Purchase of data transfer services from Mobyland Sp. z o.o.
On January 23, 2012, the Company placed with Mobyland Sp. z o.o. ("Mobyland") an order for data transfer services. The order was placed under the provisions of the agreement between both parties concluded on December 15, 2010. Under that agreement, Mobyland provides the access to wireless data transfer service, based on 1800MHz and 900MHz bands in LTE and HSPA+ technologies, respectively.
36 This order was the second one and included the purchase of 13 million GB of data transfer service with the guaranteed utilization period till December 31, 2015, with a possible extension of the term. The net price of 1 MB is PLN 0.00774 (not in thousands).
On September 28, 2012, we signed with Mobyland a memorandum of understanding concerning the agreement for the provision of data transfer services, that defines the terms of settling the unused data packages from the first two orders together with a new – third order. As a result, all packages purchased so far and not used will be settled at a new, lower rate of PLN 0.00645 net (not in thousands) per 1 MB.
The new package of 31 million GB includes unused by us data packages from orders no.1 and no. 2 and additional 10.4 million GB. We believe it is an optimal volume of data package acquired at an optimal price, and it guarantees a chance to achieve our medium term business goals.
Submitting order no. 3 enables us to achieve our business objectives over the medium term, and the lower rate for 1MB allows us to present even more attractive offering for our customers, contributing to a faster rate of subscriber acquisition in the future and improvement of margins generated from the telecommunications services.
Finalization of acquisition of INFO-TV-FM Sp. z o.o.
On January 30, 2012, 100% shares in the share capital of INFO-TV-FM Sp. z o.o. (INFO-TV-FM) were transferred to the Company following the fulfillment of all conditions precedent included in the acquisition agreement with Narodowy Fundusz Inwestycyjny Magna Polonia S.A. and Evotec Management Limited dated October 28, 2011. The fair value price of the acquisition amounted to PLN 29,313,202.19 (not in thousands).
The agreement for the acquisition of shares in INFO-TV-FM was concluded in order to further implementation of the Group’s strategy aiming at the widest possible content distribution based on all latest technologies. Upon the acquisition of INFO-TV- FM, the Company acquired frequencies on 470-790 MHz and reservation agreements related to them. Based on these assets, we have expanded our business by mobile television service and a pay Ekstra Package offered within digital terrestrial television, which fits well with both our business plans, market development trends and customers’ expectations. Acquisition of internet television ipla
On March 12, 2012, the Company concluded with Bithell Holdings Ltd. agreements concerning the acquisition of shares in the companies running ipla service, the leader in online video distribution in Poland. The agreements concerned the following shares:
1. 100% shares in Redefine Sp. z o.o. seated in Warsaw;
2. 100% shares in Gery.pl Sp. z o.o. seated in Warsaw (in liquidation); 3. 100% shares in Frazpc.pl Sp. z o.o. seated in Warsaw;
4. 100% shares in Netshare Sp. z o.o. seated in Warsaw.
The price for shares in the companies abovementioned and the amount necessary to repay ipla’s current bank and trade liabilities amounted to PLN 150 million (not in thousands); cash consideration transferred amounted to PLN 43 million (not in thousands. The transfer of the legal rights to the acquired shares was effectuated on April 2, 2012.
The purchased entities run ipla, the leader of online video market in Poland in terms of: availability on different devices - PCs, laptops, tablets, smatrphones, connected TVs, game consoles, home cinemas and set-top-boxes; content library, thanks to programming deals with TV Polsat, TVP and film studios (i.e. Warner Bros, Disney, Best Film, Kino Świat, Epelpol Entertainment); number of users and time spent by user on watching video online.
The acquisition of ipla completes the Company's strategy of which an important element was the acquisition of TV Polsat, aiming at providing the best quality content using most advanced devices and technologies. Ipla, being the leader on online
37 video market, strengthens Cyfrowy Polsat’s market position as a content aggregator and distributor and provides a competitive advantage in the developing market segment.
Launching cooperation with Polkomtel Sp. z o.o.
The Company has established cooperation with Polkomtel Sp. z o.o., the leading telecommunications company operating Plus mobile network, within the introduction of package offer and cross selling of standard products. The agreement is effective from April 2012.
As a result of this cooperation, Cyfrowy Polsat began to offer its subscribers a special offer of mobile telephony services rendered by Polkomtel, and Polkomtel's customers can profit from dedicated offer of the largest satellite TV platform in Poland. New customers can get a joint offer and receive additional benefits with both services. At the same time standard offers of Polkomtel and Cyfrowy Polsat were introduced to both sales networks.
As of the end of 2012, the cross-selling included almost 800 points of sales of Polkomtel’s network and over 700 points of sales of our network, while the additional benefits to the customers of both satellite TV of Cyfrowy Polsat and telephony of Plus are provided in the entire sales networks of both companies.
The cooperation of Cyfrowy Polsat and Polkomtel means more attractive offers of both companies, additional benefits for the users buying services from both operators, increased sales potential due to the possibility to reach the partner’s subscribers with an attractive product, increased availability of services of both operators through cross selling and customer service in the points of sales as well as consequently, increased customer satisfaction and loyalty.
Thanks to established cooperation, we can combine the purchase potential of approximately 14 million customers of Polkomtel, who get access to television services, and more than 11 million people in over 3.5 million Polish households currently using Cyfrowy Polsat’s services.
The letter of intent with Polkomtel Sp. z o.o.
In August 2012, we have concluded a letter of intent with Polkomtel, based on which we have started to provide the internet access service within the operator’s 3G and 2G radio networks on 2100 MHz and 900 MHz frequencies in HSPA and EDGE/GPRS technology, that has a nationwide coverage. On January 31, 2013we have signed a tripartite agreement, based on which Mobyland Sp. z o.o. took over the rights and obligations of Polkomtel arising from the letter of intent. Since then, the use of Polkomtel’s telecommunications network is executed through Mobyland.
Insurance agreements
In 2012 the Company signed insurance agreements described below.
Property insurance with PZU S.A. in co-insurance of STU Ergo Hestia: insuring assets against all risks, electronic equipment insurance, insuring machinery against damages, loss-of-profit insurance, insuring assets in domestic transport (cargo) and insuring assets in international transport (cargo).
Third-party liability insurance: third-party liability insurance, including professional liability insurance with PZU S.A. in co- insurance of STU Ergo Hestia, bookkeeping liability insurance with PZU S.A., Directors and Management Board liability insurance with AIG Europe Limited Sp. z o.o. Branch in Poland (former Chartis Europe S.A.).
In 2012 the Company purchased fleet motor insurance with STU Ergo Hestia S.A. and assistance insurance with Europ Assistance Polska Sp. z o.o.
The agreement concluded in 2008 with AIG Europe Limited Sp. z o.o. Branch in Poland (former Chartis Europe S.A. and AIG Europe S.A. Branch in Poland) for the period of 6 years concerning third-party liability insurance relating to public securities offering was still in force.
38 Moreover, international business travel health insurance was concluded with ACE European Group Limited Sp. z o.o. Branch in Poland.