of comprehensive income, the interim consolidated statement of cash flows, the interim consolidated statement of changes in equity and the notes. Figures are presented in K and million as noted. The presentation currency of the groups financial statements is Euro. The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual consolidated financial statements and should be read in conjunction with the Companys annual consolidated financial statements as of December 31, 2008 and the Companys interim report for the nine months ended September 30, 2008. Results of operations of interim periods should not be expected as an indication of the results for a full year. The annual consolidated financial statements as of December 31, 2008 were released for publication by the managing directors on March 9, 2009, included in the Unitymedia 2008 Annual Report published on the investor relations section of the website: www.unitymedia.de. Except as described in the next section, the accounting policies are consistent with those of the annual financial statements for the year ended December 31, 2008, as described in those annual financial statements. The interim consolidated financial statements were released for publication by the managing directors on November 9, 2009. B Accounting Policies The Company has adopted the following new and amended IFRSs as of January 1, 2009:

IFRS 7 Financial instruments Disclosures (amendment) effective 1 January 2009. The amendment requires enhanced disclosures about fair value measurement and liquidity risk. In particular, the amendment requires disclosure of fair value measurements by level of a fair value measurement hierarchy. IAS 1 (revised), Presentation of financial statements. The revised standard prohibits the presentation of items of income and expenses (that is non-owner changes in equity) in the statement of changes in equity, requiring non-owner changes in equity to be presented separately from owner changes in equity, requiring non-owner changes in equity to be presented separately from owner changes in equity in a statement of comprehensive income. As a result the group presents in consolidated statement of changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the consolidated statement of comprehensive income. Comparative information has been re-presented so that it also is in conformity with the revised standard.

F-12

UNITYMEDIA GMBH, COLOGNE Notes to the Interim Consolidated Financial Statements for the Nine Months Ended September 30, 2009 (continued) The following new standards, amendments to standards or interpretations are mandatory for the first time for the financial year beginning January 1, 2009 but are not currently relevant for the group:

IFRS 2 (amendment), Share-based payment (effective 1 January 2009) deals with vesting conditions and cancellations. It clarifies that vesting conditions are service conditions and performance conditions only. Other features of a share-based payment are not vesting conditions. These features would need to be included in the grant date fair value for transactions with employees and others providing similar services; they would not impact the number of awards expected to vest or valuation there of subsequent to grant date. All cancellations, whether by the entity or by other parties, should receive the same accounting treatment. In respect of borrowing costs relating to qualifying assets for which the commencement date for capitalisation is on or after 1 January 2009, the group capitalises borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. The group previously recognised all borrowing costs as an expense immediately. This change in accounting policy was due to the adoption of IAS 23, Borrowing costs (2007) in accordance with the transition provisions of the standard; comparative figures have not been restated.

The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year beginning January 1, 2009 and have not been early adopted:

IFRS 3 (revised), Business combinations (effective from July 1, 2009). The revised standard continues to apply the acquisition method to business combinations, with some significant changes. For example, all payments to purchase a business are to be recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through the statement of comprehensive income. There is a choice on an acquisition-by-acquisition basis to measure the minority interest in the acquiree either at fair value or at the minority interests proportionate share of the acquirees net assets. All acquisition-related costs should be expensed. The group will apply IFRS 3 (revised) to all business combinations from July 1, 2009. IFRIC 17, Distributions of non-cash assets to owners, effective for annual periods beginning on or after July 1, 2009. This is not currently applicable to the group, as it has not made any non-cash distributions. IAS 27 (revised), Consolidated and separate financial statements, (effective from 1 July 2009). The revised standard requires the effects of all transactions with non controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. The standard also specifies the accounting when control is lost. Any remaining interest in the entity is remeasured to fair value, and a gain or loss is recognised in profit or loss. The group will apply IAS 27 (revised) prospectively to transactions with non-controlling interests from 1 January 2010. IAS 38 (amendment), Intangible Assets. The amendment is part of the IASBs annual improvements project published in April 2009 and the group and company will apply IAS 38 (amendment) from the date IFRS 3 (revised) is adopted. The amendment clarifies guidance in measuring the fair value of an intangible asset acquired in a business combination and it permits the grouping of intangible assets as a single asset if each asset has similar useful economic lives. The amendment will not result in a material impact on the group or companys financial statements. IFRS 5 (amendment), Measurement of non-current assets (or disposal groups) classified as held-for-sale. The amendment is part of the IASBs annual improvements project published in April 2009. The amendment provides clarification that IFRS 5 specifies the disclosures required in respect of non-current assets (or disposal groups) classified as held for sale or discontinued operations. It also clarifies that the general requirement of IAS 1 still apply, particularly paragraph 15 (to achieve a fair presentation) and paragraph 125 (sources of estimation uncertainty) of IAS 1. The group and company will apply IFRS 5 (amendment) from 1 January 2010. It is not expected to have a material impact on the group or companys financial statements.

F-13

UNITYMEDIA GMBH, COLOGNE Notes to the Interim Consolidated Financial Statements for the Nine Months Ended September 30, 2009 (continued)

IAS 1 (amendment), Presentation of financial statements. The amendment is part of the IASBs annual improvements project published in April 2009. The amendment provides clarification that the potential settlement of a liability by the issue of equity is not relevant to its classification as current or non current. By amending the definition of current liability, the amendment permits a liability to be classified as non-current (provided that the entity has an unconditional right to defer settlement by transfer of cash or other assets for at least 12 months after the accounting period) notwithstanding the fact that the entity could be required by the counterparty to settle in shares at any time. The group and company will apply IAS 1 (amendment) from 1 January 2010. It is not expected to have a material impact on the group or companys financial statements. IFRS 2 (amendments), Group cash-settled and share-based payment transactions. In addition to incorporating IFRIC 8, Scope of IFRS 2, and IFRIC 11, IFRS 2 Group and treasury share transactions, the amendments expand on the guidance in IFRIC 11 to address the classification of group arrangements that were not covered by that interpretation. The new guidance is not expected to have a material impact on the groups financial statements.

C Explanations of the Income Statement and the Balance Sheet Operating performance is measured based on EBITDA (Earnings before interest, tax, depreciation and amortization) and adjusted EBITDA. We define EBITDA as profit before income taxes and financial result as well as amortization and depreciation expenses. Adjusted EBITDA excludes certain non recurring items and non-cash share based expenses. EBITDA is not a recognized measure in accordance with EU-IFRS and should not be viewed as a substitute for net earnings. Our income statement also shows the performance figures EBIT as well as EBT for information purposes. However Adjusted EBITDA is a key performance figure used by management to measure the Companys operating performance. C.1 Revenue (note 1) Revenue decreased by 3.1%, from 845.8 million in the nine months ended September 30, 2008 to 819.7 million in the nine months ended September 30, 2009. The decrease in revenue was primarily due to the reduction in Premiere sublicense revenues and Premiere share revenue recognition following the expiry of our rights to retail Bundesliga programming as of July 1, 2009, and lower revenue from arena primarily reflecting the lower arenaSAT subscriber base. This decrease was partially offset by increased revenues from New Services subscriptions, the full effect of the basic cable price increase in the multi-user segment in July 2008 as well as increased digital carriage fees in the cable segment. C.2 Other expenses (note 2) Other expenses decreased from 374.5 million in the nine months ended September 30, 2008 to 323.9 million in the nine months ended September 30, 2009. This decrease is primarily due to lower programming costs following the expiry of our rights to retail Bundesliga programming as of July 1, 2009, and lower operating costs at arena following a lower satellite subscriber base. This decrease was partially offset by higher marketing expenses in the cable segment. C.3 Depreciation and amortization expenses (note 3) Depreciation and amortization increased by 16.1%, from 184.3 million in the nine months ended September 30, 2008 to 213.9 million in the nine months ended September 30, 2009. The increase relates to a higher fixed and intangible asset base primarily resulting from upgrade projects as well as a higher amount of short-term depreciable CPE and capitalized customer acquisition costs from the larger triple play base. C.4 Financial income (note 4) Financial income decreased from 67.3 million in the nine months ended September 30, 2008 to 19.9 million in the nine months ended September 30, 2009. The decrease is primarily due to capital gains

F-14

UNITYMEDIA GMBH, COLOGNE Notes to the Interim Consolidated Financial Statements for the Nine Months Ended September 30, 2009 (continued) recorded in the first quarter of 2008 in connection with the sale of Premiere shares in the amount of 42.1 million as well as a 11.4 million gain from the 236.0 million repurchased NRW/Hesse Notes below par value. Financial income in the nine months ended September 30, 2009 primarily reflect a 17.8 million non-cash gain on the valuation of the prepayment options of the Unitymedia Group Notes as well as 1.3 million interest income (2008: 6.0 million) from cash deposits. The decrease in interest income is due to the lower cash and interest rate level in 2009. C.5 Financial expenses (note 5) Financial expenses decreased from 113.5 million in the nine months ended September 30, 2008 to 98.1 million in the nine months ended September 30, 2009. Financial expenses in the nine months ended September 30, 2008 include a 1.8 million non-cash writedown on the value of prepayment options for the fixed rate Unitymedia Notes. Net of this effect, the decrease in interest expenses year on year was primarily due to a positive netting effect of interest payments from the nominal 251 million NRW/Hesse Notes repurchased in the course of 2008 as well as lower Euribor rates on the unhedged portion of the NRW/Hesse Notes and Term Loan in the first nine months of 2009. C.6 Income Taxes (note 6) Income taxes includes current tax expenses in amount of 14.1 million and a positive deferred tax impact in the amount of 37.8 million. The positive deferred tax impact is primarily the result of a tax audit conducted in 2009 offset by additional deferred taxes on the valuation of the prepayment options for the fixed rate Unitymedia Notes. The tax audit covered corporate income tax and trade tax with respect to the financial years 2000-2004 for Unitymedia Hessen and Unitymedia NRW and was completed in September 2009. Management determined the outcome of the tax audit to be 1.0 million of additional income taxes and additional loss carry forwards for trade income taxes in the amount of 308.0 million resulting in a deferred tax asset of 48.5 million. The group recognizes deferred tax assets net of any existing tax loss carry forwards based on certain assumptions about the groups future performance and events as well as the groups forecast of taxable income from the operating business. C.7 Available for sale securities (note 7) During the first nine months of 2009, Unitymedia Hessen has acquired shares of the parent company Unitymedia S.C.A. for 43.7 million. These shares are presented at fair value as of the balance sheet date, with the result that an unrealized gain of 23.0 million has been reflected within equity. Considering the absence of an active market for shares of Unitymedia S.C.A. and in accordance with IAS 39, a valuation technique based on International Private Equity and Venture Capital Valuation Guidelines was used to determine fair value of the investment. The valuation technique chosen considered the nature, facts and circumstances of the investment and utilized an earnings multiple approach based primarily on a set of comparable companies that were determined to be similar in terms of business, market, size, risk attributes and earnings growth prospects, as well as a percentage discount to reflect the illiquid nature of the investment. Unitymedia continues to evaluate alternative uses of its liquidity and may, depending on market conditions and other factors, resell all or a portion of its share repurchases and debt buybacks and engage in additional debt and equity buybacks similar to previous buybacks. C.8 Trade accounts receivables (note 8) Trade accounts receivables have decreased from 77.8 million to 30.7 million in the nine months ended September 30, 2009 primarily due to the receipt of cash in-transit as of December 31, 2008 in the amount of 33.7 million as cash collection for a year-end billing cycle occurred in the first week of January 2009. In addition, accounts receivable as of September 30, 2009 were lower in the arena segment following the lower subscriber base as well as in the Cable segment following an improved collections process.

F-15

UNITYMEDIA GMBH, COLOGNE Notes to the Interim Consolidated Financial Statements for the Nine Months Ended September 30, 2009 (continued) C.9 Goodwill and other intangible assets (note 9) Goodwill and other intangible assets decreased from 1,264 million to 1,209 million in the nine months ended September 30, 2009. This is due to recurring amortization of customer contracts. C.10 Bonds, bank liabilities and derivative financial instruments (note 10) C.10.1 Bonds and bank liabilities Bonds and bank liabilities have the following values at the respective balance sheet date:
Sep 30, 2009 December 31, 2008

(in 000)

Bond and bank liabilities Nominal value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transaction costs and FX revaluation of USD 151 million . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bank liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Short-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,699,145 (49,821) 1,649,324 0 21,256 21,256 1,670,580

1,699,145 (49,389) 1,649,756 30,000 42,644 72,644 1,722,400

Short term liabilities as of September 30, 2009 decreased as a result of the 30.0 million repayment of the NRW/Hesse Revolving Credit Facility as described in note 13 as well as interest payments made in January 2009, which remained accrued as of December 31, 2008. The terms and conditions of the Companys long-term liabilities to third parties are further described in the annual consolidated financial statements as of December 31, 2008. C.10.2 Derivative financial instruments Derivative financial instruments have the following values at the respective balance sheet date:
September 30, 2009 Assets Liabilities December 31, 2008 Assets Liabilities

(in 000)

Interest rate swap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepayment options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

26,719 28,248 18,778 18,778 54,967 929 929

13,768 12,845 26,613

The value of the prepayment options increased in the first nine months of 2009 primarily as a result of the lower interest rate levels and yield curve as of September 30, 2009. The value of the swaps was further negative as of September 30, 2009 due to the interest and foreign exchange rate decline in the first nine months of 2009. The terms and conditions of the Companys interest rate swap and foreign currency swap are further described in the annual consolidated financial statements as of December 31, 2008.

F-16

UNITYMEDIA GMBH, COLOGNE Notes to the Interim Consolidated Financial Statements for the Nine Months Ended September 30, 2009 (continued) D Other explanations D.1 Contingent assets, liabilities and financial obligations (note 11) D.1.1 Contingent assets and liabilities At the reporting date no contingent assets existed. The group has contingent liabilities in respect of legal claims arising in the ordinary course of business. It is not anticipated that any material liabilities will arise from the contingent liabilities other than those provided for. D.1.2 Other financial obligations and contractual financial obligations Other financial obligations and contractual financial obligations comprise obligations which are not presented in the balance sheet and which are not contingent liabilities. The following other financial obligations existed at the balance sheet date for capital expenditures in property, plant and equipment and other intangibles:
Sep 30, 2009 December 31, 2008

(in 000)

Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,747 179 3,926

808 1,107 1,915

Furthermore the Company has entered into the following other contractual financial obligations:
Sep 30, 2009 December 31, 2008

(in 000)

Less than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . More than one year and less than five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . More than five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

55,608 5,150 0 60,758

154,813 0 0 154,813

Other contractual financial obligations comprise license costs for copyright fees and other purchase obligations. The future minimum obligations are determined based on contractual obligations to make cash payments in the future and for which no obligations have been included in the balance sheet. Contractually agreed adjustments (such as inflation) are included within the figures mentioned above.

F-17

UNITYMEDIA GMBH, COLOGNE Notes to the Interim Consolidated Financial Statements for the Nine Months Ended September 30, 2009 (continued) D.1.3 Finance leases The following table shows the reconciliation between the future minimum payments and the present value of the leasing liabilities for capitalised finance leases:
Sep 30, 2009 December 31, 2008

(in 000)

Finance leases future minimum lease payments Not later than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Later than one year and not later than five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Later than five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Future minimum lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereof: Finance cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities for finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereof: Not later than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Later than one year and not later than five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Later than five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities for finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,849 7,065 12,542 21,456 (9,729) 11,727 859 3,786 7,082 11,727

1,631 6,718 10,222 18,571 (8,185) 10,386 779 3,962 5,645 10,386

The net carrying amounts of the assets amounts to K12,276 in 2009 (2008: K11,064); thereof K8,360 (2008: K6,448) network leases (broadband cable network) and K3,916 (2008: K4,617) car leases (other plant, furniture and office equipment). D.1.4 Operating leases

The following operating lease contracts with the respective significant leasing arrangements exist within the group:
Lease Terms Terms of renewal Purchase options Contingent rent

Building . . . . . . . . . . . . . . Dark fiber . . . . . . . . . . . . . Colocation area . . . . . . . . Cable ducts . . . . . . . . . . . .

10 years 1 - 20 years 1 - 14 years 10 - 30 years

no 3 months - 1 year 1 months - 1 year 1 - 5 years

no no no no

no no no no

The future minimum lease payments for operating leases are as follows:
Sep 30, 2009 December 31, 2008

(in 000)

Less than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . More than one year and less than five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . More than five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

102,368 379,139 95,099 576,606

105,510 384,278 94,470 584,258

D.2 Related party disclosures (note 12) Shareholders On September 30, 2009, our sole shareholder Unitymedia S.C.A. had 100 shareholders (including Management holders of Class B Shares) and is controlled by investment vehicles controlled by BC Partners

F-18

UNITYMEDIA GMBH, COLOGNE Notes to the Interim Consolidated Financial Statements for the Nine Months Ended September 30, 2009 (continued) (including Finakabel Holdings Limited), Apollo (which includes AP Cable LLC and AP Participations, L.P.), which hold 35.1% and 29.1%, respectively, of the equity interest in Unitymedia S.C.A and 37.7% and 31.5%, respectively, of the equity in Unitymedia S.A. Unitymedia S.C.A. Shares During the first nine months of 2009, Unitymedia Hessen has acquired shares of the parent company Unitymedia S.C.A. for approximately 43.7 million as described in note 7 above. Share based payments As of December 31, 2008, certain members of our management and the board of directors of Unitymedia S.A. or their affiliated companies, respectively, held Class B ordinary shares (Class B Shares) in Unitymedia S.C.A., which in the aggregate represent approximately 7.2 percent of the Unitymedia S.C.A.s outstanding share capital, including options held by the Companys management board over securities of Unitymedia S.C.A. (as discussed below). Subject to time vesting and performance restrictions, the Class B Shares participate in the equity value of Unitymedia S.C.A. above certain thresholds. In August 2009, performance hurdles for performance shares and super-performance shares were removed and reduced from the previous time IRR hurdle from 2005 to time and fixed equity valuation hurdles through the respective vesting schedule, respectively. These changes were made to reflect the unintended consequences of a compounding IRR hurdle from 2005 and to ensure ongoing shareholder alignment. The fair value effect resulting from these changes were zero in both cases. Vesting of Class B Shares will be accelerated upon certain events, including a change of control of Unitymedia S.C.A. The shareholders of Unitymedia S.C.A. have authorized the issuance of additional Class B Shares to other members of our management, which would, including the currently outstanding Class B Shares, represent up to approximately 8.2 percent of Unitymedia S.C.A.s outstanding capital on a fully diluted basis. Certain members of the Companys management board continue to hold options over securities of Unitymedia S.C.A. and Unitymedia S.A., the economics of which have been capped at the point at which Class B Shares received in relation to such cap would begin to participate in the equity value of Unitymedia S.C.A. These economically capped options are subject to the same time and performance vesting restrictions as the associated Class B Shares and represent approximately 2.3 percent, 2.4 percent and 0.8 percent of the respective outstanding capital of Unitymedia S.C.A., Unitymedia S.A. and Unitymedia on a fully diluted basis. Expenses for share based payments for the nine months ended September 30, 2009 amount to 0.2 million (September 30, 2008: 1.3 million). D.3 Explanations regarding the cash flow statement (note 13) Cash and cash equivalents comprise cash on hand and demand deposits. Bank overdrafts which are repayable on demand are also included in cash and cash equivalents. In the first quarter 2008 the indirect shareholding in Premiere AG, Munich, was sold. As a result of the sale cash inflow of 286.1 million was realized. In the cash flow statement the 244.1 million book value of the shares is recognized in cash flow from operating activities as the shares were originated from operating activities. The 42.1 million gain from the increase in the fair value of the shares during the holding period is recognized in cash flow from investing activities as the gain is not incurred by operating activities. Included in the decrease of trade receivables in the first nine months of 2009 are cash collections in the amount of 33.7 million from a year-end billing cycle that occured in the first week of January 2009. In January 2009, Unitymedia repaid 30 million of the NRW/Hesse Revolving Credit Facility, which remained outstanding as of December 31, 2008 to further enhance the Companys financial flexibility and to remain opportunistic with uses of its existing liquidity. During the nine months of 2009, we incurred K1,889 of additions to fixed assets (capital leases).

F-19

UNITYMEDIA GMBH, COLOGNE Notes to the Interim Consolidated Financial Statements for the Nine Months Ended September 30, 2009 (continued) D.4 Segment reporting (note 14) Segment reporting is based on the management approach according to IFRS 8. The segments reported are the Unitymedia Cable and arena Broadcast and Satellite business lines. This segmentation is consistent with our current internal reporting system, which is used for allocating resources to the segments and assessing their performance. Management assesses the performance of the operating segments based on a number of measures, including adjusted EBITDA. This measurement basis excludes the effects of certain non-recurring income and expenditure as well as non-cash expenses for share based payments. The Segment information provided to management is measured in a manner consistent with that in the financial statements. Our legal organization supports this view as the Broadcast and Satellite Business is organized within the legal entity arena, whereas the Unitymedia Cable Business is organized within separate legal entities for the Unitymedia Cable businesses. The following tables disclose the main figures for the segments Cable and arena for the respective periods:
Period from January 1 until Sep 30, 2009 Cable K Arena K Subtotal K Cons. K Total K

Revenues from external customers . . . . . . . . . . . . . . . . . . . . . . . . . . . Intersegment revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization expenses . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment assets (as of Sep 30, 2009) . . . . . . . . . . . . . . . Reportable segment liabilities (as of Sep 30, 2009) . . . . . . . . . . . . Expenditures for non current assets . . . . . . . . . . . . . . . . . . . . . . . . . . Non-recurring items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Share based payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . .
Period from January 1 until Sep 30, 2008

649,003 0 335,114 18,961 (98,139) (212,091) 28,359 72,204 2,470,290 2,125,288 187,440 (3,972) 144 331,286
Cable K

170,720 0 4,996 985 0 (1,826) (4,664) (509) 90,756 34,932 466 11,306 0 16,302
Arena K

819,723 0 340,110 19,946 (98,139) (213,917) 23,695 71,695 2,561,046 2,160,220 187,906 7,334 144 347,588
Subtotal K Cons. K

0 0 0 0 0 0 0 0 0 0 0 0 0 0

819,723 0 340,110 19,946 (98,139) (213,917) 23,695 71,695 2,561,046 2,160,220 187,906 7,334 144 347,588
Total K

Revenues from external customers . . . . . . . . . . . . . . . . . . . . . . . . . . . Intersegment revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization expenses . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment profit (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment assets (as of Sep 30, 2008) . . . . . . . . . . . . . . . Reportable segment liabilities (as of Sep 30, 2008) . . . . . . . . . . . . Expenditures for non current assets . . . . . . . . . . . . . . . . . . . . . . . . . . Non-recurring items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Share based payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . .

597,887 0 294,660 67,320 (113,520) (179,877) (13,990) 54,593 2,387,495 2,107,855 150,300 (1,669) 1,289 294,280

247,911 0 30,769 4,562 (4) (4,382) (8,199) 22,746 167,577 125,282 797 (4,431) 0 26,338

845,798 0 325,429 71,882 (113,524) (184,259) (22,189) 77,339 2,555,072 2,233,137 151,097 (6,100) 1,289 320,618

0 0 0 (4,592) 0 0 0 (4,592) 0 0 0 0 0 0

845,798 0 325,429 67,290 (113,524) (184,259) (22,189) 72,747 2,555,072 2,233,137 151,097 (6,100) 1,289 320,618

F-20

UNITYMEDIA GMBH, COLOGNE Notes to the Interim Consolidated Financial Statements for the Nine Months Ended September 30, 2009 (continued) Cologne, November 9, 2009 Unitymedia GmbH, Cologne

Parm Sandhu Managing Director Chief Executive Officer

Dr. Herbert Leifker Managing Director Chief Commercial Officer

Christopher Winfrey Managing Director Chief Financial Officer

Joachim Grendel Managing Director Chief Operating Officer

F-21

UNITYMEDIA GMBH COLOGNE Audited Consolidated Financial Statements December 31, 2008

F-22

UNITYMEDIA GMBH, COLOGNE CONSOLIDATED INCOME STATEMENT

Notes 2008 K 2007 K 2006 K

CONTINUING OPERATIONS Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Own work capitalized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost of materials and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Personnel expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net profit/(loss) from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DISCONTINUED OPERATIONS (Loss)/Gain for the period from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . Gain from disposal from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Profit/(loss) from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Profit/(loss) for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Attributable to: Equity holders of the parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Profit/(loss) for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 2 3 4 5 6 7 8 9 10

1,161,925 18,082 41,249 -145,633 -104,701 -527,803 443,119 -255,645 187,474 71,267 -153,381 105,360 -19,279 86,081 0 0 0 86,081 86,081 0 86,081

998,964 14,858 44,129 -140,139 -104,074 -522,378 291,360 -230,660 60,700 16,260 -163,159 -86,199 37,432 -48,767 0 0 0 -48,767 -48,767 0 -48,767

665,586 10,776 24,149 -135,290 -91,131 -365,296 108,794 -227,921 -119,127 10,562 -175,438 -284,003 119,411 -164,592 -11,755 9,697 -2,058 -166,650 -172,195 5,545 -166,650

The notes on pages F-31 to F-80 are an integral part of these consolidated financial statements.

F-23

UNITYMEDIA GMBH, COLOGNE CONSOLIDATED BALANCE SHEET

Notes 31/12/2008 K 31/12/2007 K 31/12/2006 K

ASSETS Current assets Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Available for sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trade accounts receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current tax receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepaid expenses and accrued revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non current assets Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Goodwill and other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total non current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . LIABILITIES Current liabilities Bonds and bank liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Short term provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non current liabilities Bonds and bank liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pensions and other long term employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long term provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total non current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shareholders equity Subscribed capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unrealised earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Equity attributable to equity holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total shareholders equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TOTAL LIABILITIES AND EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

27 11 12 13 14

214,936 0 77,819 21,599 9,460 10,972 9,210 343,996

227,058 211,560 69,599 29,815 5,513 8,245 15,484 567,274 862,488 1,269,527 15,747 1,849 21,931 35,438 2,206,980 2,774,254

444,365 0 49,553 20,238 1,445 11,486 16,277 543,364 844,307 1,346,033 8,545 2,690 31,674 31,923 2,265,172 2,808,536

15 16 21 12,13 10

905,461 1,264,429 929 3,651 18,276 24,480 2,217,226 2,561,222

21 18 19 20

72,644 179,125 51,100 31,563 127,836 36,660 498,928

45,067 151,981 81,872 36,694 184,998 35,772 536,384 1,887,444 8,482 22,581 5,561 51,333 0 47,954 2,023,355 12,682 425,294 -26,516 -196,945 214,515 0 214,515 2,774,254

110,822 115,378 52,367 27,114 86,250 36,309 428,240 1,966,612 7,808 18,641 9,241 0 45 91,418 2,093,765 12,682 423,188 -1,159 -148,180 286,531 0 286,531 2,808,536

21 17 21 19 20 10

1,649,756 8,543 26,613 10,577 0 0 44,364 1,739,853

22 22 22 22 22 22

12,682 427,129 -6,506 -110,864 322,441 0 322,441 2,561,222

The notes on pages F-31 to F-80 are an integral part of these consolidated financial statements.

F-24

UNITYMEDIA GMBH, COLOGNE CONSOLIDATED STATEMENT OF CASH FLOWS

Notes 2008 K 2007 K 2006 K

Cash flow from operating activities Profit before interest and taxes (EBIT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other non-cash income (-)/expenses (+) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Losses (+)/ Profits (-) from disposals of property, plant and equipment . . . . . . . . . Gain from disposals of discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Increase (-)/decrease (+) of inventories, trade receivables and other assets not related to investing or financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Increase (+)/decrease (-) of provisions, trade payables and other liabilities not related to investing or financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial expenses paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Proceeds from disposal of Available for sale securities . . . . . . . . . . . . . . . . . . . . . . . Cash flow from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash flow from investing activities Proceeds from disposal of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . Proceeds from disposal of disposal groups (net of disposed cash K 8,073) . . . . . Proceeds from disposal of Available for sale securities . . . . . . . . . . . . . . . . . . . . . . . Investments in tangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investments in intangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investments in the acquisition of subsidiaries (net of cash acquired K 0) . . . . . . . Cash flow from investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash flow from financing activities Repayment of finance lease obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash paid into capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Revolver drawing (+)/ Revolver repayment (-) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Proceeds from loans, bonds or short or long term borrowings . . . . . . . . . . . . . . . . . . Cash repayments of loans or short or long term borrowings . . . . . . . . . . . . . . . . . . . Transaction costs related to financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash flow from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash and cash equivalents at the end of the period Change in cash and cash equivalents from cash relevant transactions . . . . . . . . . . . Cash and cash equivalents at the beginning of the period . . . . . . . . . . . . . . . . . . . . . . Cash and cash equivalents at the end of the period . . . . . . . . . . . . . . . . . . . . . . . .

7 28 15

187,474 255,645 0 -108,186 1,770 0 25,110 -20,048 -24,812 6,658 -144,008 244,032 423,635 29 0 42,052 -186,720 -39,688 -49,076 -233,403 -1,194 0 30,000 0 -231,160 0 -202,354 -12,122 227,058

60,700 230,660 0 -104,489 148 0 1,342 45,831 -5,731 8,065 -155,506 0 81,020 581 0 0 -150,220 -17,306 0 -166,945 -1,557 176 0 0 -130,000 0 -131,381 -217,306 444,364 227,058

-119,126 227,921 -5,545 5,586 -2,521 -9,697 -49,083 116,091 -12,169 2,081 -115,996 0 37,542 12,470 153,529 0 -121,031 -15,796 0 29,172 0 0 0 1,505,000 -1,155,966 -16,298 332,736 399,450 44,914 444,364

27

27 15 15 B.2

22

21

25/27

214,936

The notes on pages F-31 to F-80 are an integral part of these consolidated financial statements.

F-25

UNITYMEDIA GMBH, COLOGNE CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Attributable to equity holders of Unitymedia GmbH Note Subscribed capital Capital reserves K January 1, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Changes in fair value of hedging instruments (net of tax) . . . . . . . . . . . . . . . . . . . . . Revaluation of securities available for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income recognised directly in equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income (loss) of the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total income and expense for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Disposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shareholder contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additions relating to share-based payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 December 31, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Changes in fair value of hedging instruments (net of tax) . . . . . . . . . . . . . . . . . . . . . Revaluation of securities available for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income recognised directly in equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income (loss) of the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total income and expense for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Disposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shareholder contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Additions relating to share-based payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 December 31, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Changes in fair value of hedging instruments (net of tax) . . . . . . . . . . . . . . . . . . . . . Revaluation of securities available for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income recognised directly in equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net income (loss) of the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total income and expense for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Disposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shareholder contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additions relating to share-based payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,682 0 0 0 0 0 0 0 0 0 12,682 0 0 0 0 0 0 0 0 0 12,682 0 0 0 0 0 0 0 0 0 12,682 K 422,048 0 0 0 0 0 0 0 0 1,140 423,188 0 0 0 0 0 0 0 176 1,930 425,294 0 0 0 0 0 0 0 0 1,835 427,129 Cash-flow hedge available for sale Equity attributable Total reserve assets reserve retained earnings to equity holders Minorities Equity K -5,618 4,459 0 4,459 0 0 0 0 0 0 -1,159 7,115 0 7,115 0 0 0 0 0 0 5,956 -12,462 0 -12,462 0 0 0 0 0 0 -6,506 K 0 0 0 0 0 0 0 0 0 0 0 0 -32,472 -32,472 0 0 0 0 0 0 -32,472 0 32,472 32,472 0 0 0 0 0 0 0 K 24,012 0 0 0 -172,192 -172,192 0 0 0 0 -148,180 0 0 0 -48,765 -48,765 0 0 0 0 -196,945 0 0 0 86,081 86,081 0 0 0 0 -110,864 K 453,124 4,459 0 4,459 -172,192 -172,192 0 0 0 1,140 286,531 7,115 -32,472 -25,357 -48,765 -48,765 0 0 176 1,930 214,515 -12,462 32,472 20,010 86,081 86,081 0 0 0 1,835 322,441 K 64,745 0 0 0 5,545 5,545 -66,593 -3,697 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 K 517,869 4,459 0 4,459 -166,647 -166,647 -66,593 -3,697 0 1,140 286,531 7,115 -32,472 -25,357 -48,765 -48,765 0 0 176 1,930 214,515 -12,462 32,472 20,010 86,081 86,081 0 0 0 1,835 322,441

F-26

The notes on pages F-31 to F-80 are an integral part of these consolidated financial statements.

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements A General B Summary of significant accounting policies B.1 Basis of presentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B.2 Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B.3 Segment reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B.4 Accounting and valuation methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B.4.1 Special accounting and valuation methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B.4.2 Critical judgments in applying the groups accounting policies and critical accounting estimates and judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C Explanations of the Income Statement and the Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.1 Revenue (note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.2 Own work capitalized (note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.3 Other income (note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.4 Cost of materials and services (note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.5 Personnel expenses (note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.6 Other expenses (note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.7 Depreciation and amortization expenses (note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.8 Financial income (note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.9 Financial expenses (note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.10 Income taxes (note 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.11 Available for sale securities (note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.12 Trade accounts receivables (note 12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.13 Other receivables (note 13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.14 Inventories (note 14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.15 Property, plant and equipment (note 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.16 Goodwill and other intangible assets (note 16) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.17 Pensions and other long-term employee benefits (note 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.18 Other liabilities (note 18) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.19 Deferred income (note 19) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.20 Provisions (note 20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.21 Bonds, facilities and derivative financial instruments (note 21) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.21.1 Bonds and bank liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.21.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.21.3 Derivative financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C.22 Shareholders equity (note 22) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D Other explanations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D.1 Contingent assets, liabilities and financial obligations (note 23) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D.1.1 Contingent assets and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D.1.2 Other financial obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D.1.3 Finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D.1.4 Operating leases and other financial commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D.2 Related parties (note 24) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D.3 Financial instruments and risk management (note 25) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D.3.1 Carrying amounts, fair values and net result of financial instruments . . . . . . . . . . . . . . . . . . D.3.2 Risk management of financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D.3.3 Liquidity risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D.3.4 Currency risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D.3.5 Interest rate risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D.3.6 Risks of change in prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D.3.7 Credit risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D.3.8 Fair market value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D.3.9 Capital Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D.4 Events after the balance sheet date (note 26) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D.5 Explanations regarding the cash flow statement (note 27) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D.6 Segment reporting (note 28) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D.7 Disclosures according to German GAAP (note 29) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-31 F-31 F-31 F-36 F-38 F-38 F-38 F-45 F-46 F-46 F-48 F-48 F-48 F-49 F-49 F-49 F-50 F-50 F-51 F-52 F-53 F-54 F-54 F-55 F-59 F-60 F-62 F-62 F-62 F-63 F-63 F-64 F-64 F-65 F-66 F-66 F-66 F-66 F-66 F-67 F-67 F-71 F-71 F-73 F-73 F-74 F-74 F-75 F-75 F-76 F-76 F-77 F-77 F-77 F-80

F-27

LIST OF ABBREVIATIONS 2006 Refinancing

.......................

The issuance by Unitymedia Hessen and Unitymedia NRW of the NRW/Hesse Notes that mature on April 15, 2013, and replacement of the undrawn 100.0 million revolving credit facility with the NRW/ Hesse Revolving Credit Facility, available to Unitymedia Hessen, Unitymedia NRW and arena. The proceeds from the offering of the NRW/Hesse Notes were used to refinance our 1,050.0 million Senior Credit Facilities, to finance the payment by Unitymedia to Unitymedia S.C.A. of the deferred purchase price for the Tele Columbus shares and to cash collateralize a portion of the DFL bank guarantee. Apollo Management V, L.P., New York, NY/U.S.A.

Apollo

..................................

arena . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Arena Sport Rechte und Marketing GmbH, Cologne arensaSAT

.............................. .............................

satellite operations of arena BC Partners Limited, London, United Kingdom

BC Partners

Bundesliga Rights . . . . . . . . . . . . . . . . . . . . . . . Rights to broadcast the matches of the 1st and 2nd German Football Leage (Deutsche Fuball Liga) Company CPE DFL
...............................

See Unitymedia Customer Premise Equipment Deutsche Fuball Liga GmbH, Frankfurt am Main Bank guarantee, which for the first and second Bundesliga season was provided by Citigroup Global Markets Limited in connection with arenas obligations under its agreement with DFL regarding the Bundesliga programming rights Deutsche Telekom AG, Bonn Earnings before interest and tax Earnings before interest, tax, depreciation and amortization Earnings before tax

.................................... .................................... ...................

DFL Bank Guarantee

DTAG EBIT

.................................. ................................... ................................

EBITDA EBT

....................................

EU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . European Union EUR

.................................... ................................. ...............................

Euro currency European Inter Bank Offered Rate Prior financing of our group, consisting of a 360.0 million subordinated bridge facility entered into on June 21, 2005, as well as the Senior Credit Facilities consisting of a 225.0 million term loan A facility, a 250.0 million (incremental) term loan B facility, a 375.0 million term loan C facility, and a 70.0 million (incremental) revolving credit facility Federal Cartel Office, the German Bundeskartellamt

Euribor

Financing

FCO

....................................

German GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . Generally Accepted Accounting Principles in Germany (HGB)

F-28

HGB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . German Commercial Code (Handelsgesetzbuch) Housing associations

....................

Public property investors, public property owners, property management firms and financial investors International Accounting Standards International Accounting Standards Board

IAS

..................................... ...................................

IASB

IFRIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . International Financial Reporting Interpretation Committee IFRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . International Financial Reporting Standards In-Region assets
........................

Assets and liabilities related to the regions North Rhine Westphalia and Hesse within the previous Tele Columbus group Kabelnetz NRW HoldCo GmbH Kabelnetz NRW Limited Cable network business of the group of companies controlled by Kabel Baden-Wrttemberg GmbH & Co. KG, Heidelberg

Kabelnetz

............................... ..........................

Kabelnetz Ltd. KBW

...................................

KDG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cable network business of the group of companies controlled by Kabel Deutschland GmbH, Unterfhring K
......................................

Thousand EUR

M . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Million EUR MEP

....................................

Management Equity Participation programs

MSG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Kabel Deutschland Breitband Services GmbH (formerly MSG MediaServices GmbH), a subsidiary of KDG NRW/Hesse Notes
......................

1,350,000,000 senior secured floating rate notes due 2013 issued by Unitymedia Hessen and Unitymedia NRW 130.0 million revolving credit facility issued during the 2006 Refinancing Assets and liabilities related to the regions of Tele Columbus excluding North Rhine Westphalia and Hesse Pictet & Cie. Banquiers, Geneva, Switzerland Premiere AG, Unterfhring PrimaCom AG, Mainz Transfer Loan Agreement between Unitymedia to Unitymedia Hesse of USD 151 million from the Unitymedia New Senior Notes The offering by Unitymedia of the Notes and the entering into of the 230.0 million senior credit facilities consisting of a 200.0 million term loan facility and a 30.0 million revolving credit facility Senior credit facilities entered into in connection with the Refinancing and Financing

NRW/Hesse Revolving Credit Facility

..

Out-of-Region assets

....................

Pictet

................................... ................................ .............................. ..........................

Premiere

PrimaCom

Proceeds Loan

Refinancing

.............................

Senior Credit Facilities

..................

F-29

SIC

.....................................

Standards Interpretation Committee

Tele Columbus Group . . . . . . . . . . . . . . . . . . . Tele Columbus Kabel Holding GmbH, Hannover and its subsidiaries Term Loan
..............................

100 million Senior Secured Term Loan Facility maturing in October 2011 entered into by the Unitymedia group companies Unitymedia Hessen, Unitymedia NRW and arena on October 20, 2006

Unitymedia, we, us, our, the Company and other similar terms . . .

Unitymedia GmbH, Cologne (formerly Unity Media GmbH or iesy Repository GmbH, respectively) and its consolidated subsidiaries, except where the context otherwise requires. Unitymedia Aachen GmbH, Cologne, formerly PrimaCom Aachen GmbH, Mainz, which was renamed December 30, 2008

Unitymedia Aachen

.....................

Unitymedia Cable . . . . . . . . . . . . . . . . . . . . . . . Cable business of Unitymedia, including primarily operations of Unitymedia Hessen, Unitymedia NRW and Unitymedia Services, excluding Tele Columbus Out of Region assets and arena Unitymedia GmbH . . . . . . . . . . . . . . . . . . . . . . Unitymedia GmbH, Cologne (formerly Unity Media GmbH) Unitymedia Group Unitymedia Hessen
...................... .....................

Unitymedia GmbH, Cologne and its subsidiaries Unitymedia Hessen GmbH & Co. KG (formerly iesy Hessen GmbH & Co. KG), Cologne, which was renamed Unitymedia Hessen GmbH & Co. KG on May 14, 2007 Unitymedia Hessen Verwaltung GmbH (fomerly iesy Hessen FinanyManagement GmbH), Cologne, which was renamed on May 22, 2007 Unitymedia Management GmbH (formerly Unity Media Management GmbH), Cologne, was renamed Unitymedia Management GmbH on September 10, 2008. 235 million 10 1 8% senior notes of the Company due 2015 and $151 million 10 3 8% senior notes of the Company due 2015

Unitymedia Hessen Verwaltung

.........

Unitymedia Management

...............

Unitymedia New Senior Notes

..........

Unitymedia Notes . . . . . . . . . . . . . . . . . . . . . . . The Unitymedia Senior Notes and Unitymedia New Senior Notes Unitymedia NRW . . . . . . . . . . . . . . . . . . . . . . . Unitymedia NRW GmbH, Cologne (formerly: ish NRW GmbH, Cologne) Unitymedia S.A.
........................ ......................

Unity Media Management S.A., Luxembourg Unity Media S.C.A., Luxembourg

Unitymedia S.C.A.

Unitymedia Senior Notes . . . . . . . . . . . . . . . . 215 million 8 3 4% senior notes of the Company due 2015 that were offered by Unitymedia as part of the Refinancing in February 2005 Unitymedia Services
....................

Unitymedia Services GmbH, Cologne (formerly: Unitymedia Services Verwaltungs GmbH or: Tele Columbus West Beteiligungs GmbH, which was renamed on August 22, 2008 and October 5, 2007 respectively ; as well its underlying operating business Unitymedia Services GmbH & Co. KG or Tele Columbus West GmbH & Co. KG, which was renamed on August 6, 2007, respectively) Unitymedia Wiesbaden GmbH, Cologne, (formerly PrimaCom Region Wiesbaden GmbH), Mainz, which was renamed January 6, 2009 United States Dollar

Unitymedia Wiesbaden

.................

USD

....................................

F-30

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements A General The Unitymedia group is the second largest cable operator in Germany operating in the German states of Hesse and North Rhine-Westphalia. The group provides basic and premium cable television services, as well as internet access and telephony services to its customers. Its subsidiary arena acquired certain Bundesliga programming rights for three seasons starting with the 2006/2007 season. These rights were sublicensed in 2007 to Premiere for the remaining two seasons in 2007/08 and 2008/09. Unitymedias headoffice is located in Cologne, Germany. The address is Aachener Strae 746-750, Cologne. The Company changed its name from Unity Media GmbH to Unitymedia GmbH on January 5, 2009. The company has issued the Unitymedia Notes on the official market and the NRW/Hesse notes on the alternative securities market of the Irish Stock Exchange. The consolidated financial statements were released for publication by the managing directors on March 09, 2009. B Summary of significant accounting policies The principal accounting policies applied in preparing these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. B.1 Basis of presentation The consolidated financial statements of Unitymedia for the three years ended December 31, 2008, 2007 and 2006 have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), London, and adopted by the European Union (EU) and applicable to the company and the additional requirements of German Commercial Law pursuant to Sec. 315 a (3) German Commercial Code. The consolidated financial statements comprise the consolidated balance sheet, the consolidated income statement, the consolidated statement of cash flows, the consolidated statement of changes in equity and the notes. The Notes include the segment reporting. The presentation currency of the group financial statements is Euro. All amounts are presented in K unless otherwise stated. The reporting date of the consolidated financial statements is December 31, 2008, which is in line with the reporting date of all group entities. Receivables and liabilities to related parties are presented in 2008 within other receivables (note 13) respectively other liabilities (note 18) whereas in the group financial statements 2007 they have been presented separately on the balance sheet. The Companys consolidated income statement has been prepared using the nature of expenses method under IFRS. The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of available for sale securities, financial assets and liabilities (including financial instruments) and expenses related to the MEP. Operating performance is measured based on EBITDA (Earnings before interest, tax, depreciation and amortization) and adjusted EBITDA. We define EBITDA as profit before income taxes and financial result as well as amortization and depreciation expenses. Adjusted EBITDA excludes certain non recurring items and non-cash share based expenses. EBITDA and Adjusted EBITDA are not recognized measures in accordance with EU-IFRS and should not be viewed as a substitute for net earnings. Our income statement also shows the performance figures EBIT (Earnings before Interest and tax) as well as EBT (Earnings before tax) for information purposes. However Adjusted EBITDA is the key performance figure used by management to measure the Companys operating performance.

F-31

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) (a) Interpretations effective in 2008

IFRIC 14, IAS 19 The limit on a defined benefit asset, minimum funding requirements and their interaction, provides guidance on assessing the limit in IAS 19 on the amount of the surplus that can be recognized as an asset. It also explains how the pension asset or liability may be affected by a statutory or contractual minimum funding requirement. This interpretation does not have any impact on the groups financial statements, as the group has a pension deficit and is not subject to any minimum funding requirements. IFRIC 11, IFRS 2 Group and treasury share transactions, provides guidance on whether share-based transactions involving treasury shares or involving group entities (for example, options over a parents shares) should be accounted for as equity-settled or cash-settled share-based payment transactions in the stand-alone accounts of the parent and group companies. This interpretation does not have an impact on the groups financial statements. b) 2008 standards and amendments previously adopted by the group

IFRS 8, Operating segments, was previously adopted in 2006. IFRS 8 replaces IAS 14, Segment reporting, and aligns segment reporting with the requirements of the US standard SFAS 131, Disclosures about segments of an enterprise and related information. The new standard requires a management approach, under which segment information is presented on the same basis as that used for internal reporting purposes. c) Interpretations effective in 2008 but not relevant for the group. IFRIC 12, Service concession arrangements d) Standards, amendments and interpretations to existing standards that are not yet effective and have not been previously adopted by the group: The following standards and amendments to existing standards have been published and are mandatory for the groups accounting periods beginning on or after 1 January 2009 or later periods, but the group has not adopted them in advance: IAS 23 (Amendment), Borrowing costs (effective from 1 January 2009). The amendment requires an entity to capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (one that takes a substantial period of time to get ready for use or sale) as part of the cost of that asset. The option of immediately expensing those borrowing costs will be removed. The group will apply IAS 23 (Amendment) from 1 January 2009. The amendment is currently not applicable to the group as there are no qualifying assets. IAS 1 (Revised), Presentation of financial statements (effective from 1 January 2009). The revised standard will prohibit the presentation of items of income and expenses (that is, non-owner changes in equity) in the statement of changes in equity, requiring non-owner changes in equity to be presented separately from owner changes in equity. All non-owner changes in equity will be required to be shown in a performance statement, but entities can choose whether to present one performance statement (the statement of comprehensive income) or two statements (the income statement and statement of comprehensive income). Where entities restate or reclassify comparative information, they will be required to present a restated balance sheet as at the beginning comparative period in addition to the current requirement to present balance sheets at the end of the current period and comparative period. The group will apply IAS 1 (Revised) from 1 January 2009. It is likely that both the income statement and statement of comprehensive income will be presented as performance statements. IFRS 2 (Amendment), Share-based payment (effective from 1 January 2009). The amended standard deals with vesting conditions and cancellations. It clarifies the definition of vesting conditions as service conditions and performance conditions. Other features of a share-based payment are not vesting conditions. These features would need to be included in the grant date fair value for transactions with employees and others providing similar services; they would not impact the number of awards expected to vest or valuation thereof subsequent to grant date. All cancellations, whether by the entity or by other parties, should receive the same accounting treatment. The group will apply IFRS 2 (Amendment) from 1 January 2009. It is not expected to have a material impact on the groups financial statements.

F-32

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) IAS 32 (Amendment), Financial instruments: Presentation, and IAS 1 (Amendment), Presentation of financial statements Puttable financial instruments and obligations arising on liquidation (effective from 1 January 2009). The amended standards require entities to classify puttable financial instruments and instruments, or components of instruments that impose on the entity an obligation to deliver to another party a pro rata share of the net assets of the entity only on liquidation as equity, provided the financial instruments have particular features and meet specific conditions. The group will apply IAS 32 and IAS 1(Amendment) from 1 January 2009. It is not expected to have an impact on the groups financial statements. IFRS 1 (Amendment) First time adoption of IFRS, and IAS 27 Consolidated and separate financial statements(effective from 1 January 2009). The amended standard allows first-time adopters to use a deemed cost of either fair value or the carrying amount under previous accounting practice to measure the initial cost of investments in subsidiaries, jointly controlled entities and associates in the separate financial statements. The amendment also removes the definition of the cost method from IAS 27 and replaces it with a requirement to present dividends as income in the separate financial statements of the investor. The group will apply IFRS 1 (Amendment) from 1 January 2009. The amendment will not have an impact on the groups financial statements. IAS 27 (Revised), Consolidated and separate financial statements, (effective from 1 July 2009). The revised standard requires the effects of all transactions with no controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. The standard also specifies the accounting when control is lost. Any remaining interest in the entity is re-measured to fair value, and a gain or loss is recognized in profit or loss. The group will apply IAS 27 (Revised) prospectively to transactions with non-controlling interests from 1 January 2010. IFRS 3 (Revised), Business combinations (effective from 1 July 2009). The revised standard continues to apply the acquisition method to business combinations, with some significant changes. For example, all payments to purchase a business are to be recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through the income statement. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquire either at fair vale or at the non-controlling interests proportionate share of the acquirers net assets. All acquisition-related costs should be expensed. The group will apply IFRS 3 (Revised) to all future business combinations from 1 January 2010. IFRS 5 (Amendment), Non-current assets held-for-sale and discontinued operations (and consequential amendment to IFRS 1, First-time adoption) (effective from 1 July 2009). The amendment is part of the IASBs annual improvements project published in May 2008. The amendment clarifies that all of a subsidiarys assets and liabilities are classified as held for sale if a partial disposal sale plan results in loss of control. Relevant disclosure should be made for this subsidiary if the definition of a discontinued operation is met. A consequential amendment to IFRS 1 states that these amendments are applied prospectively from the date of transition to IFRSs. The group will apply IFRS 5 (Amendment) to all future partial disposals of subsidiaries from 1 January 2010. IAS 23 (Amendment), Borrowing costs (effective from 1 January 2009). The amendment is part of the IASBs annual improvements project published in May 2008. The definition of borrowing costs has been amended so that interest expense is calculated using the effective interest method defined in IAS 39 Financial instruments: Recognition and measurement. This eliminates the inconsistency of terms between IAS 39 and IAS 23. The group will apply IAS 23 (Amendment) to the capitalization of borrowing costs on qualifying assets from 1 January 2009. IAS 28 (Amendment), Investments in associates (and consequential amendments to IAS 32, Financial Instruments: Presentation, and IFRS 7, Financial instruments: Disclosures) (effective from 1 January 2009). The amendment is part of the IASBs annual improvements project published in May 2008. An investment in associate is treated as a single asset for the purposes of impairment testing. Any impairment loss is not allocated to specific assets included within the investment, for example, goodwill. Reversals of impairment are recorded as an adjustment to the investment balance to the extent that the recoverable amount of the associate increases. The group will apply IAS 28 (Amendment) to impairment tests related to investments in subsidiaries and any related impairment losses from 1 January 2009.

F-33

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) IAS 36 (Amendment), Impairment of assets (effective from 1 January 2009). The amendment is part of the IASBs annual improvements project published in May 2008. Where fair value less costs to sell is calculated on the basis of discounted cash flows, disclosures equivalent to those for value-in-use calculation should be made. The group will apply IAS 28 (Amendment) and provide the required disclosure where applicable for impairment tests from 1 January 2009. IAS 38 (Amendment), Intangible assets (effective from 1 January 2009). The amendment is part of the IASBs annual improvements project published in May 2008. A prepayment may only be recognised in the event that payment has been made in advance of obtaining right of access to goods or receipt of services. IAS 19 (Amendment), Employee benefits (effective from 1 January 2009). The amendment is part of the IASBs annual improvements project published in May 2008.

The amendment clarifies that a plan amendment that results in a change in the extent to which benefit promises are affected by future salary increases is a curtailment, while an amendment that changes benefits attributable to past service gives rise to a negative past service cost if it results in a reduction in the present value of the defined benefit obligation. The definition of return on plan assets has been amended to state that plan administration costs are deducted in the calculation of return on plan assets only to the extent that such costs have been excluded from measurement of the defined benefit obligation. The distinction between short term and long term employee benefits will be based on whether benefits are due to be settled within or after 12 months of employee service being rendered. IAS 37, Provisions, contingent liabilities and contingent assets, requires contingent liabilities to be disclosed, not recognised. IAS 19 has been amended to be consistent.

The group will apply IAS 19 (Amendment) from 1 January 2009. IAS 39 (Amendment), Financial instruments: Recognition and measurement (effective from 1 January 2009). The amendment is part of the IASBs annual improvements project published in May 2008.

This amendment clarifies that movements are possible into and out of the fair value through profit or loss category where a derivative commences or ceases to qualify as a hedging instrument in a cash flow or net investment hedge. The definition of financial asset or financial liability at fair value through profit or loss as it relates to items that are held for trading is also amended. The current guidance on designating and documenting hedges states that a hedging instrument needs to involve a party external to the reporting entity and cites a segment as an example of a reporting entity. This means that in order for hedge accounting to be applied at segment level, the requirements for hedge accounting are currently required to be met by the applicable segment. The amendment removes the example of a segment so that the guidance is consistent with IFRS 8, Operating segments, which requires disclosure for segments to be based on information reported to the chief operating decisionmaker. When remeasuring the carrying amount of a debt instrument on cessation of fair value hedge accounting, the amendment clarifies that a revised effective interest rate (calculated at the date fair value hedge accounting ceases) are used.

The group will apply the IAS 39 (Amendment) from 1 January 2009. It is not expected to have an impact on the groups income statement. IAS 1 (Amendment), Presentation of financial statements (effective from 1 January 2009). The amendment is part of the IASBs annual improvements project published in May 2008. The amendment clarifies that some

F-34

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) rather than all financial assets and liabilities classified as held for trading in accordance with IAS 39, Financial instruments: Recognition and measurement are examples of current assets and liabilities respectively. The group will apply IAS 39 (Amendment) from 1 January 2009. It is not expected to have an impact on the groups financial statements. There are a number of minor amendments to IFRS 7, Financial instruments: Disclosures, IAS 8, Accounting policies, changes in accounting estimates and errors, IAS 10, Events after the reporting period, IAS 18, Revenue and IAS 34, Interim financial reporting, which are part of the IASBs annual improvements project published in May 2008 (not addressed above). These amendments are unlikely to have an impact on the groups accounts and have therefore not been analyzed in detail. IFRIC 16, Hedges of a net investment in a foreign operation (effective from 1 October 2008). IFRIC 16 clarifies the accounting treatment in respect of net investment hedging. This includes the fact that net investment hedging relates to differences in functional currency not presentation currency, and hedging instruments may be held anywhere in the group. The requirements of IAS 21, The effects of changes in foreign exchange rates, do apply to the hedged item. The group will apply IFRIC 16 from 1 January 2009. It is not expected to have a material impact on the groups financial statements. e) Interpretations and amendments to existing standards that are not yet effective and not relevant for the groups operations The following interpretations and amendments to existing standards have been published and are mandatory for the groups accounting periods beginning on or after 1 January 2009 or later periods but are not relevant for the groups operations: IFRIC 13, Customer loyalty programmes (effective for annual periods beginning after 1 July 2008). IFRIC 13 clarifies that where goods or services are sold together with a customer loyalty incentive (for example, loyalty points or free products), the arrangement is a multiple element arrangement, and the consideration receivable from the customer is allocated between the components of the arrangement using fair values. IFRIC 13 is not expected to have a material impact on the groups financial statements. IAS 16 (Amendment), Property, plant and equipment (and consequential amendment to IAS 7, Statement of cash flows) (effective from 1 January 2009). The amendment is part of the IASBs annual improvements project published in May 2008. Entities whose ordinary activities comprise renting and subsequently selling assets present proceeds from the sale of those assets as revenue and should transfer the carrying amount of the asset to inventories when the asset becomes held for sale. A consequential amendment to IAS 7 states that cash flows arising from purchase, rental and sale of those assets are classified as cash flows from operating activities. The amendment will not have an impact on the groups operations because none of the groups companies ordinary activities comprise renting and subsequently selling assets. IAS 27 (Amendment), Consolidated and separate financial statements (effective from 1 January 2009). The amendment is part of the IASBs annual improvements project published in May 2008. Where an investment in a subsidiary that is accounted for under IAS 39, Financial instruments: recognition and measurement, is classified as held for sale under IFRS 5, Non-current assets held-for-sale and discontinued operations, IAS 39 would continue to be applied. The amendment will not have an impact on the groups operations because it is the groups policy for an investment in subsidiary to be recorded at cost in the standalone accounts of each entity. IAS 28 (Amendment), Investments in associates (and consequential amendments to IAS 32, Financial Instruments: Presentation and IFRS 7, Financial instruments: Disclosures) (effective from 1 January 2009). The amendment is part of the IASBs annual improvements project published in May 2008. Where an investment in associate is accounted for in accordance with IAS 39 Financial instruments: recognition and measurement, only certain rather than all disclosure requirements in IAS 28 need to be made in addition to disclosures required by IAS 32, Financial Instruments: Presentation and IFRS 7 Financial Instruments: Disclosures. The amendment will not have an impact on the groups operations as there are no investments held in associates. IAS 29 (Amendment), Financial reporting in hyperinflationary economies (effective from 1 January 2009). The amendment is part of the IASBs annual improvements project published in May 2008. The guidance has

F-35

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) been amended to reflect the fact that a number of assets and liabilities are measured at fair value rather than historical cost. The amendment will not have an impact on the groups operations, as none of the groups subsidiaries operate in hyperinflationary economies. IAS 31 (Amendment), Interests in joint ventures (and consequential amendments to IAS 32 and IFRS 7) (effective from 1 January 2009). The amendment is part of the IASBs annual improvements project published in May 2008. Where an investment in joint venture is accounted for in accordance with IAS 39, only certain rather than all disclosure requirements in IAS 31 need to be made in addition to disclosures required by IAS 32, Financial instruments: Presentation, and IFRS 7 Financial instruments: Disclosures. The amendment will not have an impact on the groups operations as there are no interests held in joint ventures. IAS 38 (Amendment), Intangible assets (effective from 1 January 2009). The amendment is part of the IASBs annual improvements project published in May 2008. The amendment deletes the wording that states that there is rarely, if ever support for use of a method that results in a lower rate of amortization than the straightline method. The amendment will not have an impact on the groups operations, as all intangible assets are amortised using the straight-line method. IAS 40 (Amendment), Investment property (and consequential amendments to IAS 16) (effective from 1 January 2009). The amendment is part of the IASBs annual improvements project published in May 2008. Property that is under construction or development for future use as investment property is within the scope of IAS 40. Where the fair value model is applied, such property is, therefore, measured at fair value. However, where fair value of investment property under construction is not reliably measurable, the property is measured at cost until the earlier of the date construction is completed and the date at which fair value becomes reliably measurable. The amendment will not have an impact on the groups operations, as there are no investment properties are held by the group. IAS 41 (Amendment), Agriculture (effective from 1 January 2009). The amendment is part of the IASBs annual improvements project published in May 2008. It requires the use of a market-based discount rate where fair value calculations are based on discounted cash flows and the removal of the prohibition on taking into account biological transformation when calculating fair value. The amendment will not have an impact on the groups operations as no agricultural activities are undertaken. IAS 20 (Amendment), Accounting for government grants and disclosure of government assistance (effective from 1 January 2009). The benefit of a below market rate government loan is measured as the difference between the carrying amount in accordance with IAS 39, Financial instruments: Recognition and measurement, and the proceeds received with the benefit accounted for in accordance with IAS 20. The amendment will not have an impact on the groups operations as there are no loans received or other grants received from the government. The minor amendments to IAS 20 Accounting for government grants and disclosure of government assistance, and IAS 29, Financial reporting in hyperinflationary economies, IAS 40, Investment property, and IAS 41, Agriculture, which are part of the IASBs annual improvements project published in May 2008 (not addressed above). These amendments will not have an impact on the groups operations as described above. IFRIC 15, Agreements for construction of real estates (effective from 1 January 2009). The interpretation clarifies whether IAS 18, Revenue, or IAS 11, Construction contracts, should be applied to particular transactions. It is likely to result in IAS 18 being applied to a wider range of transactions. IFRIC 15 is not relevant to the groups operations as all revenue transactions are accounted for under IAS 18 and not IAS 11. B.2 Consolidation Subsidiaries Subsidiaries are all entities over which the company has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the group controls another entity. Subsidiaries are fully consolidated from the day on which control is transferred to the group. They are de-consolidated from the date that control ceases.

F-36

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) The purchase method of accounting is used to account for the acquisition of subsidiaries by the group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the groups share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement. Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated. In addition to Unitymedia GmbH, the parent company, the following subsidiaries are included in the consolidated financial statements according to the principles of full consolidation.
Name of company Headquarter Country Share of equity % (1)

Unitymedia Management GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unitymedia Hessen Verwaltung GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unitymedia Hessen GmbH & Co. KG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unitymedia NRW GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iesy Hessen Beteiligungs-GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tele Columbus Holding GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unitymedia Services GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unitymedia Wiesbaden GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unitymedia Aachen GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iesy Hessen Verwaltungs-GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Arena Sport Rechte und Marketing GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cologne Cologne Cologne Cologne Cologne Hannover Cologne Cologne Cologne Cologne Cologne

Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

(1) % in 2008 and 2007 except for Unitymedia Wiesbaden GmbH and Unitymedia Aachen GmbH which have been acquired in 2008.

Changes in scope of consolidation in 2008 and 2007 Acquisition of PrimaCom entities On August 31, 2008, following Bundeskartellamt (FCO) review, Unitymedia Hessen GmbH & Co. KG acquired 100% of the voting rights of the entities Unitymedia Aachen GmbH and Unitymedia Wiesbaden GmbH, which contain PrimaComs networks in Aachen (North Rhine Westphalia) and Wiesbaden (Hesse) serving a total of approximately 100,000 cable television subscribers. The acquisition costs for acquiring the shares are as following:
K

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transfer of intercompany liability to Unitymedia Hessen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Directly attributable costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

48,507 11,190 621 60,318

F-37

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) The following table reflects the amounts recognized at the acquisition date for each class of the acquirees assets and liabilities and the carrying amounts of each of those classes determined in accordance with IFRS, immediately before the combination.
Class of assets/liabilities of PrimaCom Amount in PPA (1) K Carrying value before PPA (1) K Reserves K

Tangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bank liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Purchase Price / Net equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,519 25,290 32,473 14,358 0 76,640 0 -9,578 -6,744 -16,322 60,318

2,561 0 2,090 14,358 0 19,009 0 0 -5,075 -5,075 13,934

1,958 25,290 30,383 0 0 57,631 0 -9,578 -1,669 -11,247 46,384

(1) PPA = Purchase Price Allocation

Goodwill contains synergy effects and intangible assets which do not fulfill the requirements for being capitalized as an intangible asset. Other intangible assets contain mainly the customer base of PrimaCom in Aachen and Wiesbaden. Since the acquisition date the acquirees profit contributed K 1,012 to the consolidated profit & loss statement. If the acquisition date had been at the beginning of the reporting period revenue would amount to 1,165.7 million and profit would amount to 86.7 million. B.3 Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources to and assessing performance of the operating segment, has been identified as the groups management board that makes strategic decisions. B.4 Accounting and valuation methods B.4.1 Special accounting and valuation methods Property, plant and equipment Property, plant and equipment are measured at initial cost after deducting any accumulated depreciation or accumulated impairment losses. Impairment losses are reversed if the reasons for the impairment loss no longer exist or the impairment loss has decreased. The initial cost comprises its purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Borrowing costs, if applicable, are recognized as expenses in the period they are incurred and are not capitalized within the initial cost. Property, plant and equipment is generally amortized on a straight line basis over a period of 3 to 23 years. The cable network has an estimated useful life ranging from 15 to 20 years. The cable network infrastructure comprises technical equipment with estimated useful life ranging from 8 to 15 years.

F-38

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) The estimated useful lives are reviewed on an annual basis. Adjustments are recognized at the new basis going forward. Property, plant and equipment is impaired when there is a corresponding indication for the impairment. Impairment exists when the carrying value exceeds the recoverable amount. The recoverable amount is the higher amount between fair value less costs to sell and value in use. The impairment test is generally based on a single asset. Subsequent costs are included in the assets carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will be achieved and when the cost can be measured reliably. The carrying amount of the replaced item is derecognized. All other expenditures for repairs and maintenance are expensed as incurred. Profits and losses due to disposals are recognized within other income or expenses, respectively. Intangible assets Intangible assets acquired in a separate acquisition are measured at initial cost. Intangible assets acquired within a business combination are measured at fair value. Internally developed software is capitalized and measured at initial costs, if certain requirements are fulfilled. The amortization of intangible assets with definite useful lives is based on the straight line method over the assets estimated useful life (1 to 15 years). Amortization begins when the asset is ready for use. The estimated useful life of customer contracts is based on the average number of terminations or churn or if shorter the remaining contract terms with the Suppliers who have the contractual relationship with the subscriber units (Gestattungsvertrge). Customer contracts acquired within a business combination are amortized generally over 10 to 20 years. Unitymedia recognizes subscriber acquisition costs incurred to obtain new subscribers as an intangible asset if the costs directly attributable to obtaining specific contracts are incremental, payable to a third party, can be measured reliably and meet the definition and recognition criteria of an intangible asset in accordance with IAS 38. Unitymedia amortizes these costs over the initial contract period, which lasts from 1 to 2 years. Goodwill and other intangible assets with an indefinite life are not amortized on a straight line basis but tested for impairment on an annual basis. Straight line amortization and impairment losses are presented within depreciation and amortization expenses in the income statement. The estimated useful lives are reviewed on an annual basis. Adjustments are recognized prospectively at the new basis going forward. The impairment test of goodwill is done based on the respective cash generating units. The cash generating units are determined by the operating segments Unitymedia Cable and arena Satellite and Broadcasting. Profits and losses due to disposals are recognized within other income or expenses, respectively. Leasing Lease contracts according to IAS 17 can be divided into operating lease contracts and finance lease contracts. In the case of finance leases, the main risks and rewards are allocated to the lessee and therefore the leased asset has to be capitalized in the financial statements of the lessee. Assets leased under finance leases are recorded at the lower of fair value at the inception of the lease or the present value of the lease payments. The

F-39

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) assets are depreciated using the straight line method over the shorter of the estimated useful life or over the lease period. The obligations related to future lease payments are recognized as liabilities. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. A lease is accounted for as an operating lease if the main risks and rewards incidental to ownership of the leased item remain with the lessor. Operating lease payments are therefore recognized as incurred. During 2008, finance leases for broadband cable network fiber upgrades were capitalized. In order to receive digital TV and broadband services, Unitymedia leases the necessary CPE to customers. These leases for which the company is the lessor, are classified as an operating lease. Therefore, Unitymedia capitalizes the CPE as fixed assets based on the acquisition cost. The CPE is depreciated over the estimated useful life of 3-8 years with the customer, using the straight line method. Inventories Inventories are measured at the lower of cost or net realizable value. Cost of inventories is determined using the weighted average cost method. Net realizable value is the estimated selling price in the ordinary course of business, less applicable variable selling costs. Financial assets Classification The group classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, and available for sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. (a) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short-term. Derivatives are also categorised as held for trading unless they are designated as hedges. (b) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. The groups loans and receivables comprise trade and other receivables and cash and cash equivalents in the balance sheet (c) Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date. Recognition and measurement Regular purchases and sales of financial assets are recognised on the trade-date the date on which the group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the income statement. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the group has transferred substantially all risks and rewards of ownership.

F-40

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are carried at amortised cost using the effective interest method. Gains or losses arising from changes in the fair value of the financial assets at fair value through profit or loss category are presented in the income statement within financial income/expenses in the period in which they arise. The group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered as an indicator that the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement. Derivative financial instruments and hedging activities Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The group designates certain derivatives as either: (a) hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge); or (b) hedges of a particular risk associated with a recognised asset or liability or a highly probable forecast transaction (cash flow hedge). The group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. The fair values of derivative instruments used for hedging purposes are disclosed in note 25. Movements on the hedging reserve in shareholders equity are shown in the Consolidated Statement of Changes in Equity. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining hedged item is more than 12 months, and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified as a current asset or liability. Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any these derivative instruments are recognized immediately in the income statement within financial income / expenses. (a) Fair value hedge

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The group only applies fair value hedge accounting for hedging currency risks on borrowings. The gain or loss relating to the effective portion of interest rate swaps hedging fixed rate borrowings is recognised in the income statement within finance expenses. The gain or loss relating to the ineffective portion is recognised in the income statement within financial income / expenses. Changes in the fair value of the hedge fixed rate borrowings attributable to interest rate risk are recognised in the income statement within finance expenses. If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortised to profit or loss over the period to maturity.

F-41

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) (b) Cash flow hedge

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in equity. The gain or loss relating to the ineffective portion is recognised immediately in the income statement within financial income / expenses. Amounts accumulated in equity are recycled in the income statement in the periods when the hedged item affects profit or loss (for example, when the forecast sale that is hedged takes place). The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognised in the income statement within finance expenses. The gain or loss relating to the ineffective portion is recognised in the income statement within financial income / expenses. When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognized when the forecast transaction is ultimately recognized in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement within financial income / expenses. Trade receivables Trade receivables are recognized initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. If permitted, trade accounts receivables are tested for bad debt expense on a portfolio basis. The portfolios comprise receivables with similar risk factors. Bad debt expense ratios are determined based on aging of the receivables and past experience of losses of receivables at certain aging levels. The amount of the provision is the difference between the assets carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the income statement within other expenses. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against other income in the income statement. Cash and cash equivalents Cash and cash equivalents comprise cash at banks, cash in transit, checks and cash pledged as collateral. Bonds and bank liabilities Bonds and bank liabilities are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method. Trade payables Trade payables and other liabilities are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. Employee benefits Defined contribution plans Defined contribution plans are post-employment benefit plans under which an enterprise pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further contributions. Defined contributions exist for former employees of Deutsche Telekom AG, Bonn, (DTAG) who qualify as civil servants and are currently employed at Unitymedia NRW and Unitymedia Hesse. A monthly

F-42

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) consideration is paid without any further obligation for the respective entities. Such contributions are recognized in personnel expenses. As of December 31, 2008 192 (2007: 196) employees participated in this defined contribution plan. Defined benefit plans Defined benefit plans are post-employment benefit plans other than defined contribution plans. Defined benefit plans exist for certain employees within the Unitymedia Group, who were with DTAG prior to the sale of cable networks to Unitymedia NRW and Unitymedia Hesse, but are not civil servants. The valuation of the defined benefit plans is based on the projected unit credit method including several assumptions and expectations regarding increase of salary, increase of pension payments, fluctuation and mortality rate. The rate of mortality is based on the schedules of mortality of Mr. Heubeck (Heubeck Richttafeln 2005). The accrual of the defined benefit liability is presented completely within personnel expenses. As of December 31, 2008 180 (2007: 181) employees participated in this defined benefit plan. The defined benefit liability does not include the actuarial gains or losses within a 10% corridor based on the defined benefit obligation according to IAS 19. Only when the actuarial gains or losses exceed the 10% corridor, the exceeding amount is amortized over the remaining service period. According to IFRS 1 no actuarial gains or losses were recognized at the transition date as of January 1, 2005 (fresh start method). Beginning with this point in time the 10% corridor has been applied. Early retirement agreements Employees of certain entities are, in certain cases, offered early retirement agreements. The valuation of the provision is based on the total of claims received from employees requesting termination payments or payments due to services performed. If the employees have the opportunity to enter an early retirement agreement without having concluded a contract at the reporting date, the valuation of the provision is based on assumptions regarding the likelihood of an agreement in future. Share-based compensation The group operates a number of equity-settled, share-based compensation plans, under which the entity receives services from employees as consideration for equity instruments (options) of the group. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted, excluding the impact of any non-market service and performance vesting conditions (for example, profitability, sales growth targets and remaining an employee of the entity over a specified time period). Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total amount expensed is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At each balance sheet date, the entity revises its estimates of the number of options that are expected to vest based on the non-marketing vesting conditions. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised. Termination benefits Terrmination benefits are payable when employment is terminated by the group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The group recognises termination benefits when it is demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the balance sheet date are discounted to their present value.

F-43

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) Provisions Provisions are liabilities of uncertain timing and/or amount. A provision is recognized when an enterprise has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Revenue Recognition Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Groups activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating intercompany sales within the group. We derive revenues from six main business activities: our analogue and digital basic cable television business, Pay TV business, Internet business, Telephony (including subscription and usage fees), carriage fees and arenaSAT. Revenue generated by the delivery of analog and digital access products, Internet and Telephone services, digital TV Pay subscriber fees, as well as carriage fees paid by television broadcasters, are recognized when services have been provided, the costs incurred can be measured reliably and the Company is not obliged to provide any future services. Prepayments are accounted for by deferring the received payments and amortizing them straight-line over the service period. When free months are offered to customers in relation to a subscription, the Company recognizes the total amount of billable revenue in equal monthly instalments over the term of the contract provided that the Company has the enforceable and contractual right to deliver the customer with the products after the promotional free month period. If free months are given without a contract at the beginning of a subscription period, the company does not recognize revenues during the free months as the customers continuance is not assured. Installation fees are realized as incurred matched by related internal handling and activation costs for new customers. Sublicensing fees are realized for the sublicensing of the Bundesliga Rights to Premiere by arena. The revenue (as well as the expenses to DFL) is realized on a proportional basis based on the number of games within the respective season. Interest income Interest income is recognized on a time-proportion basis using the effective interest method. When a receivable is impaired, Unitymedia reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income on impaired loans using the original effective interest rate. Royalty income Royalty income is recognized on an accrual basis in accordance with the substance of the relevant agreements. Income taxes Current taxes Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities at undiscounted value. The tax rates and tax laws used to compute the amounts are those that are (substantively) enacted as of the balance sheet date.

F-44

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) Deferred taxes Generally deferred taxes are recognized for any temporary differences between the tax base and the IFRS base, except on goodwill which is not recognized for tax purposes. Deferred tax assets are recognized for deductible temporary differences and tax loss carry forwards, if it is probable that future taxable profits will be available against which the unused tax losses or temporary differences can be utilized. However deferred tax assets are not recognized if the deferred tax asset arises from the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction affects neither accounting profit nor taxable profit. The recoverability of the carrying value of deferred taxes is determined by future taxable profits and assessed on an annual basis. If it is no longer probable that enough future taxable profits will be available against which the unused tax losses or temporary differences can be used, an impairment in a corresponding amount is recognized on the deferred tax assets. Deferred taxes are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates that have been (substantively) enacted by the balance sheet date. Deferred taxes must not be discounted. Deferred taxes are presented within long term assets and liabilities. If the changes in the value of assets or liabilities are recognized in a separate component of equity, the change of value of the corresponding deferred tax assets and liabilities are also recognized in this separate component of equity (instead of income taxes). B.4.2 Critical judgments in applying the groups accounting policies and critical accounting estimates and judgments The following critical judgments have been made by management regarding the groups accounting policies:

The company has rental contracts for using cable ducts. The rental contracts are based on a long term basis (up to 30 years). However the company did not capitalize those cable ducts as finance leases because the cable ducts are not used by the company alone. Therefore the cable ducts do not fulfill the requirements as a specific asset according to IFRIC 4. The company is obliged to remove network equipment and infrastructure after the expiration of rental contracts. However no asset retirement cost has been included as a provision, because the probability of paying this asset retirement cost has been assessed as remote. Customer contracts acquired through the purchase of the shares of Unitymedia Hessen, Unitymedia NRW, Unitymedia Aachen and Wiesbaden and Tele Columbus In-Region-assets are depreciated on a basis of 10 to 20 years. The estimated useful life is based on the estimated contractual period with the customers. At the balance sheet date customer contracts amount to 635 million (2007: 685 million). The company offers products that contain signal delivery and the right to use hardware devices (CPE). The hardware devices are essential for the signal delivery to the customer. Since the fulfillment of these arrangements is dependent on the use of a specific asset and the arrangements convey a right to use the asset, the contracts qualify as a lease with Unitymedia qualifying as a lessor. Management and members of the board of Unitymedia S.C.A. have received options on the shares of Unitymedia and Unitymedia S.C.A respectively, which have effectively been exchanged for Class B shares of Unitymedia S.C.A. The vesting of the shares depends on time vesting and/or the achievement of certain performance criteria. The options have been valued using the Black Scholes Model for the time vesting options and the Binomial Model for the Performance vesting options. The main parameters of these models are the expected volatility, the estimated term of the options and the risk free interest rate on the grant date. We refer to our explanations in note 24 (D.2 Related parties).

F-45

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued)

arena has sublicensed the Bundesliga Rights for Season 2 (2007/08) and Season 3 (2008/09) of DFL to Premiere in exchange for 16.4 million shares of Premiere in February 2007 and additional cash payments. The revenues (as well as the expenses for the Bundesliga Rights to the DFL) for the respective seasons are realised on a proportional basis based on the number of games in the respective season. The shares of Premiere have been classified as available for sale securities. These were measured with their fair market value at the balance sheet date 2007 by including the difference between the fair market value and the purchase price within a separate component of equity (Unrealised earnings). In 2008 all shares of Premiere hold by the company have been disposed of. As a result of the sale cash inflow of 286.1 million was realized. In the cash flow statement the 244.0 million book value of the shares is recognized in cash flow from operating activities as the shares were originated from operating activities. The 42.1 million gain from the increase in the fair value of the shares during the holding period is recognized in cash flow from investing activities as the gain is not incurred by operating activities.

The group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. Assumptions are made based on managements current understanding of facts and circumstances and managements evaluation of the economic environment, which are subject to change. Estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below:

Goodwill is tested for impairment on an annual basis by using discounted cash flow approaches which discount expected future cash flows. The estimate of future cash flows, discount rates and growth rates is based on assumptions with a relatively high uncertainty. Goodwill recognized at balance sheet date is 581.5 million. If actual cash flows in future years were to differ by 10% from managements estimates, the group would not need to adjust goodwill. We refer to our explanations in note 16 Goodwill and other intangible assets. The group is subject to income taxes. Significant judgement is required in determining the provision for income taxes as well as the amount of loss carry forwards available. There are many transactions and calculations for which the ultimate tax determination is uncertain. The group adjusts the available loss carry forwards and recognises liabilities for anticipated tax audit issues when they become likely. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made. The group recognizes deferred tax assets net of any existing tax loss carry forwards based on certain assumptions about the groups future performance and events as well as the groups forecast of taxable income from the operating business. Were the actual final outcome (on the judgement areas) or actual cash flows in future years to differ from managements estimates, the group might need to adjust the capitalized deferred taxes. The book value of capitalized tax assets is 161 million as of December 31, 2008.

C Explanations of the Income Statement and the Balance Sheet C.1 Revenue (note 1)
2008 M 2007 M 2006 M

Basic Cable Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital TV Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Internet (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Telephony (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Installation (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Carriage fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Arena . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

553.6 60.0 55.1 51.4 8.2 81.2 352.4

535.8 54.5 25.9 26.8 9.0 54.4 292.6

486.4 25.3 11.6 8.5 11.5 53.0 69.3

1,161.9

999.0

665.6

F-46

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued)

(1) Bundling discounts are allocated to telephony since the second quarter of 2008 whereas until and including first quarter 2008 the full effect of bundeling discounts was reflected in internet. (2) Fees primarily from installations of basic cable services

We derive revenues from six main business activities: our analog and digital basic cable television business, Pay TV business, internet business, telephony business (including subscription and usage fees), carriage fees and arena. Basic cable services Basic cable services revenues are primarily made up of monthly subscription fees paid for access to our network and the delivery of analog signals to both our direct and indirect subscribers. Unitymedias basic analogue programming package consists of 32 to 37 analog television channels (depending on the region served) and up to 34 analog radio channels. In addition, our entry level digital access product Digital TV Basic offers more than 60 digital channels, including the analogue simulcast and 67 radio channels. Unitymedia provides basic cable services to three market segments: residential customers, small to medium enterprises (SME) and Key Accounts. Housing associations (in SME and Key Accounts) and Level 4 operators pass through or re-sell our basic cable signal to the end customer. We also generate revenues from the installation of cable connections and generally have end-user access for digital and broadband services described below. Digital TV Pay Digital TV pay revenues are primarily made up of monthly subscription fees paid for access to our Pay TV packages as well as rented set-top boxes and, from December 2008 digital video recorders. Our Digital TV Pay products include programming that we assemble into packages as well as digital pay content of other content providers, including international and domestic German broadcasters. Internet Unitymedias broadband Internet business generates sales primarily through subscription fees both on a retail and wholesale basis. Unitymedias current retail broadband Internet access service portfolio consists of services with download speeds ranging from 2Mbit/s to 32MBit/s without any time or data volume restrictions. Broadband Internet service is available in product bundles with telephony and basic cable services, including Unitymedias core triple play product, Unity3play. In addition, Unitymedia offers the Multimedia-Anschluss (MMA), a service tailored for housing associations to purchase internet access at 128 kbit/s on a bulk basis and to enable their properties for the full triple play services. Telephony Telephony revenues are primarily made up of monthly subscription fees and usage fees. Unitymedia currently markets its telephony services both in product bundles and, from April 2008, on a standalone basis. Unitymedia provides telephony for a monthly fee without any time or volume restrictions to fixed line numbers in Germany. Unitymedia also generates usage fees for calls to mobile phones and international numbers and additional subscription fees for certain phone service packages. Carriage fees In addition to subscription and activation fees, we receive carriage fees from broadcasters for the delivery of television and audio signals in analogue and digital mode via our network. Private as well as public broadcasters pay carriage fees. The underlying contracts typically have an average of one to four year terms with automatic renewal clauses for successive one-year terms. We generally collect the carriage fees directly from our broadcasters under regime-specific feed-in contracts on a regional basis. In general, carriage fees for analogue and digital channels are charged on a monthly basis, depending on the number of subscribers. Within a collective agreement with all public broadcasters we have flat-fee arrangements with each of the public broadcasters in connection with the transmissions of their analogue and digital programming.

F-47

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) arena Arena generates revenue from installation and subscription fees for arena satellite packages as well as wholesale revenues, sales generated from set top boxes sold and airtime sales earned, the Premiere share revenue recognition and sublicense fee payments by Premiere. The cash and share-based sublicensing revenues (as well as the expenses for the Bundesliga Rights to DFL) for the respective seasons are realised on a proportional basis based on the number of games in the respective season. C.2 Own work capitalized (note 2) Own capitalized costs increased by 21.5 % from 14.9 million in the year ended December 31, 2007 to 18.1 million in the year ended December 31, 2008. This largely reflects an increase in the level of network projects staffed by in-house employees resulting from increased upgrade activity of the cable footprint. A corresponding amount of expenditure is reflected in personnel expenses. C.3 Other income (note 3) Other income includes prior period income, sale of stock, reversal of prior period accruals and collection fees, among others. Within other income the following non recurring items are included:
2008 K 2007 K 2006 K

Non recurring settlement gain related to the disposal of the Tele Columbus Out-of-region assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Release of accruals related to Bundesliga Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non recurring compensation for acquisition of Unitymedia NRW shares in 2005 . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0 6,118 0 2,667 8,785

16,106 0 0 0 16,106

0 0 1,700 247 1,947

Other income of 41.2 million in 2008 primarily includes 11.2 million (2007: 7.8 million) from release of prior period accruals, 6.2 million dunning fees (2007: 5.8 million), 2.2 million related to Arena broadcast operations, and 3.1 million (2007: 1.5 million) from written off trade receivables. The definition of non recurring items shown in 2006 and 2007 has been adjusted compared to prior year. K 2,913 for 2007 and K 1,621 for 2006 are no longer presented as non recurring item in 2008. C.4 Cost of materials and services (note 4)
2008 K 2007 K 2006 K

Cost of materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Purchased services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9,824 135,809 145,633

10,134 130,005 140,139

18,849 116,441 135,290

Cost of materials consists of raw materials and consumables. Raw materials and consumables primarily include the cost of repair and maintenance, wireless LAN routers, and the portion of cable modems and set-top boxes which we sell. Purchased services primarily consists of network infrastructure services, which include costs under long term agreements with DTAG, costs for arenas satellite platform as well as other agreements. Our most significant costs include payments under long term agreements with DTAG for the use of assets which are shared between our network and that of DTAG and for services provided by DTAG.

F-48

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) C.5 Personnel expenses (note 5)
2008 K 2007 K 2006 K

Salaries and wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Social security, pension, terminations and other benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non cash charges (share based payments) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non recurring items (restructuring payments, benefits) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

86,502 16,364 1,835 0 104,701

81,182 15,037 1,930 5,925 104,074

71,576 14,034 1,140 4,381 91,131

Personnel expenses include salaries and wages, social security, pension, and other benefits of our permanent staff including share based payments. They also include other forms of compensation such as overtime and stand-by pay, but do not include outsourced or temporary staff expenses, which are included in Other expenses. Regarding pension benefits we refer to our explanations in note 17 Pensions and other long-term employee benefits. C.6 Other expenses (note 6) Other expenses include copyright license fees, rental and leasing fees, sales and marketing expenses, sales commissions related to acquisitions of new analogue basic cable subscribers (which do not qualify for capitalization), legal, consulting, bad debt allowance and miscellaneous other expenses including costs for our customer care, billing and network systems, management fees as well as payments for the Bundesliga rights to DFL. We pay license fees for our premium cable television business. We expect these fees to increase as we expand the programming we offer to our customers. Furthermore the following non recurring fees are included in other expenses:
2008 K 2007 K 2006 K

Restructuring expenses arena . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Start up expenses arena . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transaction related accruals for set top box distribution and inventory . . . . . . . . . . . . . . . . . . Restructuring charges for Unitymedia Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.................................................................................

0 0 0 0 0 0

21,211 0 5,000 0 0 26,211

0 30,402 9,459 1,772 150 41,783

Other expenses increased from 522.4 million in the twelve months ended December 31, 2007 to 527.8 million in the twelve months ended December 31, 2008. The decrease due to lower operating costs at arena after the shut down of arenas broadcasting business and the incurrence of restructuring costs was exceeded by higher sales and marketing expenses as well as outsourcing and temporary staff costs for customer care in the cable segment. Included in other expenses 2008 are 360.5 (2007: 354.6) million for content rights, license and copyright fees, 60.7 (2007: 60.6) million for marketing costs, 22.8 (2007: 22.7) million for impairment of trade receivables as well as 17.3 (2007: 15.8) million for sales distribution costs. The definition of non recurring items shown in 2006 and 2007 has been adjusted compared to prior year. K 2,154 for 2007 and K 3,763 for 2006 are no longer presented as non recurring item in 2008. C.7 Depreciation and amortization expenses (note 7) Regarding the depreciation of the tangible assets in 2006, 2007 and 2008 respectively we refer to the schedule of fixed assets in (note 15) Property, plant and equipment.

F-49

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) The following schedule discloses the amortization expenses of the intangible assets for the periods 2006, 2007 and 2008 respectively.
2008 K 2007 K 2006 K

Customer Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Software and Concessions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subscriber Acquisition Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Brand name arena . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

80,793 9,195 11,924 333 102,245

78,946 9,734 4,565 333 93,578

78,619 10,084 2,272 167 91,142

Depreciation and amortization expenses relate to property, plant and equipment and intangible assets, which are depreciated or amortized over the useful asset life. This includes the cost of set-top boxes and cable modems rented to the customer as well as third party customer acquisition costs, which are capitalized and depreciated over the useful asset life or contract period. The goodwill resulting from the acquisitions of Unitymedia NRW, Unitymedia Services, Unitymedia Wiesbaden and Unitymedia Aachen are not amortized on a straight line basis but tested for impairment annually. C.8 Financial income (note 8)
2008 K 2007 K 2006 K

Gain from the sale of available for sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cancelled or repurchased NRW/Hesse Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Profit due to fair value adjustments of derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest and similar income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

42,052 15,480 0 13,735 71,267

1,160 1,673 2,862 10,565 16,260

0 0 4,854 5,708 10,562

Gain from sale of available for sale securities relates to the sale of the Premiere shares to News Corporation in 2008, and from the Premiere rights offering in 2007. The profit due to fair value adjustments in prior years results from the fair value adjustments of derivative instruments which do not qualify for hedge accounting and from the valuation of prepayment options included in the fixed interest rate bonds. Financial income increased from 16.3 million in the twelve months ended December 31, 2007 to 71.3 million in the total twelve months ended December 31, 2008. The increase is primarily due to the capital gain from the sale of Premiere shares in amount of 42.1 million in 2008 and gain of 15.5 million from the 251 million repurchased NRW/Hesse Notes below carrying value during 2008. C.9 Financial expenses (note 9)
2008 K 2007 K 2006 K

Interest expenses Interest expense to third parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest expense relating to release of deferred transaction costs . . . . . . . . . . . . . . . . . . . . Release of deferred transaction costs relating to refinanced debt . . . . . . . . . . . . . . . . . . . . Other Financial expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . loss due to fair value adjustments of derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

143,030 5,601 0 4,750 153,381

155,174 7,985 0 0 163,159

139,064 5,396 30,804 174 175,438

Interest expenses relating to transaction costs comprise the release of the deferred transaction costs for the the 2006 Refinancing.

F-50

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) The loss due to fair value adjustments in 2008 stems from valuation of prepayment options included in the fixed interest rate bonds. Financial expenses decreased from 163.2 million in the twelve months ended December 31, 2007 to 153.4 million in the twelve months ended December 31, 2008. The decrease in interest expenses year on year was primarily due to lower outstanding debt principal from the retired 75 million of NRW/Hesse Notes in December 2007, as well as from the nominal 251 million NRW/Hesse Notes repurchased in 2008. C.10 Income taxes (note 10)
2008 K 2007 K 2006 K

Current tax expenses / (income) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prior year tax expenses / (income) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred tax expenses / (income) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17,906 -2,169 3,542 19,279

12,927 -122 -50,237 -37,432

23,559 -299 -142,671 -119,411

We incurred income tax expenses of 19.3 million in the twelve months ended December 31, 2008, primarily related to accrued trade tax and corporate income tax expenses of 17.9 million. In spite of the 2008 German tax reform the total income tax expense compared to prior year increased by 56.7 million, primarily due to the remeasurement of the deferred tax liabilities in year 2007 based on the new tax rates, as well as higher current tax expenses due to higher taxable profits. The portion of the gain or loss on the cash flow hedge that is determined to be an effective hedge is recognized directly in equity through the statement of changes in equity. Hence the associated deferred taxes regarding the cash flow hedges are also recognized directly within equity. At the balance sheet date, the income tax charged/credited directly to equity amounted to K -3,002 (2007: K 2,748; 2006: K -940). The following table discloses the reconciliation between the tax expenses (income) and the product of accounting profit multiplied by the applicable tax rate:
2008 K 2007 K 2006 K

Earnings before taxes before continuing operations (EBT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Applicable tax rate of Unitymedia GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Calculated tax expenses/(income) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjustments due to changes in tax rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjustments of deferred taxes due to disposal of Unitymedia Services within the group . . . Reassessment of deferred taxes on temporary differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reassessment of deferred tax assets on loss carry forwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additions and reductions for trade tax purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating expenses not deductible for tax purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Revenues not taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Taxes related to prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

105,360 -86,199 -284,003 31.58% 39.90% 39.90% 33,293 -34,393 -113,317 0 -29,954 0 0 0 -22,513 170 4,155 0 -7,789 10,199 4,459 8,889 11,612 10,159 155 0 460 -12,570 0 -526 -2,169 -122 -299 -700 1,071 2,166 19,279 -37,432 -119,411

The applicable tax rate is the tax rate of Unitymedia GmbH in 2008. In 2007 the German Business Tax Reform was approved by the Federal Cabinet (Bundesrat). The tax rate was reduced from approximately 40% to approximately 31% depending on the trade tax the company is liable to pay. The new tax rate was applied from January 1, 2008 for the computation of actual income taxes and applied for the assessment of deferred taxes as of December 31, 2007.

F-51

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) Deferred taxes have been recognized for the following kinds of temporary differences and unused tax losses:
Deferred tax assets (DTA) 31/12/2008 K 31/12/2007 K 31/12/2006 K Deferred tax liabilities (DTL) 31/12/2008 K 31/12/2007 K 31/12/2006 K

Property, plant and equipment . . . . . . . . . . . . . . . . . Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial assets without derivatives . . . . . . . . . . . . Derivative instruments . . . . . . . . . . . . . . . . . . . . . . . Liabilities and provisions . . . . . . . . . . . . . . . . . . . . . Loss carry forwards . . . . . . . . . . . . . . . . . . . . . . . . . . Netting DTA/DTL within the same tax jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

37,381 213 8,403 3,180 160,882 -185,579 24,480

41,529 219 7,130 4,719 181,448 -199,607 35,438

54,975 0 7,474 5,024 205,958 -241,508 31,923

13,253 191,268 718 0 24,699

20,397 201,784 370 4,567 20,443

30,398 274,704 181 3,343 24,300

-185,579 44,364

-199,607 47,954

-241,508 91,418

Deferred tax assets for property, plant and equipment, and intangible assets have been recognized mainly for taxable increases of the value of those assets (Ergnzungsbilanzwerte), caused by business combinations on the level of the separate entity. Deferred tax liabilities have been recognized mainly for differences between IFRS base and tax base due to the purchase price allocation. Deferred tax assets include long term deferred tax assets K 23,031 (2007: K 29,639) of assets which are expected to be recovered or settled after one year. Deferred tax liabilities include long term deferred tax liabilities of K 43,123 (2007: K 45,589) which have been netted with short term deferred tax assets of K 1,241 (2007: K 1,721). Deferred tax assets on tax loss carry forwards for trade tax and corporate income tax purposes which exceed the deferred tax liabilities by K 161,282 have been capitalized because, based on recent forecasts the respective entities will probably realize taxable profits in future years. No deferred tax assets have been recognized for the following kinds of tax loss carry forwards:
31/12/2008 K 31/12/2007 K 31/12/2006 K

Trade tax loss carry forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Corporate income tax loss carry forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

50,615 149,743

55,324 184,446

33,971 154,789

The tax loss carry forwards do not expire under current law. Deferred tax assets on those tax loss carry forwards of K 31,669 (2007 K 37,902) have not been recognized due to the following reasons:

The respective entities have agreed to a profit and loss agreement with the parent company. Due to this agreement they are not permitted to use tax loss carry forwards as long as the profit and loss agreement is active (vororganschaftliche Verlustvortrge), or It is uncertain whether the respective entities are able to realize enough taxable profits in future to offset these profits with the existing tax loss carry forwards.

C.11 Available for sale securities (note 11) arena has acquired the economic interest to 16.4 million shares of Premiere in exchange for sublicensing the Bundesliga rights of DFL to Premiere. The shares have been acquired as of February 8, 2007 with a share price of 15.14. The economic rights to these shares have been classified as available for sale securities and subsequently transferred to Unitymedia NRW. As of December 31, 2007 the share price of Premiere was 12.90. The unrealized loss from the revaluation at year-end (K 32,472) has been charged directly against equity. In

F-52

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) January 2008 the shares of Premiere have been sold by Pictet & Cie, Geneva, on behalf of Unitymedia NRW GmbH, to an affiliate of News Corporation, Inc. As a result of the sale a gain of K 74,524 was realized which has been reflected with K 42,052 in financial income and K 32,472 charged directly against equity. C.12 Trade accounts receivables (note 12)
31/12/2008 K 31/12/2007 K 31/12/2006 K

Trade receivables gross amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less: provisions for impairment of trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trade receivables net amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereof long term trade accounts receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Short term trade accounts receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trade receivables neither impaired nor past due . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

98,914 -20,478 78, 436 617 77,819 8,107

91,170 -20,640 70,530 931 69,599 39,832

69,417 -18,883 50,534 981 49,553 2,069

Regarding trade receivables neither impaired or past due we have no indication that creditors will not fulfill their commitments. Impairment losses have been included within other expenses. We refer to our explanations in note 25 Carrying amounts, fair values and net result of financial instruments. Regarding the carrying amounts of trade accounts receivables pledged as collateral for liabilities we refer to our explanations in note 21 C.21.2 Covenants Included in 2008 receivables were 33.7 million of cash in-transit where direct debits were made but cash was not received until after the balance sheet date. Movements on the group provision for impairment of trade receivables are as follows:
31/12/2008 K 31/12/2007 K 31/12/2006 K

As of January 1, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additional provision for receivables impairment on a collective basis . . . . . . . . . . . . . . . . Additional provision for receivables impairment on an individual basis . . . . . . . . . . . . . . . Reduction of receivables written off during the year as uncollectible . . . . . . . . . . . . . . . . . As of December 31, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

20,640 598 12,852 -13,612 20,478

18,883 3,216 10,009 -11,468 20,640

12,098 5,866 4,917 -3,998 18,883

The creation and release of provision for impaired trade receivables have been included in other expenses in the income statement. Generally receivables are impaired with 60% if they are overdue by 90 days and with 100% if they are overdue by 120 days. Additionally we include impairments on an individual basis if certain reasons for an impairment exist. Also in some cases, we include impairments on younger receivables if a customer has not paid its outstanding invoices for other overdue receivables which have already been impaired. Receivables are de-recognized and corresponding impairments are reversed when the customer becomes insolvent, or the account is handed over to a collection agency.

F-53

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) The following trade receivables are past due but have not been impaired: These receivables relate to a number of customers for whom there is no history of default:
31/12/2008 K 31/12/2007 K 31/12/2006 K

0 - 30 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 - 60 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 - 90 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11,535 3,928 2,865 18,328

18,167 4,620 2,905 25,692

42,982 8,330 2,276 53,588

C.13 Other receivables (note 13)

31/12/2008 K 31/12/2007 K 31/12/2006 K

Other receivables gross amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Less: provisions for impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other receivables net amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereof long term other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Short term other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

24,633 0 24,633 3,034 21,599

30,733 0 30,733 918 29,815

21.947 0 21,947 1,709 20,238

Other receivables include:

31/12/2008 K 31/12/2007 K 31/12/2006 K

Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Loans and receivables to related parties (see note 24) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11,506 916 4,102 5,075 21,599

10,055 937 3,680 15,143 29,815

13,632 1,692 0 4,914 20,238

Loans and receivables included in other receivables are neither impaired nor past due. We have no indication that the debtors will not fulfil their commitments. C.14 Inventories (note 14)
31/12/2008 K 31/12/2007 K 31/12/2006 K

Set top boxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Network equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventories gross amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impairment losses set top boxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impairment losses network equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventories net amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7,799 6,132 13,931 -1,269 -1,690 -2,959 10,972

6,362 7,303 13,665 -2,705 -2,715 -5,420 8,245

10,463 8,449 18,912 -2,804 -4,622 -7,426 11,486

Inventories comprise set-top boxes, cable modems, network materials and spare parts for repair purposes. Impairment losses of set top boxes are calculated on a basis of assumed commercialization, primarily at Arena. Impairment losses of network equipment are due to slow moving items and technical age, primarily for the Cable segment.

F-54

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) In 2008 impairment losses of K 2,461 (2007: K 2,006) have been reversed as a result of disposals. The reversals of the impairment losses have been included within the other costs of materials and services. C.15 Property, plant and equipment (note 15) Our capital expenditure relates primarily to expanding or upgrading our network. Capital expenditure also includes intangible assets (except our customer list) and does not include financial assets. Incremental capital expenditure such as the upgrade of the Level 4 or in-house network or the introduction of a new product is designed to ensure that our return on investment thresholds are met. In addition, we incur expenditure required to sustain our current network, which we account for as repair and maintenance expenditure within raw materials and consumables on our income statement.

F-55

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) The following table represents the reconciliation of carrying amounts of tangible and intangible assets at the beginning and end of the period from January 1, 2008 until December 31, 2008 and the two preceding periods 2007 and 2006.

Development of Fixed Assets as of December 31, 2008 Acquisition costs K Fixed assets I. Property, plant and equipment 1. Tenant improvements and cable duct assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180,477 2. Broadband cable network . . . . . . . . . . . . . 1,102,191 3. Other plant, furniture and office equipment . . . . . . . . . . . . . . . . . . . . . . . . . 30,212 4. Advanced payments and construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,920 1,368,800 II. Goodwill and other intangible assets 1. Concessions, industrial property rights and similar rights . . . . . . . . . . . . . . . . . . . 1,185,493 2. Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . 556,222 3. Advanced payments . . . . . . . . . . . . . . . . . 6,198 1,747,913 3,116,713 K K K K K K K Depreciation and Amortization K K K K Net book value K K 01/01/2008 Additions Primacom Disposals Transfers 31/12/2008 01/01/2008 Additions Impairment Disposals Transfers 31/12/2008 31/12/2008 31/12/2007

1,437 157,953 3,985 29,974 193,349

0 4,384 101 34 4,519

0 5,596 70 29 5,695

2 41,042 502 -41,254 290

181,916 1,299,974 34,730 44,646 1,561,264

23,824 465,899 16,495 94 506,312

9,898 138,503 5,000 0 153,401

0 0 0 0 0

0 3,855 54 0 3,909

0 0 0 0 0

33,722 600,546 21,441 94 655,803

148,194 699,427 13,288 44,552 905,461

156,653 636,292 13,717 55,826 862,488

F-56

27,447 0 12,241 39,688 233,037

32,473 25,290 0 57,763 62,282

1,039 0 0 1,039 6,733

5,085 0 -5,375 -291 0

1,249,459 581,512 13,064 1,844,035 3,405,299

478,387 0 0 478,387 984,699

101,949 0 33 101,982 255,383

263 0 0 263 263

1,026 0 0 1,026 4,935

0 0 0 0 0

579,573 0 33 579,606 1,235,409

669,885 581,512 13,031 1,264,429 2,169,890

707,106 556,222 6,198 1,269,526 2,132,014

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued)

Development of Fixed Assets as of December 31, 2007 Acquisition costs K Fixed assets I. Property, plant and equipment 1. Tenant improvements and cable duct assets . . . . . 2. Broadband cable network . . . . . . . . . . . . . . . . . . . . 3. Other plant, furniture and office equipment . . . . . . 4. Advanced payments and construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . K K K K K K Depreciation and Amortization K K K K Net book value K K 01/01/2007 Additions Disposals Transfers 31/12/2007 01/01/2007 Additions Impairment Disposals Transfers 31/12/2007 31/12/2007 31/12/2006

178,300 981,838 22,952 31,856 1,214,946

1,028 101,996 8,730 44,501 156,255

89 1,328 855 345 2,617

1,238 19,685 -615 -20,092 216

180,477 1,102,191 30,212 55,920 1,368,800

14,058 344,051 12,432 98 370,639

9,855 122,553 4,633 0 137,041

0 0 41 0 41

89 705 611 4 1,409

0 0 0 0 0

23,824 465,899 16,495 94 506,312

156,653 636,292 13,717 55,826 862,488

164,242 637,787 10,520 31,758 844,307

II. Goodwill and other intangible assets 1. Concessions, industrial property rights and similar rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,173,737 2. Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 556,222 3. Advanced payments . . . . . . . . . . . . . . . . . . . . . . . . 1,387 1,731,346 2,946,292

11,996 0 5,310 17,306 173,561

524 0 0 524 3,141

284 0 -499 -215 1

1,185,493 556,222 6,198 1,747,913 3,116,713

385,312 0 0 385,312 755,951

92,583 0 0 92,583 229,624

995 0 0 995 1,036

503 0 0 503 1,912

0 0 0 0 0

478,387 0 0 478,387 984,699

707,106 556,222 6,198 1,269,526 2,132,014

788,425 556,222 1,387 1,346,034 2,190,341

F-57

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued)

Development of Fixed Assets as of December 31, 2006 Acquisition costs K Fixed assets I. Property, plant and equipment 1. Tenant improvements and cable duct assets . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Broadband cable network . . . . . . . . . . 3. Other plant, furniture and office equipment . . . . . . . . . . . . . . . . . . . . . . 4. Advanced payments + construction in progress . . . . . . . . . . . . . . . . . . . . . . . 5. Discontinued operations . . . . . . . . . . . K K K K K K K Depreciation and Amortization K K K K K Net book value K K 01/01/2006 Consol. Additions Disposals Transfers 31/12/2006 01/01/2006 Consol. Additions Impairment Disposals Transfers 31/12/2006 31/12/2006 31/12/2005

180,537 908,350 20,922

0 0 0

1,113 79,183 4,001 25,213 11,521

3,718 9,093 2,024 12,300 8,733 35,868

368 3,398 53 -3,753 69 135

178,300 981,838 22,952 31,856 0 1,214,946

5,393 233,162 10,042 4,148 0 252,745

0 0 0 0 0 0

9,913 107,873 4,347 24 0 122,157

2,108 12,514 0 0 0 14,622

3,576 9,244 1,991 4,074 0 18,885

220 -254 34 0 0 0

14,058 344,051 12,432 98 0 370,639

164,242 637,787 10,520 31,758 0

175,144 675,188 10,880 18,548 199,664

22,696 0 199,664 -202,521

1,332,169 -202,521 121,031 II. Goodwill and other intangible assets 1. Concessions, industrial property rights + similar rights . . . . . . . . . . . . . 1,151,937 0 2. Goodwill . . . . . . . . . . . . . . . . . . . . . . . 556,222 0 3. Advanced payments . . . . . . . . . . . . . . 856 0 4. Discontinued operations . . . . . . . . . . . 714,070 -708,044 2,423,085 -708,044

844,307 1,079,424

F-58

14,726 0 898 909 16,533

-633 0 367 726 460 36,328

6,441 0 0 -6,209 232 367

1,173,737 556,222 1,387 0 1,731,346 2,946,292

294,529 0 0 0 294,529 547,274

0 0 0 0 0 0

90,791 0 0 0 90,791 212,948

351 0 0 0 351 14,973

359 0 0 0 359 19,244

0 0 0 0 0 0

385,312 0 0 0 385,312 755,951

788,425 556,222 1,387 0

857,408 556,222 856 714,070

1,346,034 2,128,556 2,190,341 3,207,980

3,755,254 -910,565 137,564

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) Regarding the carrying amounts of tangible and intangible assets pledged as collateral for liabilities we refer to our explanations in note 21 Bonds, facilities and derivative financial instruments. Regarding finance lease assets and obligations we refer to our explanations in note 23 Contingent assets, liabilities and other financial obligations. Regarding operating lease obligations we refer to our explanations in note 23 Contingent assets, liabilities and Other financial obligations. Regarding goodwill we refer to our explanations in note 16 Goodwill and other intangible assets. Regarding purchase obligations for tangible and intangible assets due to existing contracts not recognized in the balance sheet we refer to our explanations in note 23 Contingent assets, liabilities and Other financial obligations. Impairments were included in 2006 due to exchanging old cable network equipment with new cable network equipment within the Cable business segment. The impairments in 2007 relate to shutting down the broadcast operations in restructuring arena following the agreements with Premiere. In 2008 impairments relate to the write off of software no longer used. C.16 Goodwill and other intangible assets (note 16)
31/12/2008 K 31/12/2007 K 31/12/2006 K

Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Customer Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Software and concessions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subscriber Acquisition Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Advance Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Brand name arena . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

581,512 634,945 21,065 13,709 13,031 167 1,264,429

556,222 685,357 16,256 4,994 6,198 500 1,269,527

556,222 765,152 19,641 2,798 1,387 833 1,346,033

The impairment test of goodwill is done based on the respective cash generating units. The cash generating units are determined by the business segments Unitymedia Cable and arena Satellite and Broadcasting. For Unitymedia Cable the impairment test is performed by comparing the carrying amount with the recoverable amount. For arena Satellite and Broadcasting, no goodwill is recognized. At the balance sheet date the goodwill in the cable business amounts to K 581,512. The increase of K 25,290 compared to the prior year is due to the acquisition of the PrimaCom companies. The recoverable amount is determined based on the fair value less costs to sell using a discounted cash flow approach. The determination of the recoverable amount is based on the following estimates:
31/12/2008 31/12/2007 31/12/2006

Length of projection period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Weighted average cost of capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Growth rate beyond projection period for terminal value . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10 years 12.5% 1.5%

9 years 11.8% 2.5%

10 years 10.0% 3.5%

The determination of the recoverable amount has been determined by using cash flow projections based on financial budgets approved by senior management covering a planning period of 10 years. The relatively long projection period for estimating future cash flows is justified by the long contractual relationship with the customers. The projections of subscribers, revenue, costs, and capital expenditures are based on reasonable and supportable assumptions that represent managements best estimates. Key assumptions are the estimated number of subscribers and the level of upgraded network infrastructure. The projections are based on both past experience and expected future market penetration with the various products.

F-59

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) Unitymedia has capitalized the following customer contracts with the following respective remaining useful lives:
31/12/2008 K 31/12/2007 K 31/12/2006 K

Customer contracts on the level of Unitymedia NRW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Customer contracts on the level of Unitymedia Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . Customer contracts on the level of Unitymedia Hessen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Customer contracts on the level of Unitymedia Wiesbaden . . . . . . . . . . . . . . . . . . . . . . . . . . Customer contracts on the level of Unitymedia Aachen . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

467,135 77,990 60,454 17,825 11,541 634,945

519,133 97,919 68,305 685,357

571,133 117,912 76,152 765,197

The following schedule discloses the average remaining useful life of the customers:
31/12/2008 31/12/2007 31/12/2006

Customer contracts on the level of Unitymedia NRW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Customer contracts on the level of Unitymedia Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . Customer contracts on the level of Unitymedia Hessen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Customer contracts on the level of Unitymedia Wiesbaden . . . . . . . . . . . . . . . . . . . . . . . . . . Customer contracts on the level of Unitymedia Aachen . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9.0 4.7 7.8 9.8 9.8

10.0 5.7 8.8

11.0 6.7 9.8

C.17 Pensions and other long-term employee benefits (note 17) The liabilities for long-term employee benefits comprise provisions for pensions and for early retirement agreements.
31/12/2008 K 31/12/2007 K 31/12/2006 K

Pension obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Early retirement obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7,718 825 8,543

7,679 803 8,482

6,928 880 7,808

Pension accruals and early retirement obligations which are expected to be settled within the subsequent financial period amount to K 26. The following table shows the reconciliation between the defined benefit obligation and the defined benefit liability:
31/12/2008 K 31/12/2007 K 31/12/2006 K

Defined benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unrecognised actuarial gains (losses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Defined benefit liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,185 1,533 7,718

6,678 1,001 7,679

7,539 -611 6,928

F-60

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) The following table summarizes the development of defined benefit obligation:
2008 K 2007 K 2006 K

Defined benefit obligation as of January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Actuarial gains and losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Plan Division/Business Combinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Curtailment / Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Defined obligation as of December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,678 248 367 -579 0 -509 -18 6,185

7,539 424 337 -1,604 0 0 -18 6,678

7,436 448 287 -873 241 0 0 7,539

Expenses for pensions are included as follows:

2008 K 2007 K 2006 K

Current service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Actuarial gains and losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Curtailment / Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

248 367 -47 -21 547

424 337 7 0 768

448 287 55 0 790

The expenses for pensions are presented completely within the personnel expenses. The calculation of the different kinds of liabilities for future employee benefits is based on the following assumptions:
31/12/2008 % 31/12/2007 % 31/12/2006 %

Discount rate pensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected rate of salary increases p.a. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected rate of pension increases p.a. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected rate of fluctuations p.a. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.0 2.5 - 2.75 1.5 - 1.7 7.00

5.5 2.5 - 2.75 1.5 - 1.7 7.00

4.45 2.5 - 3.25 1.50 7.00

The group has defined contribution plans regarding former employees of the DTAG. The expenses in the financial year 2008 are K 1,550 (prior year: K 1,387) The experience adjustments (difference between actuarial assumptions and plan experience) amounts to a negative K 62.7 on December 31, 2008. One subsidiary has offered their employees early retirement programs. At the balance sheet date, it is not known whether employees will use this program or not. The provision for early retirement programs comprises early retirement programs due to existing contracts at the balance sheet date as well as expected contracts in the future. The calculation of the provision is based on the assumption that 10% to 50% (depending on the potential starting year of the early retirement) of the respective employees will use the early retirement program.

F-61

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) C.18 Other liabilities (note 18)
31/12/2008 K 31/12/2007 K 31/12/2006 K

Payroll related accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Amounts due to related parties (see note 24) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14,509 6,567 0 30,024 51,100

17,469 28,676 176 35,551 81,872

20,017 9,653 175 22,522 52,367

Other liabilities also include 6.0 million (2007: 5.2 million) accrued expenses for buildings and 8.0 million (2007: 8.1 million) debtors with credit balances. C.19 Deferred income (note 19) Revenue has been deferred to the subsequent financial periods for the following items:
2008 K 2007 K 2006 K

Sublicensing Bundesliga rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereof long term deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereof short term deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

51,304 76,532 127,836 0 127,836

153,911 82,420 236,331 51,333 184,998

0 86,250 86,250 0 86,250

C.20 Provisions (note 20) The following table shows the reconciliation of the other provisions for the year 2008:
01/01/2008 K Additions K Usage K Release K 31/12/2008 K

Disposal of discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repurchase and exchange agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . Termination/Adjustment of contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . Litigation accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11,500 10,643 7,920 729 4,980 35,772

0 1,652 4,264 0 10,253 16,169

2,802 1,855 5,272 98 3,728 13,755

0 0 483 580 463 1,526

8,698 10,440 6,430 50 11,042 36,660

The provisions related to the disposal of discontinued operations consist mainly of potential tax liabilities related to the sale of Tele Columbus in 2006. All provisions are estimates very probable to occur within one year and probable regarding the amount.

F-62

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) C.21 Bonds, facilities and derivative financial instruments (note 21) C.21.1 Bonds and bank liabilities
31/12/2008 K 31/12/2007 K 31/12/2006 K

Bond and bank liabilities-Nominal value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transaction costs and FX revaluation of MUSD 151 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bank liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Short-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,699,145 -49,389 1,649,756 30,000 42,644 72,644 1,722,400

1,950,145 -62,701 1,887,444 0 45,067 45,067 1,932,511

2,025,145 -58,533 1,966,612 55,000 55,822 110,822 2,077,434

The amount of bonds and bank liabilities due after five years is K 575,145 (31/12/2007: K 1,850,145). In October 2007 a nominal amount of 75 million of the NRW/Hesse Notes have been repurchased and subsequently cancelled. Through the year 2008 Unitymedia Hessen repurchased NRW/Hesse Notes of nominal 251 million. The acquisition price was 231.2 million without accrued interest. The repurchased NRW/Hesse Notes have not been formally retired and may be resold into the market, however they have been classified as extinguishment of debt in accordance with the application guidance of IAS 39. The difference between the carrying amount and the acquisition cost has been recognized as a gain in amount of 15.5 million in financial income. On October 31, 2008 Unitymedia NRW has drawn 50 million of the NRW/Hesse Revolving Credit Facility to further enhance its financial flexibility and to remain opportunistic with uses of its existing liquidity. On November 28, 2008 20 million has been repaid. The long-term liabilities to third parties have the following terms and conditions:
Bonds Senior Note M215 Senior Note M235 Senior Note M$151 NRW/Hesse Note M1.275

Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nominal interest rate . . . . . . . . . . . . . . . . . . Effective interest rate . . . . . . . . . . . . . . . . . . Hedging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Beginning redemption price for prepayment option . . . . . . . . . . . . . . . . . .
Loans

02/2005 - 02/2015 8.75% 9.44% no 108.75% (2)

07/2005 - 02/2015 10.125% 10.79% no 110.125% (2)

07/2005 - 02/2015 10.375% 11.074% FX Swap 110.375% (2)

04/2006 - 04/2013 Euribor + 2.875% 5.34% Interest rate Swap 102% (2)

Term loan M100

Further Notes
(1)

Term . . . . . . . . . . . . . . . . . . . .

10/2006 - 10/2011

The nominal interest rate of the NRW/Hesse Revolving Credit Facility is Euribor + 2% on drawn amounts. The calculated effective interest rate is 4.63%. The respective redemption price for prepayment decreases over the term of the bonds and the loan. The prepayment options for the bonds with a fixed interest rate are valued based on a financial mathematics model. We refer to our explanations under derivative financial instruments.

Nominal interest rate . . . . . . Effective interest rate . . . . .

3.125% + Euribor 7.01%

(2)

Hedging . . . . . . . . . . . . . . . . . Beginning redemption price for prepayment option . . . . . . . . . . . . . . . . .

no

102% (2)

F-63

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) The NRW/Hesse Revolving Credit Facility was drawn as of the balance sheet dates with the following amounts:
31/12/2008 K 31/12/2007 K 31/12/2006 K

Revolving credit facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Drawn portion of the facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Outstanding amount available on the revolving credit facility . . . . . . . . . . . . . . . . . . . . . . . .

130,000 -30,000 100,000

130,000 0 130,000

130,000 -55,000 75,000

C.21.2 Covenants The indenture for the Unitymedia Notes and NRW/Hesse Notes include certain covenants which, among other things, restrict the ability of Unitymedia, Unitymedia Hessen, Unitymedia NRW and certain of their subsidiaries to:

make certain payments, including dividends or make other distributions; incur or guarantee debt and issue preferred stock; make certain investments or acquisitions, including participating in joint ventures; prepay or redeem subordinated debt or equity; engage in certain transactions with affiliates and other related parties; sell assets, consolidate, merge with or into other companies; issue or sell share capital of certain subsidiaries; and create certain liens.

The following assets with the respective amounts have been pledged as securities for liabilities:
31/12/2008 K 31/12/2007 K 31/12/2006 K

Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trade accounts receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

663,467 214,936 78,436 956,839

588,825 227,058 70,530 (1)

575,872 444,365 49,553 (1)

886,413 (1) 1,069,790 (1)

(1) Presentation was changed in 2008 by + K 39,312 for 2007 and + K 21,980 for 2006: Trade accounts receivables of subsidiary have not been included in the amounts presented in the group financial statements 2007.

C.21.3 Derivative financial instruments The derivative financial instruments have the following values at the respective balance sheet date:
31/12/2008 Assets K Liabilities K 31/12/2007 Assets K Liabilities K 31/12/2006 Assets K Liabilities K

Interest rate swap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepayment options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13,768 12,845 929 929 26,613

10,058 22,581 5,689 15,747 22,581

5,708 18,641 2,837 8,545 18,641

F-64

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) In 2008 Unitymedia Hesse entered into a new 2-year 800.0 million three-month Euribor forward interest rate swap of 3.35% relating to the NRW/Hesse Notes. The new swap will become effective on April 30, 2009 and replace the existing swap of 3.66% for the same notional amount which expires on the same date. Gains and losses on the current interest rate swap contract that are reflected in the cash flow hedge reserve in equity will be continuously released to the income statement over the contract term until April 30, 2009. The hedged forward transactions denominated in foreign currency are expected to occur at various dates until the repayment of the $151 million Senior Note. Gains and losses on forward foreign exchange contracts that are reflected in the cash flow hedge reserve in equity are recognized in the income statement in the period or periods during which the hedged forecast transactions affects the income statement. The valuation of the interest rate swap and the foreign currency swap is based on market data provided by an international bank. The valuation of the prepayment options is based on models using financial mathematics procedures. The interest rate swap and the foreign currency swap have the following terms and conditions:
Receiver side Swap / Term nominal amount K except where noted Interest Payer side nominal amount K interest

Interest rate swap 07/2006 - 04/2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest rate swap 05/2009 - 04/2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Foreign currency swap 07/2005 - 02/2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

800,000 800,000 K$151,000

Euribor Euribor 10.375%

800,000 800,000 125,145

3.66% 3.35% 9.625%

The interest rate swap and the foreign currency swap qualify for hedge accounting. Changes in the value of the respective swaps are included in unrealized earnings within a separate line item within equity. C.22 Shareholders equity (note 22) Regarding a reconciliation of equity we refer to the Consolidated Statement of Changes in Equity. Distributions to the shareholders are only possible based on the profits according to German GAAP (HGB) regarding the separate entities. According to German GAAP the capitalization of start up costs is permitted and has been applied by several companies. According to the German commercial code (HGB) it is not permitted to distribute funds if the available reserves/profits do not exceed the amount of capitalized start up costs. Remaining capitalized start up expenditures according to German GAAP amount to K 7,732 at the level of arena (2007: K 23,250). Subscribed capital comprises the capital to be paid by the shareholder according to the statutory agreement. At the balance sheet date the subscribed capital is fully paid-in by the shareholders. The capital reserves comprise reserves of the shareholders, which exceed the statutory subscribed capital and reserves related to share based payments to certain members of management. The contribution to capital reserves in 2007 relates to a cash payment of the shareholder.

F-65

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) D Other explanations D.1 Contingent assets, liabilities and financial obligations (note 23) D.1.1 Contingent assets and liabilities At the reporting date no contingent assets existed. The group has contingent liabilities in respect of legal claims arising in the ordinary course of business. It is not anticipated that any material liabilities will arise from the contingent liabilities other than those provided for (see note 20). D.1.2 Other financial obligations Other financial obligations comprise obligations which are not presented in the balance sheet and which are not contingent liabilities. The following other financial obligations existed at the balance sheet date for capital expenditures in property, plant and equipment and other intangibles:
31/12/2008 K 31/12/2007 K 31/12/2006 K

Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

808 1,107 1,915

2,695 1,191 3,886

6,038 873 6,911

D.1.3 Finance leases The following table shows the reconciliation between the future minimum payments and the present value of the leasing liabilities for long term network leases and car leases.
31/12/2008 K 31/12/2007 K 31/12/2006 K

Future minimum lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Finance cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

18,571 -8,185 10,386

5,201 -722 4,479

0 0 0

The net carrying amounts of the assets amounts in 2008 K 11,064 (2007: K 5,536); thereof K 6,448 (2007: K 0) network leases (broadband cable network) and K 3,938 (2007: K 5,536) car leases (other plant, furniture and office equipment. The future minimum lease payments for finance leases are as follows:
31/12/2008 K 31/12/2007 K 31/12/2006 K

Not later than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Later than one year and not later than five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Later than five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,631 6,718 10,222 18,571

826 4,375 0 5,201

0 0 0 0

Several in 2008 contracted long term network agreements fulfill the requirements for finance lease.

F-66

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) The liabilities for finance leases are as follows:
31/12/2008 K 31/12/2007 K 31/12/2006 K

Not later than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Later than one year and not later than five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Later than five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

779 3,962 5,645 10,386

596 3,883 0 4,479

0 0 0 0

D.1.4 Operating leases and other financial commitments The following operating lease contracts with the respective significant leasing arrangements exist within the group:
Lease Terms Terms of renewal Purchase options Contingent rent

Building . . . . . . . . . . . . . . Dark fiber . . . . . . . . . . . . . Colocation area . . . . . . . . Cable ducts . . . . . . . . . . . .

10 years 1 - 20 years 1 - 14 years 10 - 30 years

no 3 months - 1 year 1 months - 1 year 1 - 5 years

no no no no

no no no no

The future minimum lease payments for operating leases are as follows:
31/12/2008 K 31/12/2007 K 31/12/2006 K

Less than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . More than one year and less than five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . More than five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

105,510 384,278 94,470 584,258

105,828 403,265 99,522 608,615

103,981 424,700 103,496 632,177

In 2008 the expenses for operating leases amount to K 97,159 (2007: K 101,096; 2006: K 108,530). Furthermore the company has entered into the following other contractual financial obligations:
31/12/2008 K 31/12/2007 K 31/12/2006 K

Less than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . More than one year and less than five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . More than five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

154,813 0 0 154,813

329,973 136,650 0 466,623

260,953 350,625 0 611,578

Other contractual financial obligations comprise licence costs for the DFL rights, copyright fees and other purchase obligations. The future minimum obligations are determined based on contractual obligations to make cash payments in the future and for which no obligations have been included in the balance sheet. Contractually agreed adjustments (like inflation) are included within the figures mentioned above. D.2 Related parties (note 24) Shareholder On December 31, 2008, our sole shareholder, Unitymedia S.C.A., had 105 shareholders (including Management holders of Class B Shares) and is controlled by investment vehicles controlled by BC Partners

F-67

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) (including Finakabel Holdings Limited), Apollo (which includes AP Cable LLC and AP Participations, L.P.), which hold approximately 35.1% and 29.1%, respectively, of the equity interest in Unitymedia S.C.A and 37.7% and 31.5%, respectively, of the equity in Unitymedia S.A. Receivables and liabilities The following receivables and liabilities were outstanding:
31/12/2008 K 31/12/2007 K 31/12/2006 K

Loan to Finakabel Holdings Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Loan to Unitymedia S.C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Payable to Unitymedia S.C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,317 1,785 0

1,915 1,765 176

175

The loan to Unitymedia S.C.A. was provided for funding parent company expenses, bears interest of 10% p.a. and is due (including interest) as of December 31, 2010. The receivable to Finakabel Holdings Limited amounts to K 2,317 bears interest of 12% p.a. and is due on December 31, 2009. Board of Directors The following table sets out the name and position for each of the members of Unitymedia S.A.s Board of Directors as of December 31, 2008:
Name Position

Eric Zinterhofer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Raymond Svider . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Michael Block . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Michael Wunderlich . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jean Luc Allavena . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Moritz von Hauenschild . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lucien Farrell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Michael Kramer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Serge Bijnens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chairman, Compensation Committee Member, Compensation Committee Member, Audit Committee Member, Audit Committee Member Member Member, Audit Committee Member Member

Unitymedia currently has the following managing directors:

Name Position

Parm Sandhu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dr. Herbert Leifker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Christopher Winfrey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Christoph Bellmer (until July, 2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Managing Director Managing Director Managing Director Managing Director

On April 29, 2008 Christoph Bellmer, Chief Operating Officer (COO), was appointed to the board of directors. On July 31, 2008, Christoph Bellmer stepped down from his duties as COO for private reasons. Dr. Herbert Leifker, Chief Commercial Officer, assumed responsibility for customer service in the interim period and Joachim Grendel, previously a partner at the Boston Consulting Group, will assume the COO role in March 2009.

F-68

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) Key management personnel including Managing Directors, Vice Presidents and other executives engaged on the level of Unitymedia Management have received the following salaries and benefits:
2008 K 2007 K 2006 K

Salaries and wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Social security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pension expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Termination benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Share based payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,516 212 76 633 1,835 9,271

7,829 247 28 32 1,931 10,067

5,644 180 28 0 1,140 6,992

Share based payments As of December 31, 2008, certain members of our management and the board of directors of Unity Media S.A. or their affiliated companies, respectively, held Class B ordinary shares (Class B Shares) in Unity Media S.C.A., which in the aggregate represent approximately 7.2 percent of the Unity Media S.C.A.s outstanding share capital, including options held by the Companys management board over securities of Unity Media S.C.A. (as discussed below). Subject to time vesting and performance restrictions, the Class B Shares participate in the equity value of Unity Media S.C.A. above certain thresholds. Vesting of Class B Shares will be accelerated upon certain events, including a change of control of Unity Media S.C.A.. The shareholders of Unity Media S.C.A. have authorized the issuance of additional Class B Shares to other members of our management, which would, including the currently outstanding Class B Shares, represent up to approximately 8.2 percent of Unity Media S.C.A.s outstanding capital on a fully diluted basis. Certain members of the Companys management board continue to hold options over securities of Unity Media S.C.A. and Unity Media S.A., the economics of which have been capped at the point at which Class B Shares received in relation to such cap would begin to participate in the equity value of Unity Media S.C.A. These economically capped options are subject to the same time and performance vesting restrictions as the associated Class B Shares and represent approximately 2.3 percent, 2.4 percent and 0.8 percent of the respective outstanding capital of Unity Media S.C.A., Unity Media S.A. and Unitymedia on a fully diluted basis.

F-69

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) The following schedule discloses the information about the respective plans:
Date MEP I 2003 MEP II 2005 MEP III 2006 MEP IV 2007 Total

Number of SCA options, or equivalent Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . Granted to managing directors in 2008 (6) Vested/Exercisable . . . . . . . . . . . . . . . . . . . . . . Features of option plans Share price at grant date . . . . . . . . . . . . . . . . . . Exercise price . . . . . . . . . . . . . . . . . . . . . . . . . . . Life of Option/B-share . . . . . . . . . . . . . . . . . . . Expected dividends . . . . . . . . . . . . . . . . . . . . . . Time Vesting options/B-shares . . . . . . . . . . . Vesting periods in years . . . . . . . . . . . . . . . . . . Performance vesting options/B-share (3) . . . . Determination of Fair value Average fair value per option/B-share . . . . . Models used . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected volatility (5) . . . . . . . . . . . . . . . . . . . . Expected term of option/B-share . . . . . . . . . . Expected turnover of management . . . . . . . . Risk free interest rate . . . . . . . . . . . . . . . . . . . .

01/01/2005 2005 2005 31/12/2005 2006 2006 31/12/2006 2007 2007 31/12/2007 2008 2008 31/12/2008 31/12/2008

1,100 310 -359 1,051 0 0 1,051 0 0 1,051 0 0 1,051 1,051

0 3,298 0 3,298 127 0 3,425 0 0 3,425 0 0 3,425 108 685

0 0 0 0 5,661 0 5,661 0 0 5,661 510 -532 5,639 992 5,720 (1) 6,706 (2) 5,720 max 10 no 1,421 4 4,218

0 0 0 0 0 0 0 900 0 900 0 0 900 675

1,100 3,608 -359 4,349 5,788 0 10,137 900 0 11,037 510 -532 11,015 3,403

1,200 700 max 10 no 1,051 4 0

4,850 4,600 max 10 no 856 4 2,569

6,415 6,415 max 10 no 900 3 0

4,228 6,787

284 BSM (4) 25% 4 0.0% 2.4%

385 928 BSM/BIM (4) BSM/BIM (4) 25% 27.50% 4 3 0.0% 10.0% 3.2% 2.2% 3.75%

1,324 BIM (4) 30.0% 3 10.0% 4.1%

(1) 2007 (2) 2008 (3) Options will only vest if certain performance and super performance measures will be achieved in future; performance and super performance measures contain an absolute return threshold and a time-based return threshold which both have to be met to exercise the options. The threshold for the performance measures is the greater of 1.5x of the original valuation at the formation of Unitymedia in 2005 and the sum of original valuation and 20% internal rate of return and the greater of 2.0x and 30% respectively for the super performance measures. (4) BSM = Black Scholes Model used for time vesting options / BIM = Binomial Model used for performance vesting options (5) The assumptions about the expected volatility stem from historical data of share prices of comparable companies and from implied volatility data of call options on shares of comparable companies within the telecommunications sector. The expected volatility reflects the assumptions of the respective grant dates. (6) Fair Value = 566

Expenses for share based payments amount to K 1,835 (2007: K 1,931; 2006: K 1,140) and are included in personnel expenses.

F-70

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) D.3 Financial instruments and risk management (note 25) D.3.1 Carrying amounts, fair values and net result of financial instruments
Assets/ liabilities at fair value through profit & loss K

31/12/2008

Note

Loans and receivables K

Total K

Fair value K

Assets Cash and equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Receivables / Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Receivables from related parties and other receivables (1) . . . . . . . . . . Derivative financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

27 12 13 21

214,936 78,436 13,123 929

214,936 78,436 13,123 929

214,936 78,436 13,123 929

(1) Prepayments are excluded from the receivables balance as this analysis is only required for financial instruments.
Derivatives used for hedging K

31/12/2008

Note

Other financial liabilities K

Total K

Fair value K

Liabilities Financial liabilities measured at amortised cost / Financing . . . Financial liabilities measured at amortised cost (excluding finance lease liabilities) (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . Finance lease liabilities (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21

1,722,400 230,416

1,722,400 230,416 26,613 10,386

1,415,218 230,416 26,613 10,386

21 23

26,613 10,386

(2) The categories in this disclosure are determined by IAS 39. Finance lease are mostly outside the scope of IAS 39, but they remain within the scope of IFRS 7. Therefore, finance lease liabilities have been shown separately.

Trade receivables, cash and cash equivalents and other receivables are short term and the carrying amount are a reasonable approximation of fair value. Trade payables, bank overdraft and other payables are short term, and the carrying values are a reasonable approximation of fair value. The fair value of the listed bonds and the long term bank loan is the nominal value multiplied with the market price at balance sheet date. The finance lease is valued using the actual interest rate, and the carrying amount is a reasonable approximation of fair value.
Assets/ liabilities at fair value through profit & loss K

31/12/2007

Note

Loans and receivables K

Derivatives used for hedging K

Available for sale K

Total K

Fair value K

Assets Cash and equivalents . . . . . . . . . . . . . . . . . . . Receivables / Trade receivables . . . . . . . . . . Available for sale securities . . . . . . . . . . . . . Receivables from related parties and other receivables (3) . . . . . . . . . . . . . . . . . . . . . . . . Derivative financial instruments . . . . . . . . .

27 12 11 13 21

227,058 70,530 211,560 20,674 5,689 10,058

227,058 70,530 211,560 20,674 15,747

227,058 70,530 211,560 20,674 15,747

(3) Prepayments are excluded from the receivables balance as this analysis is only required for financial instruments.

F-71

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued)

Other financial liabilities K Derivatives used for hedging K

31/12/2007

Note

Total K

Fair value K

Liabilities Financial liabilities measured at amortised cost / Financing . . . Financial liabilities measured at amortised cost (excluding finance lease liabilities) (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . Finance lease liabilities (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21

1,932,511 234,934

1,932,511 234,934 22,581

1,909,942 234,934 22,581 4,480

21 23

22,581 4,480

(4) The categories in this disclosure are determined by IAS 39. Finance lease are mostly outside the scope of IAS 39, but they remain within the scope of IFRS 7. Therefore, finance lease liabilities have been shown separately.

The following tables disclose the net result for each class of financial instruments:
Gains and losses with Profit or Loss impact Disposal/ Repurchase K Gains & Losses from Hedging K Net result K

Financial period 2008

Interest K

Impairment K

Fair value K

Financial assets/liabilities at fair value through profit or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Loans and receivables (LAR) . . . . . . . . . . . . . . . . Financial liabilities in foreign currency . . . . . . . . FX Swap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Available for sale securities . . . . . . . . . . . . . . . . . . Financial liabilities measured at amortised cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13,735

-19,698 -7,594 7,594 42,052

-4,750 n.a.

-4,750 -5,963

42,052 -133,151 -19,698 0 -4,750 101,812

-148,631 -134,896

15,480 57,532

Impairments relating to the category loans and receivables include write-offs of K 22,750 (2007: K 23,222) and income from written-off receivables of K 3,052 (2007: K 1,497) which are shown in other expenses respectively other income. For all other categories, the net result is shown in financial income or financial expenses. In connection with the revaluation of the available for sale securities (see note 11) a loss of K 32,472 was recognised in 2007 directly in equity. Due to the sale of the Premiere shares in 2008 this amount was transferred to the profit and loss statement in 2008.
Gains and losses with Profit or Loss impact Disposal/ Repurchase K Gains & Losses from Hedging K Net result K

Financial period 2007

Interest K

Impairment K

Fair value K

Financial assets/liabilities at fair value through profit or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Loans and receivables (LAR) . . . . . . . . . . . . . . . . Financial liabilities in foreign currency . . . . . . . . FX Swap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Available for sale securities . . . . . . . . . . . . . . . . . . Financial liabilities measured at amortised cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,862 10,565 -21,725 5,583 -5,583 1,160 -163,159 -152,594 1,673 2,833 -21,725 0 . 2,852

2,862 -11,160

1,160 -161,486 -168,624

F-72

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) D.3.2 Risk management of financial instruments Unitymedias activities expose it to a variety of financial risks: liquidity risk, currency risk, interest rate risk, price risk and credit risk. Unitymedias overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the groups financial performance. Unitymedia uses derivative financial instruments to hedge certain risk exposures. Risk management is carried out by the treasury department under policies according to a delegation of authority and control limits. The treasury department identifies, evaluates and hedges financial risks in close cooperation with the groups operating departments. The management board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative and non derivative financial instruments, and investment of excess liquidity. Within the group Unitymedia recognizes original and derivative financial instruments. Non-derivative financial instruments exist in connection with operating activities, investing activities and financing activities. The respective activities induce the following non-derivative financial instruments:
Activity Main financial instruments

Operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Trade receivables and trade liabilities Long-term receivables Cash and bank Bonds and loans

Stand-alone derivative instruments exist only for hedging cash flow and fair value risks due to exposure to fluctuations in interest rates and/or foreign exchange rates. In addition to stand-alone derivatives, embedded derivatives exist in the bonds due to prepayment options. D.3.3 Liquidity risk Liquidity risks can emerge, if cash out flows are generated from the operating and investing activities. Furthermore liquidity risks can exist within the financing activities, if short-term cash outflows are necessary for the repayment of liabilities and the cash inflows from the operating activities and cash on hand are not sufficient for the future repayment, or no possibility of a payment extension exists. In the operating activities no liquidity risk exists, because the operating business generates cash inflows. The financing activities are based on long-term contracts. The repayment dates of the long-term liabilities are scheduled in 2011, 2013 and 2015 respectively. Furthermore, the undrawn portion of NRW/Hesse Revolving Credit facility remains available through 2013. Liquidity risks on a short-term or medium-term basis can only occur if the covenants of the bonds or the loan will not be fulfilled. Compliance with the covenants is supervised on a regular basis based on budget planning and active monitoring of the respective key financial figures. The following schedules contain an analysis of the forecasted cash payments based on the contractual maturities of our financial obligations from financial instruments:
as of December 31, 2008 2009 M 2010 - 2013 M After 2013 M Total M

Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NRW/Hesse Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Term loan and Revolver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other liabilities measured at amortised cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.0 0.0 30.0 131.5 230.9 392.4

0.0 1,024.0 100.0 509.8 8.2 1,642

575.1 0.0 0.0 93.6 5.6 674.3

575.1 1,024.0 130.0 734.9 244.7 2,708.7

F-73

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued)

as of December 31, 2007 2008 M 2009 - 2012 M After 2012 M Total M

Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NRW/Hesse Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Term loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other liabilities measured at amortised cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.0 0.0 0.0 196.7 233.6 430.3

0.0 0.0 100.0 572.4 5.6 678.0

2008 - 2011 M

575.1 1,275.0 0.0 207.7 0.0 2,057.8

After 2011 M

575.1 1,275.0 100.0 976.8 239.2 3,166.1

Total M

as of December 31, 2006

2007 M

Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NRW/Hesse Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Revolving Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Term loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other liabilities measured at amortised cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.0 0.0 55.0 0.0 202.2 165.8 423.0

0.0 0.0 0.0 100.0 549.0 9.2 658.2

575.1 1,350.0 0.0 0.0 352.4 0.0 2,277.5

575.1 1,350.0 55.0 100.0 1,103.6 175.0 3,358.7

Forecasted interest cash payments include 27.3 million (2007: 45.1 million) which have already been included within the balance sheet accruals. If future cash flow payments have been hedged, the hedged amounts have been included within the schedules. For further information about our contractual liabilities for lease contracts affecting our cash flow planning we refer to our explanations in note 23 Contingent assets, liabilities and Other financial obligations. D.3.4 Currency risk Our reporting currency is the Euro. We have no revenues, and few expenses or liabilities that are denominated in currencies other than the euro, except for the Dollar portion of the Unitymedia Senior Notes. As the proceeds from the Unitymedia Senior Notes were provided to Unitymedia Hessen through the Proceeds Loan, Unitymedia Hessen has hedged the entire amount of the Dollar-denominated Proceeds Loans into euros for the lifetime of the Notes so that interest payments can be made in Euro and Unitymedia is not subject to foreign currency exchange risk. D.3.5 Interest rate risk Our exposure to market risk for changes in interest rates relates primarily to our floating rate debt obligations. We have interest rate risk on the NRW/Hesse Notes, the Term loan and the NRW/Hesse Revolving Credit Facilities. In 2006 we entered into a 3-year 800.0 million interest rate swap at Unitymedia Hessen relating to the NRW/Hesse Notes. In 2008 we entered into a new 2-year 800.0 million three-month Euribor forward interest rate swap relating to the NRW/Hesse Notes. The new swap will become effective on April 30, 2009 and replace the existing swap for the same notional amount which expires on the same date. We did not enter into any interest rate hedging for the NRW/Hesse Revolving Credit Facility in connection with the 2006 Refinancing, or the Term loan. For our remaining fixed rate debt, changes in interest rates generally affect the fair value of the debt instrument but not our earnings or cash flows. We do not currently have any obligation to prepay fixed rate debt prior to maturity and accordingly, interest rate risk and changes in fair market value should not have a significant effect on the fixed rate debt until we would be required to refinance such debt.

F-74

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) Long-term financial instruments are exposed to a cash flow risk if the interest rate payments are variable (for example if the interest rate is based on a market rate such as Euribor) or they are exposed to a fair value risk if the interest rate payments are fixed. The explanations within our note 21 show our fixed rate and variable rate liabilities as well as the corresponding hedging instruments. The interest rate for the NRW/Hesse Notes is fixed every quarter based at Euribor + 2.875%. For a nominal amount of 800.0 million the variable interest rate is swapped into a fixed interest rate of 6.535% (3.66% + 2.875%) until April 2009 and from April 2009 until April 2011 into a fixed interest rate of 6.225% (3.35% + 2.875%) (see note 21 Bonds, facilities and derivative financial instruments). The following schedule discloses the impact of changes in the Euribor on equity and profit and loss:
2008 Type of Risk Factor Equity Impact K P&L Impact K 2007 Equity Impact K P&L Impact K

Increase Euribor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Decrease Euribor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

+0.25% 4,559 -0.25% -5,221

-977 977

2,315 -2,323

-1,438 1,438

Regarding the effective interest rates of the respective liabilities see (note 21) Bonds, facilities and derivative financial instruments. D.3.6 Risks of change in prices A portion of our costs are affected by inflation. We attempt to restrict increases in our costs below the rate of inflation through productivity improvements and capital expenditure. However, general inflation affects costs for our competitors and us. Furthermore, Unitymedia held 16.4 million shares of Premiere as of December 31, 2007. The shares were classified as available for sale securities which are measured at fair value by including the difference between the purchase cost and the fair market value within the Unrealised Earnings as a separate component of equity. These shares were exposed to price risks related to the quotation on the stock exchange. However the shares were sold completely in January 2008. D.3.7 Credit risks Credit risks exist regarding trade receivables, derivative financial assets, other receivables and cash positions. The trade receivables exist against companies and retail customers. Activities to mitigate credit risks regarding trade receivables include preventive actions, collection agencies and other procedures. Preventive actions are performed by examining beforehand whether the creditworthiness of the customer is assured before the contractual relationship with the customer begins taking into account its financial position (insolvency, statutory declaration, detention order), past experience out of existing or former contract relationships and other factors. Other procedures comprise demand notes which are sent to the customers based on a scheduled timeline. Generally demand notes are sent automatically to the respective customers. However for wholesale customers demand notes proposal lists are prepared based on a scheduled timeline. The respective departments decide at which point the wholesale customer should get the demand notes according to specific contract. If the customer still does not pay the outstanding amounts, collection agencies, or lawyers in the case of commercial clients are involved in demanding the respective amounts, and/or the customer is disconnected from the service. Collection agencies are generally involved into the collection process after the third demand note did not lead to a payment from the customer.

F-75

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) The credit risks of receivables have not been transferred to third parties unless fully written off. Hence the maximum credit risk is determined by the carrying value recognized in the balance sheet. The company does not have financial assets for which the credit risk has been transferred to other parties. Therefore the maximum risk of default is equal to the complete carrying value of the respective kinds of financial assets. The counterparty of the swaps and major cash positions are banks with a first quality rating as defined of at least A- (Standard & Poor) or A3 (Moodys). Hence the credit risk regarding these instruments is considered to be very low. However the maximum credit risk of these financial instruments is also the carrying value. D.3.8 Fair market value Usually the carrying value of the financial instruments recognized in the balance sheet is comparable to their fair market value. The carrying value less impairment provision of trade receivables are believed to approximate their fair values. However the long-term liabilities which have fixed interest rates are measured at amortized cost. The fair market value of fixed rate liabilities can differ significantly from the carrying value, because the fair market value of fixed rate liabilities fluctuate with the development of interest rates and capital markets generally. Furthermore the fair market value of all long-term liabilities can differ from the nominal value due to changes in the credit rating. The following table shows the fair market value in percent of the fixed rate interest bonds and the NRW/Hesse Notes based on their traded market prices at the balance sheet date:
2008 % 2007 % 2006 %

Unitymedia Senior Note M 215 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unitymedia New Senior Note M 235 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unitymedia New Senior Note M$ 151 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unitymedia NRW/Hesse Notes M 1,350 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

77.33 81.06 95.13 81.00

98.33 104.59 103.00 97.53

97.65 103.53 91.67 99.44

D.3.9 Capital Risk Management The groups objectives when managing capital are to safeguard the groups ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. We are focused on actively managing our balance sheet by retaining a sufficient level of financial leverage to maximise the returns to our shareholders. Therefore we maintain cash and cash equivalents to fund the day-to-day requirements of our business. We hold cash primarily in euros. Historically, we have relied primarily upon the proceeds of offerings of debt securities, bank borrowings and cash flow from operations to provide funds required for acquisitions and operations. Our principal source of liquidity on an on-going basis will be our operating cash flows, drawings under the NRW/Hesse Revolving Credit Facility, a portion of the proceeds of the offering of the NRW/Hesse Notes as well as the Term Loan. Our ability to generate cash from our operations will depend on our future operating performance, which is in turn dependent, to some extent, on general economic, financial, competitive, market, regulatory and other factors, many of which are beyond our control. Our high number of subscribers to basic cable services who pre-pay their annual bill in the months between November and February leads to higher cash inflows in these months as compared to the rest of the year. We believe that the proceeds from the NRW/Hesse Notes offering, the Term Loan and cash flow from operations will be sufficient to fund our currently anticipated working capital needs, capital expenditures, and debt service requirements. To the extent that we are not able to fund any principal payment at maturity with respect to any of our indebtedness, we will be required to refinance this indebtedness with additional credit facilities or the issue of new debt or equity securities in the capital markets.

F-76

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) D.4 Events after the balance sheet date (note 26) Unitymedia appoints new Chief Operating Officer On January 21, 2009 Unitymedia announced that it has appointed Joachim Grendel as its Chief Operating Officer, effective March 2009. Joachim Grendel joined Unitymedia from The Boston Consulting Group where he has served for 10 years most recently as the responsible TMT partner for Eastern Europe and Russia. He assumes responsibility for customer operations which includes all aspects of customer service, information technology and operating process development. Nortel Networks Bankruptcy Filing On January 14, 2009, Nortel Networks Corp. (Nortel) filed for bankruptcy protection under the Canadian Companies Creditors Arrangement Act, Chapter 11 of the U.S. Bankruptcy Code and administration under English insolvency law. Nortel provides switching systems for Unitymedia Cables telephony operations and optical transport equipment for Unitymedias IP backbone, with a contractual obligation to provide spare parts and software support for periods of eight and ten years, respectively. Unitymedia is actively working with Nortel GmbH to ensure contractual compliance for its support obligations, as well as evaluating alternative and back-up solutions. Unitymedia S.C.A. Share Purchases During the first quarter of 2009 to the date hereof, Unitymedia Hessen has acquired 0.6% of the shares of Unitymedia S.C.A. for approximately 3.7 million at what it believes are attractive prices in distressed capital markets. The purchase represents a financial investment in the interest of maximising shareholder value and is in line with the Companys return-oriented use of cash. Unitymedia continues to evaluate alternative uses of its liquidity and may, depending on market conditions and other factors, resell all or a portion of such shares at a later date and engage in additional debt and equity buybacks similar to previous buybacks. D.5 Explanations regarding the cash flow statement (note 27) Cash and cash equivalents comprise cash on hand and demand deposits. Bank overdrafts which are repayable on demand are also included in cash and cash equivalents. In the first quarter 2008 the indirect shareholding in Premiere AG, Munich, was sold. As a result of the sale cash inflow of 286.1 million was realized. In the cash flow statement the 244.0 million book value of the shares is recognized in cash flow from operating activities as the shares were originated from operating activities. The 42.1 million gain from the increase in the fair value of the shares during the holding period is recognized in cash flow from investing activities as the gain is not incurred by operating activities. Until December 31, 2008 we repurchased NRW/Hesse Notes of nominal 251 million. The acquisition price of 231.2 million excluding accrued interest has been classified as a repayment of debt under the application guidance of IAS 39, although the repurchased securities have not been formally retired. An addition at 75 million par value of NRW/Hesse Notes was purchased in 2007 and retired. Regarding undrawn lines of the NRW/Hesse Revolving Credit Facility see note 21 Bonds, facilities and derivative financial instruments. Cash which was restricted primarily for the DFL Bank Guarantee amounts to 102.5 million (2007: 106.6 million). During 2008, we incurred K 6,631 (2007: K 6,617) of additions to fixed assets (capital leases) without cash payments. D.6 Segment reporting (note 28) For the year 2006, 2007 and 2008 the segment reporting is based on the management approach according to IFRS 8. The standard requires a management approach under which segment information is presented on the same basis as that used for internal reporting purposes. The segments reported are the Unitymedia Cable and arena Broadcast and Satellite business lines.

F-77

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) This segmentation is consistent with our current internal reporting system, which is used for allocating resources to the segments and assessing their performance. Our legal organization supports this view as the Broadcast and Satellite Business is organized within the legal entity arena, whereas the Unitymedia Cable Business is organized within separate legal entities for the Unitymedia Cable businesses. The Unitymedia Cable business derives its revenues from basic and premium cable services, carriage fees, our internet business and our telephony business. Furthermore, revenues are included in other income due to shared services agreements between Unitymedia Cable and the arena Satellite segment. The arena Broadcast and Satellite business generates revenue from installation and subscription fees for arena satellite packages as well as wholesale revenues, sales generated from set top boxes sold and airtime sales earned, the Premiere share revenue recognition and sublicense fee payments by Premiere. The cash and sharebased sublicensing revenues (as well as the expenses for the Bundesliga Rights to DFL) for the respective seasons are realised on a proportional basis based on the number of games in the respective season. Adjusted EBITDA presented within the segment reporting represents the Earnings before interest, tax and depreciation and amortization excluding non recurring items and share based payments. Expenditures for non current assets do not comprise expenditures for fixed assets related to disposal groups because disposal groups only include current assets and liabilities. Intersegment transfers or transactions are entered into under normal commercial terms and conditions that would also be available to an unrelated third party. The following schedule discloses the major non cash transactions related to the respective segments in 2008:
Cable K arena K Total K

Release of deferred income for Premiere shares received as partial payment for sublicensing the Bundesliga rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Release of provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Share based payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non cash income presented within the Cash flow statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fair value adjustment of derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reversal/Capitalization of deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0 1,526 -1,835 5,888 5,579 -4,750 1,646 2,475

102,607 0 0 0 102,607 0 -5,188 97,419

102,607 1,526 -1,835 5,888 108,186 -4,750 -3,542 99,894

The following schedule discloses the major non cash transactions related to the respective segments in 2007:
Cable K arena K Total K

Release of deferred income for Premiere shares received as partial payment for sublicensing the Bundesliga rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Settlement regarding disposal of Out of region operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fair value adjustment of derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Share based payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non cash income presented within the Cash flow statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reversal/Capitalization of deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0 9,500 2,862 -1,931 10,431 42,013 52,444

94,057 0 0 0 94,057 8,224 102,281

94,057 9,500 2,862 -1,931 104,488 50,237 154,725

In 2006 significant non cash transactions have occurred for the reversal of deferred taxes (Income K 142,671) and the disposal of Tele Columbus Out-of-region (Expense K 21,200) which were related to the Cable segment. The segment Unitymedia Cable includes, as discontinued operations, the profits/losses from Tele Columbus Out-of-region. In 2008 arena realized revenue with a single customer of K 275,414 (2007: K 176,415).

F-78

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) Consolidated segment reporting for the period January 1, 2008 until December 31, 2008
Cable K arena K Cons. K Total K

Segment reporting (IFRS GAAP) Revenues from external customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intersegment revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortisation expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment profit/loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expenditures for non current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

809,516 0 395,740 70,005 -153,369 -250,505 -7,983 53,888 2,430,633 2,161,490 231,456 394,908

352,409 0 47,379 5,854 -12 -5,140 -11,296 36,785 130,589 77,291 1,581 41,261

0 0 0 -4,592 0 0 0 -4,592 0 0 0 0

1,161,925 0 443,119 71,267 -153,381 -255,645 -19,279 86,081 2,561,222 2,238,781 233,037 436,169

Consolidated segment reporting for the period January 1, 2007 until December 31, 2007
Cable K arena K Cons. K Total K

Segment reporting (IFRS GAAP) Revenues from external customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intersegment revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortisation expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment profit/loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expenditures for non current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

706,395 0 338,797 10,515 -162,463 -223,241 29,208 -7,184 2,549,759 2,354,817 171,715 332,832

292,569 16,054 -47,437 6,906 -1,857 -7,419 8,224 -41,583 224,495 204,922 1,847 -24,200

0 -16,054 0 -1,161 1,161 0 0 0 0 0 0 0

998,964 0 291,360 16,260 -163,159 -230,660 37,432 -48,767 2,774,254 2,559,739 173,562 308,562

Consolidated segment reporting for the period January 1, 2006 until December 31, 2006 For further information about the figures of our segments we refer to the following schedule:
Cable K arena K Cons. K Total K

Segment reporting (IFRS GAAP) Revenues from external customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intersegment revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortisation expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Minorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment profit/loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expenditures for non current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

596,343 0 285,687 8,698 -174,876 -225,307 119,411 -2,058 -5,545 6,010 2,688,340 2,467,533 103,965 291,320

69,243 9,107 -176,893 3,515 -2,213 -2,614 0 0 0 -178,205 201,881 136,157 14,680 -135,032

0 -9,107 0 -1,651 1,651 0 0 0 0 0 -81,685 -81,685 0 0

665,586 0 108,794 10,562 -175,438 -227,921 119,411 -2,058 -5,545 -172,195 2,808,536 2,522,005 118,645 156,288

F-79

UNITYMEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) D.7 Disclosures according to German GAAP (note 29) The average number of employees in 2008 was 1,557 (2007: 1,475 employees). Our auditor has received the following remuneration for the respective services:
2008 K 2007 K

Audit of financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other confirmation and valuation services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tax advisory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

480 288 0 158 926

449 21 22 50 542

The following table discloses the remuneration of management:

2008 K 2007 K

Salaries, bonuses, benefits and non-cash share based payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pension expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,927 76 5,003

3,549 47 3,596

Cologne, March 09, 2009 Unitymedia GmbH, Cologne

Parm Sandhu Managing Director Chief Executive Officer

Dr. Herbert Leifker Managing Director Chief Commercial Officer

Christopher Winfrey Managing Director Chief Financial Officer

F-80

The following auditors report (Besttigungsvermerk) has been issued in accordance with 322 German Commercial Code (Handelsgesetzbuch) on the consolidated financial statements and the group management report (Konzernlagebericht) of Unitymedia GmbH as of and for the fiscal year ended December 31, 2008. The group management report is neither included nor incorporated by reference in this offering memorandum. Auditors report We have audited the consolidated financial statements prepared by Unitymedia GmbH, Cologne, comprising the balance sheet, the income statement, statement of changes in equity, cash flow statement and the notes to the consolidated financial statements, together with the group management report for the business year from January 1 to December 31, 2008. The preparation of the consolidated financial statements and the group management report in accordance with the IFRSs, as adopted by the EU, and the additional requirements of German commercial law pursuant to Article 315a (1) HGB (German Commercial Code) are the responsibility of the parent Companys Managing Directors. Our responsibility is to express an opinion on the consolidated financial statements and on the group management report based on our audit. We conducted our audit of the consolidated financial statements in accordance with Article 317 HGB and German generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprfer (Institute of Public Auditors in Germany). Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial position and results of operations in the consolidated financial statements in accordance with the applicable financial reporting framework and in the group management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Group and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the consolidated financial statements and the group management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual financial statements of those entities included in consolidation, the determination of the entities to be included in consolidation, the accounting and consolidation principles used and significant estimates made by the Companys Managing Directors, as well as evaluating the overall presentation of the consolidated financial statements and the group management report. We believe that our audit provides a reasonable basis for our opinion. Our audit has not led to any reservations. In our opinion based on the findings of our audit the consolidated financial statements comply with the IFRSs as adopted by the EU and the additional requirements of German commercial law pursuant to Article 315a Abs. 1 HGB and give a true and fair view of the net assets, financial position and results of operations of the Group in accordance with these requirements. The group management report is consistent with the consolidated financial statements and as a whole provides a suitable view of the Groups position and suitably presents the opportunities and risks of future development. Frankfurt am Main, March 10, 2009 PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprfungsgesellschaft

(signed Brigitte Dreel) Wirtschaftsprfer

(signed ppa. Dirk Sattler) Wirtschaftsprfer

F-81

UNITY MEDIA GMBH COLOGNE Audited Consolidated Financial Statements December 31, 2007

F-82

UNITY MEDIA GMBH, COLOGNE CONSOLIDATED INCOME STATEMENT

Notes 2007 K 2006 K 2005 K

CONTINUING OPERATIONS Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Own work capitalized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost of materials and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Personnel expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net profit/(loss) from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DISCONTINUED OPERATIONS (Loss)/Gain for the period from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . Gain from disposal from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Profit/(loss) from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Profit/(loss) for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Attributable to: Equity holders of the parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Profit/(loss) for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 2 3 4 5 6 7 8 9 10

998,964 14,858 44,129 -140,139 -104,074 -522,378 291,360 -230,660 60,700 16,260 -163,159 -86,199 37,432 -48,767 0 0 0 -48,767 -48,767 0 -48,767

665,586 10,776 24,149 -135,290 -91,131 -365,296 108,794 -227,921 -119,127 10,562 -175,438 -284,003 119,411 -164,592 -11,755 9,697 -2,058 -166,650 -172,195 5,545 -166,650

341,898 4,698 7,175 -73,400 -63,433 -80,958 135,980 -160,307 -24,327 12,051 -88,674 -100,950 77,909 -23,041 730 0 730 -22,311 -22,684 373 -22,311

F-83

UNITY MEDIA GMBH, COLOGNE CONSOLIDATED BALANCE SHEET

Notes 31/12/2007 K 31/12/2006 K 31/12/2005 K

ASSETS Current assets Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Receivables from related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Available for sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trade accounts receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current tax receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepaid expenses and accrued revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current assets from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Assets of disposal groups held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non current assets Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Goodwill and other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total non current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . LIABILITIES Current liabilities Bonds and bank liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities to related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Short term provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current liabilities from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities of disposal groups held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non current liabilities Bonds and bank liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pensions and other long term employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long term provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total non current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shareholders equity Subscribed capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unrealised earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Equity attributable to equity holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total shareholders equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TOTAL LIABILITIES AND EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25 11 12

13

227,058 1,765 211,560 69,599 28,050 5,513 8,245 15,484 567,274 0 567,274

444,365 0 0 49,553 20,238 1,445 11,486 16,277 543,364 0 543,364 844,307 1,346,033 8,545 2,690 31,674 31,923 2,265,172 2,808,536

36,003 548 0 24,828 5,147 1,841 2,826 6,484 77,677 995,361 1,073,038 879,760 1,414,487 10,162 3,541 36,581 3,982 2,348,513 3,421,551

14 15 19

10

862,488 1,269,527 15,747 1,849 21,931 35,438 2,206,980 2,774,254

19

17 18

45,067 176 151,981 81,696 36,694 184,998 35,772 536,384 0 536,384

110,822 175 115,378 52,192 27,114 86,250 36,309 428,240 0 428,240 1,966,612 7,808 18,641 9,241 0 45 91,418 2,093,765 12,682 423,188 -1,159 -148,180 286,531 0 286,531 2,808,536

28,361 84,926 47,490 58,868 4,801 79,362 2,740 306,548 786,384 1,092,932 1,579,012 6,672 7,809 14,602 0 115 202,540 1,810,750 12,682 422,048 -5,618 24,012 453,124 64,745 517,869 3,421,551

19 16 19 17 18 10

1,887,444 8,482 22,581 5,561 51,333 0 47,954 2,023,355

20 20 20 20 20 20 20

12,682 425,294 -26,516 -196,945 214,515 0 214,515 2,774,254

F-84

UNITY MEDIA GMBH, COLOGNE CONSOLIDATED STATEMENT OF CASH FLOWS

Notes 2007 K 2006 K 2005 K

Cash flow from operating activities Profit before interest and taxes (EBIT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other non-cash income (-)/expenses (+) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Losses (+)/ Profits (-) from disposals of property, plant and equipment . . . . . . . . . Gain from disposals of discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Increase (-)/decrease (+) of inventories, trade receivables and other assets not related to investing or financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Increase (+)/decrease (-) of accruals, trade payables and other liabilities not related to investing or financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial expenses paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash flow from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash flow from investing activities Proceeds from disposal of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . Proceeds from disposal of disposal groups (net of disposed cash K 8,073) . . . . . Investments in tangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investments in intangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investments in the acquisition of subsidiaries (net of cash acquired K 104,876) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash flow from investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash flow from financing activities Repayment of finance lease obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash paid into capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Proceeds from loans, bonds or short or long term borrowings . . . . . . . . . . . . . . . . . Cash repayments of loans or short or long term borrowings . . . . . . . . . . . . . . . . . . . Transaction costs related to financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash flow from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash and cash equivalents at the end of the period Change in cash and cash equivalents from cash relevant transactions . . . . . . . . . . Cash and cash equivalents at the beginning of the period . . . . . . . . . . . . . . . . . . . . . Cash and cash equivalents at the end of the period including cash in disposal groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash and cash equivalents at the end of the period included in disposal groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash and cash equivalents at the end of the period excluding cash in disposal groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14 26

60,700 230,660 0 -104,489 148 0 1,342 45,831 -5,731 8,065 -155,506 81,020 581 0 -150,220 -17,306 0 -166,945 -1,557 176 0 -130,000 0 -131,381 -217,306 444,364

-119,126 227,921 -5,545 5,586 -2,521 -9,697 -49,083 116,091 -12,169 2,081 -115,996 37,542 12,470 153,529 -121,031 -15,796 0 29,172 0 0 1,505,000 -1,155,966 -16,298 332,736 399,450 44,914 444,364 0 444,364

-24,327 160,307 -373 -5,462 168 0 54,285 -5,288 0 583 -50,400 129,493 1,152 0 -30,134 -6,402 -850,819 -886,203 0 650 1,625,145 -783,698 -83,802 758,295 1,585 43,329 44,914 8,911 36,003

14 14

19 19

25

227,058 0

25

227,058

F-85

UNITY MEDIA GMBH, COLOGNE CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Attributable to equity holders of Unitymedia GmbH Subscribed Capital Cash-flow hedge available for sale Equity attributable to capital reserves reserve assets reserve retained earnings equity holders Minorities Total Equity K K K K K K K K

January 1, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additions relating to share-based payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Changes in fair value of hedging instruments (net of tax) . . . . . . . . . . . . . . . . . Revaluation of securities available for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shareholder contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net loss of the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . December 31, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additions relating to share-based payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Changes in fair value of hedging instruments (net of tax) . . . . . . . . . . . . . . . . . Revaluation of securities available for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shareholder contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Disposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net loss of the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . December 31, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additions relating to share-based payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Changes in fair value of hedging instruments (net of tax) . . . . . . . . . . . . . . . . . Revaluation of securities available for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shareholder contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net loss of the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . December 31, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12,682 0 0 0 0 0 0 12,682 0 0 0 0 0 0 0 12,682 0 0 0 0 0 12,682

179,138 156 0 0 242,754 0 0 422,048 1,140 0 0 0 0 0 0 423,188 1,930 0 0 176 0 425,294

0 0 -5,618 0 0 0 0 -5,618 0 4,459 0 0 0 0 0 -1,159 0 7,115 0 0 0 5,956

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 -32,472 0 0 -32,472

46,696 0 0 0 0 0 -22,684 24,012 0 0 0 0 0 0 -172,192 -148,180 0 0 0 0 -48,765 -196,945

238,516 156 -5,618 0 242,754 0 -22,684 453,124 1,140 4,459 0 0 0 0 -172,192 286,531 1,930 7,115 -32,472 176 -48,765 214,515

0 0 0 0 0 64,372 373 64,745 0 0 0 0 -66,593 -3,697 5,545 0 0 0 0 0 0 0

238,516 156 -5,618 0 242,754 64,372 -22,311 517,869 1,140 4,459 0 0 -66,593 -3,697 -166,647 286,531 1,930 7,115 -32,472 176 -48,765 214,515

F-86

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements A. General
........................................................................................... ................................................................................. ............................................................................ ..........................................................

F-91 F-91 F-93 F-94 F-95 F-95 F-96 F-101 F-101 F-103 F-103 F-103 F-104 F-104 F-104 F-105 F-105 F-105 F-107 F-107 F-108 F-108 F-112 F-113 F-114 F-115 F-115 F-115 F-116 F-117 F-117 F-118 F-118 F-118 F-118 F-118 F-119 F-119 F-122 F-122 F-123 F-124 F-125 F-125 F-126 F-126 F-127 F-127 F-127 F-128 F-128 F-132

B. Adoption of IFRS

C. Scope of consolidation

D. Basis of presentation and consolidation

E. Accounting and valuation methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1. Critical management assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2. Special accounting and valuation methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F. Explanations of the Income Statement and the Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1. Revenue (note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2. Own work capitalized (note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3. Other income (note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4. Cost of materials and services (note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5. Personnel expenses (note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6. Other expenses (note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7. Depreciation and amortization expenses (note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8. Financial income (note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9. Financial expenses (note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.10. Income taxes (note 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11. Available for sale securities (note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.12. Trade accounts receivables (note 12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13. Inventories (note 13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.14. Property, plant and equipment (note 14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.15. Goodwill and other intangible assets (note 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.16. Pensions and other long-term employee benefits (note 16) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.17. Deferred income (note 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.18. Provisions (note 18) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.19. Bonds, facilities and derivative financial instruments (note 19) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.19.1. Bonds and bank liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.19.2. Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.19.3. Derivative financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.20. Shareholders equity (note 20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G. Other explanations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1. Contingent assets, liabilities and financial obligations (note 21) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1.1. Contingent assets and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1.2. Other financial obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1.3. Finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1.4. Operating leases and other financial commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2. Related parties (note 22) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3. Financial instruments and risk management (note 23) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3.1. Carrying amounts and net result of financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3.2. Risk management of financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3.3. Liquidity risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3.4. Currency risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3.5. Interest rate risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3.6. Risks of change in prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3.7. Credit risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3.8. Fair market value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3.9. Capital Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4. Events after the balance sheet date (note 24) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5. Explanations regarding the cash flow statement (note 25) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6. Segment reporting (note 26) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.7. Disclosures according to German GAAP (note 27) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-87

LIST OF ABBREVIATIONS 2005 Financing

.........................

(i) the issuance of the 215.0 million in principal amount of the February 2005 Notes, (ii) the repayment of 93.8 million of Unitymedia Hessens previous senior credit facilities, (iii) the drawdown of 200.0 million under the Senior Credit Facilities, (iv) the purchase of all the outstanding shares of Kabelnetz (now Unitymedia NRW) for a total consideration of 1,540.3 million, including the repayment of the existing indebtedness of Kabelnetz and its subsidiaries, (v) the drawdown of 360.0 million under the Subordinated Bridge Facility, (vi) the drawdown of 850.0 million under the Senior Credit Facilities, (vii) the issuance of the equivalent of 360.1 million in principal amount of the July 2005 Notes and the repayment of the Subordinated Bridge Facility, and (viii) the payment of fees and expenses related to the foregoing The issuance by Unitymedia Hessen and Unitymedia NRW of the NRW/Hesse Notes that mature on April 15, 2013, and replaced the undrawn 100.0 million revolving credit facility with the NRW/ Hesse Revolving Credit Facility, available to Unitymedia Hessen, Unitymedia NRW and arena. The proceeds from the offering of the NRW/Hesse Notes were used to refinance our 1,050.0 million Senior Credit Facilities, to finance the payment by Unitymedia to Unity Media S.C.A. of the deferred purchase price for the Tele Columbus shares and to cash collateralize a portion of the DFL bank guarantee. Apollo Management V, L.P., New York, NY/U.S.A.

2006 Refinancing

.......................

Apollo

..................................

arena . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Arena Sport Rechte und Marketing GmbH, Cologne BC Partners

.............................

BC Partners Limited, London, United Kingdom

Bundesliga Rights . . . . . . . . . . . . . . . . . . . . . . . Rights to broadcast the matches of the 1st and 2nd German Football Leage (Deutsche Fuball Liga) Company CPE DFL
...............................

See Unitymedia Customer Premise Equipment Deutsche Fuball Liga, Frankfurt am Main Deutsche Telekom AG, Bonn Earnings before interest, tax Earnings before interest, tax, depreciation and amortization Earnings before tax

.................................... .................................... .................................. ................................... ................................

DTAG EBIT

EBITDA EBT

....................................

EU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . European Union EUR

.................................... ................................. ...............................

Euro European Inter Bank Offered Rate Prior financing of our group, consisting of a 360.0 million subordinated bridge facility entered into on June 21, 2005, as well as the Senior Credit Facilities consisting of a 225.0 million term loan A facility, a 250.0 million (incremental) term loan B facility, a 375.0 million term loan C facility, and a 70.0 million (incremental) revolving credit facility

Euribor

Financing

F-88

FCO

....................................

Federal Cartel Office, the Bundeskartellamt

German GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . Generally Accepted Accounting Principles in Germany (HGB) HGB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . German Commercial Code (Handelsgesetzbuch) IAS
..................................... ...................................

International Accounting Standards International Accounting Standards Board

IASB

IFRIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . International Financial Reporting Interpretation Committee IFRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . International Financial Reporting Standards In-Region assets
........................

Assets and liabilities related to the regions North Rhine Westphalia and Hesse within the previous Tele Columbus group Kabelnetz NRW HoldCo GmbH Kabelnetz NRW Limited Kabel Baden-Wrttemberg GmbH & Co. KG

Kabelnetz

............................... ..........................

Kabelnetz Ltd. KBW

...................................

KDG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Kabel Deutschland GmbH K

......................................

Thousand EUR

M . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Million EUR MEP

....................................

Management Equity Participation programs

MSG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Kabel Deutschland Breitband Services GmbH (formerly MSG MediaServices GmbH), a subsidiary of KDG NRW/Hesse Notes
......................

1,350,000,000 senior secured floating rate notes due 2013 issued by Unitymedia Hessen and Unitymedia NRW 130.0 million revolving credit facility issued during the 2006 Refinancing Assets and liabilities related to the regions of Tele Columbus excluding North Rhine Westphalia and Hesse Pictet & Cie., Geneva, Switzerland Premiere AG, Unterfhring Transfer Loan Agreement between Unitymedia to Unitymedia Hesse of USD 151 million from the Unitymedia New Senior Notes The offering by Unitymedia of the Notes and the entering into of the 230.0 million senior credit facilities consisting of a 200.0 million term loan facility and a 30.0 million revolving credit facility Senior credit facilities entered into in connection with the Refinancing and Financing Standards Interpretation Committee

NRW/Hesse Revolving Credit Facility

..

Out-of-Region assets

....................

Pictet

................................... ................................ ..........................

Premiere

Proceeds Loan

Refinancing

.............................

Senior Credit Facilities

..................

SIC

.....................................

Tele Columbus Group . . . . . . . . . . . . . . . . . . . Tele Columbus Kabel Holding GmbH, Hannover and its subsidiaries

F-89

Term Loan

..............................

100 million Senior Secured Term Loan Facility maturing in October 2011 entered into by the Unitymedia group companies Unitymedia Hessen, Unitymedia NRW and arena on October 20, 2006 Unity Media GmbH and its consolidated subsidiaries; Company and other similar terms except where the context otherwise requires. It is planned for Unity Media GmbH to be renamed Unitymedia GmbH.

Unitymedia, we, us, our,

.......

Unitymedia Cable . . . . . . . . . . . . . . . . . . . . . . . Cable business of Unitymedia, not including arena Unitymedia GmbH . . . . . . . . . . . . . . . . . . . . . . Unity Media GmbH, Cologne Unitymedia Group Unitymedia Hessen
...................... .....................

Unitymedia GmbH, Cologne and its subsidiaries Unitymedia Hessen GmbH & Co. KG, Cologne (formerly: iesy Hessen & Co. KG, Cologne) Unitymedia Hessen Verwaltung GmbH, Cologne (formerly: iesy Hessen Verwaltung GmbH, Cologne) Unitymedia Management GmbH, Cologne 235 million 10 1 8% senior notes of the Company due 2015 and $151 million 10 3 8% senior notes of the Company due 2015

Unitymedia Hessen Verwaltung

.........

Unitymedia Management

............... ..........

Unitymedia New Senior Notes

Unitymedia NRW . . . . . . . . . . . . . . . . . . . . . . . Unitymedia NRW GmbH, Cologne (formerly: ish NRW GmbH, Cologne) Unitymedia S.A.
........................ ......................

Unity Media S.A., Luxembourg Unity Media S.C.A., Luxembourg

Unitymedia S.C.A.

Unitymedia Senior Notes . . . . . . . . . . . . . . . . 215 million 8 3 4% senior notes of the Company due 2015 that were offered by Unitymedia as part of the Refinancing in February 2005 Unitymedia Services
....................

Unitymedia Services GmbH & Co. KG, Bochum (formerly: Tele Columbus West GmbH & Co. KG, Bochum)

Unitymedia Services Verwaltung . . . . . . . . Unitymedia Services Verwaltung GmbH, Bochum (formerly: Tele Columbus West Beteiligungs GmbH, Bochum) USD
....................................

United States Dollar

F-90

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements General The Unitymedia group is the second largest cable operator in Germany operating in the German states of Hesse and North Rhine-Westphalia. The group provides basic and premium cable television services, as well as internet access and telephony services to its customers. Its subsidiary arena acquired certain Bundesliga programming rights for three seasons starting with the 2006/07 season. These rights were sublicensed in 2007 to Premiere for the remaining two seasons in 2007/08 and 2008/09. Unitymedias head office is located in Cologne, Germany. The address is Aachener Strae 746-750, Cologne. The consolidated financial statements of Unitymedia for the three years ended December 31, 2007, 2006 and 2005 have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), London, and adopted by the European Union (EU) and applicable to the company and the additional requirements of German Commercial Law pursuant to Sec. 315 a (3) German Commercial Code. The company has issued the Senior Notes on the official market and the NRW/Hesse notes on the alternative securities market of the Irish Stock Exchange. The consolidated financial statements comprise the consolidated balance sheet, the consolidated income statement, the consolidated statement of cash flow, the consolidated statement of changes in equity and the notes. The Notes include the segment reporting. Figures are presented in K and million. The functional currency is Euro. The consolidated financial statements were released for publication by the managing directors on April 9, 2008. Adoption of IFRS The interpretation IFRIC 7 Applying the restatement approach under IAS 29 Financial reporting in hyperinflationary economics has become mandatory to accounting periods beginning on or after January 1, 2007 but is not relevant to the groups operations: Unitymedia has complied with the following IFRS and IFRIC interpretations, if applicable, that have become effective in 2007: In August 2005, the IASB published IFRS 7 Financial Instruments Disclosures. This standard results in a fundamental restructuring of the disclosure obligations for financial instruments and combines all disclosure regulations for financial instruments in a new standard. IFRS 7 requires disclosure of information on the importance of financial instruments for the asset and income situation of companies. In addition it contains new requirements for reporting on risks, which are associated with financial instruments. Also associated with the adoption of IFRS 7 is an expansion of IAS 1 Presentation of Financial Statements. Qualitative information is to be disclosed on objectives, methods and processes for the management of capital. In addition external minimum capital claims, infringements of these as well as the resulting consequences are to be disclosed. IFRS 7 is effective for reporting periods beginning on or after January 1, 2007. The adoption of this standard led to extensive additional quantitative and qualitative disclosures with respect to the relevance of financial instruments for the financial, assets and income position. The disclosures are based on a management approach. In January 2006, the IFRIC issued IFRIC interpretation 8, Scope of IFRS 2 (IFRIC 8). The interpretation clarifies that IFRS 2 applies to arrangements where an entity makes share-based payments for apparently no or inadequate consideration. If the identifiable consideration given appears to be less than the fair value of the equity instruments granted, under IFRIC 8 this situation typically indicates that other consideration has been or will be received. IFRS 2 would therefore apply. IFRIC 8 becomes effective for financial years beginning on or after May 1, 2006. The adoption of this interpretation did not have any impact on Unitymedias results of operations, financial position or cash flow.

F-91

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) In March 2006, the IFRIC issued IFRIC interpretation 9, Reassessment of Embedded Derivatives (IFRIC 9). The interpretation clarifies whether an embedded derivative has to be separated from a newly entered contract under IAS 39 only when a new contract is entered into or even subsequently. A subsequent reassessment is prohibited unless there is a change in the terms of the contract. IFRIC 9 applies for all annual periods beginning on or after June 1, 2006. The adoption of this interpretation did not have any impact on Unitymedias results of operations, financial position or cash flow. IFRIC 10, Interim Financial reporting and impairment, prohibits the impairment losses recognized in an interim period on goodwill and investments in equity instruments and in financial assets carried at cost to be reversed at a subsequent balance sheet date. The adoption of this interpretation did not have any impact on Unitymedias results of operations, financial position or cash flow. Unitymedia has not applied the following IFRS and IFRIC interpretations that have been issued and endorsed by the EU but are not effective as of December 31, 2007: In November 2006, the IFRIC issued IFRIC interpretation 11, IFRS 2 Group and Treasury Share Transactions (IFRIC 11). The interpretation provides guidelines for three different situations related to sharebased payments. It clarifies that share-based payment arrangements involving an entitys own equity instruments which it has to buy back (treasury shares) to fulfill its obligations have to be accounted for as an equity settled share-based payment transaction. Furthermore, it provides guidance regarding the application of IFRS 2 for share-based payment transactions where an entity grants its employees rights to equity instruments and the equity instruments are provided by the shareholders. IFRIC 11 becomes effective for financial years beginning April 1, 2007. Unitymedia expects to adopt the IFRIC 11 beginning January 1, 2008. The adoption of this interpretation is not expected to have a material impact on Unitymedias results of operations, financial position or cash flow. Unitymedia has not applied the following IFRSs and IFRIC interpretations that have been issued but have not yet been endorsed by the EU and are not effective as of December 31, 2007: In November 2006, the IFRIC issued IFRIC interpretation 12, Service Concession Agreements (IFRIC 12). The interpretation addresses how service concession operators should apply existing IFRSs to account for the obligations they assume and rights they receive in service concession arrangements. In one type of such an arrangement, the operator receives a financial asset, i.e., an unconditional contractual right to receive cash or another financial asset from the government in return for constructing or upgrading a public sector asset that it contracts or upgrades. A right to charge users is not an unconditional right to receive cash because the amounts are contingent to the extent to which the public uses the service. IFRIC 12 allows for the possibility that both types of arrangements may exist within a single contract. To the extent that the government has given an unconditional guarantee to pay for the construction of the public sector asset, the operator owns a financial asset. IFRIC 12 applies for all annual periods beginning on or after January 1, 2008. Unitymedia expects to adopt the IFRIC 12 beginning January 1, 2008. The adoption of this interpretation is not expected to have a material impact on Unitymedias results of operations, financial position or cash flow. In 2007, the IASB issued IFRIC 13 Customer Loyalty Programmes. The interpretation addresses how companies, that grant their customers loyalty award credits (often called points) when buying goods or services, should account for their obligation to provide free or discounted goods or services if and when the customers redeem the points. The interpretation becomes effective for annual periods beginning on or after July 1, 2008. The adoption of this interpretation is not expected to have a material impact on Unitymedias results of operations, financial position or cash flow. In 2007, the IASB issued IFRIC 14 IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction The interpretation addresses three issues:

how entities should determine the limit placed by IAS 19 Employee Benefits on the amount of a surplus in a pension plan they can recognise as an asset how a minimum funding requirement affects that limit and

F-92

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued)

when a minimum funding requirement creates an onerous obligation that should be recognised as a liability in addition to that otherwise recognised under IAS 19.

The interpretation becomes effective for annual periods beginning on or after January 1, 2008. The adoption of this interpretation is not expected to have a material impact on Unitymedias results of operations, financial position or cash flow. In 2007 the IASB has issued a revised IAS 23 Borrowing costs. The standard requires an entity to capitalize borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. The standard becomes effective for annual periods beginning on or after January 1, 2009. The adoption of this interpretation is not expected to have a material impact on Unitymedias results of operations, financial position or cash flow. Unitymedia has applied the following IFRS that has been issued and endorsed by the EU but which is not compulsory as of December 31, 2007: In November 2006, the IASB issued IFRS 8 Operating Segments. The standard requires an entity to report financial and descriptive information about its reportable segments. IFRS 8 requires identification of operating segments based on internal reports that are regularly reviewed by the entitys chief operating decision makers in order to allocate resources to the segment and assess its performance. The standard also requires an explanation of how segment profit or loss and segment assets and liabilities are measured for each reportable segment. IFRS 8 requires an entity to report information about revenues derived from its products or services, about the countries in which it earns revenues and holds assets, and about major customers. The provisions of IFRS 8 are effective for annual periods beginning on or after January 1, 2009. While the current management approach is based on an internal reporting measured according to the principles of German GAAP (HGB), management intends to review the same segments under IFRS in the near future. Scope of consolidation In addition to Unitymedia GmbH, the parent company, the following subsidiaries are included in the consolidated financial statements according to the principles of full consolidation.
Name of company Headquarter Country Share of equity %

Unity Media Management GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Arena Sport Rechte und Marketing GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unitymedia Hessen GmbH & Co. KG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iesy Hessen Verwaltungs-GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unitymedia NRW GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unitymedia Hessen Verwaltung GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iesy Hessen Beteiligungs-GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . KSG Kabel-Service-Gesellschaft des Handwerks mbH . . . . . . . . . . . . . . . . . . . . . . Tele Columbus Holding GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unitymedia Services Verwaltung GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Concepta Ost GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unitymedia Services GmbH & Co. KG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cologne Cologne Cologne Cologne Cologne Cologne Cologne Paderborn Hannover Bochum Bochum Bochum

Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Changes in scope of consolidation in 2005, 2006 and 2007 Acquisition of Unitymedia NRW On June 24, 2005 Unitymedia Hessen acquired all shares in Kabelnetz. The acquisition was based on the bid of March 11, 2005 and subsequently received approval from the Federal Cartel Office. Through a chain of horizontal and vertical mergers, in a first step Kabelnetzs subsidiaries with the exception of KSG KabelService-Gesellschaft des Handwerks mbH ultimately merged into Kabelnetz. In a second step, Kabelnetz merged into iesy Services GmbH. Prior to the merger, iesy Services GmbH had no operating activities. The date of the first consolidation was June 24, 2005.

F-93

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) The name of iesy Services GmbH was changed to ish NRW GmbH and the corporate domicile was shifted from Frankfurt am Main to Cologne in 2005. The company statutes were adjusted accordingly. The name was subsequently changed to Unitymedia NRW in 2007. A profit and loss transfer agreement was concluded between Unitymedia Hessen and Unitymedia NRW as controlled company on October 19, 2005, which was effective retroactively as of January 1, 2005. Acquisition/Disposal of Tele Columbus On August 1, 2005, our parent company Unitymedia S.C.A., Luxembourg, concluded a contract with Tele Columbus Kabel Holding GmbH concerning the merger of the two groups. The Federal Cartel Office approved the merger in November 2005. On December 9, 2005, the merger was completed. The shareholders of Tele Columbus Kabel Holding GmbH exchanged their shares in Tele Columbus Kabel Holding GmbH for shares in Unitymedia S.C.A. Subsequently, Unitymedia purchased 25.75% of those shares from the parent company. Simultaneously, 74.25% of the shares were contributed from Unitymedia S.C.A. to Unitymedia as a contribution in kind. The valuation of the contribution corresponds to the exchange value of the shares at the time of their contribution into Unitymedia S.C.A. The Tele Columbus Group primarily provided broadband cable network television and communications services via Level 4 network infrastructures in different regions in Germany. As a professional Level 4 operator, Tele Columbus provided cable television and radio services to approximately 2.6 million subscribers principally under exclusive arrangements with housing associations. In addition to analogue cable services, Tele Columbus also offered digital television, internet and telephony services. Tele Columbus generally sourced television and radio transmission signals either from Level 3 operators at Tele Columbus hand-over points or through its own satellite head ends, and subsequently provided cable services directly to subscriber homes. Unitymedia harmonized operations of its own and Tele Columbus In-Region assets in Hesse and North Rhine-Westphalia. The remaining regions of Tele Columbus in Germany including its corporate headquarters and service company in Hannover were sold in 2006. The business of Tele Columbus outside of Hesse and North Rhine-Westphalia has been disclosed as discontinued operations according to IFRS 5 until the final disposal as of October 31, 2006. Basis of presentation and consolidation Reporting date of consolidated financial statements The reporting date of the consolidated financial statements is December 31, 2007, which is in line with the reporting date of all group entities. Presentation and measurement The consolidated financial statements of Unitymedia have been prepared based on the same accounting and consolidation policies throughout all periods presented. The Company`s income statement has been prepared using the nature of expenses method under IFRS. The consolidated financial statements have been prepared on a historical cost basis except for derivative financial instruments, available for sale securities and expenses related to the MEP. Consolidation of equity The capital consolidation is performed according to the purchase method (IFRS 3.14) by netting the value of the investments with the subsidiaries fair values of assets (without goodwill) and liabilities on the acquisition date. The fair value of assets includes fair value of customer contracts and internally developed software. To the extent that the purchase price exceeds the fair value of assets (without goodwill) and liabilities, goodwill has to be capitalized. According to IFRS, goodwill must not be amortized but has to be tested on a yearly basis as to whether there is an impairment. An impairment loss has to be recognized if the recoverable amount is less than the carrying amount of goodwill. The recoverable amount is the higher amount between the value in use amount and the fair value less costs to sell.

F-94

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) Other principles of consolidation Intercompany payables and receivables are eliminated within the framework of debt consolidation. Intercompany profits are eliminated. Income and expenses from intercompany transactions are eliminated within the framework of income and expense consolidation. Discontinued operations Disposal groups qualifying as discontinued operations are presented as follows:

The assets and liabilities related to discontinued operations are presented separately from other assets or liabilities respectively in the balance sheet. Beginning with the date of acquisition depreciation of non current assets ceases. The post-tax profit or loss is presented as a single amount in a separate line item within the income statement. The post-tax gain or loss recognized on both the measurement to fair value less costs to sell and/or on the disposal of the disposal group constituting the discontinued operation is presented as a single amount in a separate line item within the income statement.

Accounting and valuation methods 5.1. Critical management assumptions

The following critical management assumptions have been made by management regarding the accounting and valuation methods:

The company has rental contracts for using cable ducts. The rental contracts are based on a long term basis (up to 30 years). However the company did not capitalize those cable ducts as finance leases because the cable ducts are not used by the company alone. Therefore the cable ducts do not fulfill the requirements as a specific asset according to IFRIC 4. The company is obliged to remove network equipment and infrastructure after the expiration of rental contracts. However no asset retirement cost has been included as a provision, because the probability of paying this asset retirement cost has been assessed as remote. The goodwill is tested for impairment on an annual basis by using discounted cash flow approaches which discount expected future cash flows. The estimate of future cash flows, discount rates and growth rates is based on assumptions with a relatively high uncertainty. We refer to our explanations under (15) Goodwill. Deferred tax assets are capitalized if sufficient taxable income is expected for future periods to be netted with the existing tax loss carry forwards. The estimate of management regarding sufficient taxable income is based on existing deferred tax liabilities as of the respective balance sheet date and/or taxable income from the operating business during forecasted periods based on the internal reporting. Customer contracts acquired through the purchase of the shares of Unitymedia Hessen, Unitymedia NRW and Tele Columbus In-Region-assets are depreciated on a basis of 10 to 20 years. The estimated useful life is based on the estimated contractual period with the customers. The company offers products that contain signal delivery and the right to use hardware devices (CPE). The hardware devices are essential for the signal delivery to the customer. Since the fulfillment of these arrangements is dependent on the use of a specific asset and the arrangements convey a right to use the asset, the contracts qualify as a lease with Unitymedia qualifying as a lessor.

F-95

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued)

Management and members of the board of Unitymedia S.C.A. have received options on the shares of Unitymedia and Unitymedia S.C.A respectively, which have effectively been exchanged for Class B shares of Unitymedia S.C.A. The vesting of the shares depends on time vesting and the achievement of certain performance criteria. The options have been valued using the Black Scholes Model for the time vesting options and the Binomial Model for the Performance vesting options. The main parameters of these models are the expected volatility, the estimated term of the options and the risk free interest rate on the grant date. We refer to our explanations under note 22 (G.2 Related parties). arena has sublicensed the Bundesliga Rights for Season 2 (2007/08) and season 3 (2008/09) of the DFL to Premiere in exchange for 16.4 million shares of Premiere in February 2007 and additional cash payments. The revenues (as well as the expenses for the Bundesliga Rights to the DFL) for the respective seasons are realised on a proportional basis based on the number of games in the respective season. The shares of Premiere have been classified as available for sale securities. These are measured with their fair market value at the balance sheet date by including the difference between the fair market value and the purchase price within a separate component of equity (Unrealised earnings). In 2008 the shares of Premiere have been disposed of. We refer to our explanations under note 24 (G.4. Events after the balance sheet). Special accounting and valuation methods

5.2.

Property, plant and equipment Property, plant and equipment are measured at initial cost after deducting any accumulated depreciation or accumulated impairment losses. Impairment losses are reversed if the reasons for the impairment loss no longer exist or the impairment loss has decreased. The initial cost comprises its purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Borrowing costs, if applicable, are recognized as expenses in the period they are incurred and are not capitalized within the initial cost. Property, plant and equipment is generally amortized on a straight line basis over a period of 3 to 23 years. The cable network has an estimated useful life ranging from 15 to 20 years. The cable network infrastructure comprises technical equipment with estimated useful life ranging from 8 to 15 years. The estimated useful lives are reviewed on an annual basis. Adjustments are recognized at the new basis going forward. Property, plant and equipment is impaired when there is a corresponding indication for the impairment. Impairment exists when the carrying value exceeds the recoverable amount. The recoverable amount is the higher amount between fair value less costs to sell and value in use. The impairment test is generally based on the single asset. Expenditures for maintenance and repair are expensed as incurred. Subsequent expenditure for significant renovations and additions are capitalized, if it is probable that future economic benefits in excess of the originally assessed standard of performance will be realized by the company. Profits and losses due to disposals are recognized within other income or expenses, respectively. Intangible assets Intangible assets acquired in a separate acquisition are measured at initial cost. Intangible assets acquired within a business combination are measured at fair value. Internally developed software is capitalized and measured at initial costs, if certain requirements are fulfilled. The amortization of intangible assets with definite useful lives is based on the straight line method over the assets estimated useful life. Amortization begins when the asset is ready for use.

F-96

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) Intangible assets with a definite useful life are amortized over their useful life of 2 to 15 years on a straight line basis. The estimated useful life of customer contracts is based on the average number of terminations or churn or if shorter the remaining contract terms with the Suppliers who have the contractual relationship with the subscriber units (Gestattungsvertrge). Customer contracts acquired within a business combination are amortized generally over 10 to 20 years. Unitymedia recognizes subscriber acquisition costs incurred to obtain new subscribers as an intangible asset if the costs are directly attributable to obtaining specific contracts are incremental, payable to a third party, can be measured reliably and meet the definition and recognition criteria of an intangible asset in accordance with IAS 38. Unitymedia amortizes these costs over the initial contract period, which lasts from 1 to 2 years. Goodwill and other intangible assets with an indefinite life are not amortized on a straight line basis but tested for impairment on an annual basis. Straight line amortization and impairment losses are presented within depreciation and amortization expenses in the income statement. The estimated useful lives are reviewed on an annual basis. Adjustments are recognized prospectively. The impairment test of goodwill has to be done based on the respective cash generating unit. The cash generating units are determined by the operating segments Unitymedia Cable and arena Satellite and Broadcasting. Profits and losses due to disposals are recognized within other income or expenses, respectively. Leasing Lease contracts according to IAS 17 can be divided into operating lease contracts and finance lease contracts. In the case of finance leases, the main risks and rewards are allocated to the lessee and therefore the leased asset has to be capitalized in the financial statements of the lessee. Assets leased under finance leases are recorded at the lower of fair value at the inception of the lease or the present value of the lease payments. The assets are depreciated using the straight line method over the shorter of the estimated useful life or over the lease period. The obligations related to future lease payments are recognized as liabilities. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. A lease is accounted for as an operating lease if the main risks and rewards incidental to ownership of the leased item remain with the lessor. Operating lease payments are therefore recognized on a straight line basis over the lease term. In order to receive digital TV and broadband services, Unitymedia leases the necessary CPE to customers. These leases for which the company is the lessor, are classified as an operating lease. Therefore, Unitymedia capitalizes the CPE as fixed assets based on the acquisition cost. The CPE is depreciated over the estimated contractual period of 1 to 2 years with the customer, using the straight line method. Available for sale securities Securities which have been acquired for sale but not for active trading purposes are classified as available for sale securities. These securities are measured with its fair market value. The changes between acquisition cost and fair market value is credited/charged directly against equity. Inventories Inventories are measured at the lower of cost or net realizable value. Cost of inventories is determined using the weighted average cost method.

F-97

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) Financial instruments Financial instruments are any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. According to IAS 32 and IAS 39, financial instruments comprise both non-derivative financial instruments like receivables, liabilities and shares, and derivative financial instruments. Financial assets and liabilities are recognized when an entity enters into a contractual relationship with the respective counterparty or issuer. A financial asset is de-recognized if the rights expire, the financial asset is settled or the rights transferred to another party. A financial obligation is de-recognized when the obligation under the liability is discharged or cancelled or the rights expire. The accounting of the respective classes of financial instruments is as follows:
Financial assets Initial measurement (1) Subsequent measurement Presentation of change in value

1. Trade accounts receivables and other receivables . . . . . . 2. Other financial assets 2.1. Held to maturity investments . . . . . . . . . . . . . . . . . 2.2. Available for sale securities . . . . . . . . . . . . . . . . . . 2.3. Derivatives qualifying for hedge accounting . . . . 2.4. Derivatives not qualifying for hedge accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . .

Fair value Fair value Fair value Fair value

Amortized cost Amortized cost Amortized cost/ Fair value (2) Fair value (3)

Other income/expense Financial income Equity Equity / Financial income (4) Financial income Financial income
Presentation of change in value

Fair value Fair value

Initial measurement (1)

Fair value (3) Fair value

Subsequent measurement

Financial liabilities

1. Bonds and revolving credit facilities . . . . . . . . . . . . . . . . . 2. Trade accounts payables and other liabilities . . . . . . . . . . 3. Derivatives 3.1. Derivatives qualifying for hedge accounting . . . . 3.2. Derivatives not qualifying for hedge accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fair value deducted by transaction costs Fair value Fair value

Amortized cost (5) Amortized cost Fair value (3)

Financial income Other income/expense Equity / Financial income (4) Financial income

Fair value

Fair value (3)

(1) The fair values are measured at acquisition cost, as acquisition costs between third parties are negotiated at arms length. (2) Generally available for sale securities are measured at fair value. If the fair value of available for sale securities can not be determined properly, they are measured at cost. (3) The fair value of derivative instruments is based on fair market values, if the derivatives are traded in an active market. If no active market with fair market values is available the fair value is determined based on financial mathematical models. (4) Derivatives qualifying for hedge accounting can be separated into cash flow hedges and fair value hedges. Cash flow hedges hedge future cash flows whereas no asset or liability has been recognized in the balance sheet at the valuation date. Fair value hedges hedge future cash flows whereas assets or liabilities have been recognized at the reporting date. Changes to cash flow hedges are recognized within a separate component of equity. The amounts in the separate component of equity are reversed in future periods when the hedged instrument is recognized in profit or loss. Changes to fair value hedges are recognized in financial income immediately. (5) Amortized cost including transaction costs is determined based on the effective interest method.

F-98

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) Financial instruments measured at amortized cost are impaired if the amortized cost exceeds the present value based on the initial effective interest rate. Foreign currency monetary items are measured using the spot rate of the respective reporting period. If permitted, trade accounts receivables are tested for bad debt expense on a portfolio basis. The portfolios comprise receivables with similar risk factors. Bad debt expense ratios are determined based on aging of the receivables and past experience of losses of receivables at certain aging levels. Cash and cash equivalents comprise cash at banks, cash in transit, checks and cash pledged as collateral. Pension accruals and other long-term benefits for employees Defined contribution plans Defined contribution plans are post-employment benefit plans under which an enterprise pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further contributions. Defined contributions exist for former employees of Deutsche Telekom AG, Bonn, (DTAG) who qualify as civil servants and are currently employed at Unitymedia NRW and Unitymedia Hesse. A monthly consideration is paid without any further obligation for the respective entities. Such contributions are recognized in Personnel expenses. As of December 31, 2007, 196 (2006: 198) employees participated in this defined contribution plan. Defined benefit plans Defined benefit plans are post-employment benefit plans other than defined contribution plans. Defined benefit plans exist for certain employees within the Unitymedia Group, who were with DTAG prior to the sale of cable networks to Unitymedia NRW and Unitymedia Hesse, but are not civil servants. The valuation of the defined benefit plans is based on the projected unit credit method including several assumptions and expectations regarding increase of salary, increase of pension payments, fluctuation and mortality rate. The rate of mortality is based on the schedules of mortality of Mr. Heubeck (Heubeck Richttafeln 2005). The accrual of the defined benefit liability is presented completely within the Personnel expenses. As of December 31, 2007 122 (2006: 131) employees participated in this defined benefit plan. The defined benefit liability does not include the actuarial gains or losses within a 10% corridor based on the defined benefit obligation according to IAS 19. Only when the actuarial gains or losses exceed the 10% corridor, the exceeding amount is amortized over the remaining service period. According to IFRS 1 no actuarial gains or losses were recognized at the transition date as of January 1, 2005 (fresh start method). Beginning with this point in time the 10% corridor has been applied. Early retirement agreements Employees of certain entities are, in certain cases, offered early retirement agreements. The valuation of the accrual is based on the claims of the employees due to termination payments and due to services performed. If the employees have the opportunity to enter an early retirement agreement without having concluded a contract at the reporting date, the valuation of the accrual is based on assumptions regarding the likelihood of an agreement in future. Provisions Provisions are liabilities of uncertain timing and/or amount. A provision is recognized when an enterprise has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Reimbursements are included in the valuation of the provision, if it is very probable that the reimbursement will be received.

F-99

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) Revenue Recognition Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Groups activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating intercompany sales within the group. Unitymedia recognizes revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of Unitymedias activities as described below. Sales We derive revenues from six main business activities: our analogue and digital basic cable television business, Pay TV business, Internet business, telephony business (including subscription and usage fees), carriage fees and arena. Subscription fees are generally realized on a straight line basis over the term of the individual contract. New customers may be offered promotional products with a number of free months of service within the contract period of 1 to 2 years. If the customer is permitted to cancel the contract within the promotional free months no revenue is realized within this period. If the customer is obliged to pay the subscription fees over a minimum contractual period the revenue is realized on a linear basis over the complete contractual minimum period. Usage and carriage fees are realized on a linear basis over the complete contractual period. Installation fees are realized as incurred matched by related internal handling and activation costs for new customers. Sublicensing fees are realized for the sublicensing of the Bundesliga Rights to Premiere by arena. The revenue (as well as the expenses to the DFL) is realized on a proportional basis based on the number of games within the respective season. Interest income Interest income is recognized on a time-proportion basis using the effective interest method. When a receivable is impaired, Unitymedia reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income on impaired loans using the original effective interest rate. Royalty income Royalty income is recognized on an accrual basis in accordance with the substance of the relevant agreements. Income taxes Current taxes Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities at undiscounted value. The tax rates and tax laws used to compute the amounts are those that are (substantively) enacted as of the balance sheet date. Deferred taxes Generally deferred taxes are recognized for any temporary differences between the tax base and the IFRS base, except on goodwill which is not recognized for tax purposes.

F-100

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) Deferred tax assets are recognized for deductible temporary differences and tax loss carry forwards, if it is probable that future taxable profits will be available against which the unused tax losses or temporary differences can be utilized. However deferred tax assets are not recognized if the deferred tax asset arises from the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction affects neither accounting profit nor taxable profit. The recoverability of the carrying value of deferred taxes is determined by future taxable profits and assessed on an annual basis. If it is no longer probable that enough future taxable profits will be available against which the unused tax losses or temporary differences can be used, an impairment in a corresponding amount is recognized on the deferred tax assets. Deferred taxes are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates that have been (substantively) enacted by the balance sheet date. Deferred taxes must not be discounted. Deferred taxes are presented within long term assets and liabilities. If the changes in the value of assets or liabilities are recognized in a separate component of equity, the change of value of the corresponding deferred tax assets and liabilities are also recognized in this separate component of equity (instead of income taxes). Explanations of the Income Statement and the Balance Sheet Due to the following in-year acquisitions in 2005 the income statements between 2005 and 2006 are only comparable on a limited basis. Unitymedia NRW was acquired on June 24, 2005 and Tele Columbus was acquired on December 9, 2005. The income statement of Unitymedia NRW has been presented from June 24, 2005 within the income statement of the consolidated financial statements of Unitymedia. The In-Region part of Tele Columbus has been presented in the income statement from December 9, 2005 in the consolidated financial statements of Unitymedia. However, the Out-of-Region part of Tele Columbus has been presented in two separate line items (Loss for the period from Discontinued operations and loss from disposal of Discontinued operations) within the income statement of the consolidated financial statements of Unitymedia. 6.1. Revenue (note 1)
2007 M 2006 M 2005 M

Basic Cable Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital TV Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Internet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Telephony . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Installation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Carriage fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . arena . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

535.8 54.5 25.9 26.8 9.0 54.4 292.6 999.0

486.4 25.3 11.6 8.5 11.5 53.0 69.3 665.6

295.8 5.6 3.9 1.3 5.1 30.2 0.0 341.9

We derive revenues from six main business activities: our analogue and digital basic cable television business, Pay TV business, internet business, telephony business (including subscription and usage fees), carriage fees and arena. Basic cable services Basic cable services revenue include subscription and installation fees from subscribers. Unitymedias basic analogue programming package consists of 33 to 36 analogue television channels (depending on the region served) and up to 34 analogue radio channels. In addition, our entry level digital access product Digital TV Basic offers up to 72 digital channels, including the analogue simulcast and 12 radio channels. Unitymedia provides basic cable services to three market segments: residential customers, small to medium enterprises

F-101

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) (SME) and Key Accounts. Housing associations (in SME and Key Accounts) and Level 4 operators pass through or re-sell our basic cable signal to the end customer. We also generate revenues from the installation of cable connections and generally have end-user access for digital and broadband services described below. Digital TV Pay Our Digital TV Pay products include programming that we assemble into packages as well as digital pay content of other content providers, such as Premiere Bundesliga. Digital TV Plus offers 21 film, documentary, series and music channels, Digital TV Extra contains English and German language content with 9 entertainment channels, 6 sports channels, 3 news channels as well as 3 film and adult channels. The Premiere Bundesliga football content is available on a stand-alone basis as well as in combination with other Digital TV offers. Digital TV International consists of our individual foreign language programming packages. Furthermore we offer an International Komplett package including all foreign language packages. Our subscribers also have access to digital pay cable television programming from Premiere. Customers have to contact Premiere in order to subscribe to Premiere packages other than Premiere Bundesliga. A key element of our pay TV migration strategy has been to provide Digital TV Plus or Digital TV Extra for three months on either a positive or negative option trial basis. We have achieved relief for many of the content providers for programming fees in this trial period. Internet Unitymedias broadband Internet business generates sales primarily through subscription fees. Since January 2006, Unitymedia has marketed its broadband Internet services through a new product portfolio, which was subsequently re-branded in May 2007. As part of these packages Unitymedia provides broadband Internet services at a download speed of up to 2Mbit/s, 6Mbit/s, 16Mbit/s and 32MBit/s without any time or data volume restrictions. These packages are available in Unitymedias upgraded areas in Hesse and North Rhine-Westphalia. In addition, Unitymedia offers the Multimedia-Anschluss (MMA), a service tailored for housing associations to purchase internet access at 128 kbit/s on a bulk basis and to enable their properties for the full triple play services. Telephony Unitymedia currently markets its telephony services only in a bundle with internet as part of its new product portfolio launched in January 2006. As part of these packages, Unitymedia provides telephony without any time or volume restrictions to fixed line numbers in Germany. Carriage fees In addition to subscription and activation fees, we receive carriage fees from broadcasters for the delivery of television and audio signals in analogue and digital mode via our network. Private as well as public broadcasters pay carriage fees. The underlying contracts typically have an average of one to four year terms with automatic renewal clauses for successive one-year terms. We generally collect the carriage fees directly from our broadcasters under regime-specific feed-in contracts on a regional basis. In general, carriage fees for analogue and digital channels are charged on a monthly basis, depending on the number of subscribers. Within a collective agreement with all public broadcasters we have flat-fee arrangements with each of the public broadcasters in connection with the transmissions of their analogue and digital programming. This collective agreement expired on December 31, 2007, and is currently under renegotiation. Until December 31, 2007, we distributed Premieres pay TV packages through our arrangement with MSG. Through this arrangement, MSG charged Premiere an annual carriage fee covering encryption and distribution by MSG as well as the carriage of its content over the digital channels on our network. On July 19, 2007 we entered into a set of agreements between Unitymedia and Premiere which includes the distribution of the Premiere content in a pass-through model under improved financial terms for a six-year contract term with effect to 1 January 2008. The distribution contract replaces the former MSG distribution contract which Unitymedia had to fulfil until December 31, 2007. Except for the carriage fees for Premiere under the former MSG Term Sheet 1 we invoice the carriage fees directly to all broadcasters. For the year ended December 31, 2007, carriage fees for basic cable service amounted to 7.2% of our cable revenues.

F-102

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) arena Arena generates revenue from installation and subscription fess for arena satellite packages as well as wholesale revenues, sales generated from set top boxes sold and airtime sales earned. Furthermore arena has sublicensed the Bundesliga Rights of the DFL to Premiere in exchange for 16.4 million shares of Premiere in February 2007 and additional cash payments for Season 2 (2007/08) and season 3 (2008/09). The cash and sharebased sublicensing revenues (as well as the expenses for the Bundesliga Rights to the DFL) for the respective seasons are realised on a proportional basis based on the number of games in the respective season. 6.2. Own work capitalized (note 2)

Own capitalized costs increased by 38.0% from 10.8 million in the year ended December 31, 2006 to 14.9 million in the year ended December 31, 2007. This largely reflects an increase in the level of network projects staffed by in-house employees resulting from increased upgrade activity of the cable footprint. A corresponding amount of expenditure is reflected in personnel expenses. 6.3. Other income (note 3)

Other income includes prior period income, sale of stock, reversal of prior period accruals and collection fees, among others. Within other income the following non recurring items are included:
2007 K 2006 K 2005 K

Non recurring settlement gain related to the disposal of the Tele Columbus Out-of-region assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reversal of prior period accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non recurring compensation for acquisition of Unitymedia NRW shares in 2005 . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

16,106 2,913 0 0 19,019

0 1,621 1,700 247 3,568

0 0 0 0 0

6.4.

Cost of materials and services (note 4)

2007 K 2006 K 2005 K

Cost of materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Purchased services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10,134 130,005 140,139

18,849 116,441 135,290

4,263 69,137 73,400

Cost of materials consists of raw materials and consumables. Raw materials and consumables primarily include the cost of repair and maintenance, wireless LAN routers, and the portion of cable modems and set-top boxes which we sell. Purchased services primarily consists of network infrastructure services, which include costs under long term agreements with DTAG, costs for arenas satellite platform as well as other agreements. Beginning in 2006, we increasingly focused our efforts on a set-top box rental model, whereby the boxes are capitalized and depreciated over their useful asset life. Our most significant costs include payments under long term agreements with DTAG for the use of assets which are shared between our network and that of DTAG and for services provided by DTAG.

F-103

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) 6.5. Personnel expenses (note 5)
2007 K 2006 K 2005 K

Salaries and wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Social security, pension and other benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non cash charges (share based payments) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non recurring items (termination payments, benefits) . . . . . . . . . . . . . . . . . . . . . . . . . . . .

81,182 15,036 1,931 5,925 104,074

71,576 14,036 1,138 4,381 91,131

41,019 8,615 156 13,643 63,433

Personnel expenses include salaries and wages, and social security, pension, and other benefits of our permanent staff including share based payments. They also include other forms of compensation such as overtime and stand-by pay, but do not include outsourced or temporary staff expenses, which are included in Other expenses. Regarding the pension benefits we refer to our explanations under F.16 Pensions and other long term employee benefits. 6.6. Other expenses (note 6)

Other expenses include copyright license fees, rental and leasing fees, sales and marketing expenses, sales commissions related to acquisitions of new analogue basic cable subscribers (which do not qualify for capitalization), legal, consulting, bad debt allowance and miscellaneous other expenses including costs for our customer care, billing and network systems, management fees as well as payments for the Bundesliga rights to the DFL. We pay license fees for our premium cable television business. We expect these fees to increase as we expand the programming we offer to our customers. Furthermore the following non recurring fees are included in the other expenses:
2007 K 2006 K 2005 K

Restructuring expenses arena . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Start up expenses arena . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transaction related accruals for set top box distribution and inventory . . . . . . . . . . . . . . . . . . . Transactional legal and consulting fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Restructuring charges for Unitymedia Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cancellation long term rental contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Settlement agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21,211 0 5,000 2,154 0 0 0 0 28,365

0 30,402 9,459 3,402 1,772 361 0 150 45,546

0 0 0 12,080 0 4,000 500 2,406 18,986

6.7.

Depreciation and amortization expenses (note 7)

Regarding the depreciation of the tangible assets in 2005, 2006 and 2007 respectively we refer to the schedule of fixed assets under F.14 Property, plant and equipment. The following schedule discloses the amortization expenses of the intangible assets for the periods 2005, 2006 and 2007 respectively.
2007 K 2006 K 2005 K

Customer Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Software and Concessions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subscriber Acquisition Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Brand name arena . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

78,946 9,734 4,565 333 93,578

78,619 10,084 2,272 167 91,142

35,031 10,117 923 0 46,071

F-104

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) Depreciation and amortization expenses relate to property, plant and equipment and intangible assets. The cost of set-top boxes and cable modems rented to the customer as well as third party customer acquisition costs are capitalized and depreciated over the useful asset life. The goodwill resulting from the acquisitions of Unitymedia NRW and Unitymedia Services are not amortized on a straight line basis but tested for impairment annually. 6.8. Financial income (note 8)
2007 K 2006 K 2005 K

Disposal of rights offered for capital increase in Premiere . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cancellation of NRW/Hesse Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Profit due to fair value adjustments of derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest and similar income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,160 1,673 2,862 10,565 16,260

0 0 4,854 5,708 10,562

0 0 10,047 2,004 12,051

The profit and loss due to fair value adjustments stems from the fair value adjustments of derivative instruments which do not qualify for hedge accounting and from the valuation of prepayment options included in the fixed interest rate bonds. 6.9. Financial expenses (note 9)
2007 K 2006 K 2005 K

Interest expenses Interest expense to third parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest expense relating to release of deferred transaction costs . . . . . . . . . . . . . . . . . . . . . . . . Release of deferred transaction costs relating to refinanced debt . . . . . . . . . . . . . . . . . . . . . . . Other Financial expenses Financing costs, release of deferred transaction costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

155,174 7,985 0 0 163,159

139,064 5,396 30,804 174 175,438

66,149 3,008 0 19,517 88,674

Interest expenses relating to transaction costs comprise the release of the deferred transaction costs for the 2005 Financing and the 2006 Refinancing, respectively. 6.10. Income taxes (note 10)
2007 K 2006 K 2005 K

Current tax expenses / (income) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prior year tax expenses / (income) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred tax expenses / (income) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12,927 -122 -50,237 -37,432

23,559 -299 -142,671 -119,411

88 0 -77,997 -77,909

The portion of the gain or loss on the cash flow hedge that is determined to be an effective hedge is recognized directly in equity through the statement of changes in equity. Hence the associated deferred taxes regarding the cash flow hedges are also recognized directly within equity. At the balance sheet date, unrealized earnings amounting to K 2,748 (2006: K -940; 2005: K 4,550) have been presented within equity regarding deferred taxes for cash flow hedges.

F-105

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) The following table discloses the reconciliation between the tax expenses (income) and the product of accounting profit multiplied by the applicable tax rate:
2007 K 2006 K 2005 K

Earnings before taxes before continuing operations (EBT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Applicable tax rate of Unitymedia GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Calculated tax expenses/(income) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjustments due to changes in tax rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjustments of deferred taxes due to disposal of Unitymedia Services within the group . . . . . Reassessment of deferred taxes on temporary differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reassessment of deferred tax assets on loss carry forwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additions and reductions for trade tax purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating expenses not deductible for tax purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Differences due to consolidation effects (tax effects before acquisition) . . . . . . . . . . . . . . . . . . . Capitalisation of acquisition costs/goodwill without deferred tax liabilities . . . . . . . . . . . . . . . . Revenues not taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Taxes related to prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

-86,199 -284,003 -100,950 39.90% 39.90% 39.90% -34,393 -113,317 -40,279 -29,954 0 4,155 10,199 11,612 0 0 0 0 -122 1,071 -37,432 0 -22,513 0 4,459 10,159 460 0 0 -526 -299 2,166 -119,411 0 0 0 -37,360 5,549 20 1,254 -7,511 -78 0 496 -77,909

` The applicable tax rate is the tax rate of Unitymedia GmbH in 2007. In 2007 the German Business Tax Reform was approved by the Federal Cabinet (Bundesrat). The tax rates will be reduced from approximately 40% to approximately 30% depending on the trade tax the company is liable to pay. The tax base is broadened by the limited deductability of interest expenses for liabilities and interest expenses within rental, lease and royalty payments. Furthermore, the usage of tax loss carry forwards after a change of control will not be permitted for corporate entities. The new tax rates will be applicable from January 1, 2008. Therefore deferred tax assets and liabilities are measured using the new tax rates. Deferred taxes have been recognized for the following kinds of temporary differences and unused tax losses:
Deferred tax assets (DTA) 31/12/2007 K 31/12/2006 K 31/12/2005 K Deferred tax liabilities (DTL) 31/12/2007 K 31/12/2006 K 31/12/2005 K

Property, plant and equipment . . . . . . . . . . . . . . . . . Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial assets without derivatives . . . . . . . . . . . . Derivative instruments . . . . . . . . . . . . . . . . . . . . . . . Liabilities and provisions . . . . . . . . . . . . . . . . . . . . . Loss carry forwards . . . . . . . . . . . . . . . . . . . . . . . . . . Fair value adjustments . . . . . . . . . . . . . . . . . . . . . . . . Netting DTA/DTL . . . . . . . . . . . . . . . . . . . . . . . . . . .

41,529 219 7,130 4,719 219,350 -37,902 -199,607 35,438

54,975 0 7,474 5,024 252,926 -46,968 -241,508 31,923

55,439 0 3,116 3,730 179,750 -42,509 -195,544 3,982

20,397 201,784 370 4,567 20,443

30,398 274,704 181 3,343 24,300

36,011 339,383 217 4,031 18,442

-199,607 47,954

-241,508 91,418

-195,544 202,540

Deferred tax assets for property, plant and equipment, and intangible assets have been recognized mainly for taxable increases of the value of those assets (Ergnzungsbilanzwerte), caused by business combinations on the level of the separate entity. Deferred tax liabilities have been recognized mainly for differences between IFRS base and tax base due to the purchase price allocation. Deferred tax assets include long term deferred tax assets K 29,639 (2006: K 31,170) of assets which are expected to be recovered or settled after one year. Deferred tax liabilities include long term deferred tax liabilities of K 45,589 (2006: K 93,076) which have been netted with short term deferred tax assets of K1.721 (2006: K 1,589).

F-106

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) Deferred tax assets on tax loss carry forwards for trade tax and corporate income tax purposes which exceed the deferred tax liabilities by K 35.438 have been capitalized although the taxable income for the respective entities within the group have been negative in the current or preceding financial period. Based on recent forecasts, however, the respective entities will realize taxable profits in future years based. No deferred tax assets have been recognized for the following kinds of tax loss carry forwards:
31/12/2007 K 31/12/2006 K 31/12/2005 K

Trade tax loss carry forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Corporate income tax loss carry forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

55,324 184,446

33,971 154,789

22,238 149,743

Deferred taxes on those tax loss carry forwards have not been recognized due to the following reasons:

The respective entities have agreed to a profit and loss agreement with the parent company. Due to this agreement they are not permitted to use tax loss carry forwards as long as the profit and loss agreement is active (vororganschaftliche Verlustvortrge), or It is uncertain whether the respective entities are able to realize enough taxable profits in future to offset these profits with the existing tax loss carry forwards. Available for sale securities (note 11)

6.11.

arena has acquired the economic interest to 16.4 million shares of Premiere in exchange for sublicensing the Bundesliga rights of DFL to Premiere. The shares have been acquired as of February 8, 2007 with a share price of 15.14. The economic rights to these shares have been classified as available for sale securities and subsequently transferred to Unitymedia NRW. As of December 31, 2007 the share price of Premiere was 12.90. However the shares have been disposed by Unitymedia NRW in January 2008 realising a gain. We refer to our explanations under G.4 Events after the balance sheet date (note 24). The unrealized loss from the revaluation at year-end (K 32,472) has been charged directly against equity. 6.12. Trade accounts receivables (note 12)
31/12/2007 K 31/12/2006 K 31/12/2005 K

Trade receivables gross amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trade receivables net amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereof long term trade accounts receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Short term trade accounts receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

91,170 -20,640 70,530 931 69,599

69,417 -18,883 50,534 981 49,553

39,328 -12,098 27,230 2,402 24,828

Impairment losses have been included within other expenses. We refer to our explanations under G.3.1 Carrying amounts and net result of financial instruments (note 23). Regarding the carrying amounts of trade accounts receivables pledged as collateral for liabilities we refer to our explanations under F.19 Bonds, facilities and derivative financial instruments. Movements on the group provision for impairment of trade receivables are as follows:
31/12/2007 K 31/12/2006 K

As of January 1, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additional provision for receivables impairment on a collective basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additional provision for receivables impairment on an individual basis . . . . . . . . . . . . . . . . . . . . . . . . . . . Reduction of receivables written off during the year as uncollectible . . . . . . . . . . . . . . . . . . . . . . . . . . . . . As of December 31, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

18,883 3,216 10,009 -11,468 20,640

12,098 5,866 4,917 -3,998 18,883

F-107

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) Generally receivables are impaired with 60% if they are overdue by 90 days and with 100% if they are overdue by 120 days. Additionally we include impairments on an individual basis if certain reasons for an impairment exist. Also in some cases, we include impairments on younger receivables if the customer has not paid his outstanding invoices for other overdue receivables which have already been impaired. Receivables are de-recognized and corresponding impairments are reversed when the customer becomes insolvent, or the account is handed over to a collection agency. The following trade receivables are past due but have not been impaired:
31/12/2007 K 31/12/2006 K

0 - 30 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 - 60 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 - 90 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

18,167 4,620 2,905 25,692

42,982 8,330 2,276 53,588

6.13.

Inventories (note 13)

31/12/2007 K 31/12/2006 K 31/12/2005 K

Set top boxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Network equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventories gross amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impairment losses set top boxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impairment losses network equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventories net amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,362 7,303 13,665 -2,705 -2,715 -5,420 8,245

10,463 8,449 18,912 -2,804 -4,622 -7,426 11,486

990 6,564 7,554 0 -4,728 -4,728 2,826

In 2007 impairments of K 2,005 have been reversed as a result of disposals. Impairment losses in 2006 amount to K -2,698. The impairment losses and the reversal of the impairment losses have been included within the other costs of materials and services. Inventories comprise set-top boxes, cable modems, network materials and spare parts for repair purposes. 6.14. Property, plant and equipment (note 14)

Our capital expenditure relates primarily to expanding or upgrading our network. Capital expenditure also includes intangible assets (except our customer list) and does not include financial assets. Incremental capital expenditure such as the upgrade of the Level 4 or in-house network or the introduction of a new product is designed to ensure that our return on investment thresholds are met. In addition, we incur expenditure required to sustain our current network, which we account for as repair and maintenance expenditure within raw materials and consumables on our income statement.

F-108

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued)

The following table represents the reconciliation of carrying amounts of tangible and intangible assets at the beginning and end of the period from January 1, 2007 until December 31, 2007 and the two preceding periods 2006 and 2005.
Development of Fixed Assets as of December 31, 2007 Acquisition costs K K K K K K K Depreciation and Amortization K K K K Net book value K K 01/01/2007 Additions Disposals Transfers 12/31/2007 01/01/2007 Additions Impairment Disposals Transfers 31/12/2007 31/12/2007 31/12/2006

I. Property, plant and equipment 1. Tenant improvements and cable duct assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Broadband cable network . . . . . . . . . . . . . . . . 3. Other plant, furniture and office equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. Advanced payments and construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. Discontinued operations . . . . . . . . . . . . . . . . .

178,300 1,028 981,838 101,996 22,952 31,856 8,730 44,501

89 1,328 855 345 2,618

1,238 180,476 14,058 19,685 1,102,191 344,051 -615 -20,092 30,212 55,921 0 12,432 98

9,855 122,553 4,633 0 137,041

0 0 41 0 41

89 705 611 4 1,410

0 0 0 0 0

23,824 465,899 16,495 94 0 506,311

156,652 636,291 13,718 55,827 0 862,488

164,242 637,787 10,520 31,758 0 844,307

F-109

1,214,946 156,255 II. Goodwill and other intangible assets 1. Concessions, industrial property and similar rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,173,737 2. Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 556,222 3. Advanced payments . . . . . . . . . . . . . . . . . . . . . 1,387 4. Discontinued operations . . . . . . . . . . . . . . . . . 1,731,346

216 1,368,800 370,639

11,996 0 5,310 17,306

524 0 0 524 3,142

284 1,185,493 385,312 0 556,222 0 -499 6,198 0 0 -215 1,747,913 385,312 1 3,116,713 755,951

92,583 0 0 92,583 229,624

995 0 0 995 1,036

503 0 0 503 1,913

0 0 0 0 0

478,387 0 0 0

707,106 556,222 6,198 0

788,425 556,222 1,387 0

478,387 1,269,526 1,346,034 984,699 2,132,014 2,190,341

2,946,292 173,562

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued)

Development of Fixed Assets as of December 31, 2006 Acquisition costs 01/01/2006 K Consol. K K K K K K K Depreciation and Amortization K K K K K Net book value K K Additions Disposals Transfers 31/12/2006 01/01/2006 Consol. Additions Impairment Disposals Transfers 31/12/2006 31/12/2006 31/12/2005

I. Property, plant and equipment 1. Tenant improvements and cable duct assets . . . . 2. Broadband cable network . . . . . . . . . . . . . . . 3. Other plant, furniture and office equipment . . . 4. Advanced payments and construction in progress . . . . . . . . . . . . . . . 5. Discontinued operations . . . . . . . . . . . . .

180,537 908,350 20,922

0 0 0

1,113 79,183 4,001

3,718 9,093 2,024

368 3,398 53

178,300

5,393

0 0 0

9,913 107,873 4,347

2,108 12,514 0

3,576 9,244 1,991

220 -254 34

14,058 344,051 12,432

164,242 637,787 10,520

175,144 675,188 10,880

981,838 233,162 22,952 10,042

F-110

22,696

25,213 11,521

12,300 8,733 35,868

-3,753 69 135

31,856 0

4,148 0

0 0 0

24 0 122,157

0 0 14,622

4,074 0 18,885

0 0 0

98 0 370,639

31,758 0

18,548 199,664

199,664 -202,521

1,332,169 -202,521 121,031 II. Goodwill and other intangible assets 1. Concessions, industrial property and similar rights . . . . . . . . . . . . . . . . . 1,151,937 0 2. Goodwill . . . . . . . . . . . . . . 556,222 0 3. Advanced payments . . . . 856 0 4. Discontinued operations . . . . . . . . . . . . . 714,070 -708,044 2,423,085 -708,044

1,214,946 252,745

844,307 1,079,424

14,726 0 898 909 16,533

-633 0 367 726 460 36,328

6,441 0 0 -6,209 232 367

1,173,737 294,529 556,222 0 1,387 0 0 0 1,731,346 294,529 2,946,292 547,274

0 0 0 0 0 0

90,791 0 0 0 90,791 212,948

351 0 0 0 351 14,973

359 0 0 0 359 19,244

0 0 0 0 0 0

385,312 0 0

788,425 556,222 1,387

857,408 556,222 856

0 0 714,070 385,312 1,346,034 2,128,556 755,951 2,190,341 3,207,980

3,755,254 -910,565 137,564

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued)

Development of Fixed Assets as of December 31, 2005 Acquisition costs 01/01/2005 K Consol. K K K K K K K Depreciation and Amortization K K K K K Net book value K K Additions Disposals Transfers 12/31/2005 01/01/2005 Consol. Additions Impairment Disposals Transfers 31/12/2005 31/12/2005 31/12/2004

I. Property, plant and equipment 1. Tenant improvements and cable duct assets . . . . . . . . . . . . . . . . . . . 2,090 2. Broadband cable network . . . . . . 252,687 3. Other plant, furniture and office equipment . . . . . . . . . . . . . . . . . . . 10,077 4. Advanced payments and construction in progress . . . . . . . 12,727 5. Discontinued operations . . . . . . . 0 II. Goodwill and other intangible assets 1. Concessions, industrial property and similar rights . . . . . . . . . . . . . 334,224 2. Goodwill . . . . . . . . . . . . . . . . . . . . 85,005 3. Advanced payments . . . . . . . . . . . 404 4. Discontinued operations . . . . . . . 0

177,793 550 635,567 22,573 10,335 26,180 199,664 939 6,072 0

0 12,368 541 12,176 0 25,085

104 9,891 112 -10,107 0

180,537 211 908,350 143,652 20,922 22,696 199,664 7,646 10,013 0

0 0 0 0 0 0

5,182 84,325 2,160 9,740 0 101,407

0 12,829 0 0 0 12,829

0 12,368 382 10,881 0 23,631

0 4,724 618 -4,724 0 618

5,393 233,162 10,042 4,148 0

175,144 1,879 675,188 109,035 10,880 18,548 199,664 2,431 2,714 0

F-111

277,581 1,049,539 30,134

0 1,332,169 161,522

252,745 1,079,424 116,059

812,884 471,217 412 714,070

5,681 0 721 0 6,402

1,526 0 7 0 1,533 26,618

674 1,151,937 249,984 0 556,222 0 -674 856 0 0 714,070 0 0 2,423,085 249,984 0 3,755,254 411,506

0 0 0 0 0 0

45,924 0 0 0 45,924 147,331

147 0 0 0 147 12,976

1,526 0 0 0 1,526 25,157

0 0 0 0 0 618

294,529 0 0 0

857,408 556,222 856 714,070

84,240 85,005 404 0

419,633 1,998,583

294,529 2,128,556 169,649 547,274 3,207,980 285,708

697,214 3,048,122 36,536

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) The following table discloses the historical acquisition costs of fully depreciated property, plant and equipment that are still in use:
31/12/2007 K 31/12/2006 K 31/12/2005 K

Technical equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other office equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

85,943 32,400 87,613 205,956

41,155 28,195 72,477 141,827

38,339 25,806 60,039 124,184

Regarding the carrying amounts of tangible and intangible assets pledged as collateral for liabilities we refer to our explanations under F.19 Bonds, facilities and derivative financial instruments. Regarding finance lease assets and obligations we refer to our explanations under G.1.1 Contingent assets, liabilities and other financial obligations. Regarding operating lease obligations we refer to our explanations under G.1.1 Contingent assets, liabilities and other financial obligations. Regarding goodwill we refer to our explanations under F.15 Goodwill and other intangible assets. Regarding purchase obligations for tangible and intangible assets due to existing contracts not recognized in the balance sheet we refer to our explanations under G.1.1 Contingent assets, liabilities and other financial obligations. Impairments were included in 2005 and 2006 due to exchanging old cable network equipment with new cable network equipment. The impairments in 2005 and 2006 are related to the Cable business segment. The impairments in 2007 relate to shutting down the broadcast operations in restructuring arena following the agreements with Premiere. 6.15. Goodwill and other intangible assets (note 15)
31/12/2007 K 31/12/2006 K 31/12/2005 K

Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Customer Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Software and concessions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subscriber Acquisition Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Advance Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Brand name arena . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

556,222 678,277 23,336 4,994 6,198 500 1,269,527

556,222 757,223 27,570 2,798 1,387 833 1,346,033

556,222 835,842 20,114 1,453 856 0 1,414,487

The level of the impairment test of the goodwill is the level of the respective cash generating units. The cash generating units are determined by the business segments according to IFRS 8 and management reporting. The impairment test is performed on the level of the Cable business segment comparing the carrying amount with the recoverable amount. Currently in the arena Satellite and Broadcast business segment no goodwill is recognized. At the balance sheet date the goodwill in the cable business as in prior years amounts to 556.2 million. The recoverable amount is determined based on the fair value less costs to sell using a discounted cash flow approach. The determination of the recoverable amount is based on the following estimates:
31/12/2007 31/12/2006 31/12/2005

Length of projection period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Weighted average cost of capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Growth rate beyond projection period for terminal value . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9 years 11.8% 2.5%

10 years 10.0% 3.5%

10 years 10.0% 3.5%

F-112

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued)

The determination of the recoverable amount has been determined by using cash flow projections based on financial budgets approved by senior management covering a planning period of 9 years. The relatively long projection period for estimating future cash flows is justified by the long contractual relationship with the customers. The projections of subscribers, revenue, costs, and capital expenditures are based on reasonable and supportable assumptions that represent managements best estimates. Key assumptions are the estimated number of subscribers and the level of upgraded network infrastructure. The projections are based on both past experience and expected future market penetration with the various products. Unitymedia has capitalized the following customer contracts with the following respective remaining useful lives:
31/12/2007 K 31/12/2006 K 31/12/2005 K

Customer contracts on the level of Unitymedia NRW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Customer contracts on the level of Unitymedia Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . Customer contracts on the level of Unitymedia Hessen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

519,133 97,919 61,225 678,277

571,133 117,912 68,178 757,223

623,133 137,577 75,132 835,842

The following schedule discloses the average remaining useful life of the customers:
31/12/2007 31/12/2006

Customer contracts on the level of Unitymedia NRW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Customer contracts on the level of Unitymedia Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Customer contracts on the level of Unitymedia Hessen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10.0 5.7 8.8

11.0 6.7 9.8

6.16.

Pensions and other long-term employee benefits (note 16)

The liabilities for long-term employee benefits comprise provisions for pensions and for early retirement agreements.
31/12/2007 K 31/12/2006 K 31/12/2005 K

Pension obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Early retirement obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7,679 803 8,482

6,928 880 7,808

5,896 776 6,672

Pension accruals and early retirement obligations which will be settled within the subsequent financial period amount to K 19 (2006: K 17; 2005: K 0). The following table shows the reconciliation between the defined benefit obligation and the defined benefit liability:
31/12/2007 K 31/12/2006 K 31/12/2005 K

Defined benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unrecognised actuarial gains (losses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Defined benefit liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,815 864 7,679

7,525 -597 6,928

7,436 -1,540 5,896

The defined benefit obligation as of January 1, 2005 amounted to K 5,627. As of January 1, 2005 no actuarial gains or losses have been recognized, because January 1, 2005 was the transition date from German GAAP to IFRS and Unitymedia applied the fresh start method to the valuation of pension liabilities. No plan assets or liabilities exist regarding the pension liabilities.

F-113

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) The following table summarizes the development of pension accruals.
2007 K 2006 K 2005 K

Defined benefit liability as of January 1, (Unitymedia NRW June 24, 2005) . . . . . . . . . . . . . . . . . . . . . . . Current service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Actuarial gains and losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Plan Division/Business Combinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Defined benefit liability as of December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,928 424 338 6 0 -17 7,679

5,896 448 287 55 242 0 6,928

5,627 173 198 0 -88 -14 5,896

Expenses for pensions are included as follows:

2007 K 2006 K 2005 K

Current service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Actuarial gains and losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

424 338 6 768

448 287 55 790

173 198 0 371

The expenses for pensions are presented completely within the personnel expenses. The calculation of the different kinds of liabilities for future employee benefits is based on the following assumptions:
31/12/2007 % 31/12/2006 % 31/12/2005 %

Discount rate pensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected rate of salary increases p.a. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected rate of pension increases p.a. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected rate of fluctuations p.a. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.5 2.5 - 2.75 1.5 - 1.7 7.00

4.45 2.5 - 3.25 1.50 7.00

4.10 2.75 - 3.5 1.50 5.00

The group has defined contribution plans regarding former employees of the DTAG. The expenses in the financial year 2007 are K 1,387 (prior year: K 1,400) One subsidiary has offered their employees early retirement programs. At the balance sheet date, it is not known whether employees will use this program or not. The provision for early retirement programs comprises early retirement programs due to existing contracts at the balance sheet date as well as expected contracts in the future. The calculation of the provision is based on the assumption that 10% to 50% (depending on the potential starting year of the early retirement) of the respective employees will use the early retirement program. 6.17. Deferred income (note 17)

Revenue has been deferred to the subsequent financial periods for the following items:
2007 K 2006 K 2005 K

Sublicensing Bundesliga rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereof long term deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thereof short term deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

153,911 82,420 236,331 51,333 184,998

0 86,250 86,250 0 86,250

0 79,362 79,362 0 79,362

F-114

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) 6.18. Provisions (note 18)

The following table shows the reconciliation of the other provisions for the year 2007:
01/01/2007 K Additions K Usage K Release K 31/12/2007 K

Long term provisions Onerous contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Short term provisions Disposal of discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . Repurchase and exchange agreements . . . . . . . . . . . . . . . . . . . . . . . Termination/Adjustment of contracts . . . . . . . . . . . . . . . . . . . . . . . . Restructuring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Litigation accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

45 21,200 8,176 6,277 496 160 36,354

45 9,700 7,760 7,920 233 4,824 20,736 5,293 6,277 (1) 4 11,574 9,745

0 11,500 10,643 7,920 0 729 4,980 35,772

(1) Obligations for settlement agreements within the restructuring provisions have been reclassified to the other liabilities

The provisions related to the disposal of discontinued operations consist mainly of possible tax liabilities. Arena and Unitymedia NRW have obligations regarding the repurchase and exchange of set top boxes. Therefore the respective provisions have been included. Provisions for restructuring are related to the restructuring of Unitymedia Services. The short term provisions are expected to occur within one year. We estimate the uncertainty of the different kinds of provisions as very probable to occur within one year and probable regarding the amount. 6.19. 6.19.1. Bonds, facilities and derivative financial instruments (note 19) Bonds and bank liabilities
31/12/2007 K 31/12/2006 K 31/12/2005 K

Bond and bank liabilities Nominal value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transaction costs and FX revaluation of MUSD 151 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bank liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest Rate liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Short-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,950,145 -62,701 1,887,444 0 45,067 45,067 1,932,511

2,025,145 -58,533 1,966,612 55,000 55,822 110,822 2,077,434

1,625,145 -46,133 1,579,012 0 28,361 28,361 1,607,373

On April 5, 2006 we completed the issuance by Unitymedia Hessen and Unitymedia NRW of 1,350 million of senior-secured floating rate notes (the NRW/Hesse Notes) that mature on April 15, 2013, and replaced the undrawn 100.0 million revolving credit facility with a 130.0 million revolving credit facility (the NRW/Hesse Revolving Credit Facility), available to Unitymedia Hessen, Unitymedia NRW and arena. Furthermore, the Unitymedia group companies Unitymedia Hesse, Unitymedia NRW and arena entered into a 100 million Senior Secured Term Loan Facility maturing in October 2011 on October 20, 2006. In October 2007 a nominal amount of 75 million of the NRW/Hesse notes have been repurchased and subsequently cancelled.

F-115

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) The long-term liabilities to third parties have the following terms and conditions:
Bonds Senior Note M 215 Senior Note M 235 Senior Note M$ 151 NRW/Hesse Note M 1.350

Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nominal interest rate . . . . . . . . . . . . . . . . . . Effective interest rate . . . . . . . . . . . . . . . . . . Hedging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Beginning redemption price for prepayment option . . . . . . . . . . . . . . . . . .

02/2005 - 02/2015 8.75% 9.44% no 108.75% (1)

Loans Term loan M 100

07/2005 - 02/2015 10.125% 10.79% no 110.125% (1)

07/2005 - 02/2015 10.375% 11.074% FX Swap 110.375% (1)

04/2006 - 04/2013 Euribor + 2.875% 5.34% Interest rate Swap 102% (1)

Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nominal interest rate . . . . . . . . . . . . . . . . . . Effective interest rate . . . . . . . . . . . . . . . . . . Hedging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Beginning redemption price in case for prepayment option . . . . . . . . . . . . . . . . . .

10/2006 - 10/2011 3.125% + Euribor 7.01% no 102% (1)

The nominal interest rate of the NRW/Hesse Revolving Credit Facility is Euribor + 2% on drawn amounts. The calculated effective interest rate is 4.63%. (1) The respective redemption price for prepaying the liabilities decreases over the term of the bonds and the loan. The prepayment options for the bonds with a fixed interest rate are valued based on a financial mathematics model. We refer to our explanations under derivative financial instruments.

6.19.2.

Covenants

The indenture for the Unitymedia Senior Notes, Unitymedia New Senior Notes and NRW/Hesse Notes include certain covenants which, among other things, restrict the ability of Unitymedia, Unitymedia Hessen, Unitymedia NRW and certain of their subsidiaries to:

make certain payments, including dividends or make other distributions; incur or guarantee debt and issue preferred stock; make certain investments or acquisitions, including participating in joint ventures; prepay or redeem subordinated debt or equity; engage in certain transactions with affiliates and other related parties; sell assets, consolidate, merge with or into other companies; issue or sell share capital of certain subsidiaries; and create certain liens.

The following assets with the respective amounts have been pledged as securities for liabilities:
31/12/2007 K 31/12/2006 K 31/12/2005 K

Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trade accounts receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

588,825 227,058 31,218 847,101

575,872 444,365 27,573 1,047,810

610,404 36,003 24,338 670,745

F-116

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) 6.19.3. Derivative financial instruments

The derivative financial instruments have the following values at the respective balance sheet date:
31/12/2007 Assets K Liabilities K 31/12/2006 Assets K Liabilities K 31/12/2005 Assets K Liabilities K

Interest rate swap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FX swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepayment options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10,058 22,581 5,689 15,747 22,581

5,708 18,641 2,837 8,545 18,641

7,245 7,809 2,917 10,162 7,809

Gains and losses recognized in the hedging reserve in equity on the interest rate swap contract will be continuously released to the income statement over the contract term until April 30, 2009. The hedged highly probable forecast transactions denominated in foreign currency are expected to occur at various dates until the repayment of the $151 million Senior Note. Gains and losses recognized in the hedging reserve in equity on forward foreign exchange contracts are recognized in the income statement in the period or periods during which the hedged forecast transactions affects the income statement. The valuation of the interest rate swap and the FX swap is based on market data provided by an international bank. The valuation of the prepayment options is based on models using financial mathematics procedures. The interest rate swap and the FX swap have the following terms and conditions:
Receiver side Swap / Term nominal amount interest Payer side nominal amount interest

Interest rate swap 07/2006 - 04/2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FX swap 07/2005 - 02/2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

800,000,000 151,000,000 $

Euribor

800,000,000

3.66% 9.625%

10.375% 125,145,036

The interest rate swap and the FX swap qualify for hedge accounting. Changes in the value of the respective swaps are included in unrealized earnings within a separate line item within equity. The NRW/Hesse Revolving Credit Facility was drawn as of the balance sheet dates with the following amounts:
31/12/2007 K 31/12/2006 K 31/12/2005 K

Revolving credit facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Drawn portion of the facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Outstanding amount available on the revolving credit facility . . . . . . . . . . . . . . . . . . . . . . . .

130,000 0 130,000

130,000 -55,000 75,000

100,000 0 100,000

6.20.

Shareholders equity (note 20)

Regarding a reconciliation of equity we refer to the Consolidated Statement of Changes in Equity. Distributions to the shareholders are only possible based on the profits according to German GAAP (HGB) regarding the separate entities. According to German GAAP the capitalization of start up costs is permitted and has been applied by several companies. According to the German commercial code (HGB) it is not permitted to distribute funds if the available reserves/profits do not exceed the amount of capitalized start up costs. Capitalized start up expenditures according to German GAAP amount to K 23,250 (2006: K 42,853).

F-117

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) Subscribed capital comprises the capital to be paid by the shareholder according to the statutory agreement. At the balance sheet date the subscribed capital fully paid-in by the shareholders. The capital reserves comprises reserves of the shareholders, which exceed the statutory subscribed capital and reserves related to share based payments to certain members of management. Other explanations 7.1. 7.1.1. Contingent assets, liabilities and financial obligations (note 21) Contingent assets and liabilities

At the reporting date no contingent assets or liabilities existed. 7.1.2. Other financial obligations

Other financial obligations comprise obligations which are not presented in the balance sheet and which are not contingent liabilities. The following other financial obligations existed at the balance sheet date for capital expenditures in property, plant and equipment and other intangibles:
31/12/2007 K 31/12/2006 K 31/12/2005 K

Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,695 1,191 3,886

6,038 873 6,911

6,932 276 7,208

7.1.3.

Finance leases

The following table shows the reconciliation between the future minimum payments and the present value of the leasing liabilities for office equipment (technical fleet):
31/12/2007 K 31/12/2006 K 31/12/2005 K

Future minimum lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Finance cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,201 -722 4,479

0 0 0

0 0 0

The future minimum lease payments for finance leases are as follows:
31/12/2007 K 31/12/2006 K 31/12/2005 K

Not later than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Later than one year and not later than five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Later than five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

826 4,375 0 5,201

0 0 0 0

0 0 0 0

The liabilities for finance leases are as follows:

31/12/2007 K 31/12/2006 K 31/12/2005 K

Not later than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Later than one year and not later than five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Later than five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

596 3,883 0 4,479

0 0 0 0

0 0 0 0

F-118

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) 7.1.4. Operating leases and other financial commitments

The following operating lease contracts with the respective significant leasing arrangements exist within the group:
Lease Terms Terms of renewal Purchase options Contingent rent

Building . . . . . . . . . . . . . . Dark fiber . . . . . . . . . . . . . Colocation area . . . . . . . . Cable ducts . . . . . . . . . . . .

10 years 1 - 20 years 1 - 14 years 10 - 30 years

no 3 months - 1 year 1 months - 1 year 1 - 5 years

no no no no

no no no no

The future minimum lease payments for operating leases are as follows:
31/12/2007 K 31/12/2006 K 31/12/2005 K

Less than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . More than one year and less than five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . More than five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

105,828 403,265 99,522 608,615

103,981 424,700 103,496 632,177

99,214 403,472 124,227 626,913

In 2007 the expenses for operating leases amount to K 101,096 (2006: K 108,530; 2005: K 86,238). Furthermore the company has entered into the following other contractual financial obligations:
31/12/2007 K 31/12/2006 K

Less than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . More than one year and less than five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . More than five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

329,973 136,650 0 466,623

260,953 350,625 0 611,578

Other contractual financial obligations comprise licence costs for the DFL rights, copyright fees and other purchase obligations. The future minimum obligations are determined based on contractual obligations to make cash payments in the future and for which no obligations have been included in the balance sheet. Contractually agreed adjustments (like inflation) are included within the figures mentioned above. 7.2. Related parties (note 22)

Shareholder On December 31, 2007, our sole shareholder, Unitymedia S.C.A., has 94 shareholders (including Management holders of Class B Shares) and is controlled by investment vehicles controlled by BC Partners (including Finakabel Holdings Limited), Apollo (which includes AP Cable LLC and AP Participations, L.P.), which hold approximately 35.3% and 29.1%, respectively, of the equity interest in Unitymedia S.C.A and 38.2% and 31.5%, respectively, of the equity in Unitymedia S.A.

F-119

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) Receivables and liabilities The following loan and liability were outstanding:
31/12/2007 K 31/12/2006 K

Loan against Unitymedia S.C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities against Unitymedia S.C.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,765 176

175

The loan against Unitymedia S.C.A. was provided for funding parent company expenses, bears interest of 10% p.a. and is due as of December 31, 2010. The liability to Unitymedia S.C.A. stems from the purchase of the shares of Tele Columbus in 2005. Board of Directors The following table sets out the name and position for each of the members of Unitymedia S.A.s Board of Directors as of December 31, 2007:
Name Position

Eric Zinterhofer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Raymond Svider . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Michael Block . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Michael Wunderlich . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jean Luc Allavena (as of 15/02/2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Moritz von Hauenschild (as of 16/11/2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lucien Farrell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Michael Kramer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Serge Bijnens (as of 15/02/2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chairman, Compensation Committee Member, Compensation Committee Member, Audit Committee Member, Audit Committee Member Member Member, Audit Committee Member Member

Unitymedia currently has the following managing directors:

Name Position

1. Parm Sandhu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Dr. Herbert Leifker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Christopher Winfrey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. Christoph Bellmer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Managing Director Managing Director Managing Director Managing Director

Christoph Bellmer has been appointed as managing director in 2008. Key management personnel including Managing Directors, Vice Presidents and other executives engaged on the level of Unitymedia Management have received the following salaries and benefits
2007 K 2006 K 2005 K

Salaries and wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Social security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pension expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Share based payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7,861 247 28 1,931 10,067

5,644 180 28 1,140 6,992

3,211 113 28 156 3,508

Transactions between related parties After completion of the divestiture of Tele Columbus to ewt, Unitymedia NRW paid in 2007 3.0 million and 1.2 million in market value advisory fees to Apollo and BC partners, respectively, which equate to less than 0.5% of total transaction value.

F-120

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) Share based payments As of December 31, 2007, certain members of Management and the Board of Directors of Unitymedia S.A. or their affiliated companies, respectively, hold Class B ordinary shares (Class B Shares) in Unitymedia S.C.A. which in the aggregate represent approximately 7.4% of Unitymedia S.C.A.s outstanding share capital. Subject to time vesting and performance restrictions, the Class B Shares participate in the equity value of Unitymedia S.C.A above certain thresholds. Vesting of Class B Shares will be accelerated upon certain events, including a change of control of Unitymedia S.C.A. The shareholders of Unitymedia S.C.A. have authorized the issuance of additional Class B Shares to members of our senior management, which would, including the currently outstanding Class B Shares, represent up to approximately 8.2% of Unitymedia S.C.A.s outstanding capital on a fully diluted basis. Certain Management continues to hold options over securities of Unitymedia S.C.A., Unitymedia S.A. and Unitymedia, the economics of which have been capped at the point at which Class B Shares received in relation to such cap would begin to participate in equity value of Unitymedia S.C.A. These economically capped options are subject to the same time and performance vesting restrictions as the associated Class B Shares and represent approximately 2.3%, 2.4% and 0.8% of the respective outstanding capital of Unitymedia S.C.A., Unitymedia S.A. and Unitymedia on a fully diluted basis. The following schedule discloses the information about the respective plans:
Date MEP I 2003 MEP II 2005 MEP III 2006 MEP IV 2007 Total

Number of SCA options, or equivalent Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vested/Exercisable . . . . . . . . . . . . . . . . . . . . . . . . . . Features of option plans Share price at grant date . . . . . . . . . . . . . . . . . . . . . . Exercise price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Life of Option/B-share . . . . . . . . . . . . . . . . . . . . . . . Expected dividends . . . . . . . . . . . . . . . . . . . . . . . . . . Time Vesting options/B-shares . . . . . . . . . . . . . . . . Vesting periods in years . . . . . . . . . . . . . . . . . . . . . . Performance vesting options/B-share (1) . . . . . . . . Determination of Fair value Average fair value per option/B-share . . . . . . . . . . Models used . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected volatility (3) . . . . . . . . . . . . . . . . . . . . . . . . . Expected term of option/B-share . . . . . . . . . . . . . . Expected turn over of management . . . . . . . . . . . . Risk free interest rate . . . . . . . . . . . . . . . . . . . . . . . .

01/01/2005 2005 2005 31/12/2005 2006 2006 31/12/2006 2007 2007 31/12/2007 31/12/2007

1,100 310 -359 1,051 0 0 1,051 0 0 1,051 1,051 1,200 700 max 10 no 1,051 4 0

0 3,298 0 3,298 127 0 3,425 0 0 3,425 514 4,850 4,600 max 10 no 856 4 2,569

0 0 0 0 5,661 0 5,661 0 0 5,661 631 5,720 5,720 max 10 no 1,421 4 4,280

0 0 0 0 0 0 0 900 0 900 338 6,415 6,415 max 10 no 900 3 0

1,100 3,608 -359 4,349 5,788 0 10,137 900 0 11,921 2,534

4,228 6,849

284 BSM (2) 25% 4 0.0% 2.4%

385 BSM/BIM (2) 25% 4 0.0% 2.2%

928 BSM/BIM (2) 27.50% 3 10.0% 3.2% - 3.75%

1,616 BSM 30.0% 3 10.0% 4.1%

(1) Options will only vest if certain performance and super performance measures will be achieved in future; performance and super performance measures contain an absolute return threshold and a time-based return threshold which both have to be met to exercise the options

F-121

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued)
(2) BSM = Black Scholes Model used for time vesting options BIM = Binomial Model used for performance vesting options (3) The assumptions about the expected volatility stem from historical data of share prices of comparable companies and from implied volatility data of call options on shares of comparable companies within the telecommunications sector. The expected volatility reflects the assumptions of the respective grant dates.

Expenses for share based payments amount to K 1,931 (2006: K 1,140; 2005: K 156) and are included in personnel expenses. 7.3. 7.3.1. Financial instruments and risk management (note 23) Carrying amounts and net result of financial instruments
Note Risk Exposure 2007 K 2006 K

Financial assets at fair value through profit or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative hedging financial assets (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Receivables / Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Receivables / Cash and equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Receivables / Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Available for sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative hedging financial liabilities (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial liabilities measured at amortised cost / Financing . . . . . . . . . . . . . . . . . . . Financial liabilities measured at amortised cost / Other . . . . . . . . . . . . . . . . . . . . . . .

19 19 12 25 11 19 19

IR IR CR CR CR PR IR, FX IR, FX

10,058 5,689 70,530 227,058 30,730 211,560 -22,581 -1,932,511 -239,414 -1,638,881

5,708 2,837 50,534 444,365 21,944 0 -18,641 -2,077,434 -176,986 -1,747,673

IR = Interest rate risk CR = Credit risk PR = Price risk FX = Forward exchange risk (1) Derivative hedging financial assets and liabilities which qualify for hedge accounting do not fulfill the criteria to be classified within of one of the categories of Financial instruments according to IAS 39. However they fulfill the requirement of a financial instrument and are measured with their fair value by recognizing the changes in fair value within Unrealised Earnings. As a result, there is no impact in the profit and loss statement.

Financial assets at fair value through profit or loss contain the embedded derivatives for the prepayment options within the Senior Notes. Available for sale securities contain the shares of Premiere which are intended for disposal and valued at the closing price of December 31, 2007.

F-122

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) The following tables disclose the net result for each class of financial instruments:
Gains and losses with Profit or Loss impact Fair value Profit Loss K Fair value/ Equity K

Financial period 2007

Interest K

Disposal/ Repurchase K

Impairment K

FX Calc. K

Net result K

Financial assets at fair value through profit or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative hedging financial assets . . . . . . . . . Receivables / Trade receivables . . . . . . . . . . . . Receivables / Cash . . . . . . . . . . . . . . . . . . . . . . . Receivables / Other . . . . . . . . . . . . . . . . . . . . . . . Available for sale securities . . . . . . . . . . . . . . . Derivative hedging financial liabilities . . . . . . Financial liabilities measured at amortised cost / Financing . . . . . . . . . . . . . . . . . . . . . . . . Financial liabilities measured at amortised cost / Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,852 2,904 -21,725 10,565 1,160 435 -166,498 1,673 11,818 -11,818 -32,472 7,736 3,068

2,852 5,972 -21,725 10,565 0 -31,312 19,989 -176,643 0

-152,594

2,833

-21,725

2,852

-21,668

-190,302

Gains and losses with Profit or Loss impact Fair value Profit Loss K Fair value/ Equity K

Financial period 2006

Interest K

Disposal/ Repurchase K

Impairment K

FX Calc. K

Net result K

Financial assets at fair value through profit or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative hedging financial assets . . . . . . . . . Receivables / Trade receivables . . . . . . . . . . . . Receivables / Cash . . . . . . . . . . . . . . . . . . . . . . . Receivables / Other . . . . . . . . . . . . . . . . . . . . . . . Available for sale securities . . . . . . . . . . . . . . . Derivative hedging financial liabilities . . . . . . Financial liabilities measured at amortised cost / Financing . . . . . . . . . . . . . . . . . . . . . . . . Financial liabilities measured at amortised cost / Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,854 -640 -13,715 5,708 5,708

-560 -174,238

13,049 -13,049

2,359

4,854 5,068 -13,715 5,708 0 0 14,848 -187,287 0

-169,730

-13,715

4,854

8,067

-170,524

7.3.2.

Risk management of financial instruments

Unitymedias activities expose it to a variety of financial risks: liquidity risk, currency risk, interest rate risk, price risk and credit risk. Unitymedias overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the groups financial performance. Unitymedia uses derivative financial instruments to hedge certain risk exposures. Risk management is carried out by a treasury department under policies according to a delegation of authority and control limits. The treasury department identifies, evaluates and hedges financial risks in close cooperation with the groups operating departments. The management board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative and non derivative financial instruments, and investment of excess liquidity. Within the group Unitymedia recognizes original and derivative financial instruments.

F-123

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) Non-derivative financial instruments exist in connection with operating activities, investing activities and financing activities. The respective activities induce the following non-derivative financial instruments:
Activity Main financial instruments .............................................. ............................................... ..............................................

Operating Investing Financing

Trade receivables and trade liabilities Long-term receivables Cash and bank Bonds and loans

Stand-alone derivative instruments exist only for hedging cash flow and fair value risks due to exposure to fluctuations in interest rates and/or foreign exchange rates. In addition to stand-alone derivatives, embedded derivatives exist in the bonds due to prepayment options. 7.3.3. Liquidity risk

Liquidity risks can emerge, if cash out flows are generated from the operating and investing activities. Furthermore liquidity risks can exist within the financing activities, if short-term cash outflows are necessary for the repayment of liabilities and the cash inflows from the operating activities and cash on hand are not sufficient for the future repayment or no possibility of a payment extension exists. In the operating activities no liquidity risk exists, because the operating business generates cash inflows. The financing activities are based on long-term contracts. The repayment dates of the long-term liabilities are scheduled in 2011, 2013 and 2015 respectively. Furthermore, the undrawn portion of NRW/Hesse Revolving Credit facility remains available. Liquidity risks on a short-term or medium-term basis can only occur if the covenants of the bonds or the loan will not be fulfilled. Compliance with the covenants is supervised on a regular basis based on budget planning and active monitoring of the respective key financial figures. The following schedules contain an analysis of the forecasted cash payments based on the contractual maturities of our financial obligations from financial instruments:
as of December 31, 2007 2008 M 2009 - 2012 M After 2012 M Total M

Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NRW/Hesse Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Term loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other liabilities measured at amortised cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.0 0.0 0.0 196.7 233.6 430.3

0.0 0.0 100.0 572.4 5.6 678.0

2008 - 2011 M

575.1 1,275.0 0.0 207.7 0.0 2,057.8

After 2011 M

575.1 1,275.0 100.0 976.8 239.2 3,166.1

Total M

as of December 31, 2006

2007 M

Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NRW/Hesse Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Revolving Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Term loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other liabilities measured at amortised cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.0 0.0 55.0 0.0 202.2 165.8 423.0

0.0 0.0 0.0 100.0 549.0 9.2 658.2

575.1 1,350.0 0.0 0.0 352.4 0.0 2,277.5

575.1 1,350.0 55.0 100.0 1,103.6 175.0 3,358.7

F-124

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) Forecasted interest cash payments include 45.1 million (2006: 55.8 million) which have already been included within the balance sheet. If future cash flow payments have been hedged the hedged amounts have been included within the schedules. For further information about our contractual liabilities for lease contracts affecting our cash flow planning we refer to our explanations under note 21 G.1 Contingent assets, liabilities and financial obligations. 7.3.4. Currency risk

Our reporting currency is the Euro. We have no revenues, and few expenses or liabilities that are denomina-ted in currencies other than the Euro, except for the Dollar portion of the Unitymedia Senior Notes. As the proceeds from the Unitymedia Senior Notes were provided to Unitymedia Hessen through the Proceeds Loan, Unitymedia Hessen has hedged the entire amount of the Dollar-denominated Proceeds Loans into euros for the lifetime of the Notes so that interest payments can be made in Euro and Unitymedia is not subject to foreign currency exchange risk. Following the 2006 Refinancing, the currency hedge remained outstanding. The following schedule discloses the impact of changes in interest rates and spot rates on equity:
2007 Type of Risk Factor Interest K Spot Rate K Interest K 2006 Spot Rate K

Increase USD Yield Curve (Spot Rate) against EUR . . . . . . . . . . . . . . . Decrease USD Yield Curve (Spot Rate) against EUR . . . . . . . . . . . . . . .

+0.5% 2,801.1 -0.5% -2,714.7

226.3 -226.7

2,964.5 -2,862.7

-628.9 628.9

The FX swap hedges the foreign currency completely by changing the $-payments into -payments. Therefore a change in the spot rate at the balance sheet date would only have an impact on equity through the cash flow hedge. 7.3.5. Interest rate risk

Our exposure to market risk for changes in interest rates relates primarily to our floating rate debt obligations. We have interest rate risk on the NRW/Hesse Notes, the Term loan and the NRW/Hesse Revolving Credit Facilities. In 2006 we entered into a 3-year 800.0 million interest rate swap at Unitymedia Hessen relating to the NRW/Hesse Notes. We did not enter into any interest rate hedging for the NRW/Hesse Revolving Credit Facility in connection with the 2006 Refinancing, or the Term loan. For our remaining fixed rate debt, changes in interest rates generally affect the fair value of the debt instrument but not our earnings or cash flows. We do not currently have any obligation to prepay fixed rate debt prior to maturity and accordingly, interest rate risk and changes in fair market value should not have a significant effect on the fixed rate debt until we would be required to refinance such debt. Long-term financial instruments are exposed to a cash flow risk if the interest rate payments are variable (for example if the interest rate is based on a market rate like Euribor) or they are exposed to a fair value risk if the interest rate payments are fixed. The explanations within our note 19 show our fixed rate and variable rate liabilities as well as the corresponding hedging instruments. The interest rate for the NRW/Hesse Notes is fixed every quarter based at Euribor + 2.875%. For a nominal amount of 800.0 million the variable interest rate is swapped into a fixed interest rate of 6.535% (3.66% + 2.875%) until April 2009 (see F.19 Bonds, facilities and derivative financial instruments).

F-125

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) The following schedule discloses the impact of changes in the Euribor on equity and profit and loss:
2007 Type of Risk Factor Equity Impact K P&L Impact K 2006 Equity Impact K P&L Impact K

Increase Euribor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Decrease Euribor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

+0.25% 2,314.6 -0.25% -2,322.6

-1,437.5 1,437.5

4,098.2 -4,122.4

-1,625.0 1,625.0

Regarding the interest rate risk related to the FX Swap we refer to the preceding paragraph. Regarding the effective interest rates of the respective liabilities see F.19 Bonds, facilities and derivative financial instruments. 7.3.6. Risks of change in prices

A portion of our costs are affected by inflation. We attempt to restrict increases in our costs below the rate of inflation through productivity improvements and capital expenditure. However, general inflation affects costs for our competitors and us. Furthermore Unitymedia holds 16.4 million shares of Premiere as of December 31, 2007. The shares are classified as available for sale securities which are measured at fair value by including the difference between the purchase cost and the fair market value within the Unrealised Earnings as a separate component of equity. These shares are exposed to price risks related to the quotation on the stock exchange. A change of the share price of 1 leads to a positive or negative impact of unrealized earnings within equity respectively of 16.4 million. However the shares have been sold completely in January 2008. We refer to our explanations under note 24 Events after the balance sheet date. 7.3.7. Credit risks

Credit risks exist regarding trade receivables, derivative financial assets, other receivables and cash positions. The trade receivables exist against companies and retail customers. Activities to mitigate credit risks regarding trade receivables include preventive actions, collection agencies and other procedures. Preventive actions are performed by examining beforehand whether the creditworthiness of the customer is assured before the contractual relationship with the customer begins taking into account its financial position, past experience and other factors. Other procedures comprise demand notes which are sent to the customers based on a scheduled timeline. Generally demand notes are sent automatically to the respective customers. However for wholesale customers demand notes are prepared based on a schedule timeline as internal notes. The respective departments decide whether the demand notes are sent to the wholesale customers according to special agreements with those customers. If the customer still does not pay the outstanding amounts, collection agencies, or lawyers in the case of commercial clients are involved in demanding the respective amounts, and/or the customer is disconnected from the service. Collection agencies are involved into the collection process after the third demand note did not lead to a payment from the customer. The credit risks of receivables have not been transferred to third parties unless fully written off and transferred to a collection agency. Hence the maximum credit risk is determined by the carrying value recognized in the balance sheet. The company does not have financial assets, for which the credit risk has been transferred to other parties. Therefore the maximum risk of default is equal to the complete carrying value of the respective kinds of financial assets.

F-126

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) The counterparty of the swaps and the cash positions are banks with a first quality rating. Hence the credit risk regarding these instruments is considered to be very low. However the maximum credit risk of these financial instruments is also the carrying value. 7.3.8. Fair market value

Usually the carrying value of the financial instruments recognized in the balance sheet is comparable to their fair market value. The carrying value less impairment provision of trade receivables are assumed to approximate their fair values. However the long-term liabilities which have fixed interest rates are measured at amortized cost. The fair market value of fixed rate liabilities can differ significantly from the carrying value, because the fair market value of fixed rate liabilities fluctuate with the development of interest rates and capital markets generally. Furthermore the fair market value of the floating rate bonds can differ from the nominal value due to changes in the credit rating. The following table shows the fair market value in percent of the fixed rate interest bonds and the NRW/Hesse Notes based on their traded market prices at the balance sheet date:
2007 % 2006 % 2005 %

Unitymedia New Senior Note M 215 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unitymedia New Senior Note M 235 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unitymedia New Senior Note M$ 151 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unitymedia NRW/Hesse Notes M 1,350 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

98.33 104.59 103.00 97.53

97.65 103.53 91.67 99.44

99.09 104.19 104.00

7.3.9.

Capital Risk Management

The groups objectives when managing capital are to safeguard the groups ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. Therefore we maintain cash and cash equivalents to fund the day-to-day requirements of our business. We hold cash primarily in euros. Historically, we have relied primarily upon the proceeds of offerings of debt securities, bank borrowings and cash flow from operations to provide funds required for acquisitions and operations. Our principal source of liquidity on an on-going basis will be our operating cash flows, drawings under the NRW/Hesse Revolving Credit Facility, a portion of the proceeds of the offering of the NRW/Hesse Notes as well as the Term Loan. Our ability to generate cash from our operations will depend on our future operating performance, which is in turn dependent, to some extent, on general economic, financial, competitive, market, regulatory and other factors, many of which are beyond our control. Our high number of subscribers to basic cable services who pre-pay their annual bill in the months between November and February leads to higher cash inflows in these months as compared to the rest of the year. We believe that the proceeds from the NRW/Hesse Notes offering, the Term Loan and cash flow from operations will be sufficient to fund our currently anticipated working capital needs, capital expenditures, and debt service requirements. To the extent that we are not able to fund any principal payment at maturity with respect to any of our indebtedness, we will be required to refinance this indebtedness with additional credit facilities or the issue of new debt or equity securities in the capital markets. 7.4. Events after the balance sheet date (note 24)

As announced on January 7, 2008, Pictet has sold its 14.58% interest in Premiere AG to News Armenia B.V., an affiliate of News Corporation for a price of 17.50 per share, receiving 287 million gross proceeds for the sale on behalf of Unitymedia NRW. The parties have notified the respective regulatory bodies.

F-127

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) Unitymedia Hessen has completed an open market buyback of 151 million par value of the currently outstanding 1,275 million NRW/Hesse Notes due 2013. The open market purchases were completed at an average market price below par value using available cash on hand. 7.5. Explanations regarding the cash flow statement (note 25)

Cash and cash equivalents comprise cash on hand and demand deposits. Bank overdrafts which are repayable on demand are also included in cash and cash equivalents. Regarding undrawn lines of the NRW/Hesse Revolving Credit Facility see F.19 Bonds, facilities and derivative financial instruments. Cash which was restricted for the use for special purposes amounts to 106.6 million (2006: 116.1 million) 7.6. Segment reporting (note 26)

For the year 2006 and 2007 the segment reporting is based on the management approach according to IFRS 8. The segments reported are the Unitymedia Cable and arena Broadcast and Satellite business lines. In 2005 the regular business of arena had not started. The net profit of arena in 2005 was K 31. This segmentation is consistent with our current internal reporting system, which is used for allocating resources to the segments and assessing their performance. Our legal organization supports this view as the Broadcast and Satellite Business is organized within the legal entity arena, whereas the Unitymedia Cable Business is organized within separate legal entities for the Unitymedia Cable businesses. The Unitymedia Cable business derives its revenues from basic and premium cable services, carriage fees, our internet business and our telephony business. Furthermore, revenues are included in other income due to shared services agreements between Unitymedia Cable and the arena Satellite segment. The Broadcast and Satellite business derives its revenues from the sales to customers (including subscription, installation and carriage fees) who receive the content for the matches of the 1st and the 2nd Bundesliga via the Satellite network. Also included are wholesale revenues generated from arenas distribution partners on cable outside Hesse and North Rhine-Westphalia as well as broadcasting airtime sales. Furthermore the revenue comprises the intercompany sales to the Cable business for distribution of sports content for subscribers in NRW and Hesse. Finally arena has sublicensed the Bundesliga rights of the DFL to Premiere and receives both cash payments and received share-based payments. According to IFRS 8.25 the amount of each segment item shall be the measure reported to the chief operating decision maker. Currently our internal reporting system is based on German GAAP (HGB) and prior to the disposal of Tele Columbus Out-of-Region assets in November 2006, we reviewed the In-Region financial statements as part of our internal reporting system. The following material differences exist between IFRS and German GAAP for internal reporting purposes:

Third party commissions for new contracts are capitalized and amortized over the initial contractual period Goodwill is not amortized on a straight line basis but tested annually for impairment. Deferred Taxes are recognized also for tax loss carry forward if it is probable that sufficient taxable income will be realized in future to offset the tax loss carry forwards. Financing liabilities, which are not derivative instruments, are measured at amortized cost by deducting deferred transaction costs from the nominal amount. Derivative instruments are measured at their fair value. If they qualify for hedge accounting the changes in fair value do not have an impact on profit or loss.

F-128

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued)

Start up expenditures are expensed as incurred. Options granted to management are recognized as share based payments by allocating the fair value of the options at the grant date over the vesting period of the respective options as expense.

We intend to adopt IFRS also for internal reporting purposes in 2008. The Adjusted EBITDA presented within the segment reporting represents the Earnings before interest, tax and depreciation and amortization excluding non recurring items and share based payments. Expenditures for non current assets do not comprise expenditures for fixed assets related to disposal groups because disposal groups only include current assets and liabilities. Intersegment transfers or transactions are entered into under the normal commercial terms and conditions that would also be available to unrelated third party. The following schedule discloses the major non cash transactions related to the respective segments in 2007:
Cable K arena K Total K

Release of deferred income for Premiere shares received as partial payment for sublicensing the Bundesliga rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Settlement regarding disposal of Out of region operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fair value adjustment of derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Share based payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non cash income presented within the Cash flow statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reversal/Capitalization of deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0 9,500 2,862 -1,931 10,431 42,013 52,444

94,057 0 0 0 94,057 8,224 102,281

94,057 9,500 2,862 -1,931 104,488 50,237 154,725

In 2006 significant non cash transactions have occurred for the reversal of deferred taxes (Income K 142,671) and the disposal of Tele Columbus Out-of-region (Expense K 21,200) which were related to the Cable segment. The segment Unitymedia Cable includes, as discontinued operations, the profits/losses from Tele Columbus Out-of-region in 2005 and 2006. In 2007 arena realized revenue with a single customer of K 176,415.

F-129

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) Consolidated segment reporting for the period January 1, 2007 until December 31, 2007
Cable K arena K Cons. K Total K

Segment reporting based on internal reporting Revenues from external customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intersegment revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortisation expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other non recurring items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment profit/(loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expenditures for non current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Segment reporting (Differences IFRS/Internal Reporting) Revenues from external customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intersegment revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortisation expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other non recurring items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment profit/loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expenditures for non current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Segment reporting (IFRS GAAP) Revenues from external customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intersegment revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortisation expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment profit/loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expenditures for non current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

705,239 0 325,332 4,820 -154,478 -261,504 20,582 10,747 -54,501 2,372,630 2,375,375 164,939 1,156 0 13,465 5,695 -7,985 38,263 8,626 -10,747 47,317 177,129 -20,558 6,776 706,395 0 338,797 10,515 -162,463 -223,241 29,208 -7,184 2,549,759 2,354,817 171,715 332,832

296,766 16,054 -23,400 6,906 -1,857 -21,226 8,495 -23,186 -54,268 231,973 204,922 1,847 -4,197 0 -24,037 0 0 13,807 -271 23,186 12,685 -7,478 0 0 292,569 16,054 -47,437 6,906 -1,857 -7,419 8,224 -41,583 224,495 204,922 1,847 -24,200

0 -16,054 0 -1,161 1,161 0 0 0 0 0 0 0

1,002,005 0 301,932 10,565 -155,174 -282,730 29,077 -12,439 -108,769 2,604,603 2,580,297 166,786 -3,041 0 -10,572 5,695 -7,985 52,070 8,355 12,439 60,002 169,651 -20,558 6,776

0 -16,054 0 -1,161 1,161 0 0 0 0 0 0 0

998,964 0 291,360 16,260 -163,159 -230,660 37,432 -48,767 2,774,254 2,559,739 173,562 308,562

F-130

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) Consolidated segment reporting for the period January 1, 2006 until December 31, 2006 For further information about the figures of our segments we refer to the following schedule:
Cable K arena K Cons. K Total K

Segment reporting based on internal reporting Revenues from external customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intersegment revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortisation expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other non recurring items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Minorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment profit/(loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expenditures for non current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Segment reporting (Differences IFRS/Internal Reporting) Revenues from external customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intersegment revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortisation expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other non recurring items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment profit/loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expenditures for non current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Segment reporting (IFRS GAAP) Revenues from external customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intersegment revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortisation expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Minorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment profit/loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expenditures for non current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

596,343 0 287,921 3,844 -138,255 -266,547 97,567 25,976 -5,545 4,961 2,523,083 2,476,095 100,348

71,460 9,107 -132,392 3,515 -2,213 -6,974 -8,495 -11,458 0 -158,017 230,563 144,652 13,680

0 -9,107 0 -1,651 1,651 0 0 0 0 0 -81,685 -81,685 0

667,803 0 155,529 5,708 -138,817 -273,521 89,072 14,518 -5,545 -153,056 2,671,961 2,539,062 114,028

0 0 -2,234 4,854 -36,621 41,240 21,844 -25,976 -2,058 1,049 165,257 -8,562 3,617

-2,217 0 -44,501 0 0 4,360 8,495 11,458 0 -20,188 -28,682 -8,495 1,000

-2,217 0 -46,735 4,854 -36,621 45,600 30,339 -14,518 -2,058 -19,139 136,575 -17,057 4,617

596,343 0 285,687 8,698 -174,876 -225,307 119,411 -2,058 -5,545 6,010 2,688,340 2,467,533 103,965 291,320

69,243 9,107 -176,893 3,515 -2,213 -2,614 0 0 0 -178,205 201,881 136,157 14,680 -135,032

0 -9,107 0 -1,651 1,651 0 0 0 0 0 -81,685 -81,685 0 0

665,586 0 108,794 10,562 -175,438 -227,921 119,411 -2,058 -5,545 -172,195 2,808,536 2,522,005 118,645 156,288

F-131

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements (continued) 7.7. Disclosures according to German GAAP (note 27) The average number of employees in 2007 was 1,475 (2006: 1,262 employees). Our auditor has received the following remuneration for the respective services:
2007 K 2006 K

Audit of financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other confirmation and valuation services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tax advisory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

449 21 22 50 542

350 47 9 73 479

The following table discloses the remuneration of management:

2007 K 2006 K

Salaries, bonuses, benefits and non-cash share based payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pension expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,549 47 3,596

3,060 0 3,060

Cologne, April 9, 2008 Unitymedia GmbH, Cologne

Parm Sandhu Managing Director Chief Executive Officer

Dr. Herbert Leifker Managing Director Chief Commercial Officer

Christopher Winfrey Managing Director Chief Financial Officer

Christoph Bellmer Managing Director Chief Operating Officer

F-132

The following auditors report (Besttigungsvermerk) has been issued in accordance with 322 German Commercial Code (Handelsgesetzbuch) on the consolidated financial statements and the group management report (Konzernlagebericht) of Unity Media GmbH as of and for the fiscal year ended December 31, 2007. The group management report is neither included nor incorporated by reference in this offering memorandum. Auditors Report We have audited the consolidated financial statements prepared by Unity Media GmbH, Cologne, comprising the balance sheet, the income statement, statement of changes in equity, cash flow statement and the notes to the consolidated financial statements, together with the group management report for the business year from January 1 to December 31, 2007. The preparation of the consolidated financial statements and the group management report in accordance with the IFRSs, as adopted by the EU, and the additional requirements of German commercial law pursuant to Article 315a (1) HGB (German Commercial Code) are the responsibility of the parent Companys Managing Directors. Our responsibility is to express an opinion on the consolidated financial statements and on the group management report based on our audit. We conducted our audit of the consolidated financial statements in accordance with Article 317 HGB and German generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprfer (Institute of Public Auditors in Germany). Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial position and results of operations in the consolidated financial statements in accordance with the applicable financial reporting framework and in the group management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Group and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the consolidated financial statements and the group management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual financial statements of those entities included in consolidation, the determination of the entities to be included in consolidation, the accounting and consolidation principles used and significant estimates made by the Companys Managing Directors, as well as evaluating the overall presentation of the consolidated financial statements and the group management report. We believe that our audit provides a reasonable basis for our opinion. Our audit has not led to any reservations. In our opinion based on the findings of our audit the consolidated financial statements comply with the IFRSs as adopted by the EU and the additional requirements of German commercial law pursuant to Article 315a Abs. 1 HGB and give a true and fair view of the net assets, financial position and results of operations of the Group in accordance with these requirements. The group management report is consistent with the consolidated financial statements and as a whole provides a suitable view of the Groups position and suitably presents the opportunities and risks of future development. Frankfurt am Main, April 9, 2008 PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprfungsgesellschaft

(signed Brigitte Dreel) Wirtschaftsprfer

(signed ppa. Dirk Sattler) Wirtschaftsprfer

F-133

UNITY MEDIA GMBH COLOGNE Audited Consolidated IFRS Financial Statements December 31, 2006

F-134

UNITY MEDIA GMBH, COLOGNE CONSOLIDATED INCOME STATEMENT

Notes 31/12/06 31/12/05 ( in thousands)

CONTINUING OPERATIONS Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Own work capitalized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost of materials and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Personnel expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net profit/(loss) from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DISCONTINUED OPERATIONS (Loss)/Gain for the period from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gain from disposal from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Profit/(loss) from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Profit/(loss) for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Attributable to: Equity holders of the parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Profit/(loss) for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 2 3 4 5 6 7 8 9 10

665,586 10,776 24,149 -135,290 -91,131 -365,296 108,794 -227,921 -119,127 10,562 -175,438 -284,003 119,411 -164,592 -11,755 9,697 -2,058 -166,650 -172,195 5,545 -166,650

341,898 4,698 7,175 -73,400 -63,433 -80,958 135,980 -160,307 -24,327 12,051 -88,674 -100,950 77,909 -23,041 730 0 730 -22,311 -22,684 373 -22,311

F-135

UNITY MEDIA GMBH, COLOGNE CONSOLIDATED BALANCE SHEET

Notes 31/12/06 31/12/05 ( in thousands)

ASSETS Current assets Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Receivables from related parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trade accounts receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current tax receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current assets from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Assets of disposal groups held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non current assets Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Goodwill and other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total non current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . LIABILITIES Current liabilities Debt in bond and bank liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities to affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Short term provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current liabilities from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities of disposal groups held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non current liabilities Debt in Bond and bank liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pension accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long term provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total non current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shareholders equity Subscribed capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unrealised earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Equity attributable to equity holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total shareholders equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TOTAL LIABILITIES AND EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

23 11

12

444,365 0 49,553 20,238 1,445 11,486 16,277 543,364 0 543,364

36,003 548 24,828 5,147 1,841 2,826 6,484 77,677 995,361 1,073,038 879,760 1,414,487 10,162 3,541 36,581 3,982 2,348,513 3,421,551

13 14 17

844,307 1,346,033 8,545 2,690 31,674 31,923 2,265,172 2,808,536

10

17

16

110,822 175 115,378 52,192 27,114 86,250 36,309 428,240 0 428,240

28,361 84,926 47,490 58,868 4,801 79,362 2,740 306,548 786,384 1,092,932 1,579,012 6,672 7,809 14,602 115 202,540 1,810,750 12,682 422,048 -5,618 24,012 453,124 64,745 517,869 3,421,551

17 15 17 16 10

1,966,612 7,808 18,641 9,241 45 91,418 2,093,765

18 18 18 18 18

12,682 423,188 -1,159 -148,180 286,531 0 286,531 2,808,536

F-136

UNITY MEDIA GMBH, COLOGNE CONSOLIDATED STATEMENT OF CASH FLOWS

Notes 31/12/06 31/12/05 ( in thousands)

Cash flow from operating activities Profit before interest and taxes (EBIT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Minorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other non-cash income (-)/expenses (+) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Losses (+)/ Profits (-) from disposals of property, plant and equipment . . . . . . . . . . . . . . . . . . . Gain from disposals of discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Increase (-)/decrease (+) of inventories, trade receivables and other assets not related to investing or financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Increase (+)/decrease (-) of accruals, trade payables and other liabilities not related to investing or financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial expenses paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash flow from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash flow from investing activities Proceeds from disposal of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Proceeds from disposal of disposal groups (net of disposed cash T 8,073) . . . . . . . . . . . . . . . Investments in tangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investments in intangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investments in the acquisition of subsidiaries (net of cash acquired K 104,876) . . . . . . . . . . . Cash flow from investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash flow from financing activities Cash paid into capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Proceeds from loans, bonds or short or long term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash repayments of loans or short or long term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transaction costs related to financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash flow from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash and cash equivalents at the end of the period Change in cash and cash equivalents from cash relevant transactions . . . . . . . . . . . . . . . . . . . . . Cash and cash equivalents at the beginning of the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash and cash equivalents at the end of the period including cash in disposal groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash and cash equivalents at the end of the period included in disposal groups . . . . . . . . . . . . Cash and cash equivalents at the end of the period excluding cash in disposal groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13

-119,126 227,921 -5,545 5,586 -2,521 -9,697 -49,083 116,091 -12,169 2,081 -115,996 37,542 12,470 153,529 -121,031 -15,796 0 29,172 0 1,505,000 -1,155,966 -16,298 332,736 399,450 44,914

-24,327 160,307 -373 -5,462 168 0 54,285 -5,288 0 583 -50,400 129,493 1,152 0 -30,134 -6,402 -850,819 -886,203 650 1,625,145 -783,698 -83,802 758,295 1,585 43,329 44,914 8,911 36,003

13 13

17 17

23

444,364 0

23

444,364

F-137

UNITY MEDIA GMBH, COLOGNE CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Attributable to equity holders of Unitymedia GmbH Subscribed capital K Capital reserves K Cash-flow hedge reserve K available for sale assets reserve K retained earnings K Equity attributable to equity holders K Total Equity

Minorities

January 1, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additions relating to share-based payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Changes in fair value of hedging instruments (net of tax) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Revaluation of securities available for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shareholder contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net loss of the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . December 31, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additions relating to share-based payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Changes in fair value of hedging instruments (net of tax) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Revaluation of securities available for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shareholder contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Disposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net loss of the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . December 31, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12,682 0 0 0 0 0 0 12,682 0 0 0 0 0 0 0 12,682

179,138 156 0 0 242,754 0 0 422,048 1,140 0 0 0 0 0 0 423,188

0 0 -5,618 0 0 0 0 -5,618 0 4,459 0 0 0 0 0 -1,159

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

46,696 0 0 0 0 0 -22,684 24,012 0 0 0 0 0 0 -172,192 -148,180

238,516 156 -5,618 0 242,754 0 -22,684 453,124 1,140 4,459 0 0 0 0 -172,192 286,531

0 0 0 0 0 64,372 373 64,745 0 0 0 0 -66,593 -3,697 5,545 0

238,516 156 -5,618 0 242,754 64,372 -22,311 517,869 1,140 4,459 0 0 -66,593 -3,697 -166,647 286,531

F-138

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 financial year A B General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . First time adoption of IFRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B.1 Adjustments on the level of the separate entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B.2 Adjustments on the level of the consolidated financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . B.3 Reclassifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Scope of consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Basis of presentation and consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounting and valuation methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E.1 Critical management assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E.2 Special accounting and valuation methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Explanations of the Income Statement and the Balance sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F.1 Revenue (note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F.2 Own work capitalized (note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F.3 Other income (note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F.4 Cost of materials and services (note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F.5 Personnel expenses (note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F.6 Other expenses (note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F.7 Depreciation and amortization expenses (note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F.8 Financial income (note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F.9 Financial expenses (note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F.10 Income taxes (note 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F.11 Trade accounts receivables (note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F.12 Inventories (note 12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F.13 Property, plant and equipment (note 13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F.14 Goodwill and other intangible assets (note 14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F.15 Pensions and other long-term employee benefits (note 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F.16 Provisions (note 16) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F.17 Bonds, facilities and derivative financial instruments (note 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F.17.1 Bonds and bank liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F.17.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F.17.3 Derivative financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F.18 Shareholders equity (note 18) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other explanations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.1 Contingent assets, liabilities and financial obligations (note 19) . . . . . . . . . . . . . . . . . . . . . G.1.1 Contingent assets and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.1.2 Other financial obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.1.3 Finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.1.4 Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.2 Related parties (note 20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.3 Financial instruments and risk management (note 21) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.3.1 Risk management of financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.3.2 Liquidity risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.3.3 Currency risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.3.4 Interest rate risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.3.5 Risks of change in prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.3.6 Credit risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.3.7 Fair market values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.3.8 Interest rate risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.3.9 Credit risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.4 Events after the balance sheet (note 22) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.5 Explanations regarding the cash flow statement (note 23) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G.6 Segment reporting (note 24) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-143 F-143 F-145 F-146 F-147 F-150 F-154 F-155 F-155 F-156 F-161 F-161 F-162 F-162 F-163 F-163 F-163 F-164 F-165 F-165 F-165 F-167 F-167 F-168 F-171 F-172 F-174 F-174 F-174 F-175 F-176 F-177 F-177 F-177 F-177 F-177 F-178 F-178 F-178 F-182 F-182 F-182 F-182 F-182 F-183 F-183 F-183 F-184 F-184 F-184 F-185 F-186

C D E

F-139

LIST OF ABBREVIATIONS 2005 Financings

........................

(i) the issuance of the 215.0 million in principal amount of the February 2005 Notes, (ii) the repayment of 93.8 million of Unitymedia Hessens previous senior credit facilities, (iii) the drawdown of 200.0 million under the Senior Credit Facilities, (iv) the purchase of all the outstanding shares of Kabelnetz (now Unitymedia NRW) for a total consideration of 1,540.3 million, including the repayment of the existing indebtedness of Kabelnetz and its subsidiaries, (v) the drawdown of 360.0 million under the Subordinated Bridge Facility, (vi) the drawdown of 850.0 million under the Senior Credit Facilities, (vii) the issuance of the equivalent of 360.1 million in principal amount of the July 2005 Notes and the repayment of the Subordinated Bridge Facility, and (viii) the payment of fees and expenses related to the foregoing The issuance by Unitymedia Hessen and Unitymedia NRW of the NRW/Hesse Notes that mature on April 15, 2013, and replaced the undrawn 100.0 million revolving credit facility with the NRW/Hesse Revolving Credit Facility, available to Unitymedia Hessen, Unitymedia NRW and arena. The proceeds from the offering of the NRW/Hesse Notes were used to refinance our 1,050.0 million Senior Credit Facilities, to finance the payment by Unitymedia to Unity Media S.C.A. of the deferred purchase price for the Tele Columbus shares and to cash collateralize a portion of the DFL bank guarantee

2006 Refinancing

.......................

arena . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Arena Sport Rechte und Marketing GmbH, Cologne Bundesliga Rights . . . . . . . . . . . . . . . . . . . . . . . Rights to broadcast the matches of the 1st and 2nd German Football Leage (Deutsche Fuball Liga) CPE DFL
.................................... .................................... .................................. ................................... ................................

Customer Premise Equipment Deutsche Fuball Liga, Frankfurt am Main Deutsche Telekom AG, Bonn Earnings before interest, tax Earnings before interest, tax, depreciation and amortization Earnings before tax

DTAG EBIT

EBITDA EBT

....................................

EU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . European Union EUR

.................................... ................................. ...............................

Euro European Inter Bank Offered Rate Prior financing of our group, consisting of a 360.0 million subordinated bridge facility entered into on June 21, 2005, as well as the Senior Credit Facilities consisting of a 225.0 million term loan A facility, a 250.0 million (incremental) term loan B facility, a 375.0 million term loan C facility, and a 70.0 million (incremental) revolving credit facility Federal Cartel Office, the Bundeskartellamt

Euribor

Financing

FCO

....................................

German GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . Generally Accepted Accounting Principles in Germany (HGB) HGB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . German Commercial Code (Handelsgesetzbuch)

F-140

IAS

..................................... ................................... .............................

International Accounting Standards International Accounting Standards Board iesy Hessen GmbH & Co. KG, which was renamed Unitymedia Hessen GmbH & Co. KG ish NRW GmbH, which was renamed Unitymedia NRW GmbH

IASB

iesy Hessen

ish

......................................

IFRIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . International Financial Reporting Interpretation Committee IFRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . International Financial Reporting Standards In-Region assets
........................

Assets and liabilities related to the regions North Rhine Westphalia and Hesse within the previous Tele Columbus group Kabelnetz NRW HoldCo GmbH Kabelnetz NRW Limited Kabel Baden-Wrttemberg GmbH & Co. KG

Kabelnetz

............................... ..........................

Kabelnetz Ltd. KBW

...................................

KDG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Kabel Deutschland GmbH K

......................................

Thousand EUR

M . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Million EUR MEP

....................................

Management Equity Participation programs

MSG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Kabel Deutschland Breitband Services GmbH (formerly MSG MediaServices GmbH), a subsidiary of KDG NRW/Hesse Notes
......................

1,350,000,000 senior secured floating rate notes due 2013 issued by Unitymedia Hessen and Unitymedia NRW 130.0 million revolving credit facility issued during the 2006 Refinancing Assets and liabilities related to the regions of Tele Columbus excluding North Rhine Westphalia and Hesse Premiere AG, Unterfhring Transfer Loan Agreement between Unitymedia to Unitymedia Hesse of USD 151 million from the Unitymedia New Senior Notes The offering by Unitymedia of the Notes and the entering into of the 230.0 million senior credit facilities consisting of a 200.0 million term loan facility and a 30.0 million revolving credit facility Senior credit facilities entered into in connection with the Refinancing and Financing Standards Interpretation Committee

NRW/Hesse Revolving Credit Facility

..

Out-of-Region assets

....................

Premiere

................................ ..........................

Proceeds Loan

Refinancing

.............................

Senior Credit Facilities

..................

SIC

.....................................

Tele Columbus Group . . . . . . . . . . . . . . . . . . . Tele Columbus Kabel Holding GmbH, Hannover and its subsidiaries Term Loan
..............................

100 million Senior Secured Term Loan Facility maturing in October 2011 entered into by the Unitymedia group companies Unitymedia Hessen, Unitymedia NRW and arena on October 20, 2006

F-141

Unitymedia, we, us, our,

.......

Unity Media GmbH and its consolidated subsidiaries; Company and other similar terms except where the context otherwise requires. It is planned for Unity Media GmbH to be renamed Unitymedia GmbH

Unitymedia Cable . . . . . . . . . . . . . . . . . . . . . . . Cable business of Unitymedia, not including arena Unitymedia Group Unitymedia Hessen
...................... .....................

Unitymedia GmbH, Cologne and its subsidiaries Unitymedia Hessen GmbH & Co. KG, Cologne (formerly: iesy Hessen & Co. KG, Cologne) Unitymedia Hessen Verwaltung GmbH, Cologne (formerly: iesy Hessen Verwaltung GmbH, Cologne) Unitymedia Management GmbH, Cologne 235 million 10 1 8% senior notes of the Company due 2015 and $151 million 10 3 8% senior notes of the Company due 2015

Unitymedia Hessen Verwaltung

.........

Unitymedia Management

............... ..........

Unitymedia New Senior Notes

Unitymedia NRW . . . . . . . . . . . . . . . . . . . . . . . Unitymedia NRW GmbH, Cologne (formerly: ish NRW GmbH, Cologne) Unity Media S.A.
....................... .....................

Unity Media S.A., Luxembourg Unity Media S.C.A., Luxembourg

Unity Media S.C.A.

Unitymedia Senior Notes . . . . . . . . . . . . . . . . 215 million 8 3 4% senior notes of the Company due 2015 that were offered by Unitymedia as part of the Refinancing in February 2005 Unitymedia Services
....................

Unitymedia Services GmbH & Co. KG, Bochum (formerly: Tele Columbus West GmbH & Co. KG, Bochum)

Unitymedia Services Verwaltung . . . . . . . . Unitymedia Services Verwaltung GmbH, Bochum (formerly: Tele Columbus West Beteiligungs GmbH, Bochum) USD
....................................

United States Dollar

F-142

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year A General The consolidated financial statements of Unitymedia GmbH, Cologne, (Unitymedia) as of December 31, 2006 have been prepared in English. The functional currency is EUR. The prior year to the financial statements is the 2005 financial year. The consolidated financial statements have been prepared on a voluntary basis. The consolidated financial statements of Unitymedia as of December 31, 2006 as well as the comparison period from January 1, 2005 to December 31, 2005 has been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), London, and applicable to the company. Unitymedia is a first time adopter of the IFRS according to IFRS 1. The consolidated financial statements comprise the consolidated balance sheet, the consolidated income statement, the consolidated statement of cash flow, the consolidated statement of changes in equity and the notes. The Notes include the segment reporting. The functional currency is . Figures are presented in K. The group is the second largest cable operator in Germany operating in the German states of Hesse and North Rhine-Westphalia. The group provides basic and premium cable television services, as well as high speed internet access and telephony services to its customers. Its subsidiary arena acquired certain Bundesliga programming rights for three seasons starting with the 2006/2007 season. These rights were sublicensed in 2007 to Premiere for the remaining two seasons in 2007. We refer to our explanations under (22) Events after the balance sheet date. Unitymedias headoffice is located in Cologne, Germany. The address is Aachener Strae 746-750, Cologne. The consolidated financial statements were released for publication by the managing directors on April 1, 2008. B First time adoption of IFRS Unitymedia is a first time adopter of IFRS according to IFRS 1. The consolidated financial statements as of December 31, 2006 have been prepared according to IFRS for the first time. The consolidated financial statements until December 31, 2006 have also been prepared according to German GAAP (HGB). The transition date is January 1, 2005. Hence Unitymedia is required to comply with each IFRS standard effective as of December 31, 2006 except as specified in IFRS 1.13 to IFRS 1.34. However an entity may apply a new IFRS standard that is not yet mandatory if it permits early application. Until December 31, 2006 the IASB has issued IFRS 7 (Financial Instruments Disclosures) and IFRS 8 (Operating Segments), which are not effective as of December 31, 2006. The company has determined not to apply IFRS 7 but to comply with IFRS 8 as of December 31, 2006. Unitymedia has not applied the following IFRS and IFRIC interpretations that have been issued and endorsed by the EU but are not effective as of December 31, 2006: In August 2005, the IASB issued an amendment to IAS 1, Presentation of Financial Statements Capital Disclosures. The amendment requires disclosures regarding an entitys objectives, policies and processes for managing capital. The provisions are effective for reporting periods beginning on or after January 1, 2007. The company expects to adopt this amended standard beginning January 1, 2007. The amendment to IAS 1 is not expected to lead to material changes in relevant disclosures. In August 2005, the IASB published IFRS 7 Financial Instruments Disclosures. This standard results in a fundamental restructuring of the disclosure obligations for financial instruments and combines all disclosure regulations for financial instruments in a new standard. IFRS 7 requires disclosure of information on the importance of financial instruments for the asset and income situation of companies. In addition it contains new

F-143

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) requirements for reporting on risks, which are associated with financial instruments. Also associated with the adoption of IFRS 7 is an expansion of IAS 1 Presentation of Financial Statements. Qualitative information is to be disclosed on objectives, methods and processes for the management of capital. In addition external minimum capital claims, infringements of these as well as the resulting consequences are to be disclosed. IFRS 7 is effective for reporting periods beginning on or after January 1, 2007. Unitymedia expects to adopt IFRS 7 beginning January 1, 2007. The adoption of this standard is expected to lead to extensive additional quantitative and qualitative disclosures with respect to the relevance of financial instruments for the financial, assets and income position. The disclosures have to be based on a management approach. In January 2006, the IFRIC issued IFRIC interpretation 8, Scope of IFRS 2 (IFRIC 8). The interpretation clarifies that IFRS 2 applies to arrangements where an entity makes share-based payments for apparently no or inadequate consideration. If the identifiable consideration given appears to be less than the fair value of the equity instruments granted, under IFRIC 8 this situation typically indicates that other consideration has been or will be received. IFRS 2 would therefore apply. IFRIC 8 becomes effective for financial years beginning on or after May 1, 2006. Unitymedia expects to adopt IFRIC 8 beginning January 1, 2007. The adoption of this interpretation is not expected to have a material impact on Unitymedias results of operations, financial position or cash flow. In March 2006, the IFRIC issued IFRIC interpretation 9, Reassessment of Embedded Derivatives (IFRIC 9). The interpretation clarifies whether an embedded derivative has to be separated from a newly entered contract under IAS 39 only when a new contract is entered into or even subsequently. A subsequent reassessment is prohibited unless there is a change in the terms of the contract. IFRIC 9 applies for all annual periods beginning on or after June 1, 2006. Unitymedia expects to adopt IFRIC 9 beginning January 1, 2007. The adoption of this interpretation is not expected to have a material impact on Unitymedias results of operations, financial position or cash flow. Unitymedia has not applied the following IFRSs and IFRIC interpretations that have been issued but have not yet been endorsed by the EU and are not effective as of December 31, 2006: In November 2006, the IFRIC issued IFRIC interpretation 11, IFRS 2 Group and Treasury Share Transaction (IFRIC 11). The interpretation provides guidelines for three different situations related to sharebased payments. It clarifies that share-based payment arrangements involving an entitys own equity instruments which it has to buy back (treasury shares) to fulfill its obligations have to be accounted for as an equity settled share-based payment transaction. Furthermore, it provides guidance regarding the application of IFRS 2 for share-based payment transactions where an entity grants its employees rights to equity instruments and the equity instruments are provided by the shareholders. IFRIC 11 becomes effective for financial years beginning April 1, 2007. Unitymedia expects to adopt the IFRIC 11 beginning January 1, 2008. The adoption of this interpretation is not expected to have a material impact on Unitymedias results of operations, financial position or cash flow. In November 2006, the IFRIC issued IFRIC interpretation 12, Service Concession Agreements (IFRIC 12). The interpretation addresses how service concession operators should apply existing IFRSs to account for the obligations they assume and rights they receive in service concession arrangements. In one type of such an arrangement, the operator receives a financial asset, i.e., an unconditional contractual right to receive cash or another financial asset from the government in return for constructing or upgrading a public sector asset that it contracts or upgrades. A right to charge users is not an unconditional right to receive cash because the amounts are contingent to the extent to which the public uses the service. IFRIC 12 allows for the possibility that both types of arrangements may exist within a single contract. To the extent that the government has given an unconditional guarantee to pay for the construction of the public sector asset, the operator owns a financial asset. IFRIC 12 applies for all annual periods beginning on or after January 1, 2008. Unitymedia expects to adopt the IFRIC 12 beginning January 1, 2008. The adoption of this interpretation is not expected to have a material impact on Unitymedias results of operations, financial position or cash flow.

F-144

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) Unitymedia has applied the following IFRS that has been issued but which is not compulsory as of December 31, 2006: In November 2006, the IASB issued IFRS 8 Operating Segments. The standard requires an entity to report financial and descriptive information about its reportable segments. IFRS 8 requires identification of operating segments based on internal reports that are regularly reviewed by the entitys chief operating decision makers in order to allocate resources to the segment and assess its performance. The standard also requires an explanation of how segment profit or loss and segment assets and liabilities are measured for each reportable segment. IFRS 8 requires an entity to report information about revenues derived from its products or services, about the countries in which it earns revenues and holds assets, and about major customers. The provisions of IFRS 8 are effective for annual periods beginning on or after January 1, 2009. While the current management approach is based on an internal reporting measured according to the principles of German GAAP (HGB), management intends to review the same segments under IFRS in the near future. The first time adoption of IFRS has the following impact on the consolidated financial statements: B.1 1) Adjustments on the level of the separate entities According to German GAAP, transaction costs for raising debt obligations are expensed as incurred. According to IFRS, these costs have to be deferred over the (expected) term of the obligation according to the effective interest rate method. These costs we recognized as a reduction to the nominal value of the debt, which is released to Financial expense over the expected term of the obligation. Interest payments for the 1,350.0 million NRW/Hesse Notes in 2006 are based on the floating Euribor rate and therefore variable. The cash flow risk is partially hedged by swaps. The swap changes the variable interest payments based on floating Euribor into fixed interest payments of 3.66% based on a nominal value of 800.0 million from July 31, 2006 to April 30, 2009. According to German GAAP, the swap is not recognized separately on the balance sheet. According to IFRS, the swap is recognized as a cash-flow-hedge. The changes in the value of the swap are recognized within a separate component of equity Unrealized earnings. We refer to our explanations under (17) Bonds, facilities and derivative financial instruments. The interest payments on the Senior Credit Facilities (1,050.0 million) until April 15, 2006 were also based on the floating Euribor rate and have been partially swapped into a fixed rate based on a nominal value of 525.0 million. As this derivative has been cancelled before its final maturity it does not qualify for hedge accounting. Therefore the changes in the fair value of the swap were recognized within the income statement. The interest payments and the payment of principal for the Unitymedia New Senior Notes amounting to $151.0 million are exposed to a foreign exchange risk in USD. The foreign exchange risk has been hedged by exchanging the foreign exchange interest payments and the principal into fixed EUR amounts using a cash flow hedge for the full term of the Unitymedia New Senior Notes. According to German GAAP, the swap is not recognized separately; only the hedged EUR amount of the 151.0 million liability is recognized within the financial statements. According to IFRS, the change of the value of the swap is recognized within the separate component of equity Unrealized earnings. The change between the fair value of the bond and the hedged EUR amount is included in Financial income. This amount in the Financial income is netted against Unrealized earnings. The fair value of the bond as of the respective balance sheet date is the USD amount recalculated with the corresponding spot rate. We refer to our explanations under F.17 Bonds, facilities and derivative financial instruments. According to German GAAP, deferred taxes are only recognized based on timing differences between consolidation differences excluding goodwill. According to IFRS, deferred taxes are

2)

3)

4)

F-145

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) recognized on any temporary difference (excluding goodwill) between the tax base and the IFRS base and on tax loss carry forwards. Deferred taxes on goodwill are only recognized if the goodwill has also been recognized for tax purposes. 5) According to German GAAP, post-employment benefits are measured using the projected unit credit method based on a discount rate of 6%, and salary and pension data applicable at the reporting date. According to IFRS, post-employment benefits are measured using the projected unit credit method based on a market discount rate, and expected salary and pension data in future. Prepayment options are included within the Unitymedia New Senior Notes and the Unitymedia Senior Notes, which offer the issuers the possibility to prepay the bonds before final maturity based on certain redemption prices. These prepayment options fulfill the requirements of an embedded derivative which has to be separated from the host contract. The prepayment options are valued based on market data and financial mathematical models at the respective reporting date. At the date of issue of the respective bond, the prepayment option is separated by recognizing the prepayment option as an asset and by increasing the bond with the same amount. In the subsequent periods, the prepayment option is re-measured and the asset is adjusted with the corresponding amount through financial income or financial expense respectively. On the other hand, the increase of the liability is amortized over the term of the bond according to the effective interest rate method. arena incurred start up expenditures to develop the business before the broadcast operations started in August 2006. According to German GAAP start up expenditures are capitalized and amortized over a period of up to 4 years. According to IFRS no capitalization of start up expenditures is permitted. However if certain kinds of these expenditures fulfill the criteria for being capitalized as a single asset they have to be capitalized. Therefore third-party costs for acquiring the Bundesliga Rights which were payable only if the Bundesliga Rights were successfully acquired have been capitalized as deferred expense and are amortized via the operating expenses over the term of the Bundesliga Rights. Furthermore arena incurred one time fees for the use of the brand name arena which was capitalized as an intangible asset according to IFRS. Unitymedia recognizes subscriber acquisition costs as intangible assets incurred to obtain new subscribers if the costs are directly attributable to obtaining new services. Unitymedia amortizes these costs over the initial contract period. According to German GAAP these costs are expensed as incurred. In 2003, 2005 and 2006 certain members of senior management have received options on shares of Unitymedia or Unitymedia SCA respectively. According to German GAAP these options are not included in the financial statements. According to IFRS the fair value of these options are measured on the grant date and this fair value is accrued as personnel expense and increasing the capital reserve over the vesting period.

6)

7)

8)

9)

B.2 Adjustments on the level of the consolidated financial statements 10) According to German GAAP, acquisition costs are only capitalized if caused by the acquisition after the decision to acquire the entity has been completed. According to IFRS any costs directly attributable to the business combination have to be capitalized as acquisition costs. According to German GAAP, goodwill has to be amortized on a straight line basis. According to IFRS, beginning from January 1, 2005 or the acquisition date (if later) goodwill is not amortized on a regular basis but tested for impairment on an annual basis. According to German GAAP, acquired obligations are measured at repayment amounts, or nominal value. According to IFRS, bonds with fair market values are measured with their fair market value within the purchase price allocation. Prepayment options embedded within the acquired bonds are not separated, because the fair value of the prepayment option is already included within the bond.

11)

12)

F-146

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) 13) According to German GAAP, the purchase price allocation excludes minority shares of reserves between fair value and book value of assets. According to IFRS, the minority shares in the reserves between fair value and book value are recognized within the purchase price allocation. Only the goodwill is recognized without minority shares.

Presentation of part of the Tele Columbus Group as discontinued operations On December 9, 2005, Tele Columbus Kabel Holding GmbH, Hannover, and its subsidiaries (Tele Columbus Group) were acquired by Unitymedia. The Tele Columbus Group at the time primarily provided broadband cable network television and communications services via Level 4 network infrastructures in different regions in Germany. The subsidiaries in the regions in North Rhine-Westphalia and Hesse (In-Region) have since been included within the operations and financials of the other Unitymedia cable subsidiaries. The other subsidiaries (Out-of-Region) have been sold to 3rd party cable operators within 2006. The Out-of-Region subsidiaries are presented within the consolidated financial statements as discontinued operations from the date of acquisition until the date of disposal. The presentation of the Out-of-Region subsidiaries has the following impact on the consolidated financial statements: 14) The assets and liabilities related to discontinued operations are presented separately in one line from other assets or liabilities respectively in the balance sheet. Beginning with the date of acquisition, depreciation of non current assets ceases for discontinued operations. Furthermore discontinued operations include adjustments regarding deferred taxes and the revaluation of Bonds listed on a market with the fair market value. The post-tax profit or loss related to the operating result and separately, the disposal, are presented as a single amount respectively in a separate line item within the profit and loss statement.

15)

16)

B.3 Reclassifications a According to German GAAP, estimated obligations without invoices are presented within the provisions. According to IFRS, those obligations are presented within the respective liability balance sheet items if the amount of cash outflows can be estimated reliably without a material uncertainty. According to IFRS, there is no distinction between extraordinary and recurring profits or losses. These profits or losses are reclassified into their respective operating revenues/expenses or financial income/expenses categories. According to IFRS, taxes comprise only current and deferred income taxes. Other taxes (such as motor vehicle or real estate taxes) are presented within other operating expenses. The structure of the balance sheet according to IFRS is separated into short term (up to one year) and long term items (exceeding one year).

The transition from German GAAP to IFRS has the following impact on equity, and profit and loss as of the respective dates.

F-147

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) Reconciliation of equity from German GAAP to IFRS as of January 1, 2005:
January 1, 2005 Notes subscribed capital K Capital reserve K Unrealized earnings K Retained earnings K Minority interest K Total K

Equity German GAAP . . . . . . . . . . . . . . . . . . . . . . Tax loss carryforward . . . . . . . . . . . . . . . . . . . . . . . Pension accrual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subscriber costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . Share based payments . . . . . . . . . . . . . . . . . . . . . . . Equity IFRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12,682 4 5 8 9 12,682

179,118

20 179,138 0

-869 47,494 -428 519 -20 46,696

190,931 47,494 -428 519 0 238,516

Reconciliation of equity as of December 31, 2005 including the profit and loss for the period from January 1, 2005 until December 31, 2005:
December 31, 2005 Notes subscribed capital K Capital reserve K Unrealized earnings K Retained earnings K Income K Minority interest K Total K

Equity German GAAP . . . . . . . . . . . . Transaction costs financing . . . . . . . . Interest Rate Swap . . . . . . . . . . . . . . . . FX Swap . . . . . . . . . . . . . . . . . . . . . . . . . Deferred taxes . . . . . . . . . . . . . . . . . . . . Pension accrual . . . . . . . . . . . . . . . . . . . Prepayment options . . . . . . . . . . . . . . . Subscriber costs . . . . . . . . . . . . . . . . . . Share based payments . . . . . . . . . . . . . Acquisition cost . . . . . . . . . . . . . . . . . . Amortization goodwill . . . . . . . . . . . . Minority interest reserves . . . . . . . . . . Discontinued operations . . . . . . . . . . . Equity IFRS . . . . . . . . . . . . . . . . . . . . . . Minority interest of income . . . . . . . . Loss in income statement . . . . . . . . . .

12,682 1 2 3 4 5 6 8 9 10 11 13 12/15 12,682

421,872

-869

-99,168 48,607 7,249 -36,532 -158 2,798 928 -156 13,080 21,864

22,892

-10,167 4,549

47,494 -428 519 -20

176

41,853 18,805 422,048 -5,618 46,696 -22,683 373 -22,310 64,745

357,409 48,607 7,249 -10,167 15,511 -586 2,798 1,447 0 13,080 21,864 41,853 18,805 517,870

F-148

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) Reconciliation of equity as of December 31, 2006 including the income for the period from January 1, 2006 until December 31, 2006:
December 31, 2006 Notes subscribed capital K Capital reserve K Unrealized earnings K Retained earnings K Profit and loss K Minority interest K Total K

Equity German GAAP . . . . . . . . . . . Transaction costs financing . . . . . . . Interest rate swap . . . . . . . . . . . . . . . . FX swap . . . . . . . . . . . . . . . . . . . . . . . Deferred taxes . . . . . . . . . . . . . . . . . . Pension accrual . . . . . . . . . . . . . . . . . Prepayment options . . . . . . . . . . . . . . Start up expenditures . . . . . . . . . . . . Depreciation start up expenditures . . . . . . . . . . . . . . . . . . Amortisation Success fee Bundesliga Rights . . . . . . . . . . . . . Subscriber Costs . . . . . . . . . . . . . . . . Share based payments . . . . . . . . . . . Acquisition cost . . . . . . . . . . . . . . . . . Amortization goodwill . . . . . . . . . . . Discontinued operations . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . Equity IFRS . . . . . . . . . . . . . . . . . . . . Minority interest of income . . . . . . . Loss in income statement . . . . . . . . .

12,682 1 2 3 4 5 6 7a 7b 7c 8 9 10 11 12/15 12,682

421,872

0 5,708 -7,808 941

-100,037 48,607 7,249 10,962 -586 2,798

-201,618 1,612 -7,237 21,716 -337 -80 -30,402 4,472 -2,641 1,345 -1,140 43,343 -1,325 97 -172,195 5,545 -166,650

132,899 50,219 5,720 -7,808 33,619 -923 2,718 -30,402 4,472 -2,641 2,792 0 13,080 65,207 17,480 97

1,316

1,447 -176 13,080 21,864 18,805 -1,159 24,013

423,188

286,529

Consolidated Statement of Cash Flows: Cash and cash equivalents for cash flow statement purposes comprise the same items in IFRS as in German GAAP. Cash and cash equivalents for cash flow statement purposes include bank overdrafts repayable on demand under German GAAP and under IFRS. Differences between the cash flow statement according to German GAAP and to IFRS exist regarding the allocation of items to the different kinds of cash flow activities (operating, investing and financing):

The cash flow reconciliation is based on the EBIT (instead of the profit and loss before extraordinary items according to HGB) Presentation of interest paid and taxes paid

F-149

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) C Scope of consolidation In addition to Unity Media GmbH, the parent company, the following subsidiaries are included in the consolidated financial statements according to the principles of full consolidation.
Name of company Headquarter Country Share of equity %

Unitymedia Management GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Arena Sport Rechte und Marketing GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unitymedia Hessen GmbH & Co. KG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iesy Hessen Verwaltungs GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unitymedia NRW GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unitymedia Hessen Verwaltung GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iesy Hessen Beteiligungs-GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . KSG Kabel-Service-Gesellschaft des Handwerks mbH . . . . . . . . . . . . . . . . . . . . . . Tele Columbus Holding GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unitymedia Services Verwaltung GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Concepta Ost GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unitymedia Services GmbH & Co. KG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tele Columbus Sd-West GmbH (Region Hessen) . . . . . . . . . . . . . . . . . . . . . . . . .

Cologne Cologne Cologne Cologne Cologne Cologne Cologne Paderborn Hannover Bochum Bochum Bochum
(1)

Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany
(1)

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
(1)

(1) Certain assets and liabilities located in Hesse were purchased through internal restructuring (asset deal) from Tele Columbus Sd-West GmbH by Unitymedia NRW, prior to the sale of Tele Columbus Sd-West GmbH to KBW.

The following table comprises shares of entities of the Tele Columbus Kabel Holding GmbH, Hannover and its subsidiaries (Tele Columbus Group) which were acquired on December 9, 2005 and sold in 2006. The subsidiaries have been presented as discontinued operations according to IFRS 5 from the date of acquisition until the date of disposal.
Name of company Headquarter Country Share of equity %

Tele Columbus Kabel Holding GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . AEP Plckhahn Kabel GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BAK Sdwest GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Finakabel Verwaltungs GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ImmoMediaNet GmbH & Co. KG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ImmoMediaNet Verwaltungs GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Infocity GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Kabel Plus Gesellschaft fr Kabel- und Satellitenfernsehen mbH . . . . . . . . . . . Kabelcom Braunschweig Gesellschaft fr Breitbandkabel-Kommunikation mbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Kabelcom Wolfsburg Gesellschaft fr Breitbandkabel-Kommunikation mbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Kabel-Service Berlin GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . KFS Kabelfernsehen Stuttgart GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . KMG Kabelfernsehen Hannover GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NeBeG Media Netzbetreiber Pool GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RKS Niederschs. Kabel-Service-Beteiligungs-GmbH . . . . . . . . . . . . . . . . . . . . RKS Niederschs. Kabel-Servicegesellschaft mbH & Co. KG . . . . . . . . . . . . . . RKS Telecom Sdwest Regionale Kabel-Service-Beteiligungsgesellschaft mbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RKS Telecom Sdwest Regionale Kabel-Servicegesellschaft mbH & Co. KG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TDS Tele Columbus Daten und Service GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . Tele Columbus Berlin-Brandenburg GmbH & Co. KG . . . . . . . . . . . . . . . . . . . . Tele Columbus GmbH & Co. KG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tele Columbus Hessen Verwaltungs GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tele Columbus Mitteldeutschland GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Hannover Stralsund Mannheim Hannover Hamburg Hamburg Hannover Lrrach Braunschweig Wolfsburg Berlin Stuttgart Hannover Hamburg Hannover Hannover Mannheim Mannheim Hannover Berlin Hannover Raunheim Jena

Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany

100.0 100.0 50.0 100.0 50.0 100.0 100.0 100.0 75.6 72.5 76.0 100.0 70.0 100.0 51.2 43.2 61.8 65.9 100.0 100.0 100.0 100.0 100.0

F-150

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued)
Name of company Headquarter Country Share of equity %

Tele Columbus Netze GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tele Columbus Nord GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tele Columbus Ost GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tele Columbus Sachsen-Anhalt GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tele Columbus Sachsen-Thringen GmbH & Co. KG . . . . . . . . . . . . . . . . . . . . . . . Tele Columbus Sd-West GmbH (Region Baden-Wrttemberg) . . . . . . . . . . . . . Tele Columbus Verwaltungs-GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . URBANA Telekommunikation Netze GmbH & Co. KG . . . . . . . . . . . . . . . . . . . . URBANA Teleunion Rostock GmbH & Co. (Kommanditgesellschaft) . . . . . . . . Verwaltung URBANA Teleunion Rostock GmbH . . . . . . . . . . . . . . . . . . . . . . . . . .

Hamburg Hamburg Hannover Kthen Jena Mannheim Berlin Berlin Rostock Rostock

Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 70.0 50.0

Changes in scope of consolidation in 2005 and 2006 Acquisition of Unitymedia NRW On June 24, 2005 Unitymedia Hessen acquired all shares in KABELNETZ NRW HoldCo GmbH. The acquisition was based on the bid of March 11, 2005 and subsequently received approval from the Federal Cartel Office. Through a chain of horizontal and vertical mergers, in a first step KABELNETZ NRW HoldCo GmbHs subsidiaries with the exception of KSG Kabel-Service-Gesellschaft des Handwerks mbH ultimately merged into KABELNETZ NRW HoldCo GmbH. In a second step, KABELNETZ NRW HoldCo GmbH merged into iesy Services GmbH. Prior to the merger, iesy Services GmbH had no operating activities. The date of the first consolidation was June 24, 2005. The merger contract between iesy Services GmbH and KABELNETZ NRW HoldCo GmbH was agreed on August 8, 2005 at the Shareholders Meeting. The merger was based on the closing balance sheet of KABELNETZ NRW HoldCo GmbH as of December 31, 2004, 24:00 hrs (balance sheet date). The transfer of assets took place as of December 31, 2004, 24:00 hrs. All business activities of KABELNETZ NRW HoldCo GmbH since January 1, 2005 (merger date) have been recorded for the account of iesy Services GmbH but not included in consolidation prior to June 24, 2005. The name of iesy Services GmbH was changed to ish NRW GmbH and subsequently to Unitymedia NRW and the corporate domicile was shifted from Frankfurt am Main to Cologne in 2005. The company statutes were adjusted accordingly. The cost of acquiring 100% of the shares of Unitymedia NRW is as follows:
K

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transfer of liability to Unitymedia Hessen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Directly attributable costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

942,590 48,054 6,027 996,671

F-151

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) The following table summarizes the amounts recognized at the acquisition date and carrying values immediately before the acquisition for each class of assets and liabilities of Unitymedia NRW.
Class of assets/liabilities of Unitymedia NRW Amount in PPA (1) K Carrying value before PPA (1) K Reserves K

Tangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bank Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net equity / Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

781,764 1,101,861 112,910 93,794 2,090,329 689,937 271,473 132,248 1,093,658 996,671

781,764 27,494 112,910 93,794 1,015,962 689,937 0 132,248 822,185 193,777

0 1,074,367 0 0 1,074,367 0 271,473 0 271,473 802,894

(1) PPA = Purchase Price Allocation

Goodwill includes synergy effects due to the combination of two similar entities engaged in the same business. A profit and loss transfer agreement was concluded between Unitymedia Hessen and Unitymedia NRW as controlled company on October 19, 2005, which was effective retroactively as of January 1, 2005. Since the acquisition date, the business of Unitymedia NRW has contributed a loss of K1,916 to the acquirers loss. Acquisition/Disposal of Tele Columbus On August 1, 2005, our parent company Unity Media S.C.A., Luxembourg, concluded a contract with Tele Columbus Kabel Holding GmbH concerning the merger of the two groups. The Federal Cartel Office approved the merger in November 2005. On December 9, 2005, the merger was completed. The shareholders of Tele Columbus Kabel Holding GmbH exchanged their shares in Tele Columbus Kabel Holding GmbH for shares in Unity Media S.C.A. Subsequently, Unitymedia purchased 25.75% of those shares from the parent company. Simultaneously, 74.25% of the shares were contributed from Unity Media S.C.A. to Unitymedia as a contribution in kind. The valuation of the contribution corresponds to the exchange value of the shares at the time of their contribution into Unity Media S.C.A. On the level of Unitymedia the cost of acquiring 100% of the shares of Tele Columbus is as follows:
K

Additional paid in capital reserve of Unitymedia GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Directly attributable costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

242,104 84,308 7,104 333,516

The purchase of 100% of the shares of Tele Columbus Kabel Holding GmbH from Unity Media S.C.A. is a transaction under common control, because Tele Columbus Kabel Holding GmbH and Unitymedia GmbH are under the common control of Unity Media S.C.A. Generally IFRS 3 is not applicable for transactions under common control. However, due to a missing guideline for those transactions IFRS 3 has been applied to this business combination. Therefore a purchase price allocation was required to allocate the difference between the purchase price and the net assets of the acquired business to the corresponding assets and liabilities.

F-152

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) The Tele Columbus Group primarily provided broadband cable network television and communications services via Level 4 network infrastructures in different regions in Germany. As a professional Level 4 operator, Tele Columbus provided cable television and radio services to approximately 2.6 million subscribers principally under exclusive arrangements with housing associations. In addition to analog cable services, Tele Columbus also offered digital television, high speed internet and telephony services. Tele Columbus generally sourced television and radio transmission signals either from Level 3 operators at Tele Columbus hand-over points or through its own satellite head ends, and subsequently provided cable services directly to subscriber homes. Unitymedia harmonized operations of its own and Tele Columbus In-Region assets in Hesse and North Rhine-Westphalia. The remaining regions of Tele Columbus in Germany including its corporate headquarters and service company in Hannover were sold in 2006. The business of Tele Columbus outside of Hesse and North Rhine-Westphalia has been disclosed as discontinued operations according to IFRS 5. The assets of the disposal group of Tele Columbus mainly comprise level 4 network equipment, customer contracts and goodwill, and net working capital. The liabilities mainly comprise the bonds of Tele Columbus GmbH & Co. KG (475.0 million nominal value). The date of disposal of the Out-of-Region assets of Tele Columbus was October 31, 2006. The Out-of-Region assets and liabilities in 2005 of Tele Columbus are included in the Unitymedia Cable operating segment. No analysis of the income statement, and of the major classes of assets and liabilities related to the discontinued operations are disclosed, because the discontinued operations comprise subsidiaries that meet the criteria to be classified as held for sale at the acquisition date according to IFRS 5.33 (b) and IFRS 5.39. The following table summarizes the information on amounts recognized at the acquisition date and carrying values immediately before the acquisition for each class of the In-Region assets and liabilities of the Tele Columbus Group.
Class of assets/liabilities of Tele Columbus Group Amount in PPA (1) K Carrying value before PPA (1) K Reserves K

Tangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bank liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

68,111 182,652 3,345 37 254,145 17,783 57,119 8,273 83,175

68,111 78,073 3,345 37 149,566 17,783 17,380 8,273 43,436

0 104,579 0 0 104,579 0 39,739 0 39,739

(1) PPA = Purchase Price Allocation

Goodwill includes synergy effects due to the combination of two similar entities engaged in the same business. From the acquisition date to December 31, 2005 the In-Region business in Hesse and North RhineWestphalia has contributed K-369 to Unitymedias loss. On November 29, 2005, the company acquired all shares in arena. The shares are valued at purchase price.

F-153

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) Pro forma disclosures The entities Unitymedia NRW and Tele Columbus were acquired during 2005. The following table discloses the pro forma figures of revenues and profit or loss as if the acquisition date had been on January 1, 2005.
January 1, 2005 Tele Columbus In-Region (1) K Unitymedia NRW K Pro forma Combined K

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Profit or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

59,510 23,427 1,424

404,141 199,770 -40,296

594,796 264,639 -70,719

(1) Prior to consolidation effects, in particular wholesale signal delivery from Unitymedia to Tele Columbus In-Region.

D Basis of presentation and consolidation Reporting date of consolidated financial statements The reporting date of the consolidated financial statements is December 31, 2006, which is in line with the reporting date of all group entities. Presentation and measurement The consolidated financial statements of Unitymedia as of December 31, 2006 have been prepared based on the same accounting policies throughout all periods presented in its first IFRS financial statements. The Companys income statement has been prepared using the nature of expenses method under IFRS. The consolidated financial statements have been prepared on a historical cost basis except for derivative financial instruments and expenses related to the MEP. Consolidation of equity The capital consolidation is performed according to the purchase method (IFRS 3.14) by netting the value of the investments with the subsidiaries fair values of assets (without goodwill) and liabilities on the acquisition date. The fair value of assets includes fair value of customer contracts and internally developed software. To the extent that the purchase price exceeds the fair value of assets (without goodwill) and liabilities, goodwill has to be capitalized. The valuation of the customer base of Unitymedia NRW was based on the business plan until 2012. Customer base values were calculated applying different scenarios concerning churn rate and EBITDA development (worst case, best case and average value). The average of these values was used to determine customer value. According to IFRS, goodwill must not be amortized but has to be tested on a yearly basis as to whether there is an impairment. An impairment loss has to be recognized if the recoverable amount is less than the carrying amount of goodwill. The recoverable amount is the higher amount between the value in use amount and the fair value less costs to sell. Other principles of consolidation Intercompany payables and receivables are eliminated within the framework of debt consolidation. Intercompany profits are eliminated. Income and expenses from intercompany transactions are eliminated within the framework of income and expense consolidation.

F-154

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) Discontinued operations Disposal groups qualifying as discontinued operations are presented as follows:

The assets and liabilities related to discontinued operations are presented separately from other assets or liabilities respectively in the balance sheet. Beginning with the date of acquisition depreciation of non current assets ceases. The post-tax profit or loss is presented as a single amount in a separate line item within the income statement. The post-tax gain or loss recognized on both the measurement to fair value less costs to sell and/or on the disposal of the disposal group constituting the discontinued operation is presented as a single amount in a separate line item within the income statement.

E Accounting and valuation methods E.1 Critical management assumptions The following critical management assumptions have been made by management regarding the accounting and valuation methods:

The company has rental contracts for using cable ducts. The rental contracts are based on a long term basis (up to 30 years). However the company did not capitalize those cable ducts as finance leases because the cable ducts are not used by the company alone. Therefore the cable ducts do not fulfill the requirements as a specific asset according to IFRIC 4. The company is obliged to remove network equipment and infrastructure after the expiration of rental contracts. However no asset retirement cost has been included as a provision, because the probability of paying this asset retirement cost has been assessed as remote. The goodwill is tested for impairment on an annual basis by using discounted cash flow approaches which discount expected future cash flows. The estimate of future cash flows, discount rates and growth rates is based on assumptions with a relatively high uncertainty. We refer to our explanations under (14) Goodwill. Deferred tax assets are capitalized if sufficient taxable income is expected for future periods to be netted with the existing tax loss carry forwards. The estimate of management regarding sufficient taxable income is based on deferred tax liabilities and/or taxable income from the operating business during forecasted periods based on the internal reporting. Customer contracts acquired through the purchase of the shares of Unitymedia Hessen, Unitymedia NRW and Tele Columbus In-Region are depreciated on a basis of 10 to 20 years. The estimated useful life is based on the estimated contractual period with the customers. The company offers products that contain signal delivery and the right to use hardware devices (CPE). The hardware devices are essential for the signal delivery to the customer. Since the fulfillment of these arrangements is dependent on the use of a specific asset and the arrangements convey a right to use the asset, the contracts qualify as a lease with Unitymedia qualifying as lessor. In 2005 and 2006 management received options on the shares of Unitymedia and Unitymedia S.C.A respectively. The vesting of the shares depends from time vesting and the achievement of certain performance criteria. The options have been valued using the Black Scholes for the time vesting options and the Binomial Model for the Performance vesting options. The main parameters of these models are the expected volatility, the estimated term of the options and the risk free interest rate on the grant date. We refer to our explanations under note 21 (G.3 Financial instruments and risk management).

F-155

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) E.2 Special accounting and valuation methods

Property, plant and equipment Property, plant and equipment are measured at initial cost after deducting any accumulated depreciation or accumulated impairment losses. Impairment losses are reversed if the reasons for the impairment loss no longer exist or the impairment loss has decreased. The initial cost comprises its purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Borrowing costs are recognized as expenses in the period they are incurred and are not capitalized within the initial cost. Property, plant and equipment is generally amortized on a straight line basis over a period of 3 to 23 years. The cable network has an estimated useful life ranging from 15 to 20 years. The cable network infrastructure comprises technical equipment with estimated useful life ranging from 8 to 15 years. The estimated useful lives are reviewed on an annual basis. Adjustments are recognized at the new basis going forward. Property, plant and equipment is impaired when there is a corresponding indication for the impairment. Impairment exists when the carrying value exceeds the recoverable amount. The recoverable amount is the higher amount between fair value less costs to sell and value in use. The impairment test is generally based on the single asset. Expenditures for maintenance and repair are expensed as incurred. Subsequent expenditure for significant renovations and additions are capitalized, if it is probable that future economic benefits in excess of the originally assessed standard of performance will be realized by the company. Profits and losses due to disposals are recognized within other operating income or expenses, respectively. Intangible assets Intangible assets acquired in a separate acquisition are measured at initial cost. Intangible assets acquired within a business combination are measured at fair value. Internally developed software is capitalized and measured at initial costs, if certain requirements are fulfilled. The amortization of intangible assets with definite useful lives is based on the straight line method over the assets estimated useful life. Amortization begins when the asset is ready for use. Intangible assets with a definite useful life are amortized over their useful life of 2 to 15 years on a straight line basis. The estimated useful life of customer contracts is based on the average number of terminations or churn or if shorter the remaining contract terms with the Suppliers who have the contractual relationship with the subscriber units (Gestattungsvertrge). Customer contracts acquired within a business combination are amortized generally over 10 to 20 years. Unitymedia recognizes subscriber acquisition costs incurred to obtain new subscribers as an intangible asset if the costs are directly attributable to obtaining specific contracts, are incremental, can be measured reliably and meet the definition and recognition criteria of an intangible asset in accordance with IAS 38. Unitymedia amortizes these costs over the initial contract period, which lasts from 1 to 2 years. Goodwill and other intangible assets with an indefinite life are not amortized on a straight line basis but tested for impairment on an annual basis.

F-156

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) Straight line amortization and impairment losses are presented within depreciation and amortization expenses in the income statement. The estimated useful lives are reviewed on an annual basis. Adjustments are recognized prospectively. The impairment test of goodwill has to be done based on a cash generating unit. The cash generating units are determined by the operating segments Unitymedia Cable and arena Satellite and Broadcasting. Profits and losses due to disposals are recognized within other operating income or expenses, respectively. Leasing Lease contracts according to IAS 17 can be divided into operating lease contracts and finance lease contracts. In the case of finance leases, the main risks and rewards are allocated to the lessee and therefore the leased asset has to be capitalized in the financial statements of the lessee. Assets leased under finance leases are recorded at the lower of fair value at the inception of the lease or the present value of the lease payments. The assets are depreciated using the straight line method over the shorter of the estimated useful life or over the lease period. The obligations related to future lease payments are recognized as liabilities. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. A lease is accounted for as an operating lease if the main risks and rewards incidental to ownership of the leased item remain with the lessor. Operating lease payments are therefore recognized on a straight line basis over the lease term. In order to receive digital TV and broadband services, Unitymedia leases the necessary CPE to customers. These leases for which the company is the lessor, are classified as an operating lease. Therefore, Unitymedia capitalizes the CPE as fixed assets based on the acquisition cost. The customer premise equipment is depreciated over the estimated contractual period of 1 to 2 years with the customer, using the straight line method. Inventories Inventories are measured at the lower of cost and net realizable value. Cost of inventories is determined using the weighted average cost method. Financial instruments Financial instruments are any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. According to IAS 32 and IAS 39, financial instruments comprise both non-derivative financial instruments like receivables, liabilities and shares, and derivative financial instruments. Financial assets and liabilities are recognized when an entity enters into a contractual relationship with the respective counterparty or issuer. A financial asset is de-recognized if the rights expire, the financial asset is settled or the rights transferred to another party. A financial obligation is de-recognized when the obligation under the liability is discharged or cancelled or the rights expire.

F-157

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) The accounting of the respective classes of financial instruments is as follows:
Financial assets Initial measurement (1) Subsequent measurement Presentation of change in value

1. Trade accounts receivables and other receivables . . . . . . . 2. Other financial assets 2.1. Held to maturity investments . . . . . . . . . . . . . . . . . . . 2.2. Available for sale securities . . . . . . . . . . . . . . . . . . . . 2.3. Derivatives qualifying for hedge accounting . . . . . 2.4. Derivatives not qualifying for hedge accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fair value

Amortized cost

Other income/ expense Financial income Equity / Financial income Equity / Financial income (4) Financial income Financial income
Presentation of change in value

Fair value Fair value Fair value

Amortized cost Amortized cost/ Fair value (2) Fair value (3)

Fair value Fair value

Initial measurement (1)

Fair value (3) Fair value

Subsequent measurement

Financial liabilities

1. Bonds and revolving credit facilities . . . . . . . . . . . . . . . . . . 2. Trade accounts payables and other liabilities . . . . . . . . . . . 3. Derivatives 3.1. Derivatives qualifying for hedge accounting . . . . . 3.2. Derivatives not qualifying for hedge accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fair value deducted by transaction costs Fair value

Amortized cost (5) Amortized cost

Financial income Other income/ expense Equity / Financial income (4) Financial income

Fair value

Fair value (3)

Fair value

Fair value (3)

(1) The fair values are measured at acquisition cost, as acquisition costs between third parties are negotiated at arms length. (2) Generally available for sale securities are measured at fair value. If the fair value of available for sale securities can not be determined properly, they are measured at cost. (3) The fair value of derivative instruments is based on fair market values, if the derivatives are traded in an active market. If no active market with fair market values is available the fair value is determined based on financial mathematical models. (4) Derivatives qualifying for hedge accounting can be separated into cash flow hedges and fair value hedges. Cash flow hedges hedge future cash flows whereas no asset or liability has been recognized in the balance sheet at the valuation date. Fair value hedges hedge future cash flows whereas assets or liabilities have been recognized at the reporting date. Changes to cash flow hedges are recognized within a separate component of equity. The amounts in the separate component of equity are reversed in future periods when the hedged instrument is recognized in profit or loss. Changes to fair value hedges are recognized in financial income immediately. (5) Amortized cost including transaction costs is determined based on the effective interest method.

Financial instruments measured at amortized cost are impaired if the amortized cost exceeds the present value based on the initial effective interest rate. Foreign currency monetary items are measured using the spot rate of the respective reporting period. If permitted, trade accounts receivables are tested for bad debt expense on a portfolio basis. The portfolios comprise receivables with similar risk factors. Bad debt expense ratios are determined based on aging of the receivables and past experience of losses of receivables at certain aging levels. Cash and cash equivalents comprise cash at banks, cash in transit, checks and cash pledged as collateral.

F-158

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) Pension accruals and other long-term benefits for employees Defined contribution plans Defined contribution plans are post-employment benefit plans under which an enterprise pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further contributions. Defined contributions exist for former employees of Deutsche Telekom AG, Bonn, (DTAG) who qualify as civil servants and are currently employed at Unitymedia NRW and Unitymedia Hesse. A monthly consideration is paid without any further obligation for the respective entities. Such contributions are recognized in Personnel expenses. As of December 31, 2006 198 employees participated in this defined contribution plan. Defined benefit plans Defined benefit plans are post-employment benefit plans other than defined contribution plans. Defined benefit plans exist for certain employees within the Unitymedia Group, who were with DTAG prior to the sale of cable networks to Unitymedia NRW and Unitymedia Hesse, but are not civil servants. The valuation of the defined benefit plans is based on the projected unit credit method including several assumptions and expectations regarding increase of salary, increase of pension payments, fluctuation and mortality rate. The rate of mortality is based on the schedules of mortality of Mr. Heubeck (Heubeck Richttafeln 2005). The accrual of the defined benefit liability is presented completely within the Personnel expenses. As of December 31, 2006, 131 employees participated in this defined benefit plan. The defined benefit liability does not include the actuarial gains or losses within a 10% corridor based on the defined benefit obligation according to IAS 19. Only when the actuarial gains or losses exceed the 10% corridor, the exceeding amount is amortized over the remaining service period. According to IFRS 1 no actuarial gains or losses are recognized at the transition date as of January 1, 2005 (fresh start method). Beginning with this point in time the 10% corridor is applied. Early retirement agreements Employees of certain entities are, in certain cases, offered early retirement agreements. The valuation of the accrual is based on the claims of the employees due to termination payments and due to services performed. If the employees have the opportunity to enter an early retirement agreement without having concluded a contract at the reporting date, the valuation of the accrual is based on assumptions regarding the likelihood of an agreement in future. Provisions Provisions are liabilities of uncertain timing and/or amount. A provision is recognized when an enterprise has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Reimbursements are included in the valuation of the provision, if it is very probable that the reimbursement will be received. Revenue Recognition Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Groups activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating intercompany sales within the group. Unitymedia recognizes revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of Unitymedias activities as described below.

F-159

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) Sales We derive revenues from six main business activities: our analogue and digital basic cable television business, Pay TV business, Internet business, telephony business (including subscription and usage fees), carriage fees and arena. Subscription fees are generally realized on a straight line basis over the term of the individual contract. New customers may be offered promotional products with a number of free months of service within the contract period of 1 to 2 years. If the customer is permitted to cancel the contract within the promotional free months no revenue is realized within this period. Usage and carriage fees are realized on a linear basis over the complete contractual period. Installation fees are realized as incurred matched by related internal handling and activation costs for new customers. Interest income Interest income is recognized on a time-proportion basis using the effective interest method. When a receivable is impaired, Unitymedia reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income on impaired loans using the original effective interest rate. Royalty income Royalty income is recognized on an accrual basis in accordance with the substance of the relevant agreements. Income taxes Current taxes Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities at undiscounted value. The tax rates and tax laws used to compute the amounts are those that are (substantively) enacted as of the balance sheet date. Deferred taxes Generally deferred taxes are recognized for any temporary differences between the tax base and the IFRS base, except on goodwill which is not recognized for tax purposes. Deferred tax assets are recognized for deductible temporary differences and tax loss carry forwards, if it is probable that future taxable profits will be available against which the unused tax losses or temporary differences can be utilized. However deferred tax assets are not recognized if the deferred tax asset arises from the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction affects neither accounting profit nor taxable profit. The recoverability of the carrying value of deferred taxes is determined by future taxable profits and assessed on an annual basis. If it is no longer probable that enough future taxable profits will be available against which the unused tax losses or temporary differences can be used, an impairment in a corresponding amount is recognized on the deferred tax assets. Deferred taxes are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates that have been (substantively) enacted by the balance sheet date. Deferred taxes must not be discounted. Deferred taxes are presented within long term assets and liabilities.

F-160

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) If the changes in the value of assets or liabilities are recognized in a separate component of equity, the change of value of the corresponding deferred tax assets and liabilities are also recognized in this separate component of equity (instead of income taxes). F Explanations of the Income Statement and the Balance sheet Unitymedia NRW was acquired on June 24, 2005 and Tele Columbus was acquired on December 9, 2005. The income statement of Unitymedia NRW has been presented from June 24, 2005 within the income statement of the consolidated financial statements of Unitymedia. The In-Region part of Tele Columbus has been presented in the income statement from December 9, 2005 in the consolidated financial statements of Unitymedia. However, the Out-of-Region part of Tele Columbus has been presented in two separate line items (Loss for the period from Discontinued operations and loss from disposal of Discontinued operations) within the income statement of the consolidated financial statements of Unitymedia. Due to the in-year acquisitions in 2005 the income statements between 2005 and 2006 are only comparable on a limited basis. F.1 Revenue (note 1)
2006 M 2005 M

Basic Cable Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital TV Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Internet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Telephony . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Installation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Carriage fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . arena . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

486.4 25.3 11.6 8.5 11.5 53.0 69.3 665.6

295.7 5.6 3.9 1.3 5.1 30.2 0.0 341.8

We derive revenues from six main business activities: our analogue and digital basic cable television business, Pay TV business, Internet business, telephony business (including subscription and usage fees), carriage fees and arena. Basic cable services Basic cable services revenue include subscription and installation fees from subscribers. Unitymedias basic cable offering consists of 30 to 36 analog television channels (depending on the region served) and up to 34 analog radio channels. Unitymedia provides basic cable services to three market segments: residential customers, small to medium enterprises (SME) and Key Accounts. Housing associations (in SME and Key Accounts) and Level 4 operators pass through or re-sell our basic cable signal to the end customer. We also generate revenues from the installation of cable connections and generally have end-user access for Digital TV pay and broadband services described below. Digital TV Pay Our Digital TV Pay products include programming that we assemble into packages as well as digital pay content of other content providers, such as Premiere Bundesliga. Digital TV Plus offers film, documentary, series and music channels, Digital TV Extra contains English and German language content with entertainment channels, sports channels, news channels as well as film and adult channels. The Premiere Bundesliga football content is available on a stand-alone basis as well as in combination with other Digital TV offers. Digital TV International consists of our individual foreign language programming packages. Furthermore we offer an International Komplett package including all foreign language packages. Our subscribers also have access to digital pay cable television programming from Premiere. Customers have to contact Premiere in order to subscribe to Premiere packages other than Premiere Bundesliga.

F-161

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) A key element of our pay TV migration strategy has been to provide Digital TV Plus or Digital TV Extra for three months on either a positive or negative option trial basis. We have achieved relief for many of the content providers for fees in this trial period. Internet Unitymedias Internet business generates sales primarily through subscription fees. Since January 2006, Unitymedia has marketed its Internet services through a new product portfolio, which was subsequently re-branded in May 2007. As part of these packages, in 2006 Unitymedia provided broadband Internet services at a download speed of up to 2Mbit/s, 6Mbit/s or 16Mbit/s without any time or data volume restrictions. These packages are available in Unitymedias upgraded areas in Hesse and North Rhine-Westphalia. In addition, Unitymedia offers the Multimedia-Anschluss (MMA), a service tailored for housing associations to purchase Internet access at 128 kbit/s on a bulk basis and to enable their properties for full triple play services. Telephony Unitymedia currently markets its telephony services only in a bundle with broadband Internet as part of its new product portfolio launched in January 2006. As part of these packages, Unitymedia provides telephony without any time or volume restrictions to fixed line numbers in Germany. Carriage fees Unitymedia receives carriage fees from broadcasters for the delivery of television and audio signals via its network. Private as well as public broadcasters pay carriage fees. The underlying contracts typically have an average of one to four year terms with automatic renewal clauses for successive one-year terms. Unitymedia generally collects the carriage fees directly from broadcasters under regime-specific feed-in contracts on a regional basis. In general, carriage fees for analog channels are charged on a monthly basis, depending on the number of subscribers. Unitymedia has flat-fee arrangements with each of the public broadcasters in connection with the transmissions of their analog and digital programming. Unitymedia invoices the carriage fees directly to all broadcasters. Moreover, Unitymedia receives carriage fees from broadcasters on a per subscriber basis within our Digital TV Pay offering. Unitymedia distributed Premieres premium cable television packages through an arrangement with MSG until December 31, 2007. Through this arrangement, MSG charged Premiere an annual carriage fee covering encryption and distribution by MSG as well as the carriage of its content over the digital channels on the three Level 3 operators Unitymedia, KDG and KBW. MSG retained 15% of the carriage fees from Premiere and allocates the balance among the cable operators. On July 19, 2007 Unitymedia announced that it has signed a six-year carriage and technical services agreement starting January 1, 2008 that will enable Premiere to distribute its content on cable in Unitymedias regions of Hesse and North Rhine-Westphalia. Unitymedia will achieve full separation from MSG in Hesse and North Rhine-Westphalia, and will receive from Premiere a fixed annual fee as well as a smart card operations and handling fee. F.2 Own work capitalized (note 2) Own work capitalized as fixed assets increased from 4.7 million in the year ended December 31, 2005 to 10.8 million in the year ended December 31, 2006. This increase is primarily due to the acquisition of Unitymedia NRW in 2005 as well as an increase in the level of network projects staffed by in-house employees resulting from increased upgrade activity in our regions. A corresponding amount of expenditure is reflected in Personnel expenses. F.3 Other income (note 3) Other income includes prior period income, sale of stock, reversal of prior period accruals and collection fees, among others.

F-162

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) Other income increased from 7.2 million in the year ended December 31, 2005 to 24.1 million in the year ended December 31, 2006 primarily due to the acquisition of Unitymedia NRW and non recurring other income which is mentioned below. Within other income the following non recurring items are included:
2006 K 2005 K

Compensation for acquisition of Unitymedia NRW shares in 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reversal of prior accrual for onerous contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,700 1,621 247 3,568

0 0 0 0

F.4 Cost of materials and services (note 4) Cost of materials consists of raw materials and consumables, and purchased services. Raw materials and consumables primarily include the cost of repair and maintenance, wireless LAN routers, and the portion of cable modems and set-top boxes which we sell. Purchased services primarily consists of network infrastructure services, which include costs under long term agreements with DTAG, costs for arenas satellite platform as well as other agreements. Beginning in 2006, we increasingly focused our efforts on a set-top box rental model, whereby the boxes are capitalized and depreciated over their useful asset life. Our most significant costs include payments under long term agreements with DTAG for the use of assets which are shared between our network and that of DTAG and for services provided by DTAG. Total cost of materials and services for the year ended December 31, 2006 was 135.3 million and 73.4 million in 2005. The main reasons for the increase were the acquisition of Unitymedia NRW in June, 2005 and the launch of arena operations in August, 2006. F.5 Personnel expenses (note 5)
2006 K 2005 K

Salaries and wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non recurring items (termination payments, benefits) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Social security, pension and other benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

72,714 4,381 14,036 91,131

41,175 13,643 8,615 63,433

Personnel expenses include salaries and wages, and social security, pension, and other benefits of our permanent staff including share based payments. They also include other forms of compensation such as overtime and stand-by pay, but do not include outsourced or temporary staff expenses, which are included in Other expenses. Total Personnel expenses increased from 63.4 million in the year ended December 31, 2005 to 91.1 million in the year ended December 31, 2006 due to higher levels of personnel following the acquisition of Unitymedia NRW in 2005, annual salary increases, new hires at arena and the inclusion of Unitymedia Services (Tele Columbus In-Region). Regarding the pension benefits we refer to our explanations under F.15 Pensions and other long term employee benefits. F.6 Other expenses (note 6) Other expenses include copyright license fees, rental and leasing fees, sales and marketing expenses, sales commissions related to acquisitions of new basic cable subscribers, legal, consulting, bad debt allowance and

F-163

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) miscellaneous other expenses including costs for our customer care, billing and network systems, as well as management fees in 2005. We pay license fees for our premium cable television business. We expect these fees to increase as we expand the programming we offer to our customers. In addition, payments for the Bundesliga rights to DFL are included in the year ended December 31, 2006. Other expenses increased from 81.0 million in the year ended December 31, 2005 to 365.3 million in the year ended December 31, 2006. This increase is primarily due the acquisition of Unitymedia NRW in 2005 as well as licensing fees for the Bundesliga rights as well as production expenses for arena programming and related expenses since arenas launch in August 2006. In addition, we incurred increased sales and marketing expenses in 2006, in particular related to arena national marketing and satellite subscriber acquisition costs as well as our triple play product offering and the marketing of arena on Unitymedia Hessen and Unitymedia NRW networks. Furthermore the following non recurring fees are included in the other expenses:
2006 K 2005 K

Start up expenses arena . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accruals for set top box distribution and inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transactional legal and consulting fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Restructuring charges for Unitymedia Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cancellation long term rental contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Settlement agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

30,402 9,459 3,402 1,772 361 0 150 45,546

0 0 12,080 0 4,000 500 2,406 18,986

F.7 Depreciation and amortization expenses (note 7) Regarding the depreciation of the tangible assets in 2005 and 2006 respectively we refer to the schedule of fixed assets under F.13 Property, plant and equipment. The following schedule discloses the amortization expenses of the intangible assets for the periods 2005 and 2006 respectively.
2006 K 2005 K

Customer Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Software and Concessions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subscriber Acquisition Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Brand name arena . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

78,619 10,084 2,272 167 91,142

35,031 10,117 923 0 46,071

Depreciation and amortization expenses relate to property, plant and equipment and intangible assets. The cost of set-top boxes and cable modems rented to the customer is capitalized and depreciated over the useful asset life. The goodwill resulting from the acquisitions of Unitymedia NRW and Unitymedia Services are not amortized on a straight line basis but tested for impairment annually. Depreciation increased from 160.3 million in the year ended December 31, 2005 to 227.9 million in the year ended December 31, 2006 due to the acquisition of Unitymedia NRW and Unitymedia Services. In 2006 the useful life for technical equipment regarding coaxial cable has been increased from 15 to 20 years. This increase of the depreciation period leads to a relative decrease in depreciation expense. As a result the depreciation expense in 2006 is lower by 69.4 million as compared to the depreciation of the coaxial cables were it based on 15 years.

F-164

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) F.8 Financial income (note 8)
2006 K 2005 K

Profit due to fair value adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest and similar income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,854 5,708 10,562

10,047 2,004 12,051

The profit and loss due to fair value adjustments stems from the fair value adjustments of derivative instruments which do not qualify for hedge accounting and from the valuation of prepayment options included in the fixed interest rate bonds. The fair value of an interest rate derivative has been terminated which led to a profit of 4.9 million in 2006 (2005: 7.2 million). F.9 Financial expenses (note 9)
2006 K 2005 K

Interest expenses Interest expense to third parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest expense relating to release of deferred transaction costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Release of deferred transaction costs relating to refinanced debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other Financial expenses Financing costs, release of deferred transaction costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

139,064 5,396 30,804 174 175,438

66,149 3,008 0 19,517 88,674

Interest expense to third parties increased from 66.1 million in the year ended December 31, 2005 to 139.1 million in the year ended December 31, 2006. This increase was primarily due the acquisition of Unitymedia NRW and a higher amount of outstanding principal in 2006, including funds raised under the 2005 Financings, the 2006 Refinancing and the Term Loan. Interest expenses relating to transaction costs comprise the release of the deferred transaction costs for the 2005 Financing and the 2006 Refinancing, respectively. Transaction costs for the 2005 Refinancing mainly stems from a bridge loan in 2005. Other transaction costs for the Senior Credit Facilities were deferred in 2005. Due to the 2006 Refinancing the deferred transaction costs for the Senior Credit facility were fully expensed in April 2006 (30.8 million) F.10 Income taxes (note 10)
2006 K 2005 K

Current tax expenses / (income) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prior year tax expenses / (income) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deferred tax expenses / (income) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

23,559 -299 -142,671 -119,411

88 0 -77,997 -77,909

The portion of the gain or loss on the cash flow hedge that is determined to be an effective hedge is recognized directly in equity through the statement of changes in equity. Hence the associated deferred taxes regarding the cash flow hedges are also recognized directly within equity (unrealized earnings). At the balance sheet date, unrealized earnings amounting to K940 (prior year: K4,550) have been presented within equity regarding deferred taxes for cash flow hedges. The aggregate change in deferred tax charged/credited directly against equity amounts to K-3,610 (prior year: K4,550).

F-165

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) The following table discloses the reconciliation between the tax expenses (income) and the product of accounting profit multiplied by the applicable tax rate:
2006 K 2005 K

Earnings before taxes before continuing operations (EBT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Applicable tax rate of Unitymedia GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Calculated tax expenses/(income) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjustments of deferred taxes due to disposal of Unitymedia Services within the group . . . . . . . . . . . . . Reassessment of deferred tax assets on loss carry forwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Additions and reductions for trade tax purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expenses not deductible for tax purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Differences due to consolidation effects (tax effects before acquisition) . . . . . . . . . . . . . . . . . . . . . . . . . . . Capitalisation of acquisition costs/goodwill without deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . Revenues not taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Taxes related to prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

-284,003 -100,950 39.90% 39.90% -113,317 -40,279 -22,513 4,459 10,159 460 0 0 -526 -299 2,166 -119,411 0 -37,360 5,549 20 1,254 -7,511 -78 0 496 -77,909

The applicable tax rate is the tax rate of Unitymedia GmbH. Deferred taxes have been recognized for the following kinds of temporary differences and unused tax losses:
Deferred tax assets (DTA) 31/12/2006 K 31/12/2005 K Deferred tax liabilities (DTL) 31/12/2006 K 31/12/2005 K

Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial assets without derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Liabilities and provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Loss carry forwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fair value adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Netting DTA/DTL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

54,975 0 7,474 5,024 252,926 -46,968 -241,508 31,923

55,439 0 3,116 3,730 179,750 -42,509 -195,544 3,982

30,398 274,704 181 3,343 24,300

36,011 339,383 217 4,031 18,442

-241,508 91,418

-195,544 202,540

Deferred tax assets for property, plant and equipment, and intangible assets have been recognized mainly for taxable increases of the value of those assets (Ergnzungsbilanzwerte), caused by business combinations on the level of the separate entity. Deferred tax liabilities have been recognized mainly for differences between IFRS base and tax base due to the purchase price allocation. Deferred tax assets include long term deferred tax assets K31,167 (2005: K1,467) of assets which are expected to be recovered or settled after one year. Deferred tax liabilities include long term deferred tax liabilities of K93,076 (2005: K204,280) which have been netted with short term deferred tax assets of K1,589 (2005: K1,740). Deferred tax assets on tax loss carry forwards for trade tax purposes on the level of Unitymedia Hesse have been recognized although the entity has suffered a taxable loss in 2006. The deferred tax asset amounts to K31.923 (2005: K3,982). However the entity will realize taxable profits in future years based on the latest forecasts.

F-166

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) No deferred tax assets have been recognized for the following kinds of tax loss carry forwards:
31/12/2006 K 31/12/2005 K

Trade tax loss carry forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Corporate income tax loss carry forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

33,971 154,789

22,238 149,743

Deferred taxes on those tax loss carry forwards have not been recognized due to the following reasons:

The respective entities have agreed to a profit and loss agreement with the parent company. Due to this agreement they are not permitted to use tax loss carryforwards as long as the profit and loss agreement is active (vororganschaftliche Verlustvortrge), or It is uncertain whether the respective entities are able to realize enough taxable profits in future to offset these profits with the existing tax loss carry forwards.

F.11 Trade accounts receivables (note 11)

31/12/2006 K 31/12/2005 K

Trade receivables gross amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trade receivables net amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

69,417 -18,883 50,534

39,328 -12,098 27,230

Impairment losses in 2006 amount to K -13.719 (2005: K-5.876). The impairment losses have been included within the other expenses. Regarding the carrying amounts of trade accounts receivables pledged as collateral for liabilities we refer to our explanations under F.17 Bonds, facilities and derivative financial instruments. F.12 Inventories (note 12)
31/12/2006 K 31/12/2005 K

Set top boxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Network equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventories gross amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impairment losses set top boxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impairment losses network equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inventories net amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10,463 8,449 18,912 -2,804 -4,622 -7,426 11,486

990 6,564 7,554 0 -4,728 -4,728 2,826

Impairment losses in 2006 amount to K -2.698. In 2005 the reversal of impairment losses resulted in a gain of K 1.557 caused by asset retirements. The impairment losses and the reversal of the impairment losses have been included within the other costs of materials and services. Inventories comprise set-top boxes, cable modems, network materials and spare parts for repair purposes.

F-167

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) F.13 Property, plant and equipment (note 13) Our capital expenditure relates primarily to expanding or upgrading our network. Capital expenditure also includes intangible assets (except our customer list) and does not include financial assets. Incremental capital expenditure such as the upgrade of the Level 4 or in-house network or the introduction of a new product is designed to ensure that our return on investment thresholds are met. In addition, we incur expenditure required to sustain our current network, which we account for as repair and maintenance expenditure within raw materials and consumables on our income statement.

F-168

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) The following table represents the reconciliation of carrying amounts of tangible and intangible assets at the beginning and end of the period from January 1, 2006 until December 31, 2006 and January 1, 2005 until December 31, 2005 respectively.
Development of Fixed Assets as of December 31, 2006 Acquisition costs K K K K K K K K Depreciation and Amortization K K K K K Net book value K K 01/01/2006 Consol. Additions Disposals Transfers 31/12/2006 01/01/2006 Consol. Additions Impairment Disposals Transfers 31/12/2006 31/12/2006 31/12/2005

I. Property, plant and equipment 1. Tenant improvements and cable duct assets . . . . . . . . . . . . . . . . . . . . 2. Broadband cable network . . . . . . . 3. Other plant, furniture and office equipment . . . . . . . . . . . . . . . . . . . . 4. Advanced payments and construction in progress . . . . . . . . 5. Discontinued operations . . . . . . . .

180,537 908,350 20,922

0 0 0

1,113 79,183 4,001 25,213 11,521

3,718 9,093 2,024 12,300 8,733 35,868

368 3,398 53 -3,753 69

178,300 981,838 22,952 31,856 0

5,393 233,162 10,042 4,148 0 252,745

0 9,913 0 107,873 0 0 0 4,347 24 0

2,108 12,514 0 0 0 14,622

3,576 9,244 1,991 4,074 0 18,885

220 -254 34 0 0 0

14,058 344,051 12,432 98 0 370,639

164,242 637,787 10,520 31,758 0

175,144 675,188 10,880 18,548 199,664

F-169

22,696 0 199,664 -202,521

1,332,169 -202,521 121,031 II. Goodwill and other intangible assets 1. Concessions, industrial property and similar rights . . . . . . . . . . . . . . 1,151,937 0 2. Goodwill . . . . . . . . . . . . . . . . . . . . . 556,222 0 3. Advanced payments . . . . . . . . . . . . 856 0 4. Discontinued operations . . . . . . . . 714,070 -708,044 2,423,085 -708,044

135 1,214,946

0 122,157

844,307 1,079,424

14,726 0 898 909 16,533

-633 0 367 726 460 36,328

6,441 1,173,737 0 556,222 0 1,387 -6,209 0 232 1,731,346 367 2,946,292

294,529 0 0 0 294,529 547,274

0 0 0 0 0

90,791 0 0 0 90,791

351 0 0 0 351 14,973

359 0 0 0 359 19,244

0 0 0 0 0 0

385,312 0 0 0

788,425 556,222 1,387 0

857,408 556,222 856 714,070

385,312 1,346,034 2,128,556 755,951 2,190,341 3,207,980

3,755,254 -910,565 137,564

0 212,948

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued)
Development of Fixed Assets as of December 31, 2005 Acquisition costs 01/01/2005 K Consol. K K K K K K K Depreciation and Amortization K K K K K Net book value K K Additions Disposals Transfers 12/31/2005 01/01/2005 Consol. Additions Impairment Disposals Transfers 31/12/2005 31/12/2005 31/12/2004

I. Property, plant and equipment 1. Tenant improvements and cable duct assets . . . . . . . . . . . . . . . . . . . 2. Broadband cable network . . . . . . 3. Other plant, furniture and office equipment . . . . . . . . . . . . . . . . . . . 4. Advanced payments and construction in progress . . . . . . . 5. Discontinued operations . . . . . . . II. Goodwill and other intangible assets 1. Concessions, industrial property and similar rights . . . . . . . . . . . . . 2. Goodwill . . . . . . . . . . . . . . . . . . . . 3. Advanced payments . . . . . . . . . . . 4. Discontinued operations . . . . . . .

2,090 252,687 10,077 12,727 0

177,793 635,567 10,335 26,180 199,664

550 22,573 939 6,072 0 30,134

0 12,368 541

104 9,891 112

180,537 908,350 20,922 22,696 199,664

211 143,652 7,646 10,013 0 161,522

0 0 0 0 0

5,182 84,325 2,160 9,740 0

0 12,829 0 0 0 12,829

0 12,368 382 10,881 0 23,631

0 4,724 618 -4,724 0 618

5,393 233,162 10,042 4,148 0

175,144 675,188 10,880 18,548 199,664

1,879 109,035 2,431 2,714 0 116,059

12,176 -10,107 0 0 25,085

F-170

277,581 1,049,539

0 1,332,169

0 101,407

252,745 1,079,424

334,224 85,005 404 0

812,884 471,217 412 714,070

5,681 0 721 0 6,402 36,536

1,526 0 7 0 1,533 26,618

674 1,151,937 0 556,222 -674 856 0 714,070 0 2,423,085 0 3,755,254

249,984 0 0 0 249,984 411,506

0 0 0 0 0

45,924 0 0 0 45,924

147 0 0 0 147 12,976

1,526 0 0 0 1,526 25,157

0 0 0 0 0 618

294,529 0 0 0

857,408 556,222 856 714,070

84,240 85,005 404 0 169,649 285,708

419,633 1,998,583 697,214 3,048,122

294,529 2,128,556 547,274 3,207,980

0 147,331

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) The following table discloses the historical acquisition costs of fully depreciated property, plant and equipment that are still in use:
31/12/2006 K 31/12/2005 K

Technical equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other office equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

41,155 28,195 72,477 141,827

38,339 25,806 60,039 124,184

Regarding the carrying amounts of tangible and intangible assets pledged as collateral for liabilities we refer to our explanations under F.17 Bonds, facilities and derivative financial instruments. Regarding finance lease assets and obligations we refer to our explanations under F.19 Contingent assets, liabilities and other financial obligations. Regarding operating lease obligations we refer to our explanations under (19) Contingent assets, liabilities and other financial obligations. Regarding goodwill we refer to our explanations under F.14 Goodwill and other intangible assets. Regarding purchase obligations for tangible and intangible assets due to existing contracts not recognized in the balance sheet we refer to our explanations under F.19 Contingent assets, liabilities and other financial obligations. Impairments were included in 2005 and 2006 due to exchanging old cable network equipment with new cable network equipment. The impairments are related to the Cable business segment. F.14 Goodwill and other intangible assets (note 14)
31/12/2006 K 31/12/2005 K

Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Customer Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Software and concessions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subscriber Acquisition Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Advance Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Brand name arena . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

556,222 757,223 27,570 2,798 1,387 833 1,346,033

556,222 835,842 20,114 1,453 856 0 1,414,487

The level of the impairment test of the goodwill is the level of the respective cash generating units. The cash generating units are determined by the business segments according to IFRS 8 and management reporting. The impairment test is performed on the level of the Cable business segment comparing the carrying amount with the recoverable amount. Currently in the arena Satellite and Broadcast business segment no goodwill is recognized. At the balance sheet date the goodwill in the cable business amounts to 556.2 million (prior year: 556.2 million). The Out-of-Region Tele Columbus business is excluded from the impairment test according to IAS 36. Instead an impairment test is done according to IFRS 5. We refer to our explanations under C. Scope of consolidation. The recoverable amount is determined based on the fair value less costs to sell using a discounted cash flow approach.

F-171

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) The determination of the recoverable amount is based on the following estimates:
31/12/2006 31/12/2005 01/01/2005

Length of projection period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Weighted average cost of capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Growth rate beyond projection period for terminal value . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10 years 10 years 10 years 10.0% 10.0% 11.4% 3.5% 3.5% 2.0%

The determination of the recoverable amount has been determined by using cash flow projections based on financial budgets approved by senior management covering a planning period of 10 years. The relatively long projection period for estimating future cash flows is justified by the long contractual relationship with the customers. The projections of subscribers, revenue, costs, and capital expenditures are based on reasonable and supportable assumptions that represent managements best estimates. Key assumptions are the estimated number of subscribers and the level of upgraded network infrastructure. The projections are based on both past experience and expected future market penetration with the various products. Unitymedia has capitalized the following customer contracts with the following respective remaining useful lives:
31/12/2006 K 31/12/2005 K

Customer contracts on the level of Unitymedia NRW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Customer contracts on the level of Unitymedia Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Customer contracts on the level of Unitymedia Hessen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

571,133 117,912 68,178 757,223

623,133 137,577 75,132 835,842

The purchase of Unitymedia Services and Unitymedia NRW increased the value of customer contracts in 2005 by 789 million. The average remaining useful life of the customer contracts on the level of Unitymedia NRW was 11 years (2005: 10 years) and the average remaining useful life of the customers on the level of Unitymedia Services was 6.7 years (2005: 7.7 years). F.15 Pensions and other long-term employee benefits (note 15) The liabilities for long-term employee benefits comprise provisions for pensions and for early retirement agreements.
31/12/2006 K 31/12/2005 K

Pension obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Early retirement obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,928 880 7,808

5,896 776 6,672

Pension accruals and early retirement obligations which will be settled within the subsequent financial period amount to K 17 (2005: K 0). The following table shows the reconciliation between the defined benefit obligation and the defined benefit liability:
31/12/2006 K 31/12/2005 K

Defined benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unrecognised actuarial losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Defined benefit liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7,525 -597 6,928

7,436 -1,540 5,896

F-172

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) The following table summarizes the development of pension accruals.
2006 K 2005 K

Defined benefit liability as of January 1, (Unitymedia NRW June 24, 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Current service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Actuarial gains and losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Plan Division/Business Combinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Defined benefit liability as of December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,896 448 287 55 242 0 6,928

5,627 173 198 0 -88 -14 5,896

Expenses for pensions are included as follows:

2006 K 2005 K

Current service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Actuarial gains and losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

448 287 55 790

173 198 0 371

The expenses for pensions are presented completely within the personnel expenses. The calculation of the different kinds of liabilities for future employee benefits is based on the following assumptions:
31/12/2006 % 31/12/2005 %

Discount rate pensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected rate of salary increases p.a. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected rate of pension increases p.a. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected rate of fluctuations p.a. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.45 2.5-3.25 1.50 7.00

4.10 2.75 - 3.5 1.50 5.00

The group has defined contribution plans regarding former employees of the DTAG. The expenses in the financial year 2006 are K 1.400 (prior year: K 1,680). One subsidiary has offered their employees early retirement programs. At the balance sheet date, it is not known whether employees will use this program or not. The provision for early retirement programs comprises early retirement programs due to existing contracts at the balance sheet date as well as expected contracts in the future. The calculation of the provision is based on the assumption that 10% to 50% (depending on the potential starting year of the early retirement) of the respective employees will use the early retirement program.

F-173

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) F.16 Provisions (note 16) The following table shows the reconciliation of the other provisions for the year 2006:
01/01/2006 K Additions K Usage K Release K 31/12/2006 K

Long term provisions Onerous contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Short term provisions Disposal of discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . Repurchase and exchange agreements . . . . . . . . . . . . . . . . . . . . . . . . Restructuring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

115 0 1,902 0 838 2,855

0 21,200 6,274 6,277 74 33,825

70 0 0 0 116 186

0 0 0 0 140 140

45 21,200 8,176 6,277 656 36,354

The provisions related to the disposal of discontinued operations consist mainly of possible tax liabilities for indemnification of the buyer and adjustments of the disposal price in connection with the disposal of assets and liabilities in connection with the discontinued operations. Arena has obligations regarding the repurchase and exchange of set top boxes. Therefore the respective provisions have been included. Provisions for disposal and discontinued operations mainly comprise possible payments for the disposal of Tele Columbus Kabel Holding GmbH (assets and liabilities related to discontinued operations). Provisions for restructuring are related to the restructuring of Unitymedia Services. The short term provisions are expected to occur within one year. We estimate the uncertainty of the different kinds of provisions as very probable to occur within one year and probable regarding the amount. F.17 Bonds, facilities and derivative financial instruments (note 17) F.17.1 Bonds and bank liabilities
31/12/2006 K 31/12/2005 K

Bond and bank liabilities - Nominal value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transaction costs and FX revaluation of MUSD 151 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bank liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest Rate liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Short-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,025,145 -58,533 1,966,612 55,000 55,822 110,822 2,077,434

1,625,145 -46,133 1,579,012 0 28,361 28,361 1,607,373

On April 5, 2006 we completed the issuance by Unitymedia Hessen and Unitymedia NRW of 1,350 million of senior-secured floating rate notes (the NRW/Hesse Notes) that mature on April 15, 2013, and replaced the undrawn 100.0 million revolving credit facility with a 130.0 million revolving credit facility (the NRW/Hesse Revolving Credit Facility), available to Unitymedia Hessen, Unitymedia NRW and arena. The proceeds from the offering of the NRW/Hesse Notes were used to refinance our 1,050.0 million Senior Credit Facilities (the 2006 Refinancing), to finance the payment by Unitymedia to Unity Media S.C.A. of the deferred purchase price for the Tele Columbus shares and to cash collateralize a portion of the DFL bank guarantee for arena. Furthermore, the Unity Media group companies Unitymedia Hesse, Unitymedia NRW and arena entered into a 100 million Senior Secured Term Loan Facility maturing in October 2011 on October 20, 2006.

F-174

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) The long-term liabilities against third parties have the following terms and conditions:
Bonds Senior Note M 215 Senior Note M 235 Senior Note M$ 151 NRW/Hesse Note M 1.350

Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nominal interest rate . . . . . . . . . . . . . . . . . . Effective interest rate . . . . . . . . . . . . . . . . . . Hedging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Beginning redemption price for prepayment option . . . . . . . . . . . . . . . . . .

02/2005 - 02/2015 8.75% 9.44% no 108.75% (1)

07/2005 - 02/2015 10.125% 10.79% no 110.125% (1)

07/2005 - 02/2015 10.375% 11.074% FX Swap 110.375% (1)

04/2006 - 04/2013 Euribor + 2.875% 5.34% Interest rate Swap 102% (1)
Loans Term loan M 100

Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nominal interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Effective interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hedging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Beginning redemption price in case for prepayment option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10/2006 - 10/2011 3.125% + Euribor 7.01% no 102% (1)

The nominal interest rate of the NRW/Hesse Revolving Credit Facility is Euribor + 2% on drawn amounts. The calculated effective interest rate is 4.63%. (1) The respective redemption price for prepaying the liabilities decreases over the term of the bonds and the loan. The prepayment options for the bonds with a fixed interest rate are valued based on a financial mathematics model. We refer to our explanations under derivative financial instruments.

F.17.2 Covenants The indenture for the Unitymedia Senior Notes, Unitymedia New Senior Notes and NRW/Hesse Notes include certain covenants which, among other things, restrict the ability of Unitymedia, Unitymedia Hessen, Unitymedia NRW and certain of their subsidiaries to:

make certain payments, including dividends or make other distributions; incur or guarantee debt and issue preferred stock; make certain investments or acquisitions, including participating in joint ventures; prepay or redeem subordinated debt or equity; engage in certain transactions with affiliates and other related parties; sell assets, consolidate, merge with or into other companies; issue or sell share capital of certain subsidiaries; and create certain liens.

The following assets with the respective amounts have been pledged as securities for liabilities:
31/12/2006 K 31/12/2005 K

Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Trade accounts receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

575,872 444,365 27,573 1,047,810

610,404 36,003 24,338 670,745

F-175

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) F.17.3 Derivative financial instruments The derivative financial instruments have the following values at the respective balance sheet date:
31/12/2006 Assets K Liabilities K 31/12/2005 Assets K Liabilities K

Interest rate swap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FX Swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prepayment options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,708 0 2,837 8,545

0 18,641 0 18,641

7,245 0 2,917 10,162

0 7,809 0 7,809

The fair value of the FX Swap as of December 31, 2006 comprises the clean value and the accrued interest. The following schedule presents the reconciliation of the clean value of the FX Swap and the MUSD 151 Bond for the financial year 2005 and 2006:
01/01/2006 Bond/Swap K FX Bond (1) K 01/01 31/12/2006 Hedge Bond (2) K Hedge IR (3) K 31/12/2006 Total K

Swap value (Clean value) . . . . . . . . . . . . . . . . . . . . Bond M$ 151 in EUR face value . . . . . . . . . . . Unrealised earnings (Equity) . . . . . . . . . . . . . . . . . FX Gains/losses from Bond (4) . . . . . . . . . . . . . . . .

-7,809 -127,504 10,168 0

19/07/2005 Bond/Swap K

-13,049 13,049

2,361 -2,361

-13,049

13,049
19/07 31/12/2005

-18,497 -114,455 7,807 0

31/12/2005

FX Bond (1) K

Hedge Bond (2) K

Hedge IR (3) K

Total K

Swap value (Clean value) . . . . . . . . . . . . . . . . . . . . Bond M$ 151 in EUR face value . . . . . . . . . . . Unrealised earnings (Equity) . . . . . . . . . . . . . . . . . FX Gains/losses from Bond (4) . . . . . . . . . . . . . . . .

0 -125,145 0 0

2,359 -2,359

-10,168 10,168

2,359

-2,359

-7,809 -127,504 10,168 0

(1) The Bond has to be revalued with the spot rate as of the respective date. (2) The changes in fair value of the bond based on the spot rate is hedged by the FX swap. (3) The changes in interest rate (IR) in future periods based on the floating Euribor is hedged by the FX swap. (4) The FX gains/losses from the bond are generally recognized within the income statement. However within the income statement no FX gains/losses are presented, because the respective effects mentioned above are offset against each other.

The valuation of the interest rate swap and the FX swap is based on market data provided by an international bank. The valuation of the prepayment options is based on models using financial mathematics procedures. The interest rate swap and the FX swap have the following terms and conditions:
Receiver side Swap / Term nominal amount interest Payer side nominal amount interest

Interest rate swap 07/2006 - 04/2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FX swap 07/2005 - 02/2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

800,000,000 151,000,000 $

Euribor 10.375%

800,000,000 125,145,036

3.66% 9.625%

F-176

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) The interest rate swap and the FX swap qualify for hedge accounting. Changes in the value of the respective swaps are included in unrealized earnings within a separate line item within equity. Regarding the Unrealized earnings we refer to our explanations under F.18 Shareholders equity. The NRW/Hesse Revolving Credit Facility was drawn as of the balance sheet dates with the following amounts:
31/12/2006 K 31/12/2005 K

Revolving credit facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Drawn portion of the facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Outstanding amount available on the revolving credit facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

130,000 -55,000 75,000

100,000 0 100,000

F.18 Shareholders equity (note 18) For the reconciliation of equity we refer to the consolidated statement of changes in equity. Distributions to the shareholders are only possible based on the profits according to German GAAP (HGB) regarding the separate entities. According to German GAAP the capitalization of start up costs is permitted and has been applied by several companies. According to the German commercial code (HGB) it is not permitted to distribute funds if the available reserves/profits do not exceed the amount of capitalized start up costs. Capitalized start up expenditures according to German GAAP amount to 42.9 million (2005: 16.1 million). Subscribed capital comprises the capital to be paid by the shareholder according to the statutory agreement. At the balance sheet date subscribed capital has been paid completely by the shareholders. The capital reserves comprises reserves of the shareholders, which exceed the statutory subscribed capital and reserves related to share based payments to certain members of management. Unrealized earnings include the change to the values of derivatives which qualify for cash flow hedging, as well as deferred tax movements. G G.1 Other explanations Contingent assets, liabilities and financial obligations (note 19)

G.1.1 Contingent assets and liabilities In 2006 Unitymedia sold assets and liabilities related to discontinued operations. In connection with the disposal to the acquirer Unitymedia had the contractual right to purchase certain in-Region assets from the acquirer. If the acquirer did not fulfill certain obligations with respect to the target in-Region assets Unitymedia had the possibility to receive compensation. On the other hand it was not clear whether Unitymedia would be required to retroactively adjust the disposal price of the discontinued operations. The financial effect of this claim and this obligation nearly offset each other. The outcome of these claims/ obligations were finalized in a final settlement agreement which was agreed in 2007. Based on this settlement agreement the acquirer of the discounted operations had to pay a lump sum amount to Unitymedia in 2007. In 2006 a provision of K 21,200 was recognized regarding this transaction. We refer to our explanations under F.16 Provisions. G.1.2 Other financial obligations Other financial obligations comprise obligations which are not presented in the balance sheet and which are not contingent liabilities.

F-177

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) The following other financial obligations existed at the balance sheet date for capital expenditures in property, plant and equipment and other intangibles:
31/12/2006 K 31/12/2005 K

Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,038 873 6,911

6,932 276 7,208

G.1.3 Finance leases On the reporting date no finance leases exist. G.1.4 Operating leases The following operating lease contracts with the respective significant leasing arrangements exist within the group:
Lease Terms Terms of renewal Purchase options Contingent rent

Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dark fiber . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Colocation area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cable ducts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10 years 1-20 years 1-14 years 10-30 years

no 3 months -1 year 1 months - 1 year 1 - 5 years

no no no no

no no no no

The future minimum lease payments for operating leases are as follows:
2006 K 2005 K

Less than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . More than one year and less than five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . More than five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

103,981 424,700 103,496 632,177

99,214 403,472 124,227 626,913

In 2006 the expenses for operating leases amount to K108,530 (prior year K86,238). The future minimum obligations are determined based on contractual obligations to make cash payments in the future and for which no obligations have been included in the balance sheet. Contractually agreed adjustments (like inflation) are included within the figures mentioned above. Furthermore arena is obliged to pay for the DFL television exploitation rights until June 2009 218.3 million for every year. Other contractual agreements amount to K27,603 (2005: K24,120) Contractually agreed adjustments if relevant, such as inflation, are included within the figures mentioned above. G.2 Related parties (note 20) The ultimate parent of Unitymedia is Unitymedia S.C.A.

F-178

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) Management of Unity Media S.C.A. and Unity Media S.A. Our parent, Unity Media S.C.A. was incorporated under the laws of the Grand Duchy of Luxembourg on June 10, 2005 as a socit en commandite par actions. Copies of its constitutional documents were filed with the Registry of Commerce in Luxembourg on June 22, 2005. The registered office of Unity Media S.C.A. is at 2, rue Joseph Hackin, L-1746 Luxembourg. Unity Media S.C.A. is registered with the Registry of Commerce in Luxembourg under number B 108625. The Articles were amended by general meetings of Unity Media S.C.A.s shareholders on June 24, 2005, on October 28, 2005 and on December 9, 2005. Unity Media S.C.A. is managed by Unity Media S.A., its general partner and manager, which is owned by the same shareholders as Unity Media S.C.A. The general manager of Unity Media S.A. is Michael Kidd. Unity Media S.A. was incorporated under the laws of the Grand Duchy of Luxembourg on June 10, 2005 as a socit anonyme. Copies of its constitutional documents were filed with the Registry of Commerce in Luxembourg on June 22, 2005. The registered office of Unity Media S.A. is at 2, rue Joseph Hackin, L-1746 Luxembourg. Unity Media S.A. is registered with the Registry of Commerce in Luxembourg under number B 108624. The Articles were amended by general meetings of Unity Media S.A.s shareholders on June 24, 2005, on October 28, 2005 and on December 9, 2005. Board of Directors The following table sets out the name and position for each of the members of Unity Media S.A.s Board of Directors as of December 31, 2006:
Name Position

Eric Zinterhofer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Marc Rowan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Michael Block . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Michael Wunderlich . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Raymond Svider . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Andrew Newington . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Michael Kramer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Steven Tananbaum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lucien Farrell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chairman Member Member Member Member Member Member Member Member

Unitymedia currently has the following management directors:

Name Position

Parm Sandhu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dr. Herbert Leifker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Christopher Winfrey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Managing Director Managing Director Managing Director

Key management personnel including Managing Directors, Vice Presidents and other executives engaged on the level of Unitymedia Management have received the following salaries and benefits
2006 K 2005 K

Salaries and wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Social security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pension expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Share based payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,644 180 28 1,140 6,992

3,211 113 28 156 3,508

F-179

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) Transactions between related parties Since Apollo, through its wholly-owned subsidiary AP Cable LLC, USA acquired control over Unitymedia in early 2003, material transactions entered into between the companies and related parties have included the following: Unity Media S.C.A. Security Holders Agreement The key principles of the constitution of Unity Media S.C.A., including corporate governance, were agreed between Unitymedia Hessen, Unitymedia and Kabelnetz Ltd. (the seller of Kabelnetz and its subsidiaries) in the Share Purchase Agreement for the Unitymedia NRW acquisition and are reflected in a Security Holders Agreement applicable to all holders of securities in Unity Media S.C.A. and Unity Media S.A. Management Services Agreements Unitymedia GmbH, on behalf of itself and its subsidiaries, entered into a management services agreement with Apollo and Pequot Capital Management, Inc. on or about February 1, 2003 that was memorialized in writing on July 29, 2004. At the time, funds managed or advised by Pequot Capital Management, Inc. were shareholders of Unitymedia GmbH and of Unitymedia Management. The management services agreement was terminated on December 9, 2005 and Unitymedia GmbH was invoiced with K 500 for services related to 2004. The respective expenses have already been included within the financial year 2004. Other transactions After completion of the Tele Columbus Acquisition by Unitymedia, Unity Media S.C.A. paid 1.2 million to BC Partners Ltd., a company affiliated with Finakabel Holdings Ltd. and Finakabel S..r.l. (which has been liquidated) which in turn hold an aggregate of 38.1% of the equity in Unity Media S.C.A. and Unity Media S.A. This payment was made to reimburse for professional fees incurred by BC Partners Ltd. on behalf of Tele Columbus Kabel Holding GmbH in connection with the Tele Columbus Acquisition. Apollo controls a 31.5% equity interest in Unity Media S.C.A. and Unity Media S.A. through a management agreement with its affiliates, AP Cable LLC and AP Participations, L.P. Following the completion of the Unitymedia NRW Acquisition, Apollo received a 12.7 million strategic advisory fee in 2005. Upon completion of the Tele Columbus Acquisition, Apollo received a 6.0 million strategic advisory fee in 2005. After completion of the divestiture of Tele Columbus to ewt, Unitymedia NRW paid in 2007 3.0 million and 1.2 million in market value advisory fees to Apollo and BC partners, respectively, which equate to less than 0.5% of total transaction value. GoldenTree Asset Management, L.P. manages certain accounts and funds that, prior to the closing of the Unitymedia NRW Acquisition, held economic interests in Kabelnetz Ltd. GoldenTree Asset Management, L.P. had managed certain accounts and funds, which in the aggregate held approximately 7.3 million of the loans under the previous senior credit facilities, which were repaid in February 2005 with the proceeds from the offering of the February 2005 Notes. Share based payments As of December 31, 2006, Management holds stock options in Unity Media S.C.A., Unity Media S.A. and Unitymedia (equity-settled share based payments), which in the aggregate represent approximately 5.9% of Unity Media S.C.A.s and Unity Media S.A.s outstanding share capital and approximately 0.83% of Unitymedias outstanding share capital, each on a fully diluted basis. Vesting of options will be accelerated upon

F-180

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) certain events, including a change of control of Unitymedia. Unity Media S.C.A. and Unity Media S.A. intend to issue additional stock options to members of our senior management, which would, including the existing stock options, represent up to approximately 10% of Unity Media S.C.A.s and Unity Media S.A.s outstanding capital upon full exercise. The following schedule discloses the information about the respective plans:
Date MEP I 2003 MEP II 2005 MEP III 2006 Total

Number of options Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cancelled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vested / Exercisable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Features of option plans Share price at grant date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exercise price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Option life in years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Time Vesting options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Vesting periods in years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Performance vesting options (1) . . . . . . . . . . . . . . . . . . . . . . . Determination of Fair value Average fair value per option . . . . . . . . . . . . . . . . . . . . . . . . . Models used . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected volatility (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected term of option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expected turn over of management . . . . . . . . . . . . . . . . . . . . Risk free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

01/01/2005 2005 2005 31/12/2005 2006 2006 31/12/2006 31/12/2006

1,100 310 -359 1,051 0 0 1,051 1,051

0 3,298 0 3,298 127 0 3,425 342

0 0 0 0 5,661 0 5,661 348

1,010 3,608 -359 4,349 5,788 0 10,137 1,741

1,200 700 max 10 no 1,051 4 0

4,850 4,600 max 10 no 856 4 2,569

5,720 5,720 max 10 no 1,421 4 4,280

3,328 6,849

284 BSM (2) 25% 4 0% 2.4%

385 BSM/BIM (2) 25% 4 0% 2.2%

928 BSM/BIM (2) 27.50% 3 10% 3.2%-3.75%

(1) Options will only vest if certain performance and super performance measures will be achieved in future; performance and super performance measures contain an absolute return threshold and a time-based return threshold which both have to be met to exercise the options (2) BSM = Black Scholes Model used for time vesting options BIM = Binomial Model used for performance vesting options (3) The assumptions about the expected volatility stem from historical data of share prices of comparable companies and from implied volatility data of call options on shares of comparable companies within the telecommunications sector. The expected volatility reflects the assumptions of the respective grant dates.

Expenses for share based payments amount to K 1,140 (2005: K 156) and are included in personnel expenses.

F-181

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) G.3 Financial instruments and risk management (note 21)

G.3.1 Risk management of financial instruments Unitymedia recognizes original and derivative financial instruments. Non-derivative financial instruments exist in connection with operating activities, investing activities and financing activities. The respective activities induce the following non-derivative financial instruments:
Activity Main financial instruments

Operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Trade receivables and trade liabilities Long-term receivables Cash and bank Bonds and loans

Stand-alone derivative instruments exist only for hedging cash flow and fair value risks due to exposure to fluctuations in interest rates and/or foreign exchange rates. In addition to stand-alone derivatives, embedded derivatives exist in the bonds due to prepayment options. The group is exposed to liquidity risk, interest rate risk, foreign currency risk, the risk of changing prices and credit risk. G.3.2 Liquidity risk Liquidity risks can emerge, if cash out flows are generated from the operating and investing activities. Furthermore liquidity risks can exist within the financing activities, if short-term cash outflows are necessary for the repayment of liabilities and the cash inflows from the operating activities and cash on hand are not sufficient for the future repayment or no possibility of a prolongation exists. In the operating activities no liquidity risk exists, because the operating business generates cash inflows. The financing activities are based on long-term contracts. The repayment dates of the long-term liabilities are scheduled in 2011, 2013 and 2015 respectively. Furthermore, the undrawn portion of NRW/Hesse Revolving Credit facility remains available. Liquidity risks on a short-term or medium-term basis can only occur if the covenants of the bonds or the loan will not be fulfilled. Compliance with the covenants is supervised on a regular basis based on budget planning and active monitoring. G.3.3 Currency risk Our reporting currency is the Euro. We have no revenues, and few expenses or liabilities that are denominated in currencies other than the euro, except for the Dollar portion of the Unitymedia Senior Notes. As the proceeds from the Unitymedia Senior Notes were provided to Unitymedia Hessen through the Proceeds Loan, Unitymedia Hessen has hedged the entire amount of the Dollar-denominated Proceeds Loans into euros for the lifetime of the Notes so that interest payments can be made in Euro and Unitymedia is not subject to foreign currency exchange risk. Following the 2006 Refinancing, the currency hedge remained outstanding. G.3.4 Interest rate risk Our exposure to market risk for changes in interest rates relates primarily to our floating rate debt obligations. We have interest rate risk on the NRW/Hesse Notes, the Term loan and the NRW/Hesse Revolving Credit Facilities.

F-182

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) The terms of the Senior Credit Facilities required us to hedge at least 50% of our floating rate debt. As of December 31, 2005, we had 525.0 million of interest rate swaps outstanding for the Senior Credit Facilities. In connection with the 2006 Refinancing, we terminated the interest rate hedges which had a positive fair value of 7.4 million as of December 31, 2005 and 12.2 million at the termination date of April 5, 2006. In addition, we entered into a new 3-year 800.0 million interest rate swap at Unitymedia Hessen relating to the NRW/Hesse Notes. We did not enter into any interest rate hedging for the NRW/Hesse Revolving Credit Facility in connection with the 2006 Refinancing, or the Term loan. For our remaining fixed rate debt, changes in interest rates generally affect the fair value of the debt instrument but not our earnings or cash flows. We do not currently have any obligation to prepay fixed rate debt prior to maturity and accordingly, interest rate risk and changes in fair market value should not have a significant effect on the fixed rate debt until we would be required to refinance such debt. G.3.5 Risks of change in prices A portion of our costs are affected by inflation. We attempt to restrict increases in our costs below the rate of inflation through productivity improvements and capital expenditure. However, general inflation affects costs for our competitors and us. G.3.6 Credit risks Credit risks exist regarding trade receivables. Trade receivables exist against companies and retail customers. Activities to mitigate credit risks regarding trade receivables include preventive actions, collection agencies and other procedures. Preventive actions are performed by examining beforehand whether the creditworthiness of the customer is assured before the contractual relationship with the customer begins. Other procedures comprise demand notes which are sent to the customers based on a scheduled timeline. If the customer still does not pay the outstanding amounts, collection agencies, or lawyers in the case of commercial clients are involved in demanding the respective amounts, and/or the customer is disconnected from the service. The company does not have financial assets, for which the credit risk has been transferred to other parties. Therefore the maximum risk of default is equal to the complete carrying value of the respective kinds of financial assets. G.3.7 Fair market values Usually the carrying value of the financial instruments recognized in the balance sheet is comparable to their fair market value. However the long-term liabilities which have fixed interest rates are measured at amortized cost. The fair market value of fixed rate liabilities can differ significantly from the carrying value, because the fair market value of fixed rate liabilities fluctuate with the development of interest rates. The following table shows the fair market value in percent of the fixed rate interest bonds based on their traded market prices at the balance sheet date:
2006 % 2005 %

Unitymedia New Senior Note M 215 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unitymedia New Senior Note M 235 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unitymedia New Senior Note M$ 151 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

97.65 103.53 91.67

99.09 104.19 104.00

F-183

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) G.3.8 Interest rate risk Long-term financial instruments are exposed to a cash flow risk if the interest rate payments are variable (for example if the interest rate is based on a market rate like Euribor) or they are exposed to a fair value risk if the interest rate payments are fixed. The following table shows financial instruments with terms exceeding one year separated according to their nature of risk (Fair value risk vs. Cash flow risk) based on the conditions of the interest rate.
as of December 31, 2006 within 1 year M/M$ 1-2 years M/M$ 2-3 years M/M$ 3-4 years M/M$ 4-5 years M/M$ more than 5 years M/M$ Total M/M$

Fixed interest rate Unitymedia New Senior Note M 215 . . . . . . . . . . . . Unitymedia New Senior Note M 235 . . . . . . . . . . . . Unitymedia New Senior Note M$ 151 . . . . . . . . . . . . Finance lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Variable interest rate NRW/Hesse loan M 1.350 . . . . . . . . . . . . . . . . . . . . . . Term loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
within 1 year M/M$ 1-2 years M/M$ 2-3 years M/M$ 3-4 years M/M$ 4-5 years M/M$

215 235 151

215 235 151

1,350 100
more than 5 years M/M$

1,350 100

as of December 31, 2005

Total M/M$

Fixed interest rate Unitymedia New Senior Note M 215 . . . . . . . . . . . . Unitymedia New Senior Note M 235 . . . . . . . . . . . . Unitymedia New Senior Note M$ 151 . . . . . . . . . . . . Finance lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Variable interest rate bank loans M 1.050 . . . . . . . . . . . . . . . . . . . . . . . . . . . .

215 235 125

215 235 125

1,050

1,050

The interest rate for the NRW/Hesse Notes is fixed every quarter based on the Euribor + 2.875%. For a nominal amount of 800.0 million the variable interest rate is swapped into a fixed interest rate of 6.535% (3.66% + 2.875%) (see F.17 Bonds, facilities and derivative financial instruments). Regarding the effective interest rates of the respective liabilities see F.17 Bonds, facilities and derivative financial instruments. G.3.9 Credit risk The credit risks of receivables have not been transferred to third parties unless fully written off and transferred to a collection agency. Hence the maximum credit risk is determined by the carrying value recognized in the balance sheet. The counterparty of the swaps are banks with a first quality rating. Hence no credit risk exists regarding these instruments. G.4 Events after the balance sheet (note 22)

On July 19, 2007, we announced a comprehensive set of agreements between Unitymedia, arena and Premiere. This followed the FCO`s review of the distribution agreements announced on February 8, 2007 as well as the FCOs written confirmation that it closed their formal review of the original distribution agreements. The agreements provide for the sublicensing of arena sports content, including its Bundesliga broadcasting rights

F-184

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) until their expiry at the end of the 2008/09 season to Premiere on an exclusive basis. Under these agreements, Premiere assumes responsibility for all production, and arena will receive a significant sublicensing fee, and through a third party financial institution, Unitymedia retained the 16.7% ownership stake in Premiere AG, which was required to be sold by June 30, 2009 and sold to Newscorp on January 7, 2008 for 287 million. Unitymedia cable subscribers and arena satellite customers will continue to receive Bundesliga from Unitymedia and arena respectively, through separate distribution agreements with Premiere through the rights period. Unitymedia and arena will pay Premiere a fixed fee per subscriber at wholesale rates for the Bundesliga content. In parallel, Unitymedia signed a six-year carriage and technical services agreement with Premiere starting January 1, 2008 that will enable Premiere to distribute its content on cable in Unitymedias regions of Hesse and North Rhine-Westphalia. In return, Unitymedia will receive from Premiere a fixed annual fee as well as a smart card operations and handling fee. These agreements reflect more stable economics for the arena project; however the ultimate financial return for Unitymedia as a group will depend on the value of the Premiere stake, which may fluctuate, and therefore there can be no assurance of the timing or the valuation of economic benefit, if any, to potential liquidity from the disposal of these shares. In 2007 the German Business Tax Reform was approved by the Federal Cabinet (Bundesrat). The tax rates will be reduced from approximately 40 % to approximately 30 % depending on the trade tax the company is liable to pay. The tax base is broadened by the limited deductability of interest expenses for liabilities and interest expenses within rental, lease and royalty payments. Furthermore, the usage of tax loss carry forwards after a change of control will be not be permitted for corporate entities. Unitymedia has completed an open market buyback of 226 million par value of the NRW/Hesse Notes due 2013. The open market purchases were completed at an average market price below par value using available cash on hand. G.5 Explanations regarding the cash flow statement (note 23)

Cash and cash equivalents comprise cash on hand and demand deposits. Bank overdrafts which are repayable on demand are also included in cash and cash equivalents. Regarding undrawn lines of the NRW/Hesse Revolving Credit Facility see F.17 Bonds, facilities and derivative financial instruments. Cash which was restricted for the use for special purposes amounts to 116.1 million (2005: 1.1 million) Major non cash transactions have been caused by the reversal of deferred taxes in 2006 and 2005 respectively and by the acquisitions of Tele Columbus and Unitymedia NRW. Regarding deferred taxes we refer to our explanations under F.10 Income Taxes and regarding the acquisitions to our section C. Scope of consolidation. These transactions are related to the Cable business segment.

F-185

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) G.6 Segment reporting (note 24) The following schedule discloses the segment reporting for our segments Cable and arena:
Period January 1, 2006 until December 31, 2006 Cable K arena K Cons. K Total K

Segment reporting based on internal reporting Revenues from external customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intersegment revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortisation expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other non recurring items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Minorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment profit/(loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expenditures for non current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Segment reporting (Differences IFRS/Internal Reporting) Revenues from external customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intersegment revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortisation expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other non recurring items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment profit/loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expenditures for non current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Segment reporting (IFRS GAAP) Revenues from external customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intersegment revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation and amortisation expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Minorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment profit/loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expenditures for non current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reportable segment Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

596,343 0 287,921 3,844 -138,255 -266,547 97,567 25,976 -5,545 4,961 2,523,083 2,476,095 100,348

71,460 9,107 -132,392 3,515 -2,213 -6,974 -8,495 -11,458 0 -158,017 230,563 144,652 13,680

0 -9,107 0 -1,651 1,651 0 0 0 0 0 -81,685 -81,685 0

667,803 0 155,529 5,708 -138,817 -273,521 89,072 14,518 -5,545 -153,056 2,671,961 2,539,062 120,780

0 0 -2,234 4,854 -36,621 41,240 21,844 -25,976 -2,058 1,049 165,257 -8,562 3,617

-2,217 0 -44,501 0 0 4,360 8,495 11,458 0 -20,188 -28,682 -8,495 1,000

-2,217 0 -46,735 4,854 -36,621 45,600 30,339 -14,518 -2,058 -19,139 136,575 -17,057 3,617

596,343 0 285,687 8,698 -174,876 -225,307 119,411 -2,058 -5,545 6,010 2,688,340 2,467,533 103,965 291,320

69,243 9,107 -176,893 3,515 -2,213 -2,614 0 0 0 -178,205 201,881 136,157 14,680 -135,032

0 -9,107 0 -1,651 1,651 0 0 0 0 0 -81,685 -81,685 0 0

665,586 0 108,794 10,562 -175,438 -227,921 119,411 -2,058 -5,545 -172,195 2,808,536 2,522,005 124,397 156,288

F-186

UNITY MEDIA GMBH, COLOGNE Notes to the Consolidated Financial Statements for the 2006 Financial Year (continued) For the year 2006 segment reporting is based on the management approach according to IFRS 8. The segments reported are the Unitymedia Cable and arena Broadcast and Satellite business lines. In 2005 the regular business of arena had not started. The net profit of arena in 2005 was K 31. This segmentation is consistent with our current internal reporting system, which is used for allocating resources to the segments and assessing their performance. Our legal organization supports this view as the Broadcast Satellite Business is organized within the legal entity arena, whereas the Unitymedia Cable Business is organized within separate legal entities for the Unitymedia Cable businesses. The Unitymedia Cable business derives its revenues from basic and premium cable services (including subscription, usage, installation and carriage fees), our high speed internet business and our telephony business (including subscription usage and installation). Furthermore, revenues are included in other income due to shared services agreements between Unitymedia Cable and the arena Satellite segment. The Broadcast and Satellite business derives its revenues from the sales to customers (including subscription, installation and carriage fees) who receive the content for the matches of the 1st and the 2nd Bundesliga via the Satellite network. Also included are wholesale revenues generated from arenas distribution partners on cable outside Hesse and North Rhine-Westphalia as well as broadcasting airtime sales. Furthermore the revenue comprises the intercompany sales to the Cable business for distribution of sports content for subscribers in NRW and Hesse. According to IFRS 8.25 the amount of each segment item shall be the measure reported to the chief operating decision maker. Currently our internal reporting system is based on German GAAP (HGB) and prior to the disposal of Tele Columbus Out-of-Region assets, we reviewed the In-Region financial statements as part of our internal reporting system. Regarding the differences between German GAAP and IFRS we refer to our explanations under B. First time adoption of IFRS. We intend to adopt IFRS also for internal reporting purposes in 2008. The Adjusted EBITDA presented within the segment reporting represents the Earnings before interest, tax and depreciation and amortization excluding non recurring items. Expenditures for non current assets do not comprise expenditures for fixed assets related to disposal groups because disposal groups only include current assets and liabilities. Intersegment transfers or transactions are entered into under the normal commercial terms and conditions that would also be available to unrelated third party. The segment Unitymedia Cable includes, as discontinued operations, the profits/losses from Tele Columbus Out-of-region. Cologne, April 1, 2008

Unitymedia GmbH, Cologne

Parm Sandhu Managing Director Chief Executive Officer

Dr. Herbert Leifker Managing Director Chief Commercial Officer

Christopher Winfrey Managing Director Chief Financial Officer

F-187

Auditors Report Report on the consolidated financial statements We have audited the accompanying consolidated financial statements of Unity Media GmbH, Cologne, and its subsidiaries (the Group) which comprise the consolidated balance sheet as of December 31, 2006 and the consolidated income statement, consolidated statement of changes in equity and consolidated cash flow statement for the year then ended and the notes. Managements responsibility for the financial statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatements. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the accompanying consolidated financial statements give a true and fair view of the financial position of the Group as of December 31, 2006, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards. Contractual basis for the engagement The contractual basis for this engagement are the General Engagement Terms for Wirtschaftsprfer and Wirtschaftsprfungsgesellschaften as of January 1, 2002. These terms are appended hereto and are also binding upon third parties. Frankfurt am Main, April 1, 2008 PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprfungsgesellschaft

(Brigitte Dreel) Wirtschaftsprfer

(ppa. Dirk Sattler) Wirtschaftsprfer

F-188

THE ISSUER UPC Germany GmbH Alsterarkaden 27 20354 Hamburg Germany LEGAL ADVISERS TO THE ISSUER as to matters of U.S. federal and New York law Ropes & Gray LLP 1211 Avenue of the Americas New York, NY 10036-8704 United States as to matters of German law Freshfields Bruckhaus Deringer LLP Prannerstrae 10 80333 Munich Germany

LEGAL ADVISERS TO THE INITIAL PURCHASERS as to matters of U.S. federal and New York law Latham & Watkins (London) LLP 99 Bishopsgate London EC2M 3XF United Kingdom as to matters of German law Latham & Watkins LLP Reuterweg 20 60323 Frankfurt am Main Germany

INDEPENDENT AUDITORS PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprfungsgesellschaft Olof Palme Strasse 35 60439 Frankfurt am Main Germany TRUSTEE, REGISTRAR, TRANSFER AND PRINCIPAL PAYING AGENT The Bank of New York Mellon One Canada Square London E14 5AL United Kingdom TRANSFER AGENT AND PAYING AGENT The Bank of New York Mellon 101 Barclay Street New York, New York 10286 United States of America

LUXEMBOURG LISTING AGENT, TRANSFER AGENT, REGISTRAR AND PAYING AGENT The Bank of New York Mellon (Luxembourg) S.A. Aerogolf Centre 1A, Hoehenhof L-1736 Senningerberg Luxembourg

Printed by RR Donnelley 15185