Telenet Group Holding NV€¦ · Telenet Group Holding NV (the "Company") is a company organized under the laws of Belgium. References to the "Senior Discount Notes" are to the 11.5%

Telenet Group Holding NV

and Subsidiaries

Report for the Year ended December 31, 2005

11.5% Senior Discount Notes due 2014

9% Senior Notes due 2013 (issued by Telenet Communications NV)

2

TABLE OF CONTENTS Introduction and Use of Certain Terms ................................................................................................................. 4 Presentation of Financial and Other Information .................................................................................................. 4 Information Regarding Forward Looking Statements ........................................................................................... 7 PART I – FINANCIAL INFORMATION Item 1. Not Applicable................................................................................................................................ 9 Item 2. Not Applicable................................................................................................................................ 9 Item 3. Key information ............................................................................................................................. 9 A. Selected financial data ................................................................................................................ 9 B. Not applicable ........................................................................................................................... 18 C. Not applicable ........................................................................................................................... 18 D. Risk factors ............................................................................................................................... 18 Item 4. Information on the company ...................................................................................................... 38 A. History and development of the company ................................................................................ 38 B. Business overview..................................................................................................................... 41 C. Organizational structure ............................................................................................................ 82 D. Property, plant and equipment .................................................................................................. 83 Item 5. Operating and financial review and prospects.......................................................................... 85 A. Operating results ....................................................................................................................... 85 B. Liquidity and capital resources ................................................................................................. 98 C. Research and development, patents and licences, etc. ............................................................ 100 D. Trend information ................................................................................................................... 100 E. Off-balance sheet arrangements .............................................................................................. 101 F. Tabular disclosure of contractual obligations......................................................................... 101 Item 6. Directors, senior management and employees ........................................................................ 101 A. Directors and senior management........................................................................................... 101 B. Compensation.......................................................................................................................... 107 C. Board practices........................................................................................................................ 108 D. Employees............................................................................................................................... 109 E. Share ownership ...................................................................................................................... 111 Item 7. Major shareholders and related party transactions ............................................................... 113 A. Major shareholders.................................................................................................................. 113 B. Related party transactions ....................................................................................................... 115 C. Not applicable ......................................................................................................................... 117 Item 8. Financial information ................................................................................................................ 117 A. Consolidated Statements and Other financial information .............................................. 117 Item 9. Not Applicable............................................................................................................................ 120 Item 10. Additional information .............................................................................................................. 120 A. Not applicable ........................................................................................................................ 120 B. Memorandum and articles of association ............................................................................... 120 C. Material contracts ................................................................................................................... 131 D. Exchange controls .................................................................................................................. 138 E. Taxation .................................................................................................................................. 138 F. Not applicable ......................................................................................................................... 149 G. Not applicable ........................................................................................................................ 149 H. Not applicable ........................................................................................................................ 149 I. Not applicable........................................................................................................................... 149 Item 11. Quantitative and qualitative disclosures about market risk ................................................... 149 (a) Quantitative disclosures about market risk ............................................................................ 149 Sensitivity analysis disclosures ................................................................................................... 150 (b) Qualitative disclosures about market risk ............................................................................. 150 Item 12. Not applicable............................................................................................................................. 152

3

Part II Item 13. Not applicable ............................................................................................................................ 153 Item 14. Not applicable............................................................................................................................. 153 Item 15. Controls and Procedures .......................................................................................................... 153 Item 16A. Audit committee financial expert ............................................................................................ 153 Item 16B. Code of Ethics ........................................................................................................................... 153 Item 16C. Principal Accountant Fees and Services ................................................................................. 153 Item 16D. Not applicable ............................................................................................................................ 154 Item 16E. Not applicable ............................................................................................................................ 154 Part III Item 17. Financial Statements ................................................................................................................. 155 Item 18. Financial Statements .................................................................................................................. F-1 Balance sheet ................................................................................................................................ F-2 Income statement .......................................................................................................................... F-3 Statement of shareholder's equity ................................................................................................. F-4 Cash flow statement...................................................................................................................... F-5 Notes to the financial statements .................................................................................................. F-7 Item 19. Exhibits ...................................................................................................................................... 155 Annex A Summary of Certain Senior Credit Facility Covenants................................................................. A-1 Annex B Summary Guarantor Financial Information .................................................................................. B-1 Annex C First Time Adoption of EU GAAP ............................................................................................... C-1

4

INTRODUCTION AND USE OF CERTAIN TERMS Telenet Group Holding NV (the "Company") is a company organized under the laws of Belgium. References to the "Senior Discount Notes" are to the 11.5% Senior Discount Notes due 2014 and references to the "Senior Notes" are to the 9.0% Senior Notes due 2013 issued by Telenet Communications NV. References to the "Notes" are to both the Senior Notes and Senior Discount Notes. Both the Senior Discount Notes and Senior Notes were issued on December 22, 2003. Unless otherwise stated herein:

• "EU" refers to the European Union;

• "Flanders" means the Flemish region of Belgium, excluding Brussels;

• "United States" or the "US" refers to the United States of America;

• "Belgian GAAP" refers to generally accepted accounting principles in Belgium;

• "EU GAAP" refers to International Financial Reporting Standards as adopted by the European Union;

• "US GAAP" refers to generally accepted accounting principles in the United States;

• "$," "US$" or "US dollars" refers to the lawful currency of the United States;

• "€" or "euro" refers to the single currency of the participating Member States in the Third Stage of European Economic and Monetary Union of the Treaty Establishing the European Community, as amended from time to time;

• "we," "us," "our" and "Telenet" refer to Telenet Group Holding NV, together with its consolidated

subsidiaries, except where the context otherwise requires;

• "Telenet Group Holding" refers to Telenet Group Holding NV, except where the context otherwise requires;

• “IPO” refers to the initial public offering of shares of Telenet Group Holding on October 11, 2005 by way

of a Primary Offering of 13,333,333 new shares, a Secondary Offering of 33,609,938 existing shares and an Employee Offering of 14,269 new shares; and

• "Shares" refers to all shares of Telenet Group Holding.

In addition, "Telenet Communications" refers to Telenet Communications NV, "Telenet Bidco" refers to Telenet Bidco NV, "Telenet Holding" refers to Telenet Holding NV, "Telenet Operaties" refers to Telenet Operaties NV, "Telenet Vlaanderen" refers to Telenet Vlaanderen NV, "MixtICS" refers to MixtICS NV, "Telenet Solutions" refers to Telenet Solutions NV and its subsidiaries, "Phone-Plus" refers to Phone-Plus SPRL and "PayTVCo" refers to PayTVCo NV. Telenet Operaties NV changed its name to Telenet NV on January 1, 2005. In July 2005, PayTVCo and MixtICS merged into Telenet NV, with effect from January 1, 2005. On December 30, 2005, Telenet Solutions merged into Telenet NV, with effect from January 1, 2006. On January 31, 2006, Telenet Holding was liquidated.

PRESENTATION OF FINANCIAL AND OTHER INFORMATION The audited consolidated annual financial statements of Telenet Group Holding as of and for the years ended December 31, 2004 and 2005 have in each case been prepared in accordance with EU GAAP. In addition, as specified in guidelines set out by the United States Securities and Exchange Commission (“SEC”) with regard to the preparation of Form 20-F reports, we also provide selected historical financial information for our five most recent financial years in US GAAP, of which financial data for the 2005 financial year is presented on an unaudited basis and financial data for the 2001 to 2004 financial years was audited in accordance with US GAAP. The transition from US GAAP to EU GAAP does not affect our operating statistics. See Item 3, “Key Information—Risk factors—Risks Related to Our Business—We adopted new accounting standards, as required, commencing with our financial statements for the year

5

beginning January 1, 2005, which could impair the interpretation of our financial statements" and Annex C "First-time Adoption of EU GAAP." The financial information included in this annual report is not intended to comply with SEC reporting requirements. Compliance with such requirements would require the modification or exclusion of certain financial measures, including EBITDA, EBITDA margin, subscriber acquisition costs, average revenue per subscriber and the presentation of certain other information not included herein. EBITDA, EBITDA margin, average revenue per subscriber, cash interest expense, net cash pay debt and certain other items included herein are non-GAAP measures and you should not consider such items as an alternative to the applicable GAAP measures. In particular, you should not consider EBITDA as a measurement of our financial performance or liquidity under EU GAAP or US GAAP, as an alternative to net income, operating income or any other performance measures derived in accordance with EU GAAP or US GAAP, or as an alternative to cash flow from operating activities as a measure of our activity. EBITDA is equivalent to operating profit plus depreciation of tangible fixed assets and amortization (including amortization of broadcasting rights) and impairment of goodwill and other intangible assets. Some of the limitations of EBITDA as a measure are:

• it does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;

• it does not reflect changes in, or cash requirements for, our working capital needs; • it does not reflect the significant interest expense, or the cash requirements necessary to service interest or

principal payments, on our debt; • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized

will often have to be replaced in the future, and EBITDA measures do not reflect any cash requirements for such replacements; and

• other companies in our industry may calculate EBITDA measures differently than we do, limiting their

usefulness as a comparative measure. Because of these limitations, EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our EU GAAP results and using EBITDA measures only supplementally. Subscriber and Related Data In conducting our business, we distinguish between "subscribers" and unique "customers." Each service provided corresponds to one revenue generating unit ("RGU"), or subscriber. A unique customer may represent multiple RGUs to us. For example, a unique customer who receives from us basic cable television, broadband internet and telephony services (regardless of their number of telephony access lines) would be counted as three RGUs, or, three subscribers. The way in which we calculate our penetration rates differs for our basic cable television service compared to our premium cable television, internet and telephony services based in part on the network infrastructure over which we are able to provide the relevant service. For basic and premium cable television, our penetration rate is calculated based on the number of RGUs receiving that service at the end of the relevant period as a percentage of the number of homes and businesses, as applicable, passed by the network we own (the "Telenet Network") at the end of the relevant period. We also calculate the penetration rate for the premium cable television service that we provide over the network on which the pure intercommunales (municipal utility companies in Flanders) have granted us usage rights (the "Partner Network" and, together with the Telenet Network, the "Combined Network"), which is based on the number of RGUs receiving premium cable television from us at the end of the relevant period as a percentage of the number of homes and businesses passed by the Partner Network at the end of the relevant period. For periods stated as of or after December 31, 2003, our penetration rate for residential internet and telephony service is calculated based on the number of RGUs receiving the relevant service at the end of the relevant period as a

6

percentage of the number of homes and businesses passed by the Combined Network at the end of the relevant period. For periods prior to December 31, 2003, we had not yet completed the upgrade of the Combined Network to provide the bi-directional capability required to provide internet and telephony service. To reflect the fact that the number of homes and businesses passed by the upgraded portion of the Combined Network was increasing as the upgrade progressed, our residential broadband internet and telephony penetration rates for those periods are based on the number of RGUs receiving the relevant service from us at the end of the relevant period as a percentage of the number of homes and businesses passed by the Combined Network at the end of December 31, 2003, the date by which the upgrade was substantially completed. Churn is calculated based on the total number of RGUs disconnected during a relevant period divided by the average number of RGUs for the period. Our churn statistics do not include customers who move within the areas of the Combined Network where we provide the relevant service and who elect to receive the same service from us that they previously received at their prior location. In addition, we exclude migrators between different service tiers from our churn statistics. We have estimated the number of homes passed by the Combined Network and its component parts in the data reported throughout this annual report. This information is based in part on network maintenance costs and records. In addition, in limited circumstances the subscriber data included herein are derived from management estimates, including penetration rates and market shares and, for the period between December 31, 2002 and March 31, 2003, average revenue per unique customer. With the exception of homes passed, we have indicated where such estimated data has been used in this annual report. The subscriber data included herein is not part of our financial statements and has not been audited or otherwise reviewed by our independent auditors or other outside auditor, consultant or expert. Industry Data Certain economic and industry data used throughout this annual report are derived from EU, Belgian government and various other industry data sources. We have accurately extracted this third-party data from published sources and, as far as we are aware and to the extent we can ascertain from information published by these sources, there are no omissions that would render such information in this annual report materially misleading. Industry publications generally state that the information they contain has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. We have not independently verified such data. Much of this information, including the market share of our competitors in Flanders and incremental changes in relative market shares, is reported only on a nationwide basis in Belgium, and we have derived estimated statistics for the Flanders region based in part on assumptions regarding the relevant population distribution among Flanders, Brussels and Wallonia and certain other factors. In addition, elsewhere in this annual report, statements regarding our industry, our position in the industry, and other cable operators are based solely on our experience, our internal studies and estimates, studies done by third parties at our request and our own investigation of market conditions, which we believe to be reliable. We cannot assure you, however, that any of these assumptions are accurate or correctly reflect our position in the industry, and none of our internal surveys or information has been verified by any independent sources. Other Data This annual report includes information with respect to the products and services that we and certain of our competitors offer. This information, including applicable tariffs and service descriptions, is subject to rapid change as providers introduce new products and services and modify their pricing strategies. As with all other information included in this annual report, neither the delivery of this annual report nor any sale made hereunder at any time after the date hereof shall, under any circumstances, create any implication that this information or the other information set forth herein is correct as of any time subsequent to the date of this annual report. On September 20, 2005, an extraordinary general shareholders' meeting of Telenet Group Holding approved a three-for-one stock split of the company's Shares. Except where otherwise noted and for certain historical information, for ease of reference we have adjusted the number of Shares reported in this annual report to reflect this split. Certain numerical figures included in this annual report have been subject to rounding adjustments; accordingly, numerical figures shown as totals in certain tables may not be an arithmetic aggregation of the figures which precede them.

7

Numbers used in this annual report follow the US convention, whereby a comma separates the thousands and other greater increments and a full-stop separates decimals. Value Added Tax (VAT) charged on the products and services that we offer is currently 21%, except with respect to certain digital television services, for which VAT is assessed at a rate of 12%.

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS This annual report includes forward-looking statements. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes," "estimates," "anticipates," "aims," "expects," "intends," "may," "will," "would" or "should" or, in each case, their negative, or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this annual report and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity and the development of the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this annual report. In addition, even if our results of operations, financial condition and liquidity and the development of the industry in which we operate are consistent with the forward-looking statements contained in this annual report, those results or developments may not be indicative of results or developments in future periods. Important factors that could cause those differences include, but are not limited to:

• competition from other companies in our industry and our ability to retain or increase our prices and our market shares, including following the introduction of Belgacom's interactive digital television service and competition from operators that offer a combination of television, internet and telephony services;

• increasing fixed to mobile substitution by telephony users;

• unfavorable market pricing conditions for our existing and planned services and for competing services;

• increasing subscriber acquisition costs;

• our ability to protect our brand name;

• our ability to successfully introduce new technologies or services, such as new applications for our interactive

digital television services and our planned implementation of a mobile virtual network operation, or to respond to technological developments;

• our ability to market effectively our existing and planned services to current and new customers;

• delays in the timing of the development and launch of our planned services;

• our ability to obtain necessary equipment at anticipated costs, including equipment required to operate our

network and provide our services;

• our ability to maintain and upgrade the networks we own or use;

• the occurrence of events that damage the networks that we own or use, and our response to such events;

• our ability to obtain premium content;

• our ability to integrate any future acquisitions;

• currency fluctuations and hedging risks resulting from our exposure to the US dollar;

• issues arising from our first time adoption of EU GAAP for the 2005 fiscal year;

8

• conflicts of interest with our shareholders or the loss of any member of our executive management team;

• adverse regulatory, legislative, tax or other judicial developments;

• the outcome of the significant litigation in which we are involved with respect to interconnection fees;

• our substantial leverage and ability to generate sufficient cash to service our debt;

• restrictions and limitations contained in the agreements governing our debt, including obligations to repurchase

debt in the event of any change of control; and

• factors that are not known to us at this time. The cautionary statements set forth above should be considered in connection with any subsequent written or oral forward-looking statements that we, or persons acting on our behalf, may issue. We do not undertake any obligation, and do not intend, to review or confirm expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise after the date of this annual report. We urge you to read the sections of this annual report entitled Item 3, “Key information–Risk factors," Item 4, “Information on the company–Business overview” and Item 5, Operating and financial review and prospects–Operating results" for a more complete discussion of the factors that could affect our future performance and the industry in which we operate. In light of these risks, uncertainties and assumptions, the forward-looking events described in this annual report may not occur.

9

PART I Item 1. Identity of directors, senior management and advisors Not applicable. Item 2. Offer statistics and expected timetable Not applicable. Item 3. Key information A. Selected financial data

Because we are reporting our financial data in EU GAAP for the first time, we present selected financial data in both EU GAAP and US GAAP.

The following table presents selected consolidated financial data as of and for each of the two years in the period ended December 31, 2005 in EU GAAP, which are derived from our audited consolidated financial statements for these periods, and should be read in conjunction with these financial statements, the related notes thereto and with Item 5, "Operating and financial review and prospects." Our audited consolidated financial statements as of December 31, 2005 and the related notes are included elsewhere in this annual report. For the years ended December 31,

EU GAAP 2004 2005 (Euro in millions, except per Share amounts) (Audited)

Income Statement Information Revenues .............................................................. 681.1 737.5 Costs and expenses Costs of services provided .............................. (430.7) (459.0) Gross profit...................................................... 250.5 278.5

Selling, general and administrative costs........ (145.8) (146.9) Operating Profit .................................................... 104.7 131.6

Finance costs, net ............................................ (161.8) (193.2)

Net loss before income taxes................................ (57.2) (61.6) Income tax expense .............................................. (4.5) (15.1) Net loss.................................................................. (61.7) (76.7)

Basic and Diluted Net Loss per Share: Weighted-average shares outstanding.................... 86,527,257 89,503,387 Net loss per share.................................................... (0.71) (0.86) Expenses by Nature Employee benefits .................................................. 107.5 110.3 Depreciation............................................................ 159.3 159.1 Amortization ........................................................... 35.6 39.1 Amortization of broadcasting rights....................... 9.4 8.1 Network operating and service costs...................... 178.9 208.4 Advertising, sales and marketing ........................... 44.2 49.4 Other costs .............................................................. 41.5 31.6 Total costs and expenses ........................................ 576.5 605.9

10

For the years ended December 31, EU GAAP 2004 2005

(Euro in millions)

(Successor)(1) (Successor)(1)

Other Financial Information EBITDA ....................................................................... 309.0 337.9 EBITDA margin .......................................................... 45.4% 45.8% Capital expenditure(1) ................................................... 152.7 184.0 Cash flow from operations .......................................... 234.3 212.6 Balance Sheet Information Cash and cash equivalents............................................ 145.2 210.4 Current assets, excluding cash and cash equivalents... 105.6 125.3 Property and equipment, net ........................................ 960.8 943.9 Total assets ................................................................... 2,520.8 2,571.4 Trade payables.............................................................. 149.5 174.7 Total cash pay debt(2).................................................... 1,368.4 1,250.9 Shareholders' equity(3) .................................................. 491.0 709.1

(1) Capital expenditure as presented here includes purchases of property and equipment, intangibles (including

broadcasting rights), and other investments, but excludes the acquisition of network user rights under the Clientele Agreements and the Annuity Agreement. See Item 5, "Operating and financial review and prospects—Liquidity and capital resources."

(2) Total cash pay debt includes all debt instruments on which we pay interest on a current basis. Total cash pay debt currently

includes our 9% Senior Notes, debt drawn under our Senior Credit Facility, the clientele and annuity fees and capital lease obligations, but excludes the 11.5% Senior Discount Notes due 2014, the principal amount of which accretes at the rate of 11.5% per annum on a semiannual basis until December 15, 2008, after which time cash interest on the notes will become payable at a rate of 11.5% per annum on a semiannual basis. Liquidated damages (due to non-registration with the U.S. Securities and Exchange Commission) equal to 1.0% per annum accrued on the Senior Discount Notes from June 30, 2005 to December 31, 2005.

(3) On October 11, 2005, Telenet’s shares were publicly listed on the Brussels Euronext Exchange following an initial

public offering which consisted of primary, secondary and employee offerings of shares.

The following table presents selected consolidated financial data as of and for each of the five years in the period ended December 31, 2005 in US GAAP. The selected consolidated financial data presented below as of and for each of the four years in the period ended December 31, 2004 are derived from our audited consolidated financial statements for these periods which we have previously reported. The selected considated financial data presented below for the year ended December 31, 2005 is presented on an unaudited basis. Neither the consolidated financial statements nor the related notes for this information are presented elsewhere in this annual report, but this information should be read in conjunction with Annex C – “First Time Adoption of EU GAAP”. For the years ended December 31,

US GAAP 2001 2002 2003 2004 2005 (Euro millions except ratios and percentages)

(Predecessor and

Successor)(1) (Successor)(1)

(Successor)(1)

(Successor)(1)

(Successor)(1)

(Unaudited) Statement of Operations

Information

Revenues Basic cable television ...................... - 64.2 187.8 206.2 206.4 Premium cable television(2) ............ - - 5.0 58.8 61.1 Residential broadband internet........ 65.7 101.1 147.9 192.3 231.1 Residential telephony(3) ................... 82.5 112.4 125.0 157.2 170.3 Business services ............................. 24.1 29.4 36.6 66.7 68.5 Total ............................................... 172.3 307.1 502.3 681.1 737.5

11

For the years ended December 31, US GAAP 2001 2002 2003 2004 2005

(Euro millions except per share amounts and percentages)

(Predecessor and

Successor)(1) (Successor)(1)

(Successor)(1)

(Successor)(1)

(Successor)(1) (Unaudited)

Expenses Operating costs (excluding

depreciation and amortization)..... (107.2) (133.0) (164.1) (247.8) (275.9) Selling, general and administrative.. (83.7) (91.5) (108.1) (133.8) (130.9) Depreciation..................................... (67.9) (109.4) (140.4) (159.3) (159.1) Amortization and impairment(4) ...... (114.5) (36.5) (368.5) (35.6) (39.1) Operating profit (loss) ................... (201.1) (63.3) (278.9) 104.6 132.7 Interest expense, net ........................ (125.8) (134.2) (172.3) (156.6) (140.8) Foreign exchange gain (loss), net.... (0.9) 0.7 (3.3) (4.7) (12.4) Other income (expense), net............ 0.0 0.0 (129.3) - (39.5) Income tax benefit (expense) .......... - - - (3.8) (12.8) Net loss before cumulative effect

of accounting change.................... (327.8) (196.8) (583.8) (60.5) (72.8) Cumulative effect of accounting

change ............................................ - (667.6) - - - - Net loss .......................................... (327.8) (864.4) (583.8) (60.5) (72.8) Basic and Diluted Net Loss per

Share(7) Weighted average shares

outstanding (8) ................................ 20,985,006 50,454,396 85,331,493 86,527,257 89,503,387 Net loss per share (Euro) (8) ............. (13.50) (17.13) (6.84) (0.70) (0.81) Other Financial Information EBITDA........................................... (18.6) 82.6 230.0 299.6 330.6EBITDA margin .............................. (10.8%) 26.9% 45.8% 44.0% 44.8%Capital expenditure(5)....................... 200.5 67.4 100.4 141.5 176.7Cash flow from (used in)

operations...................................... (35.6) 11.1 99.4 223.1 205.3

Balance Sheet Information Cash and cash equivalents............... 10.0 18.3 171.0 145.2 210.4Current assets, excluding cash and

cash equivalents ............................ 33.7 90.1 112.8

108.4

127.6Property and equipment, net............ 542.0 1,012.9 991.4 960.8 943.9Total assets....................................... 2,397.3 2,803.3 2,664.0 2,581.6 2,613.9Trade payables ................................. 186.9 112.1 130.0 145.7 169.4Total cash pay debt(6) ....................... 649.8 997.1 1,459.3 1,368.4 1,250.9Deferred payment obligations and

subordinated shareholder loans .... 878.7 357.5 -

-

- Shareholders' equity(7)...................... 640.3 1,148.0 574.1 490.2 710.8 ___________ (1) Telenet Holding is the predecessor company, Telenet Bidco is the successor company for the year ended December 31,

2001 (reflecting Telenet Bidco's acquisition of Telenet Holding in March 2001) and Telenet Group Holding is the successor company for the years ended December 31, 2002, December 31, 2003, December 31, 2004 and December 31, 2005.

(2) We began to offer premium cable services following the completion of the Canal+ Acquisition, which had financial effect

from December 1, 2003. (3) Includes interconnection fees from third-party carriers generated by calls terminating with residential and business

customers.

12

(4) Reported amortization for the year ended December 31, 2003 includes €336 million general impairment of goodwill. (5) Capital expenditure as presented here includes purchases of property and equipment, intangibles and other investments,

but excludes the acquisition of network user rights under the Clientele Agreements and the Annuity Agreement. See Item 5, "Operating and Financial Review and Prospects—Liquidity and Capital Resources."

(6) Total cash pay debt includes all debt instruments on which we pay interest on a current basis. Total cash pay debt currently

includes our 9% Senior Notes, debt drawn under our Senior Credit Facility, the clientele and annuity fees and capital lease obligations, but excludes the 11.5% Senior Discount Notes due 2014, the principal amount of which accretes at the rate of 11.5% per annum on a semiannual basis until December 15, 2008, after which time cash interest on the notes will become payable at a rate of 11.5% per annum on a semiannual basis. Liquidated damages equal to 1.0% per annum accrued on the Senior Discount Notes from June 30, 2005 to December 31, 2005.

(7) On October 11, 2005, Telenet’s shares were publicly listed on the Brussels Euronext Stock Exchange following an IPO

which consisted of primary, secondary and employee offerings of shares. Prior to the IPO, we implemented a three-for-one stock split. All shares and per share amounts are expressed taking into account the stock split.

(8) Weighted average shares outstanding and net loss per share for 2001 are based on the successor company only.

The following tables present selected consolidated financial data based on our fourth quarter 2005 results as calculated both in accordance with unaudited US GAAP and EU GAAP, and on an unaudited pro-forma basis: Annualized Information Based on Fourth Quarter 2005 Results presented in accordance with US GAAP Euro millions (except ratios)

Prior to Senior Note

prepayment(3)

After Senior Note

prepayment(3) Net cash pay debt(1) .............................................................................................. 1,040.5 915.7 Annualized EBITDA(2) ........................................................................................ 320.0 320.0 Pro forma annualized cash interest expense(1) .................................................... 83.8 72.5 Ratio of net cash pay debt to Annualized EBITDA............................................ 3.25 x 2.86 x Ratio of net total debt to Annualized EBITDA................................................... 3.94 x 3.55 x Ratio of Annualized EBITDA to pro forma annualized cash interest

expense(1)........................................................................................................... 3.82 x 4.41 x Annualized Information Based on Fourth Quarter 2005 Results presented in accordance with EU GAAP Euro millions (except ratios)

Prior to Senior Note

prepayment(3)

After Senior Note

prepayment(3) Net cash pay debt(1) .............................................................................................. 1,040.5 915.7 Annualized EBITDA(2) ........................................................................................ 331.3 331.3 Pro forma annualized cash interest expense(1) .................................................... 83.8 72.5 Ratio of net cash pay debt to Annualized EBITDA............................................ 3.14 x 2.76 x Ratio of net total debt to Annualized EBITDA................................................... 3.81 x 3.43 x Ratio of Annualized EBITDA to pro forma annualized cash interest

expense(1)........................................................................................................... 3.95 x 4.57 x (1) Cash interest expense excludes non-cash items such as amortization of debt discounts and debt issuance costs and

excludes expenses such as currency hedging costs and other borrowing expenses, such as withholding tax and commitment fees. Cash pay debt includes third party debt on which cash interest is payable from the date of issuance, and excludes the Senior Discount Notes on which interest is accruing on a discounted basis and for which cash interest is not payable on issuance. Pro forma cash interest expense is calculated assuming the following pro forma cash pay debt balances were outstanding as of December 31, 2005, for an annual period at interest rates in effect or assumed to be in effect as at March 31, 2006, both with and without adjustment for the impact of the Senior Note prepayment on January 9, 2006:

13

Euro millions

Prior to Senior Note prepayment(3)

After Senior Note prepayment(3)

Principal outstanding

Annual pro forma cash

interest expense

Pro forma Principal

outstanding

Annual pro forma cash

interest expense

Senior Credit Facility(4) Tranches at Euribor +1.50%(a) ......................... 230.0 10.0 230.0 10.0 Tranche at Euribor +2.50%(a) ........................... 405.0 21.8 405.0 21.8 Senior Notes(b) .................................................... 493.2 44.4 368.4 33.2 Other long term obligations(c)............................. 96.2 7.6 96.2 7.6 Finance lease obligations.................................... 26.5 1.0 26.5 1.0

Total cash pay debt 1,250.9 83.8 1,126.1 72.5

(a) The interest rate is calculated using the EURIBOR rate at March 31, 2006 of 2.797% plus the applicable margin, excluding withholding tax, commitment fees on undrawn facilities and other borrowing expenses.

(b) Based on the coupon rate of 9.0% for the Senior Notes.

(c) Interest is calculated using a blended rate of 7.9%, reflecting the profile of the components of these obligations

which include capital leases and clientele and annuity fees. (2) Annualized EBITDA is calculated by multiplying by four our EBITDA of €80.0 million (as presented using US GAAP)

or €82.8 million (as presented using EU GAAP), as appropriate, for the three months ended December 31, 2005. This is a measure commonly used by other companies in our sector.

(3) On January 9, 2006, Telenet Communications repaid €124.8 million outstanding principal of its Senior Notes, together

with accrued interest of €0.7 million and a prepayment premium of €11.2 million. (4) See “Capitalization”, Item 10, Additional information – Material contracts – Senior Credit Facility” and Annex A for

information on our Senior Credit Facility.

14

Consolidated Operating Information (Unaudited)

As of and for the years ended December 31, (RGUs and homes passed in thousands) 2001 2002 2003 2004 2005 Homes HFC Upgraded(1)..................................................................... 2,144 2,423 2,484 2,484 2,508HFC Upgrade (% completion)............................................................ 87% 99% 100% 100% 100%Homes Passed—Telenet Network(2) ................................................... 1,653 1,683 1,683 1,683 1,699Homes Passed—Partner Network ...................................................... 755 774 801 801 801 RGUs(3) Basic cable television (CATV) (2)(5) .................................................... 1,544 1,564 1,587 1,583 1,589Premium and premium-enabled CATV—Telenet Network(4)(5) ........ — — 100 96 124Premium CATV—Partner Network(4)(5) ............................................. — — 46 44 37Residential broadband internet(5) ........................................................ 195 287 399 506 601Residential telephony(5)(6) .................................................................... 180 185 231 281 358Business services(7).............................................................................. 6 16 22 28 29

Total, excluding basic iDTV RGUs ................................................ 1,926 2,052 2,385 2,538 2,663Total, including basic iDTV RGUs ................................................ 1,926 2,052 2,385 2,538 2,738

Unique Customers (in thousands)(8) Telenet Network.................................................................................. — 1,564 1,587 1,583 1,589Partner Network(9) ............................................................................... — 117 159 198 235Combined Network(9) .......................................................................... — 1,681 1,746 1,781 1,824 RGUs per unique customer Telenet Network.................................................................................. — 1.21 1.28 1.35 1.42Partner Network(9) ............................................................................... — 1.32 1.32 1.33 1.36Combined Network(9) .......................................................................... — 1.22 1.28 1.35 1.41 Penetration Basic CATV(2)(10)................................................................................. 92.7% 92.9% 94.3% 94.1% 93.5%Premium and premium-enabled CATV—Telenet Network(4)(11)....... — — 6.0% 5.7% 7.6%Premium CATV—Partner Network(4)(11)............................................ — — 5.7% 5.5% 4.6%Premium and premium-enabled CATV—Combined Network(4)(11) .. — — 5.9% 5.6% 6.5%Residential broadband internet(12) ....................................................... 8.2% 12.2% 16.8% 21.3% 24.9%Residential telephony(12)...................................................................... 8.2% 9.1% 10.4% 12.0% 14.5% ARPU (in euro)(13) Basic CATV(14).................................................................................... — 8.3 9.4 10.3 10.4Premium and premium-enabled CATV(4)........................................... — — 33.7 33.3 28.8Residential broadband internet ........................................................... 31.0 33.5 35.2 34.1 33.3Residential telephony(15)...................................................................... 38.9 40.0 36.1 37.1 33.3 Average monthly revenue per unique customer (in euro)(8) Telenet Network.................................................................................. — — 18.4 23.4 24.8Partner Network(9) ............................................................................... — — 39.3 40.6 40.0Combined Network(9) .......................................................................... — — 20.3 25.3 26.8 Churn(16) Basic cable television(2) ....................................................................... — — — 5.1% 5.1%Premium and premium-enabled cable television(4) (17)........................ — — 13.9% 12.1% 25.0%Residential broadband internet(18) ....................................................... 6.8% 8.2% 7.3% 9.2% 8.5%Residential telephony(19)...................................................................... 14.8% 11.2% 13.1% 13.6% 11.3%

(1) See Item 4, “Information on the company – Business overview —The Combined Network—HFC Upgrade" for a

discussion of the upgrade of homes served by the Combined Network to the HFC standard. (2) Includes historic statistics for MixtICS prior to the MixtICS Acquisition in August 2002.

15

(3) Each service provided corresponds to one revenue generating unit ("RGU") or subscriber. However, a customer who receives from us basic cable television, broadband internet and telephony services (regardless of their number of telephony access lines) would be counted as three RGUs. RGUs and unique customers are presented as of the relevant period end date.

(4) We began to offer premium cable services following the completion of the Canal+ Acquisition, which had financial effect

from December 1, 2003. In November 2005, we terminated premium services broadcast in analog format to subscribers in the Telenet Network, resulting in the loss of 8,000 former premium cable television subscribers receiving broadcasts in analog format who did not take up our offer of a replacement set top box enabled for our new iDTV services.

(5) Our residential cable television, broadband internet and telephony RGUs include households and small businesses with

between one and four employees ("SoHos") that receive our services through a coaxial connection. (6) These amounts exclude RGUs that use our carrier pre-selection services. We no longer report these RGUs because they are

no longer significant nor represent part of our core telephony offering. We had 8,000 RGUs that used our carrier preselection services at December 31, 2005. Subscribers of Phone-Plus, the residential business acquired as part of the Telenet Solutions Acquisition, are not included in these statistics.

(7) Consists of small to medium sized enterprise ("SME") RGUs that receive our broadband internet and telephony services

through a coaxial connection. We had 5,000, 14,000, 18,000, 22,000 and 23,000 SME broadband internet subscribers, and 1,000, 3,000, 5,000, 6,000 and 6,000 SME telephony subscribers, respectively, as at the years ended December 31, 2001, 2002, 2003, 2004 and 2005, respectively. Neither SME and corporate RGUs that receive our services using a fiber connection, nor those business customers acquired through the Telenet Solutions Acquisition, are included in the above RGU statistics.

(8) Due to limitations in the availability of historical data prior to the introduction of our ERP system in April 2004, we are not

able to provide data for certain periods. Estimates have been used to derive the proportion of internet and telephony RGUs that took up both services between December 31, 2002 and March 31, 2003.

(9) These statistics exclude subscribers to our premium pay television service in the Partner Network area. We had

approximately 46,000, 44,000 and 37,000 of these subscribers as of December 31, 2003, December 31, 2004 and December 31, 2005, respectively.

(10) Number of RGUs at the end of the relevant period as a percentage of the number of homes and businesses, as applicable,

passed by the Telenet Network at the end of the relevant period. Penetration rates estimated where limited data available. (11) Number of RGUs at the end of the relevant period as a percentage of the number of homes and businesses, as applicable,

passed at the end of the relevant period by (a) the Telenet Network, in the case of "Premium and premium enabled CATVt—Telenet Network;" (b) the Partner Network, in the case of "Premium CATV—Partner Network" or (c) the Combined Network, in the case of "Premium and premium enabled CATV—Combined Network." Penetration rates estimated where limited data available.

(12) For periods after December 31, 2003, penetration rates are calculated based on the number of RGUs at the end of the

relevant period as a percentage of the number of homes and businesses, as applicable, passed by the Combined Network at the end of the relevant period. For periods prior to December 31, 2003, we had not yet completed the upgrade of the Combined Network to provide the bi-directional capability required to provide internet and telephony services. To limit distortions arising from the upgrade, residential broadband internet and telephony penetration rates for those periods are calculated based on the number of RGUs at the end of the relevant period as a percentage of the number of homes and businesses, as applicable, passed by the Combined Network at December 31, 2003. See "Presentation of Financial and Other Data—Subscriber and Related Data." Includes SMEs that receive our broadband internet and telephony services through a coaxial connection.

(13) Revenue earned for the period divided by the number of months in the period and divided by the average number of RGUs

for the period (which average number of RGUs may vary from the number of RGUs presented above at the period end date).

(14) Average monthly revenue per subscriber includes copyright fees and, from January 1, 2003, excluded other revenue earned

from carriage fees. (15) Average monthly revenue per subscriber excludes interconnection revenues and installation fees, and revenue generated by

RGUs that use our carrier preselection services. See footnote 6. (16) Total number of RGUs disconnected during the period divided by the average number of RGUs for the period. Churn

statistics do not include customers who move within areas of the Combined Network where we provide the relevant service

16

who elect to receive the same service from us that they previously received at their prior location. We exclude migrators between different tiers of a service from churn calculations.

(17) Premium and premium-enabled cable television churn excludes premium subscribers migrating from the former Canal+

premium service to our new iDTV premium service. (18) Includes SMEs that receive our services through a coaxial connection. Churn calculation excludes subscribers who migrate

to our narrowband internet service, FreeSurf. Statistics for FreeSurf are not disclosed. (19) Excludes RGUs that use our carrier preselection services and includes SMEs that receive our services through a coaxial

connection. See footnotes 6 and 7. We exclude RGUs that use our carrier preselection services from our residential telephony churn statistics because, for the most part, these customers subscribe to our direct access telephony services upon ceasing to subscribe to our carrier preselection services.

17

Capitalization The following table sets forth our historical cash and cash equivalents, and our capitalization, as of December 31, 2005. This table should be read in conjunction with our EU GAAP financial statements included elsewhere in this annual report.

As at

December 31, 2005 (Euro in millions) Cash and cash equivalents........................................................................................................................ 210.4 Debt:

Senior Credit Facility(1) ............................................................................................................................ 635.0 Senior Notes(2) .......................................................................................................................................... 493.2 Other long-term obligations(3) .................................................................................................................. 122.7 Total cash pay debt................................................................................................................................ 1,250.9 Senior Discount Notes (4) .........................................................................................................................

220.9

Total debt............................................................................................................................................... 1,471.7 Equity: Contributed capital ................................................................................................................................... 2,572.3 Other reserves........................................................................................................................................... 3.3 Hedging reserve ....................................................................................................................................... 1.1 Retained loss............................................................................................................................................. (1,867.6) Total shareholders' equity ..................................................................................................................... 709.1 Total capitalization................................................................................................................................ 2,180.8

___________ (1) As of December 31, 2005, excludes €200.0 million of unused capacity under the revolving tranche and €150.0 million

under the tranche C term loan. Tranche C is an uncommitted loan facility. (2) On January 9, 2006, we applied €124.8 million of funds raised in our IPO to partially redeem the outstanding balance of

the Telenet Communications Senior Notes. Including €0.7 million accrued interest and the €11.2 million prepayment premium, the total redemption payment amounted to €136.8 million.

(3) Includes €26.5 million of capital lease obligations, and €42.4 million and €53.8 million due under the Clientele

Agreements and the Annuity Agreement, respectively. (4) Accreted balance of the Senior Discount Notes, converted to Euros at the accounting rate for December 31, 2005 of

US$1.1797 per €1.00. Except as noted above there has been no material change in our capitalization since December 31, 2005.

18

Exchange Rate Information The following table sets forth, for the years indicated, the high, low, average and year-end noon buying rates in New York City for cable transfers as certified for customs purposes by the Federal Reserve Bank of New York ("Noon Buying Rates") for US dollars per €1.00.

Year ended December 31, High Low Average(1) End of Period

$ $ $ $ 2001 .................................................................. 0.9535 0.8370 0.8909 0.8901 2002.................................................................. 1.0485 0.8594 0.9495 1.0485 2003.................................................................. 1.2597 1.0361 1.1411 1.2597 2004.................................................................. 1.3625 1.1801 1.2478 1.3538 2005.................................................................. 1.3476 1.1667 1.2400 1.1842 ___________ (1) The average of the Noon Buying Rates on the last business day of each month during the period indicated. The following table sets forth, for the previous six months, the high and low Noon Buying Rates expressed in US dollars per €1.00.

High Low

$ $ October 2005 ................................................................................................... 1.2148 1.1948 November 2005 ............................................................................................... 1.2067 1.1667 December 2005................................................................................................ 1.2041 1.1699 January 2006.................................................................................................... 1.2287 1.1980 February 2006.................................................................................................. 1.2100 1.1860 March 2006 ..................................................................................................... 1.2197 1.1886 On April 27, 2006, the Noon Buying Rate was €1.00 = US$1.2525. These rates may differ from the actual rates used in the preparation of our financial statements and other financial information appearing in this annual report. 3.B. Capitalization and indebtedness

Not applicable. 3.C. Reasons for the offer and use of proceeds

Not applicable. 3.D. Risk factors You should carefully consider all the information in this annual report, including these material Risk factors. The risks we face are not limited to the risks listed here. Some risks are not yet known to us and some of the risks that we currently do not believe to be material to our operations could prove to be material at a later date. All of these risks can materially affect our business, financial condition and results of operations. This annual report also contains forward-looking statements that involve risks and uncertainties. Our results could materially differ from those anticipated in these forward-looking statements as a result of certain factors, including the risks we face as described below and elsewhere. See "Information Regarding Forward-Looking Statements".

19

Risks Related to Our Business Our financial condition and results of operations could decline if the cable television, broadband internet and telephony markets in Flanders deteriorate. Our business is focused on providing cable television, broadband internet and telephony services to residential customers in Flanders and broadband internet, data and voice products to business customers throughout Belgium and parts of Luxembourg. As a result, substantially all of our revenues are derived from Belgium and, more specifically, Flanders. Many of the markets in which we operate, including the cable television and telephony markets, already have very high penetration rates. In general, over the past five years, the overall number of fixed telephony lines in Flanders has been decreasing, in part because of the substitution of mobile telephone lines for fixed lines. In addition, the residential broadband internet market in Flanders is linked to the penetration of personal computers in the country that can support a broadband connection, which, based on recent external research estimates, restricts the addressable market for broadband internet services to approximately 60% of the households in Belgium. These limitations may make it difficult for us to increase our current level of subscribers and to grow our business. In addition, any downturn in the cable television, broadband internet or telephony markets in Belgium would have a disproportionate impact on our financial condition and results of operations. The Belgian internet, data and telephony industries are highly competitive and the television industry is likely to become more competitive in the future, which could result in higher content costs and marketing expenses, lower subscription rates and the loss of subscribers. We face significant competition from established and new competitors who provide internet, data and telephony services. In some instances, we compete against companies with easier access to financing, more comprehensive product ranges, greater personnel resources, wider geographical coverage, 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 which they are required to comply because, among other reasons, they use different technologies to provide their services, do not own their own 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. Depending on the specific service provided, competitors include Belgacom, Tele2, Mobistar, Versatel and Scarlet. This competition can make it difficult to attract new customers and retain existing customers, thereby increasing churn levels. Increased competition, tiered offerings that include lower-priced entry-level products, and special promotions and discounts for customers who subscribe for multiple services from us may contribute to increased average revenue per unique customer, but will likely reduce our average revenue per user on a per-service basis, especially for our telephony services and, to a lesser extent, for our broadband internet services. We expect competition to increase following the recent implementation of new legislation in Belgium that permits certain service providers to market a combination of television, internet and telephony products and services (a "bundle") for an aggregate price which is lower than the price of the individual products and services in the bundle. In addition, we expect additional competitive pressure to result from the convergence of broadcasting and communication technologies, as a result of which other participants in the Belgian media and telecommunications industries may seek to offer a package of fixed and mobile voice, internet and video broadcast services in competition with us. For example, Belgacom, the incumbent operator, has started to introduce a comprehensive interactive digital television ("iDTV") broadcast service in certain parts of its existing telecommunications network. With the introduction of this product, Belgacom will be able to offer a combination of television, broadband internet, fixed-line telephony and, through a subsidiary, mobile telephony services not only in Flanders where we operate, but across Belgium. Similarly, Tele2, which currently offers internet and telephony services, has announced its intention to acquire Versatel, a provider of residential and business internet and data services, subject to competition authority approval. Tele2 has also announced its intention to offer a mobile virtual network service and has stated that it may consider entering the television market in the future, and other operators are planning to offer similar services. These competitive forces may create downward pressure on prices similar to that experienced elsewhere in Europe, which may result in a decrease of our average revenue per subscriber. These forces could also increase the rate at which we lose subscribers, and increase our cost of providing content for our cable television subscribers as we compete with new entrants in the broadcast market. In addition, we may bear higher costs if we introduce new products or services to maintain or improve our competitive positioning and reduce subscriber churn. Internet. Our residential high-speed broadband internet service competes with companies that provide lower-cost (or even free), slower connections to the internet over traditional telephone lines as well as with competitors,

20

including Belgacom, that provide high-speed broadband access over digital subscriber lines ("DSL"). Belgium has recently seen the development of more sophisticated product and pricing tiers in the internet market, with competitors offering a range of products with different download speed characteristics, data transfer limits and value added services. In particular, the speed performance that is currently offered by DSL products is now more comparable to the speed performance of our broadband cable internet product than in previous years, and DSL has increased its market share over recent years. Mobistar, an established mobile operator in Belgium, has launched internet services using a DSL platform. Other mobile operators may follow Mobistar's lead in the near future. Additional competition may come from satellite technologies and the growing use of mobile handsets that use so-called third generation technology. For example, TV Vlaanderen, a satellite operator, launched multi-channel satellite services to potential Flemish customers in November 2005, offering a limited selection of content both from the Flemish language public broadcasters and from premium programming providers. As a result, we expect competition, including price competition, from current providers, new startups and other companies to increase in the future. We cannot assure you that the tiered offerings and other measures that we have introduced in response to these developments will be successful in attracting and retaining customers. Telephony. Competition in providing residential telephony service is intense, with providers introducing substantial price reductions in recent months. Belgacom, our principal competitor in the Flemish residential market, has an extensive telephone network throughout Belgium, strong market knowledge, high brand recognition and substantial capital resources. As of December 31, 2005, we estimate that Belgacom had approximately 75% of the residential fixed-line telephony market in Flanders (based on number of fixed line subscribers). In addition, although Belgacom is our major competitor, we depend on Belgacom to provide certain services to our customers, including number portability, and to connect calls made by our customers to customers of Belgacom. Our current proceedings against Belgacom or other factors may adversely affect our relations with Belgacom and negatively impact our competitive position. Belgacom has also applied resources to "win-back" activities that can entice our existing telephony customers, as well as prospective telephony customers, to return or remain with Belgacom. In addition, we face growing competition from other competitors entering the telephony market, such as Tele2. Many of these entrants have well-recognized brand names and experience conducting telephony operations elsewhere in Europe. Belgacom and many of these new entrants have substantial resources, and may be better equipped to endure an extended price war than we are. Mobile telephony services, including those offering recently launched third generation technology and mobile virtual network operators ("MVNOs"), contribute to the competitive pressures that we face. Increasing numbers of users are substituting mobile telephone lines for fixed telephone lines, with some mobile operators in Belgium launching "cut the line" campaigns to encourage customers with both fixed-line and mobile services to retain only their mobile services. These efforts have been supported by some mobile operators that offer rates that make calls made using a mobile phone less expensive than using a fixed line from Belgacom. According to our analysis, as of December 2005, 27% of households in Belgium used only a mobile telephone line, and did not pay for a fixed line service. This substitution, in addition to the increasing use of e-mail and related technologies, may negatively affect our call usage volumes and subscriber growth. If mobile use increases at a rate that outpaces the anticipated decline in fixed-to-mobile interconnection rates, mobile usage will continue to decrease the profitability of our residential telephony business. The ongoing unbundling of the Belgacom local loop, the use of carrier preselect services that allow entities to provide telephony services over the networks of other operators and the introduction of new technologies, including variations of the Voice over Internet Protocol ("VoIP") standard such as Voice over Internet ("VON") used by Skype in Belgium, may also increase the number of competitors, as it has done in other countries. Companies including Microsoft, Google and Yahoo have recently announced their own VoIP services and are rolling out additional capabilities to enable their VoIP telephony services to call PSTN lines in addition to fellow VoIP users. The Belgian telecommunications regulator has recently announced it may impose wholesale line rental, thereby providing access to potential entrants to Belgacom’s local loop. As new competitors and new technologies enter the market and prices decrease in line with the downward pressure on telephony prices experienced elsewhere in Europe, our telephony business may become less profitable and experience a decline in revenues and market share. In addition, we may be forced to respond to such developments by investing resources into our own product development initiatives, which may not be successful. We believe that almost all of our telephony competitors, including Belgacom, engage in "tromboning," a practice which consists of diverting calls that originate in Belgium abroad and then routing these calls back to Belgium in order to qualify for reduced international interconnection fees. We estimate that tromboning and international calls together represented approximately 24% of all calls terminated on the Combined Network for the year ended December 31, 2005. Increased tromboning by competitors could have an adverse impact on our revenues and profitability. See Item 4, “Information on the company – Business overview – Regulation —Telephony Regulation—Interconnection."

21

Cable Television. We expect competition in the provision of television services to increase over the coming years. Historically, our basic analog cable television service did not compete with other television and video services on a significant scale, due in part to the high penetration rate of basic cable in Flanders. Our premium cable television service had limited competition from other premium content delivery channels, including digital versatile discs ("DVDs"), internet downloads and certain satellite broadcasters. In mid-2005, Belgacom launched a comprehensive iDTV broadcast service, which it is continuing to roll-out across Belgium as it upgrades its existing telecommunications network. We expect that this new service will compete with both our basic and premium cable services, in terms of price and availability throughout Flanders. TV Vlaanderen recently launched a satellite service in Flanders which offers both basic and premium content. In addition, Scarlet and Tele2 have announced their interest in offering iDTV services in Belgium. We may also have increasing difficulty in procuring content for both our premium and basic cable service on favorable terms, or at all, as other providers enter the market. For example, we recently lost the rights to broadcast the games of the Belgian and Italian national soccer leagues to Belgacom. See Item 4, "Information on the company—Business overview". In December 2004, the PICs also launched a digital television offering to the customers served by the Partner Network. This service will likely increase competition for our premium cable offering over the Partner Network, and may heighten the competition we face to procure premium content. In addition, we may face increased competition from DSL, multi-channel satellite, digital terrestrial and other means of delivering multiple programming. In addition, digital technologies that are not currently used in Belgium have been successfully deployed in other European countries and may allow better-capitalized competitors to enter the market and offer a greater variety of channel packages and programming than we currently provide. Our competitors have recently expanded the availability of satellite and terrestrial broadcasts. Moreover, conditions placed on our acquisition of the Flemish assets of the Canal+ group, future legislation or decisions by regulators may require us to provide competitors access to the Telenet Network for purposes of providing broadcasting services at regulated prices, which would strengthen our competitors by granting them access and lowering their costs to enter into the cable television business. See "—Risks Related to Regulatory and Legislative Matters—We may become subject to more extensive regulation if we are deemed to possess significant market power in any of the markets in which we operate." As digital television develops, the difference between content distributors and content providers may become blurred. Current providers of content included on various channels may decide to market packages and seek only to acquire network access from cable providers instead of being part of the cable provider's own offering. Business Services. Competition in the provision of internet, data and voice products to business customers is intense, with Belgacom, Versatel, Mobistar and Scarlet being our most significant domestic competitors, and international companies such as Colt, MCI and BT also being important competitors. In addition to competitive activity, we continue to see challenges in this segment of the market as a result of price erosion in existing products and the need to invest in new product development to satisfy the evolving preferences of prospective customers. Any negative impact on the reputation of and value associated with our name could adversely affect our business. The Telenet name is an important asset of our business. Maintaining the reputation of and value associated with the Telenet name 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 recently launched iDTV service or planned mobile offerings, whether from technical faults, lack of necessary equipment, changes to our existing services or other factors. In addition, we depend on third-party contractors to provide a substantial majority of our installation services in customer homes and on indirect sales channels to reach business customers. In planning our launch of a mobile virtual network, we will depend on the services and quality of a third-party's mobile network and related functions, over which we will have limited or no influence or control. If these contractors, resellers or network operators do not meet our performance standards or provide technically flawed or imperfect products, the quality of our services and our reputation may be harmed. Substantial erosion in the reputation of, or value associated with, the Telenet name could have a material adverse effect on our business, financial condition and results of operations. If we fail to successfully introduce new technologies or services, such as our recently launched iDTV service, or to respond to technological developments, our business and level of revenues may be adversely affected and we may not be able to recover the cost of investments that we have made. Our business is characterized by rapid technological change and the introduction of new products and services. If any new or enhanced technologies, products or services that we introduce, in particular those associated with the deployment of iDTV, fail to achieve broad market acceptance or experience technical difficulties, our revenue growth,

22

margins and cash flows may be adversely affected. As a result, we may not recover investments that we make in order to deploy these technologies and services. In addition, enhanced television, telephony, internet and data services provided by competing operators may be more appealing to customers, and new technologies such as VoIP telephony, may enable our competitors to offer not only new services, but to also offer existing standard services at lower prices. See "—The Belgian internet, data and telephony industries are highly competitive and the television industry is likely to become more competitive in the future, which could result in higher content costs and marketing expenses, lower subscription rates and the loss of subscribers." We may not be able to fund the capital expenditures necessary to keep pace with technological developments. Our inability to obtain the funding or other resources necessary to expand or further upgrade our systems and provide advanced services in a timely manner, or successfully anticipate the demands of the marketplace, could adversely affect our ability to attract and retain customers and generate revenue. As we work to introduce new technologies, products and services to our customers, and as the number of our customers and the number of services that we offer our customers increases, the complexity of our product offerings and network architecture also increases, as does network congestion. In addition, we currently provide telephony services using both a legacy proprietary system and VoIP technology. A failure to manage the growth and complexity of the Telenet Network could lead to a degradation of service and network disruptions that could harm our reputation and result in a loss of subscribers. We recently launched our iDTV service, and face significant technological, operational and market risks that may limit its success. In particular, we are dependent on the ability to maintain a sufficient supply of television set top boxes that satisfy our required specifications and on the ability to successfully integrate complex information technology systems that are required to operate our iDTV service on the scale we are projecting. Although we are in the process of securing additional suppliers of set top boxes, we currently rely on a single provider of set top boxes to provide us equipment that is compatible with the conditional access software and related security features that have been deployed on the Telenet Network. Currently, we have a sufficient supply of these boxes available, but a future shortage may involve significant delays in seeking an alternative supply, may constrain our ability to meet customer demand and may result in negative customer reactions. We are also dependent on other suppliers who are contributing products and services which are required for the implementation and operation of our iDTV service, and on the performance of partners with whom we expect to work. Although many of our iDTV products and services are built on standardized platforms, they have been adapted or tailored to our network and the offering we have designed, as a result of which we face the risk of any newly implemented technology that there may be unexpected operational issues that arise. It is difficult to predict how potential subscribers will respond to and how to price new interactive features and other products and services that can be offered with iDTV. Although our iDTV service was launched in September 2005, we believe it is still too soon to determine how successful we will be at achieving the broad market penetration that we seek for this business. It is also difficult to predict how potential subscribers, beyond the initial “early adopters” who are generally less sensitive to price, will respond to the initial costs they are expected to incur to purchase set top boxes in order to receive our iDTV service. In addition, as part of the recent introduction of our iDTV service and in order to provide additional network capacity for our iDTV service, we digitized eight channels from our initial analog offering, including BBC World and CNN, which customers may continue to view if they obtain a cable tuner from us, which requires a cash deposit. Over time, this action may create negative publicity which may limit our ability to attract customers to our iDTV services. Also in connection with our launch of iDTV, we repackaged and rebranded our Canal+ premium cable television offering under the "Prime" brand name. While Canal+ was a recognized name that had been in operation for many years in Belgium and in other parts of Europe, customers may not recognize the Prime brand name and the services that it represents. It may take a substantial period of time for the Prime brand name to develop and gain customer acceptance, if at all. Any of these factors could negatively impact our launch of new premium and interactive services, and reduce the likelihood that they will be successful. We are subject to technological obsolescence risks associated with our customer premise equipment. We anticipate that over time, new products and services we may introduce will require upgraded or new customer premise equipment, which may therefore constrain our ability to market and distribute such new services. For example, we do not expect that previously installed internet models or set top boxes will be able to support all the enhancements we may introduce to our internet or iDTV services over time. A portion of our subscribers will therefore require some form of upgrade or potentially a replacement of their customer premise equipment. Implementing such upgrades may entail additional costs to us and therefore reduce our cash flow and profitability. Under the Public Interest Guarantees that we entered into with the MICs at the time of our acquisition by Cable Partners Europe, LLC, we agreed to launch a digital platform within a certain timeframe. As currently amended, we are required under the Public Interest Guarantees to use our best efforts to comply with certain roll-out and installation requirements for our basic iDTV service. If we do not roll-out and install set top boxes in 54% of the homes passed by

23

the Telenet Network by February 2008, the MICs have the option to request the return of six analog channels of 8 MHz, excluding channels used for our Prime premium service, that were given to Telenet by the MICs for the implementation of iDTV. The bandwidth used by these six channels could be used to provide 42 digital channels, and reallocating this bandwidth to analog signals could have a significant negative impact on any iDTV offering. The cost structure and financial impact of an iDTV offering is also uncertain, particularly in terms of access to, and prices for, content, and in terms of the cost to acquire new subscribers. Currently, we purchase all of the set top boxes for our iDTV service, and subsequently sell them to new iDTV subscribers, which involves a significant investment of funds and consumes our working capital. If customer demand is less than expected, we may not be able to recover our investment in the set top boxes. In addition, we currently collect over 90% of our basic cable television subscriptions on an annual basis in advance, but we charge our premium channel cable subscribers monthly in advance. It is possible that, if we are successful in migrating our basic cable customers to our premium platform, such customers may also expect to pay their basic cable on a more frequent quarterly or even monthly basis, therefore depriving us of the working capital benefits that we currently receive from the annual billing of our basic cable subscribers. Because of these expenses and uncertainties, we may not be able to recoup the investment that we have made in the iDTV technology. Currently, we only offer iDTV over the Telenet Network, and not to subscribers on the Partner Network. The PICs launched a DTV service for subscribers over the Partner Network in December 2004, which may reduce our potential customer base and the efficiency of our marketing efforts. In addition, we may obtain the content for our iDTV service on less favorable terms because of the smaller distribution base provided by the Telenet Network compared to the Combined Network. See Item 5, “Operating and financial review and prospects —Liquidity and capital resources—Capital Expenditure" and "—Risks Relating to Our Financial Profile—Termination of our rights of usage of the cable network in Flanders owned by four pure intercommunales (the "PICs") may adversely affect our operations and substantially lower the value of our assets in case of a bankruptcy or liquidation." In addition to iDTV, we recently decided to launch a mobile virtual network (MVNO) service in partnership with Mobistar, a mobile network operator, pursuant to which we plan to offer customers mobile telephony services under the Telenet name by reselling minutes of network airtime access acquired from Mobistar. We will be dependent on Mobistar for mobile network access and other related services provided by them that we plan to use, and any network quality or other problems that might arise could have a material adverse effect on our operations and our reputation. We will be further dependent on an intermediary who will be responsible for providing certain processes on an application service provider basis, including mobile service billing, provisioning, activation and packaging, and issues that arise as a result of this intermediary could also adversely affect our operations, reputation and profitability. Our ability to comply with applicable regulatory requirements for electronic communications providers may also in some cases depend on Mobistar’s compliance. A failure to successfully launch our anticipated MVNO service, however, could also have substantial negative consequences because we would not then be able to offer customers a full suite of mobile and fixed telephony, internet and television services that other competitors, such as Belgacom, are developing. The agreement that we have signed with Mobistar makes us dependent on them. We cannot assure you that we will be successful in our venture with Mobistar nor that our agreement with them will have a positive financial impact on our business. We have been rolling-out a national public wireless broadband internet ("Wi-Fi") network, which, as of December 31, 2005, consisted of approximately 750 active "hot spots" where wireless users can access the internet without the need for a physical cable to provide a network connection. As we continue to roll-out Wi-Fi, it may become difficult for us to locate desirable sites to install necessary equipment at reasonable rates, or to install it at all. We may face technical and logistical difficulties related to site acquisition or technical matters. In addition, landlords of locations where we currently have Wi-Fi equipment installed may decide to charge us rent on the space we use, increase the rent they currently charge or otherwise increase the expenses that we have to bear in order to provide connectivity at the relevant hot spot. The Combined Network and related systems depend on equipment and service suppliers that may discontinue their products or seek to charge us prices that are not competitive, either of which may adversely affect our business and profitability. We have important relationships with several suppliers of hardware and services that we use to operate the network that we own (the "Telenet Network"), the network on which the PICs have granted us usage rights (the "Partner Network" and the network assets we acquired pursuant to the Telenet Solutions Acquisition, (collectively, the "Combined Network"). In many cases, we have made substantial investments in the equipment or software of a particular supplier, making it difficult for us to change supply and maintenance relationships in the event that our initial

24

supplier refuses to offer us favorable prices or ceases to produce equipment or provide the support that the Combined Network requires. For example, we recently experienced delays and increased costs as a result of issues with one of our network equipment suppliers, which required us to select an alternative supplier. The success of our launch of iDTV also depends on suppliers of essential equipment, including digital set top boxes. See " —If we fail to successfully introduce new technologies or services, such as our recently launched iDTV service, or to respond to technological developments, our business and level of revenues may be adversely affected and we may not be able to recover the cost of investments that we have made." We cannot assure you that future shortages will not arise. Under a framework agreement with Motorola, we have designated Motorola as our preferred supplier of high-speed data modems, digital set top boxes and related head end equipment and we have agreed to purchase from Motorola to the extent available on an annual basis at least 30%, and over the term of the framework agreement, at least 50%, of our requirements for modems (including VoIP modems) and any set top boxes required for iDTV until the later of March 29, 2006 or such date of termination of any sub-agreement made under the framework agreement. As of the date of publication of this annual report, we remain party to one or more sub-agreements subject to the terms of the framework agreement. Under the terms of the agreement, we cannot use digital set top boxes from any other vendor until at least six months after we have deployed these required amounts of Motorola's boxes. See Item 4, “Information on the company – Business overview—Supply and Installation." Motorola's equipment, which we must purchase, may not be optimal for our purposes or may be more expensive than equipment available from other suppliers, which can put us at a competitive disadvantage and harm our business. Following Motorola's recent tender, we have agreed to begin purchasing Motorola VoIP modems as required by the framework agreement. Motorola has not yet tendered a proposal to supply us with digital set top boxes that meet our network specifications, and we have therefore selected an alternative provider to supply these products to us. If Motorola were to tender a proposal to provide us with digital set top boxes we may be required to purchase them, even if it would not be optimal to do so. Several of our supply agreements contain minimum volume commitments. If we fail to purchase products in accordance with these commitments, we may have to pay damages to our suppliers. We also depend on subcontractors to install a substantial majority of our iDTV, internet and telephony equipment in customer homes, and rely on sales forecasts and supply chain management processes to ensure that we have necessary levels of equipment and staffing to meet customer demands. If our subcontractors do not satisfy our quality standards or if our forecasting and other logistics systems prove erroneous, we may have difficulty obtaining needed equipment within required periods, which could have a material adverse effect on our ability to attract and retain customers and generate revenue. Failure to maintain and upgrade the Combined Network, or make other network improvements, could have a material adverse effect on our operations and impair our financial condition. We and our local municipal partners completed the upgrade of the Combined Network to a hybrid fiber coaxial ("HFC") standard with bi-directional digital communications capabilities in 2002. In 2006, we anticipate capital expenditure of between €190 million to €210 million, not including capital expenditure related to the extension of our headquarters office building. This amount includes recurring investments over which we do not have complete control, including amounts for required network maintenance and for network extensions that we undertake with property developers and utility companies. Approximately 40% of our total capital expenditure for 2006 is expected to be dedicated to subscriber growth, a further 45% to indirect investment in the growth of the business, and the remainder to funding of network maintenance, replacements and extensions, office and administrations costs, product development and testing. . In 2006, we anticipate that maintenance and network extension costs will amount to between €25 million and €30 million. See Item 5, “Operating and financial review and prospects —Liquidity and capital resources—Capital Expenditure." Our assumptions regarding the costs associated with maintenance and upgrades of the Combined Network and our coaxial network may prove to be inaccurate for a number of reasons, including if:

• we are unable to relieve local network capacity constraints by reducing the number of homes served by each node in the Combined Network or otherwise completing our upgrade program on either the Telenet Network or the Partner Network;

• we are unable to obtain compatible equipment from our existing suppliers required to maintain or upgrade the

Combined Network; or

• network usage requirements in the Combined Network exceed our projections and our planned investments are insufficient to maintain capacity at the level of quality we seek to provide our customers.

25

We may be required to seek additional financing if our capital expenditure exceeds our projections or our operating cash flow is lower than expected. Any inability to secure additional financing could adversely affect capital expenditure and operational plans. We are in the process of negotiating with the PICs to increase the capacity available to us on the Partner Network in order to avoid a possible degradation of service that may arise as a result of increased network usage resulting in congestion, if we are not able to resolve such potential congestion through other means available to us. We cannot assure you, however, that we will be able to negotiate an agreement with the PICs on reasonable terms, on a timely basis, or at all. To the extent that we cannot conclude our negotiations with the PICs on satisfactory terms and we have exhausted our other means to resolve network congestion issues, we expect that certain areas on the Partner Network would begin to experience congestion, resulting in a deterioration in the quality of service that we are able to provide our customers and possibly damaging our reputation and constraining our ability to add new customers in the affected areas. A system failure or security breach on the Combined Network, or the malfunctioning of technical equipment, could have a material adverse effect on our operations and impair our financial condition. If any part of the Combined Network, including our group's information technology systems, is subject to a flood, fire or other natural disaster, terrorism, a computer virus, a power loss, other catastrophe or unauthorized access, our operations and customer relations could be materially adversely affected. Although the Combined Network is built in resilient rings to ensure the continuity of network availability in the event of any damage to our underground fibers, if any ring is cut twice in different locations, transmission signals will not be able to pass through, which could cause significant damage to our business. We do not insure the coaxial portion of the Telenet Network. Any catastrophe or other damage that affects our coaxial network could result in substantial uninsured losses. In addition, disaster recovery, security and service continuity protection measures that we have or may in the future undertake, and our monitoring of network performance from our network operating center in Mechelen, may be insufficient to prevent losses. In the event of a power outage or other shortage, we do not have a back-up or alternative supply source for all of our network components. Our business is also dependent on certain sophisticated critical systems, including our switches, billing and customer service systems. The complexity of these systems is increasing as we increase the number and variety of the products and services that we offer. We are in the process of implementing an upgrade to our entire billing systems to a more recent release of our existing residential markets billing software, which we expect to complete in phases during 2006 and 2007. If we experience problems in the implementation or operation of our new billing system, it may be difficult to resolve the issue in a timely and cost effective manner. In addition, the hardware that supports our switches, billing and customer service systems is housed in a relatively small number of locations and if damage were to occur to any of such locations, or if those systems develop other problems, it could have a material adverse effect on our business. Moreover, we may incur liabilities to the extent that any accident or security breach results in a loss of or damage to customers' data or applications, or inappropriate disclosure of confidential information. In addition, although so far no incidents have occurred in numbers that are statistically significant, our technical equipment has been and may continue to be subject to occasional malfunctioning due to technical shortcomings or imperfect interfaces with equipment in private homes, the networks of other operators or our own network or with other surrounding equipment. Conditions imposed as part of the Canal+ Acquisition may restrict our ability to provide premium cable services to our customers. The Belgian competition authority (Raad voor de Mededinging / Conseil de la Concurrence) imposed several conditions on our 2003 acquisition of the Flemish assets of the Canal+ group that require us, among other things, to grant other premium television service providers access to the Telenet Network on commercially reasonable terms and to offer the Canal+ premium service to other television network operators which could be our competitors. We also cannot enter into contracts with premium television broadcasters and with certain free-to-air broadcasters (including VRT, VMMa and VT4) that make us the exclusive distributor of their signal over our basic cable service. These requirements may constrain our ability to market our premium cable television service and our ability to maximize the use of the Telenet Network by requiring us to devote bandwidth to services of competing providers. In December 2004, Belgacom requested that we distribute selected premium television content to Belgacom for inclusion in its iDTV offering. We are required by the conditions imposed on the Canal+ Acquisition to cooperate with Belgacom's request, and met with Belgacom to discuss the matter in April 2005. Since that time, however, Belgacom has not pursued its

26

initial request. Separately, the Belgian competition authority has recently requested information regarding certain of our content contracts in order to evaluate our compliance with these requirements. See Item 4, “Information on the company – Business overview —Our Products and Services—Cable Television—Premium Tier Cable Television—Canal+ Acquisition." The inability to ensure sufficient access to premium and basic programming could have an adverse effect on our operating results. The success of our basic and premium cable television services depends on access to an attractive selection of television programming from content providers. The ability to provide movie, sports and other programming, including soccer broadcast rights, is a major factor that attracts subscribers to television services, especially premium services. Historically, as the principal supplier of television broadcast services in Flanders, we have negotiated transportation and distribution agreements with various broadcasters and other providers of content over our broadband cable network. Many of our competitors, however, including Belgacom, have launched or announced their intention to offer digital television services in Belgium, which may well make it more difficult for us to procure content for both our premium and basic cable service on favorable terms, or at all. For example, we recently lost the rights to broadcast the matches of the Belgian and Italian national soccer leagues to Belgacom. See Item 4, "Information on the company—Business overview—Our Products and Services—Cable Television—Premium Tier Cable Television—Premium Tier Content." We have submitted bids to renew our rights for the Dutch, German and French soccer matches and NBA games for seasons starting in the latter half of 2006 and we are awaiting the start of the renewal process for Spanish soccer matches. Soccer rights are normally renewed for periods of one to three years. The loss of these and other content rights may reduce the number of subscribers to our premium television service. Moreover, some of our programming contracts require us to pay prices for the programming based on a guaranteed minimum number of subscribers, even if that number is larger than the number of actual subscribers. As a result, if we misjudge anticipated demand for the programming, the profitability of our service may be impaired. We may pursue acquisitions that, if consummated, may adversely affect our business if we cannot integrate these new operations. We regularly engage in discussions regarding potential acquisitions of businesses that we believe will present opportunities to realize synergies and strengthen our market position, among other perceived benefits. Any acquisition we may undertake in the future could result in the incurrence of debt and contingent liabilities and an increase in interest expense and amortization expenses related to goodwill and other intangible assets or in the use by us of available cash on hand to finance any such acquisitions. If we experience any difficulties in integrating acquired operations into our business, we may incur higher than expected costs and not realize all the benefits of these acquisitions. In addition, our management may be distracted by such acquisitions and the integration of the acquired businesses. Thus, if we consummate any further acquisitions, there could be a material adverse effect on our business, financial condition or results of operations. In addition, our debt burden may increase if we borrow funds to finance any future acquisition, which could have a negative impact on our cash flows and our ability to finance our overall operations. Currency fluctuations and hedging risks could adversely affect our earnings and cash flow. Our business is exposed to fluctuations in currency exchange rates. Although all of our revenue is denominated in euro, we have significant liabilities that are denominated in US dollars. In December 2003, Telenet Group Holding issued $558 million principal amount at maturity of its 11.5% Senior Discount Notes due 2014. We redeemed $195.3 million principal amount at maturity of the Senior Discount Notes, which was equivalent to $138.7 million in accreted value at the time of redemption, on November 23, 2005. In addition, less than 5% of our costs of operations (including costs of network hardware equipment and software and premium cable television rights) were denominated in US dollars during the 2005 fiscal year. We expect the percentage of our operational costs that are denominated in US dollars to increase to a certain extent as we enter into more dollar-denominated premium content agreements for our iDTV offering. The exchange rate between the US dollar and the euro has fluctuated significantly in recent years and may continue to fluctuate significantly in the future. See "Exchange Rate Information." Although we engage in foreign exchange hedging transactions, we have only hedged our remaining outstanding exposure on the Senior Discount Notes until December 15, 2008, and do not hedge the full amount of our other US dollar expenses. There can be no guarantee that our hedging strategies will adequately protect our operating results from the effects of exchange rate fluctuation, or that these hedges will not limit any benefit that we might otherwise receive from favorable movements in exchange rates. We could be adversely affected by any future unfavorable shifts in US dollar exchange rates against the Euro.

27

We adopted new accounting standards, as required, commencing with our financial statements for the year beginning January 1, 2005, which could impair the interpretation of our financial statements. We prepared our group's consolidated financial statements in accordance with US GAAP through the year ended December 31, 2004, and continue to also prepare stand-alone statutory annual accounts in accordance with Belgian GAAP. In June 2002, the European Council of Ministers approved a new regulation proposed by the European Commission requiring all EU-listed companies to apply EU GAAP in preparing their financial statements for years beginning on or after January 1, 2005. We are therefore presenting our consolidated financial statements in accordance with EU GAAP for the first time in this annual report for the financial years ended December 31, 2004 and December 31, 2005. Although we believe that applying EU GAAP to our group's financial statements has not had a material impact on our financial results, the presentation of our financial results has been revised in compliance with EU GAAP which differs in certain important aspects from the presentation of our financial results under US GAAP. The ability of the financial community to interpret our financial condition could therefore be affected. See Annex C "First-time Adoption of EU GAAP." Risks Relating to Our Management and Principal Shareholders Following our initial public offering (the “IPO”) in October 2005, our principal shareholders collectively retain control over our operations and minority shareholders are unable to oppose their actions, which may not always be aligned with the interests of minority shareholders. Following the IPO, our principal shareholders are a consortium of investors led by subsidiaries of Liberty Global, Inc. (the "Liberty Global Consortium"), the MICs, a consortium of regional financial institutions (the "Financial Consortium"), the PICs/Interkabel Vlaanderen CVBA and GIMV, which own 21.5%, 16.1%, 9.7%, 4.2% and 4.0% of the shares of Telenet Group Holding, respectively. The Liberty Global Consortium exercised its priority allocation rights in the IPO through an affiliate of Liberty Global, Inc. to maintain the level of its share ownership in our group following the IPO. Our principal shareholders entered into a Syndicate Agreement on the closing date of the IPO, to which Telenet Group Holding is also a party. The Syndicate Agreement imposes, among other things, special voting requirements for certain decisions of the boards of directors, including decisions to make certain acquisitions, approve (or make certain deviations from) our group's annual budget and to appoint our Chief Executive Officer. In certain circumstances, these voting requirements may allow directors nominated by minority shareholders to in effect block votes on certain matters that could impair our group's ability to operate. In addition, our principal shareholders have agreed to vote their shares to elect directors nominated by the other principal shareholders. As long as the Liberty Global Consortium owns at least 21.18% of our outstanding Shares, the Articles of Association impose an increased shareholder majority of 81.4% in respect of all decisions for which the Belgian Company Code requires the affirmative vote of 75% or more of the shares, in effect allowing it to block certain decisions, including capital increases and other amendments to the Articles of Association. Moreover, each of the ten MICs hold Golden Shares that, among other things, entitles them to appoint members to the Regulatory Board, which oversees the compliance of our group with the Public Interest Guarantees. For a description of the Syndicate Agreement and related matters, see Item 10, “Additional information – Memorandum and articles of association” and Item 7, “Major shareholders and related party transactions – Major shareholders”. Because of the block of shares subject to the Syndicate Agreement and these other arrangements, it is unlikely that the votes of minority shareholders at shareholders' meetings will be effective to oppose the actions of our principal shareholders, including actions related to the declaration of any dividends, alterations to our corporate structure, amendments to our Articles of Association, exculpation from liability of members of the Board of Directors and senior management and other important matters. Under current Belgian law, one of our principal shareholders may be able to gain control over our operations without triggering a mandatory bid. Belgian law currently provides that the acquisition of control of a listed company at a price higher than the current market price triggers an obligation to make an offer to purchase all outstanding shares of the company at the same price (or to offer minority investors an opportunity to sell their shares by maintaining the price of the shares at that level on the relevant stock exchange). When an entity gains "control" over a listed company is not currently determined

28

by reference to a particular threshold percentage of share ownership, but is instead based on the application of a qualitative definition of control to the specific facts and circumstances of each situation. The Liberty Global Consortium currently holds 21.5% of the voting stock of Telenet Group Holding, as well as options to acquire a further 25,418,826 shares of Telenet Group Holding from certain of our existing shareholders, representing an additional 25.4% of our outstanding share capital following the IPO. The exercise period for a portion of these call options ends in August 2007. If fully exercised, the Liberty Global Consortium's stake in Telenet Group Holding could rise to 46.9%, and together with certain other options held by the Liberty Global Consortium, to 47.1% (not including any of our shares which they may have purchased in the open market). Certain members of the Liberty Global Consortium, Evercore, CDP Capital and MLPE, also hold in their own name Subordinated Debt Warrants that allow them to subscribe for 4,920,000 new Shares. It is possible that the Liberty Global Consortium could, through a combination of open market purchases and the partial or full exercise of its options, increase its stake in Telenet Group Holding and gain effective control over our group without triggering any mandatory bid requirements under current Belgian law. In such a situation, the Liberty Global Consortium would not be required to make any offer for the stake of minority investors, which may lower the value of the Shares held by those investors. In contrast, the Liberty Global Consortium could in certain circumstances be required to buy out the other parties to the Syndicate Agreement upon the acquisition of a majority stake. See also Item 7, “Major shareholders and related party transactions – Major shareholders." and Item 10, “Additional information – Memorandum and articles of association – Syndicate agreement.” Belgium is required to implement the Thirteenth Company Law Directive by May 20, 2006, which may afford minority investors greater protection than that currently available. The new legislation can be expected to provide that mandatory bids will be triggered as of a certain threshold percentage of share ownership, irrespective of whether or not the price paid in the relevant transaction exceeds the current market price. Nevertheless, there can be no guarantee that the Liberty Global Consortium will not take action before this directive is implemented. It is also possible that the implementation of this directive may not occur by May 20, 2006. We may have conflicts of interest with our principal shareholders, which could adversely affect our business and the value of our shares. We may also have conflicts of interest if we engage in commercial transactions with other entities controlled by any of our principal shareholders or if there are business opportunities that both we and another entity controlled by a principal shareholder would like to pursue. The Syndicate Agreement between us and our principal shareholders requires us to grant our principal shareholders preferential treatment when we contract out certain services, provided that all agreements between us and the shareholder are concluded on an arm's-length basis and equivalent in all material respects to the best offers received from third parties. Such agreements may be deemed to be less favorable than agreements we otherwise would have entered into with unaffiliated third parties, and may violate the terms of certain of the agreements governing our outstanding indebtedness if they were subsequently found not to be on arm's-length terms. We currently have management and technical service contracts with Electrabel, Interkabel Vlaanderen CVBA ("Interkabel"), and the PICs or their affiliates. See Item 7, “Major shareholders and related party transactions – Related party transactions”. Although we have implemented policies to prevent conflicts of interest from arising among our principal shareholders and are subject to the requirements of Article 524 of the Belgian Company Code, we cannot guarantee that conflicts will not in some instances arise. See Item 10, “Additional information – Memorandum and articles of association – Board of Directors and Management – Votes of the Boards of Directors.” The loss of any of our key executives could adversely affect our ability to manage our business. Our success is substantially dependent upon the retention and the continued performance of our key executives, including: Duco Sickinghe, our Chief Executive Officer and Managing Director; Leo Steenbergen, our Chief Financial Officer; Philippe Lemmens, our Executive Vice President—Residential Markets; Hugo Lemmens, our Executive Vice President—Telenet Solutions; Paul Van Cotthem, our Senior Vice President—Residential Marketing and Sales; Jo Van Gorp, our Executive Vice President and General Counsel; and Jan Vorstermans, our Executive Vice President—Technology and Infrastructure. The loss of the services of any of our key executives could adversely affect our growth, financial condition and results of operations.

29

Risks Related to Regulatory and Legislative Matters We are subject to significant government regulation, which could require us to make additional expenditures or limit our revenues. Our activities as a cable television and telephony operator in Flanders are subject to extensive regulation and supervision by various regulatory bodies, including local, Flemish and national authorities and the European Union. These regulations may increase our administrative and operational expenses and limit our revenues. Our digital cable television, internet and data businesses are not currently subject to extensive regulation, but could become subject to more onerous data retention rules and other regulations in the future. See Item 4, “Information on the company – Business overview – Regulation.” We are subject to, among other things:

• price regulation for certain services that we provide;

• rules governing the interconnection between different telephone networks and the interconnection rates that we can charge and that we pay;

• restrictions that limit how we can sell, among other things, combined cable television, internet and

telephony products;

• requirements that, under specified circumstances, a cable system carry certain broadcast stations or obtain consent to carry a broadcast station;

• rules for authorizations, license renewals and transfers;

• rules and regulations relating to subscriber privacy;

• requirements that we provide or contribute to the provision of certain universal services, including

requirements to provide certain "social" tariffs, certain directory inquiry services and access to fixed-line telephony and pay telephone services;

• taxes imposed on our public rights of way; and

• other requirements covering a variety of operational areas such as land use and environmental protection,

moving the cables in the Telenet Network underground, equal employment opportunity, technical standards and subscriber service requirements.

We also offer new products in emerging areas, such as wireless internet access, that are not currently subject to extensive regulation. Changes in applicable law, regulations or government policy (or in the interpretation of existing laws or regulations) could greatly influence our viability and how we operate our business and introduce new products and services. Our business could be materially and adversely affected by any changes in relevant laws or regulations (or in their interpretation) regarding, for example, licensing requirements, access and price regulation, interconnection arrangements or the imposition of universal service obligations, or any change in policy allowing more favorable conditions for other operators. Some Belgian politicians have suggested that special "social" tariffs be extended to certain categories of internet users, in addition to telephony users (as is currently required). Although social tariffs for internet services have not been identified as a universal service by relevant EU directives, we cannot assure you that the provision of our internet services will not be subject to greater regulation in the future. In addition, when the Ministry of Telecommunications acts on the recommendation of the BIPT to activate a universal service fund, we expect that we could be required to contribute up to €1.5 million annually to support the provision of universal services. See Item 4, “Information on the company – Business overview – Regulation—Telephony Regulation—Universal Service." Our ability to introduce new products and services may also be affected if we cannot predict how existing or future laws, regulations or policies would apply to such product or service.

30

Recently adopted legislation has significantly altered the regulatory regime applicable to us, which could adversely affect our competitive position and profitability. As of June 30, 2005, the New Electronic Communication Law of June 13, 2005 (Wet betreffende de elektronische communicatie / Loi relative aux communications électroniques), made significant changes to the regulatory regime applicable to the provision of telephony, internet and certain interactive communication features in our iDTV services. Similarly, the Flemish decree of May 7, 2004, made significant changes to the regulations governing our broadcasting activities. Both of these measures were adopted to implement the European Union's new Community Electronic Communications Regulatory Framework and the related Universal Service Directive, the Access Directive, the Authorization Directive, the Data Protection Directive on Privacy and Electronic Communications and the Competition Directive (collectively, the "New Framework"). See Item 4, “Information on the company – Business overview – Regulation —The New Framework." Under the New Framework, as implemented in Belgium, the BIPT and the VRM may impose pricing restrictions and other requirements on entities which they deem to have "significant market power" in any non-competitive relevant market in which those entities operate. This additional requirement could force us to follow certain principles of transparency and non-discrimination, to grant others access to the networks that we use and to apply cost allocation mechanisms and accounting separation between the different electronic communications services that we provide. See "—We may become subject to more extensive regulation if we are deemed to possess significant market power in any of the markets in which we operate." All of these changes may have a material adverse effect on our business, prospects, results of operations and financial condition. We may become subject to more extensive regulation if we are deemed to possess significant market power in any of the markets in which we operate. The New Framework, as implemented in Belgium, imposes pricing and other potential requirements on entities deemed to have significant market power in non-competitive relevant markets in which they operate. Among other markets, the European Commission has identified "wholesale broadband access" and "broadcasting transmission services to deliver broadcast content to end-users" as candidate markets for a market analysis. There is a risk that we could be found to have significant market power in these markets if the Belgian regulators identify these areas as relevant markets in which there is not sufficient competition. The risk of such a determination would be heightened if the regulator focused its market analysis on Flanders instead of the entire country. In that case, it could apply particularly to broadcasting activities because that activity is already regulated at the regional level. Following the regulator’s recent analysis of the broadband access market, the regulator confirmed that the relevant market for this market is national rather than regional, and has therefore not imposed any requirements mandating rights of access to cable networks by third parties. However, we can not assure you that any potential future market analysis may not reach a different conclusion. See Item 4, “Information on the company – Business overview– Regulation —Provisions Applicable to All Electronic Communications—Entities with Significant Market Power." Such a determination could require us to provide other service providers access to the Combined Network for purposes of providing competing broadband and broadcasting services at regulated prices, and impose other restrictions on how we operate the Combined Network and market our services. Granting such access would limit the bandwidth available for us to provide other products and services to the customers served by the Combined Network. Such regulation could:

• impair our ability to use our bandwidth in ways that would generate maximum revenue;

• create a shortage of capacity on the Combined Network, which could limit the types and variety of services we could provide our customers;

• strengthen our competitors by granting them access and lowering their costs to enter into our markets; and

• have a significant adverse impact on our profitability.

The European Commission has also identified the termination of calls "on a separate public network to a fixed location" as a market that may be regulated by the Belgian regulator. Under this defined market, whether a network operator would have significant market power in terminating calls on its own network depends, among other things, on the relative market position of the operator and the other operators seeking to interconnect to its network. If an operator is found to have significant power in this market, it can be required to charge interconnection termination rates that reflect its cost of providing the service. If we are found to have significant market power we may be required to reduce our interconnection termination rates. In February 2006, the regulator issued a consultation statement based on its findings that we have significant market power in the Combined Network for the termination of calls – see “The BIPT

31

has issued a consultation statement regarding our interconnection rates, which, if adopted, could result in a significant reduction in our projected interconnection revenues in certain years.” The BIPT has issued a consultation statement regarding our interconnection rates, which, if adopted, could result in a significant reduction in our projected interconnection revenues in certain years. Following a series of rulings from the regulator of the Belgian telephony industry, the Belgian Institute for Postal Services and Telecommunications (Belgisch Instituut voor Postdiensten en Telecommunicatie / Institut Belge des Services Postaux et des Telecommunications) (the “BIPT”) in 2002, we started to apply a higher average interconnection termination rate for calls terminated on our network of €0.0475 per minute, compared to the €0.0076 per minute average termination rate we currently pay when calls made by subscribers from the Combined Network terminate their calls on the network of the incumbent fixed line telephony operator in Belgium, Belgacom. In February 2006, the BIPT issued a consultation statement on the market for fixed voice termination in which it proposed that we, as well as other non-incumbent providers of fixed line telephony, should adopt a mandated path reducing the higher interconnection rate which we currently charge for calls terminated on the Combined Network to the lower rate that is charged by Belgacom over a three year period. The consultation statement is based on the BIPT’s findings that we possess significant market power in the Combined Network for the termination of calls. If the results of this consultation, which we are opposing through the European Commission and the regulator, are adopted, the interconnection revenues which we receive could decline at a faster rate than we currently anticipate, particularly if our telephony subscriber base does not achieve the growth rates we are seeking to attain. We currently anticipate a decision based on this consultation around the middle of 2006. We may be subject to conflicting regulations and inconsistent court judgments and regulatory rulings. Our networks and related operations are subject to regulation by national, regional and local authorities. The national regulator has principal authority over regulating our broadband internet and telephony operations, and the regional regulator has principal responsibility for regulating our broadcasting activities. Local authorities may also pass regulations that affect our operations from time to time, including issuing orders that require us to move our local loop underground. Issues may arise with respect to conflicting regulations applying to the networks we operate and for the services we provide. Aspects of iDTV, for example, e-mail functions, may be subject to regulation by the national regulator, whereas the broadcasting features of iDTV are regulated by the regional regulator. Decisions of the Belgian Constitutional Court (Arbitragehof / Cour d'Arbitrage) (the "Constitutional Court") required the national and regional governments of Belgium to enter into a cooperation agreement by December 31, 2005 in order to coordinate their new regulations applicable to the communications infrastructure in Belgium, which includes our networks. The outcome of the negotiations between the national and regional regulator is not certain. In addition, political disagreement caused the national and regional governments to fail to enter into a cooperation agreement by December 31, 2005. See Item 4, “Information on the company—Business overview—Regulation —The New Framework," "—Telephony Regulation—The BIPT and the Advisory Committee—The BIPT," and "—Broadcasting Regulation—Overview." As a consequence of the absence of a cooperation agreement by December 31, 2005, our network operations are instead subject to the principles of the EU’s New Framework pursuant to a “direct effect” doctrine. This may create some uncertainty as to whether and which of the new obligations under the New Framework will be applicable to us and our operations, but we do not anticipate that such obligations would be different from what is expected from the relevant regulators. Even if a coordination agreement is ultimately concluded, we may be subject to inconsistent regulations. In addition, the Belgian Competition Council (Raad voor de Mededinging / Conseil de la Concurrence) has recently been given authority to resolve disputes between telecommunication operators regarding, among other things, interconnection. The BIPT may still intervene in such disputes on the basis of its general power to enforce relevant legislation. Belgian courts also have jurisdiction with respect to certain aspects of general competition law. These overlapping powers may result in us being forced to litigate competitors' complaints in more than one forum on the same issue. There can be no assurance that the Belgian Competition Council, the BIPT and the Belgian courts will always reach the same or consistent conclusions on identical or similar issues. Such uncertainty can lead to potentially conflicting compliance obligations being imposed on us and forum shopping by potential litigants. These overlapping powers may have a material adverse effect on our financial condition.

32

We do not have complete control over the prices that we charge or the programming that we provide, which exposes us to third-party risks and may adversely affect our business and results of operations. The Belgian Ministry for Economic Affairs and the Program Council must consent to any increase in the prices that we charge our subscribers for providing basic cable television. At the beginning of 2003, we received permission from these entities to increase our subscription fees by an average of approximately 25% (an average of approximately 15% in January 2003 and an additional 10% of the original price in July 2003). Prior to this increase, subscription prices for our overall cable television subscriber base had not changed since 1994. We may not receive approval for additional cable television subscription price increases in the future, especially if we further reduce the number of channels included in our basic cable television package, which may have an adverse impact on our revenues, profitability of new products and services and ability to respond to market changes. We are also required to carry certain broadcast and other channels on our cable system that we would not necessarily carry voluntarily. Following the implementation of the New Framework by the Flemish legislature, these "must carry" obligations apply to eight of the television channels that we deliver to any specific end user. We must carry the channels from the regional public broadcasters for no fee and also do not charge a carriage fee to the other public broadcasters, but can charge commercial rates to other channels we are required to carry. See Item 4, “Information on the company—Business overview—Regulation—Broadcasting Regulation—Must Carry." We cannot guarantee that the remuneration that we receive for providing these required channels will cover our actual costs of broadcasting these channels, or provide the return that we would otherwise receive if we were allowed to freely choose the programming we offer on our system. Under the "must carry" regulations currently in force, it is possible that we may be required to carry additional channels in the future. Increasing the number of channels that we must carry on the Telenet Network would use valuable network capacity that we could otherwise use to deliver alternative channels or services that may be profitable. We may incur significant costs to comply with city planning laws. Approximately 40% of our local loop is located above ground. Local municipal governments have the authority to require us to move these network lines underground. Usually, we are able to coordinate with other utility suppliers to share the costs associated with moving lines underground but we cannot assure you that we will always be able to do so. Nevertheless, the costs of complying with municipal orders can be substantial, and may require us to incur significant costs in the future. Litigation Risks We face various litigation risks that could have a material adverse effect on our results of operations. You should review Item 8, “Financial information – Legal Proceedings” for a summary of some significant litigation and investigations which may have a material adverse effect on our results of operations. We are currently involved in a significant dispute with Belgacom relating to the price we charge competitors to interconnect to our telephony network, and an unfavorable outcome for us in this dispute would reduce the profitability of our telephony business. In a series of rulings in June and August of 2002, the regulator of the Belgian telephony industry, the Belgian Institute for Postal Services and Telecommunications (Belgisch Instituut voor Postdiensten en Telecommunicatie / Institut Belge des Services Postaux et des Telecommunications) (the "BIPT"), approved, over the protest of Belgacom, our request to increase the rates we charge other telephone operators to terminate domestic calls on the Combined Network. We then raised our interconnection termination rates and Belgacom appealed the BIPT's decision to the Council of State (Raad van State / Conseil d'Etat), the highest administrative court in Belgium. We do not believe there is a formal timeline for this procedure to produce a result, but in any case, we do not expect a decision of the Council of State before the end of 2006. Separately, Belgacom challenged the new rates before the commercial court (Rechtbank van Koophandel) of Mechelen, alleging that the new rates constituted abusive pricing. On January 20, 2004, the President of the Commercial Court in Mechelen rendered a judgment in this case, which was heard on September 23, 2003. The court found no indication that Telenet's interconnection tariffs breached the unfair trade practices law, competition law or pricing regulations as alleged by Belgacom. The judge who heard the case was not competent to rule because of the nature of the procedure initiated by Belgacom. As a result, the court dismissed the claim.

33

The Court of Appeal of Antwerp rejected Belgacom's appeal of this decision in March 2005. In February 2006, Belgacom brought the case before the Belgian Supreme Court (Hof van Cassatie / Cour de Cassation), which will have the authority to review only whether there has been a mistake of law or breach of certain formal procedural requirements in the case. We expect a final decision may take up to three years to be reached, since the Supreme Court can refer the case back to the Court of Appeal. If, as a result of litigation or otherwise, we cannot continue to charge our current interconnection rates (which, in any event, we expect to decline over time), our revenues would decline, and our telephony operations could experience a significant decline in profitability. If the commercial or administrative courts were to require us to charge the original average reciprocal interconnection termination rate of €0.009 per minute (which has been lowered to €0.0076 per minute since January 1, 2005), we estimate that our revenues from interconnection would have been reduced by approximately €23 million in 2005. In addition, if we were required to reduce our interconnection rates, we may be required to refund the excess amounts that we have collected since August 2002, which would result in a substantial liability. See Item 8, "Financial information—Legal Proceedings—Interconnection Litigation." Our operation of an internet service provider business puts us at risk of litigation relating to transmissions of proprietary information or to the use of our service to transmit malicious computer code. As the use of the internet continues to grow and the content which is posted through internet service providers such as ourselves, increases, it may be more likely that we become subject to intellectual property infringement claims which may have a significant adverse impact on our business. Potential liability may increase if legislation is adopted that requires internet service providers to prevent subscribers from downloading illegal music, video and other content that infringes intellectual property rights. Any such claims or lawsuits, whether with or without merit, could be time-consuming, and could result in costly diversion of technical and management personnel from other duties or require us to enter into royalty or licensing agreements, which may not be available on commercially reasonable terms or at all. If such claims or lawsuits are successful, our operating results and financial condition may be adversely impacted. Our business and financial condition may also be adversely affected if individuals are able to use our internet service to transmit malicious computer code which may cause harm to our reputation, our customers or third parties. Risks Relating to Our Financial Profile Our high leverage and significant debt service obligations could materially adversely affect our business, financial condition and results of operations. We are highly indebted and have significant debt service requirements and may incur additional debt in the future. As of December 31, 2005, we had total debt of €1,471.7 million on a consolidated basis (excluding available capacity under our Senior Credit Facility) as compared to shareholders' equity of €709.1 million, and we are therefore considered highly leveraged. €635.0 million of debt outstanding under our Senior Credit Facility as at December 31, 2005 is secured by substantially all of the assets of our group and guaranteed on a senior basis by our subsidiaries. The 9% Senior Notes due 2013 issued by Telenet Communications are also guaranteed on a senior subordinated basis by our significant subsidiaries and secured by, among other things, second priority charges over the shares of Telenet Bidco and Telenet NV. See Item 10, “Additional information—Material contracts—Senior Notes.” Our high level of debt could have important consequences, including, but not limited to, the following:

• requiring that a substantial portion of our cash flows from operations be dedicated to servicing debt, thereby reducing the funds available to us to finance our operations, capital expenditures, research and development and other business activities, including maintaining the quality of the Combined Network;

• impeding our ability to obtain additional debt or equity financing, including financing for capital

expenditures, and increasing the cost of any such borrowing, particularly due to the financial and other restrictive covenants contained in the agreements governing our debt;

• impeding our ability to compete with other providers of cable television, internet and data and telephony

services in Flanders or elsewhere in Belgium;

34

• adversely affecting public perception of us and our brand; and

• making us more vulnerable to economic downturns and adverse developments and giving us less flexibility to react to changes in our business.

A portion of our debt, including all of our debt under the Senior Credit Facility, bears interest at variable rates. An increase in the interest rates on our debt will reduce the funds available to repay our debt and to finance our operations, capital expenditures and future business opportunities and, as a result, will intensify the consequences of our leveraged capital structure. In addition, under the terms of our existing interest rate hedging arrangements, our effective interest rates may be higher than actual interest rates, resulting in increased costs for us. See Item 11, “Quantitative and Qualitative Disclosures About Market Risk." From December 31, 2006, under the terms of tranches A and B of our Senior Credit Facility, we are required to make quarterly payments of principal on loans which currently represent an aggregate principal amount of €230 million, with the final payment, including all accrued interest, being due on December 31, 2011. In addition, any amounts outstanding under tranche D of the Senior Credit Facility, which is a €200 million revolving facility, are payable in full on December 31, 2011, together with €405 million under tranche E of the Senior Credit Facility. We are also able to draw down up to €150 million under tranche C to provide acquisition financing or to satisfy other liquidity requirements. The terms of our Senior Credit Facility restrict, but do not prohibit, us from incurring additional debt. We may refinance our Senior Credit Facility and/or our other debt, and we may increase our consolidated debt for various business reasons which might include, among other things, to finance acquisitions or to fund the prepayment premium on debt we refinance or for general corporate purposes. If new debt is added to our consolidated debt described above, the related risks that we now face will intensify. Our status as a publicly listed company may adversely impact our business if our shares are subject to excessive volatility. Following our IPO in October 2005, we face a higher degree of scrutiny from investors, analysts and other members of the financial community. Comments and reactions from the financial community to our financial results, other announcements we may make or announcements by third parties relevant to the markets or environment we operate in may result in adverse volatility to our share price, which may in turn result in higher degrees of management time being diverted in order to respond to such developments, uncertainty and concerns on the part of existing or potential employees, suppliers, customers, lenders or investors or difficulties in implementing other business activity such as financing activity, acquisitions or partnerships. We may not generate sufficient cash flow to fund our capital expenditures, ongoing operations and debt obligations, and may be subject to certain tax liabilities. Our ability to service our debt and to fund our ongoing operations will depend on our ability to generate cash. We cannot assure you that our businesses will generate sufficient cash flow from operations or that future debt or equity financing will be available to us in an amount sufficient to enable us to pay our debt obligations when due. Our ability to generate cash flow is dependent on many factors, including:

• our future operating performance;

• the demand and price levels for our current and planned products and services;

• our ability to maintain the required level of technical capability in our network and in the subscriber equipment and other relevant equipment connected to our network;

• general economic conditions and conditions affecting customer spending;

• competition;

• our ability to make use of our carry-forward tax losses;

• the outcome of certain litigation in which we are involved; and

35

• legal, tax and regulatory factors affecting our business.

Some of these factors are beyond our control. If we are unable to generate sufficient cash flow, we may not be able to repay our debt, grow our business, respond to competitive challenges or fund our other liquidity and capital needs, including capital expenditures. If we are unable to meet our debt service obligations, we may have to sell assets, attempt to restructure or refinance our existing indebtedness or seek additional funding in the form of debt or equity capital. We may not be able to do so on satisfactory terms, if at all. Belgian tax law does not allow for group-wide consolidation. Each group member is deemed a separate entity for tax purposes and intercompany transactions must be executed under arm's-length conditions. Mismatches between taxable income and deductible expenses (including interest on our debt) could adversely influence our ability to generate cash flow. Likewise, changes in Belgian tax law or the interpretation of permitted transactions could adversely affect our tax position and ability to utilize our carry-forward tax losses. As is standard practice in Belgium, we are subject to audits of our tax returns by the Belgian tax authorities. As a result of such audits, we may be presented with adverse conclusions regarding expenses we have deducted from our taxable earnings which could result in reducing our carry-forward tax losses or could give rise to taxes which are due immediately. Although we would retain the right to appeal any such adverse conclusions, we cannot provide assurance that these audits would not result in a reduction of our carry-forward tax losses or in the immediate payment of taxes. The Belgian tax authorities may challenge whether any restructuring for which we or our subsidiaries did not seek an official tax ruling meets the business purpose test, and may also challenge our tax treatment of such restructuring on other grounds. If successful, the authorities could require that taxes due under a different tax treatment be paid and such liability could be significant. Such a claim could adversely affect our business and financial position and cause a diversion of our resources and management time. The Belgian tax authorities have audited the 2001, 2002 and 2003 tax returns of Telenet Bidco NV, which resulted in a settlement with the tax authorities on an adjusted amount of the tax losses carried forward. Although discussions with respect to these adjustments are ongoing, we estimate that the net impact of these adjustments would result in €10.9 million in additional taxes being payable by Telenet Bidco NV in the future, based on the assumption of the current corporate tax rate of 33.99%. None of these adjustments described would imply an immediate cash outflow. Tax audits for some entities in our group for the 2003-2004 financial years are ongoing, and we cannot assure you that any resulting adjustments made, nor any future tax audits, would not result in a cash outflow. The agreements and instruments governing our debt contain restrictions and limitations that could adversely affect our ability to operate our business. Our Senior Credit Facility, the indentures governing our debt and other relevant agreements contain a number of significant covenants or other provisions that could adversely affect our ability to operate our business. These covenants restrict our ability, and the ability of our subsidiaries, to, among other things:

• pay dividends or make other distributions;

• make certain investments or acquisitions, including participating in joint ventures;

• make capital expenditures;

• engage in transactions with affiliates and other related parties;

• dispose of assets other than in the ordinary course of business;

• merge with other companies;

• incur additional debt and grant guarantees;

• repurchase or redeem equity interests and subordinated debt or issue shares of subsidiaries;

• grant liens and pledge assets; and

• change our business plan.

36

Furthermore, our Senior Credit Facility requires us to maintain specified financial ratios and meet financial tests. These financial ratios will tighten and may become more difficult to maintain over time. Our ability to comply with these provisions may be affected by events beyond our control. If we cannot comply with these tests or are otherwise in default, our group may not be able to borrow under the Senior Credit Facility, which could have a material adverse effect on our ability to operate our business and to make payments under our debt instruments. In addition to limiting our flexibility in operating our business, the breach of any covenants or obligations under the agreements and instruments governing our debt will result in a default under the applicable debt agreement or instrument and could trigger acceleration of the related debt, which in turn could trigger defaults under other agreements governing our debt. In addition, the lenders under our Senior Credit Facility could foreclose on their collateral, which includes equity interests in our operating subsidiaries, exercise other rights of secured creditors and deny us access to any unused amounts under the facility. A default under our Senior Credit Facility or under the agreements governing our other debt could materially adversely affect our growth, our financial condition and results of operations. We could be required to repay a substantial portion of our debt if there were a change of control of our group. In the event of a change of control of Telenet Group Holding or Telenet Communications, we are required to offer to purchase the outstanding Senior Discount Notes at 101% of their then-accreted value and the outstanding Senior Notes at 101% of their aggregate principal amount. Under the terms of the indentures governing the Notes, a change of control can arise if (i) a person is deemed to own or acquire, or control, including through voting arrangements, more than 50% of the voting stock of either Telenet Group Holding or Telenet Communications; (ii) following the IPO, members of the Board of Directors of either Telenet Group Holding or Telenet Communications at the beginning of any two-year period and their qualified successors cease to constitute a majority of the Board of Directors then in office; (iii) there is a liquidation or dissolution of either Telenet Group Holding or Telenet Communications or (iv) certain mergers or consolidations or asset sales involving Telenet Group Holding or Telenet Communications occur. As of December 31, 2005, the accreted value of the outstanding Senior Discount Notes (following redemptions pursuant to our IPO and a change of control offer we made) was $260.5 million and the aggregate outstanding principal amount of the outstanding Senior Notes (following redemptions pursuant to the change of control offer we made) was €493.2 million. A partial redemption subsequent to December 31, 2005 has reduced the principal amount of Senior Notes outstanding to €368.4 million. With respect to our current shareholders, please see Item 7, “Major shareholders and related party transactions – Major shareholders” and Item 10, “Additional information – Memorandum and articles of association —Syndicate Agreement." In addition, a change of control may constitute an event of default under our Senior Credit Facility and therefore require us to pay all amounts outstanding thereunder. Under the terms of our Senior Credit Facility, a change of control can arise if a shareholder and any of its affiliates (other than specified principal shareholders and their affiliates from time to time) own and control, directly or indirectly, (i) over 35% of the issued share capital of our wholly owned subsidiary Telenet Bidco and (ii) more of the issued share capital of Telenet Bidco than any specified principal shareholder, together with its affiliates. The specified principal shareholders who do not trigger this provision include the MICs, the PICs and Belgian Cable Investors, part of the Liberty Global Consortium. As of December 31, 2005, we had €635.0 million outstanding under our Senior Credit Facility. In addition to our financing agreements, a limited number of our content agreements also contain change of control clauses that generally require us to inform the counterparty of any change of control, or, in some circumstances, allowing the counterparty to terminate the agreement. Since our Shares began trading publicly, the ability of parties to acquire shares in excess of the threshold amounts that trigger these change of control provisions has increased. In the event our group is subject to a change of control, we cannot assure you that we will be able to obtain financing to enable us to make the required change of control offers and other repayments required by the terms of our outstanding indebtedness. Any such occurrence could have a material adverse effect on our operations. We have a history of negative cash flow after interest and taxes and net losses to date. We have not made a profit since the Telenet group was formed in 1996. Our history includes substantial negative net cash flows after deducting interest and taxes, and we may not generate positive cash flows in the future. On a consolidated EU GAAP basis, we reported net losses of €61.7 million in 2004 and €76.7 million in 2005. Although a substantial portion of these losses consists of depreciation and amortization expenses that do not directly impact our cash flow, as well as substantial financing costs that do not reflect our improved operating performance, continued

37

losses may limit our ability to engage in equity or debt financings in the future. For more information about our recent results, see “Item 5, “Operating and financial review and prospects—Operating results.” Termination of our rights of usage of the cable network in Flanders owned by four pure intercommunales (the "PICs") may adversely affect our operations and substantially lower the value of our assets in case of a bankruptcy or liquidation. In September 1996, the PICs, through Interkabel, granted Telenet Vlaanderen certain usage rights to their cable networks in return for shares in Telenet Vlaanderen (which have since been exchanged for shares of Telenet Group Holding). In turn, Telenet Vlaanderen has granted Telenet NV the exclusive rights to use Telenet Vlaanderen's rights to the cable network, through which Telenet NV is able to sell telephony and broadband internet services to homes passed by the Partner Network. Under the terms of the deed by which Interkabel contributed these rights to Telenet Vlaanderen, the rights will automatically terminate if, among other things, any of Telenet Holding, Telenet Vlaanderen or Telenet NV is declared bankrupt or put into liquidation. See Item 4, “Information on the company – Business overview —The Combined Network—Our Usage Rights on the Partner Network." Consequently, there is a risk that we will no longer be able to use the Partner Network, which allows us to reach approximately 32% of the homes and businesses passed by the Combined Network. If we do not have access to the Partner Network, our operations, the value of our assets or business in a sale thereof may be negatively affected.

38

Item 4. Information on the company A. History and development of the company Telenet Group Holding is a limited liability company incorporated under the laws of Belgium on June 3, 2002. Its principal executive office and registered office is located at Liersesteenweg 4, 2800 Mechelen, Belgium and its telephone number is +32 15 333 000. Telenet Group Holding and its subsidiaries were established as companies for an indefinite period. In September 1996, Telenet Holding, predecessor parent company of our group, was incorporated to deliver telephony services to residential subscribers in Flanders. Internet services were later added to its product offerings. The operating subsidiaries of Telenet Holding included Telenet NV, formerly known as Telenet Operaties, and Telenet Vlaanderen. Telenet Holding's original shareholders were:

• the mixed intercommunales ("MICs") in Flanders, which are a mixture of utilities and/or companies that are owned indirectly by both municipalities and Electrabel, the former operator of the MICs cable systems;

• a consortium of regional financial institutions (the "Financial Consortium");

• GIMV NV ("GIMV"), a publicly listed company, in which the Flemish government is the largest

shareholder (currently holding approximately 40% of GIMV's issued share capital);

• six (now four) pure intercommunales ("PICs") in Flanders, which are a mixture of utility and/or cable companies wholly owned by municipalities that hold their interest through Interkabel; and

• US West International BV (an affiliate of US West International Holdings, Inc., which was subsequently

renamed MediaOne International Holdings, Inc.). The construction of our fiber backbone in Flanders was completed in July 1997. In order for Telenet Holding to be able to deliver services to its subscribers, the MICs granted Telenet Vlaanderen a co-ownership right in their local loops, which allowed Telenet to provide certain point-to-point telecommunications, video and multimedia services to its subscribers and the PICs granted co-ownership rights in their local loops to Interkabel, and Interkabel in turn granted to Telenet Vlaanderen rights to use the PICs' local loops to provide certain point-to-point telecommunications, video and multimedia services pursuant to a contribution deed dated September 23, 1996 (the "Interkabel Contribution Deed"). These usage rights continue for a period of 50 years, of which 40 years remain, and are automatically renewable for successive 15-year periods unless terminated with ten years prior notice. See “ – Business overview —The Combined Network—Our Usage Rights on the Partner Network." In August 1997 we began to offer residential internet services, followed by residential telephony services in January 1998. In 2001, Callahan Investco Belgium 1 S.à R.L. ("CAI Belgium"), an indirect subsidiary of Callahan Associates International LLC ("Cable Partners"), through Callahan Associates Holding Belgium LLC ("CAHB"), led a consortium of investors (the "Cable Partners Consortium") to acquire a controlling interest in the Telenet group through Telenet Bidco, which acquired its interest in Telenet Holding in exchange for a mixture of cash, equity and debt. Upon the MixtICS Acquisition (see "—MixtICS Acquisition") in 2002, Cable Partners' participation was reduced to 21.6%. In December 2004, Belgian Cable Holdings, an indirect subsidiary of Liberty Global, acquired a controlling interest in CAHB through a restructuring, and CAHB changed its name to Belgian Cable Investors ("BCI"). BCI is the controlling entity within the consortium (formerly the Cable Partners Consortium, now the Liberty Global Consortium), which indirectly owns 21.5% of the Telenet Group Holding Shares, through two Luxembourg entities and Evercore. The net result of the December 2004 restructuring was that Liberty Global replaced Cable Partners as the controlling shareholder of the consortium, retaining Evercore, CDPQ and MLPE as equity partners. See also Item 7, “Major shareholders and related party transactions – Major shareholders”. MixtICS Acquisition In August 2002, the Telenet group acquired the cable television business of the MICs (the "MixtICS Acquisition"). Each of the ten MICs contributed their cable television businesses, including their network assets and subscribers, to a newly created vehicle, Mixt NV (which subsequently changed its name to MixtICS). Telenet Bidco

39

acquired the shares of MixtICS in exchange for a mixture of cash, debt, certain deferred payment and other subordinated shareholder obligations and newly issued shares and warrants of Telenet Group Holding. Concurrently with the MixtICS Acquisition, our Senior Credit Facility was amended and certain changes were made to our corporate structure. In order to allow for future financing that would be structurally subordinated to the Senior Credit Facility, two holding companies were inserted above Telenet Bidco: Telenet Group Holding (the current parent company of our group) and Telenet Holdco NV (now known as Telenet Communications). Telenet Bidco's shareholders exchanged their shares first for shares in Telenet Communications and, subsequently, exchanged their Telenet Communications' shares for shares in Telenet Group Holding. As a result, Telenet Group Holding became the parent company of our group. It owns all the shares of Telenet Communications except for one that is owned by Telenet Bidco. Telenet Communications, in turn, became the parent company of Telenet Bidco and owns all the shares of Telenet Bidco except for one owned by Telenet Group Holding. As a result of the MixtICS Acquisition, the interests of the MICs, GIMV, the Financial Consortium and the PICs in our group increased significantly. Electrabel also became a shareholder. The interest of the Cable Partners Consortium was reduced to 21.6%, but it maintained contractual control over our group until December 2004 pursuant to the then-existing shareholders' agreement. On July 16, 2005, we merged MixtICS into Telenet NV, with effect from January 1, 2005. Initial Public Offering On October 11, 2005, Telenet Group Holding launched an IPO of its Shares on the Euronext Brussels stock exchange. Our principal shareholders sold €705.8 million of their Shares by way of a secondary offering in the IPO and we raised €280.2 million by way of primary and employee offerings in the IPO. Prior to our IPO, we effected a three-for-one stock split. Shares of Telenet Group Holding were sold in the IPO at €21.00 per Share. Our share capital was increased through the primary and employee offerings, resulting in a total of 100,204,853 fully paid Shares. Through the secondary offering of Shares in the IPO, five of our principal shareholders, namely the MICs, GIMV, the Financial Consortium, the PICs and Electrabel, sold a substantial or significant portion of their former shareholdings in Telenet Group Holding, while the Liberty Global Consortium exercised its priority allocation rights to maintain its shareholding. The Liberty Global Consortium became our largest shareholder with 21.5% of our Shares as of December 31, 2005. The Liberty Global Consortium also owns options on existing shares owned by other principal shareholders which, if exercised would increase its ownership in Telenet Group Holding to 47.1%. For further discussion on the implications of our shareholding structure, see Item 3, “Key Information - Risk factors– Risks Relating to Our Management and Principal Shareholders –Following our initial public offering (the “IPO”) in October 2005, our principal shareholders collectively retain control over our operations and minority shareholders are unable to oppose their actions, which may not always be aligned with the interests of minority shareholders” and “–Under current Belgian law, one of our principal shareholders may be able to gain control over our operations without triggering a mandatory bid” and Item 6, “Directors, senior management and employees–Share ownership”. Acquisitions and Integrations In October 2003, we purchased substantially all the assets and liabilities of Sinfilo NV ("Sinfilo") related to installed and operational Wi-Fi "hotspots" throughout Belgium. In December 2003, we acquired all of the outstanding shares of Codenet NV and its subsidiaries (the "Telenet Solutions Acquisition"). Codenet was subsequently renamed Telenet Solutions NV. Telenet Solutions is a provider of broadband internet, data and voice services to business customers. The Telenet Solutions Acquisition provided us with access to a network throughout Belgium and parts of Luxembourg and enabled us to provide our business customers with a wider range of products and services. The Telenet Solutions Acquisition was completed with financial effect from December 1, 2003. On December 30, 2005, we merged Telenet Solutions into Telenet NV, with effect from January 1, 2006. In December 2003, we also acquired certain assets of the Canal+ group through a newly created subsidiary PayTVCo. The proposed acquisition was approved, subject to conditions, by the Belgian competition authority. The acquisition of the Canal+ assets in Flanders (the "Canal+ Acquisition") was completed with financial effect from December 1, 2003. See “Business overview—Our Products and Services—Cable Television—Premium Tier Cable

40

Television—Canal+ Acquisition." On July 15, 2005, we merged PayTVCo into Telenet NV, with effect from January 1, 2005. Network Upgrade Our access agreements with the MICs and the PICs provided for an upgrade of their networks to a hybrid fiber coaxial ("HFC") standard with bi-directional digital transmission capabilities. This upgrade was substantially completed by June 2002. See "–Business overview—The Combined Network—HFC Upgrade." The PICs prefinanced the full amount required to upgrade their networks and the MICs prefinanced 40% of the amount required to upgrade their networks, with the remaining 60% financed by us. The payments made pursuant to clientele agreements dated September 23, 1996 (the "Clientele Agreements"), were intended to enable the MICs and PICs to recover approximately 40% of these upgrade costs (which represented all the amounts prefinanced by the MICs) in exchange for access to their cable network subscriber databases. Our obligations under our Clientele Agreement with the MICs became an intercompany obligation after the MixtICS Acquisition and expired after the merger of MixtICS with Telenet NV on July 16, 2005, but our obligations to make payments to the PICs continue to exist. In addition, as part of the Interkabel Contribution Deed, we agreed to pay an annuity fee to the PICs (such agreement to pay such fee, the "Annuity Agreement"), pursuant to which we agreed to reimburse the remaining 60% of the cost of the HFC upgrade for the PICs through repayments made over a ten or 20 year period, depending on the useful life of the underlying assets that were part of the cost of the HFC upgrade incurred by the PICs. Our outstanding obligations under the Clientele Agreement and the Annuity Agreement equaled approximately €96.2 million as of December 31, 2005. See note 11 to our consolidated financial statements for the year ended December 31, 2005. Refinancing and Prepayments On December 22, 2003, we issued the Senior Notes and the Senior Discount Notes, the proceeds of which were used to prepay certain amounts under our Senior Credit Facility and to repay the deferred payments and other subordinated shareholder obligations incurred in conjunction with the MixtICS Acquisition (the “Refinancing”). Subsequently, we applied €100.0 million of the proceeds of the Senior Notes in March 2004 towards a reduction of our outstanding senior debt. In March 2005, we prepaid a further €105.0 million of our Senior Credit Facility using excess cash on our balance sheet. The €264.4 million net proceeds of the primary and employee offerings of our IPO were subsequently applied towards redeeming the 35% maximum allowable redemption of our Senior Discount Notes, an amount equal to $136.2 million, representing $191.7 million of the principal amount at maturity, and €124.8 million of the Telenet Communications Senior Notes. Including accrued interest and prepayment premiums, the total cost of these redemptions was €128.5 million and €136.8 million for the Senior Discount Notes and Senior Notes respectively. As a result of certain changes to our governance implemented as part of the IPO process, we initiated change of control offers for both the Senior Discount Notes and Senior Notes. These resulted in redemptions of $2.5 million in accreted value (equivalent to $3.6 million at maturity) and €6.8 million of the Senior Discount Notes and Senior Notes respectively. Including accrued interest and prepayment premiums, the total cash payment associated with these change of control related redemptions was €9.3 million for both the Senior Discount Notes and Senior Notes. Internal Reorganization In order to align our corporate structure with the operational functioning of the group, we merged MixtICS into Telenet NV and PayTVCo into Telenet NV in July 2005, with retroactive effect to January 1, 2005 and we merged Telenet Solutions into Telenet NV on December 31, 2005 with effect from January 1, 2006. On January 31, 2006, we liquidated Telenet Holding NV, since it no longer fulfilled any function in our group structure.

41

B. Business overview We are the largest provider of broadband cable services in Belgium. Through our broadband network in the Flanders region, our primary products comprise basic and premium cable television in analog and digital formats, broadband internet and telephony services, primarily to residential subscribers.

• Basic Analog and Digital Television. Basic cable television is the principal medium for the provision of television services in Flanders. Approximately 97% of television households in Belgium are passed by a basic analog cable network. As of December 31, 2005, we had approximately 1.6 million subscribers to our basic cable television service, representing a penetration rate of approximately 94% of the homes passed by the Telenet Network. The high penetration of our basic cable television business has resulted in a steady source of revenues and cash flow. Following the launch of our interactive digital television ("iDTV") service on September 3, 2005, we adjusted our basic cable offering. Customers now receive an average of 26 basic analog channels, and can access a basic digital service currently comprising 43 channels. Channels broadcast in our basic service can be accessed through a digital to analog converter box (which we refer to as a cable tuner) or one of several set top boxes that are available for purchase and which enable subscribers to access a variety of interactive features.

• Premium Analog and Digital Television. Our current premium cable television service, which we

launched on September 3, 2005, includes a combination of premium sports and film channels, a range of thematic channels, and a variety of interactive features. Customers are required to have a digital set top box to access these offerings. We began to directly offer premium television channels as part of our December 2003 acquisition of the premium cable pay television assets of Canal+ in Flanders, including related content rights in both analog and digital formats. In conjunction with the launch of our iDTV services, we re-branded and repackaged the Canal+ premium service together with additional content into several channels under our "Prime" brand. As of December 31, 2005, we had approximately 161,000 premium and premium-enabled analog and digital television subscribers. Subscribers to the iDTV services available on the Telenet Network have a choice of content and services in addition to the basic channel offering. Currently, our premium iDTV tier consists of two channels in our Prime Sports and six channels in our Prime Film packages. A further 31 channels grouped into different genres represent our thematic and specialist packages and a selection of 16 channels are available on an on-demand basis. In addition, we offer five French language BeTV channels, so that our overall iDTV service currently comprises over 90 channels, not counting the on-demand channels, and we plan to further increase this choice over time, together with an expanding menu of interactive features. For former Canal+ customers on the Partner Network, Prime Sports and Prime Film are offered in analog format only. In November 2005, we terminated approximately 6,000 analog premium cable television customers in the Telenet Network area, who had not taken up our offer of a free replacement iDTV set top box in place of their existing Canal+ set top box in order to more efficiently utilize our network capacity.

• Residential Broadband Internet. We are the leading provider of residential broadband internet services in

Flanders. As of December 31, 2005, we had approximately 601,000 residential broadband internet subscribers, which contributed to our estimated share of approximately 53% of all broadband internet subscribers in Flanders, contributing to a penetration rate of 25.1%. This compares to approximately 506,000 subscribers and a penetration rate of 21.3% as of December 31, 2004. Through our hybrid fiber coaxial-upgraded network, we offer our residential subscribers an "always on" broadband internet service at a downstream data transfer speed of up to 20 Mbps, which is among the fastest speeds available to residential customers in Western Europe. We believe that the combination of service quality, tiered products offering a range of speeds and brand recognition of our internet offering has enabled us to achieve rapid growth amid strong competition in Flanders. We also offer narrowband and wireless internet services.

• Residential Telephony. We offer our residential subscribers local, national and international long distance

telephony services, as well as a variety of value-added features. As of December 31, 2005, we had approximately 358,000 residential subscribers, which contributed to an estimated share of 21% of all residential telephony subscribers in Flanders (based on the number of RGUs). These results compare to approximately 281,000 residential subscribers as of December 31, 2004. We achieved a penetration rate of 14.7% as of December 31, 2005, compared to a penetration rate of 11.5% as of December 31, 2004. We believe that we are currently the largest competitor to Belgacom, the Belgian incumbent, in Flanders due in part to our emphasis on customer service and innovative tariff plans.

42

For the year ended December 31, 2005, our residential basic and premium cable, broadband internet and telephony services (including interconnection revenues relating to both residential subscribers and business customers) accounted for approximately 36.3%, 31.3% and 23.1% of our consolidated revenues, respectively. In addition, we offer our business customers a range of internet, data and voice services, which accounted for approximately 9.3% of our consolidated revenues for the year ended December 31, 2005. For the year ended December 31, 2005, we generated consolidated revenues and EBITDA of €737.5 million and €337.9 million, respectively. The Telenet Network passes approximately 1.7 million homes and businesses in Flanders, to which we are able to offer cable television, broadband and narrowband internet and telephony services. In addition, we are also able to offer internet and telephony services to subscribers whose homes are passed by the Partner Network, pursuant to 50-year usage rights, of which 40 years remain. The Partner Network passes approximately 800,000 additional homes and businesses. Our network covers approximately 68% of homes and businesses passed by the Combined Network in Flanders. We, in cooperation with our local municipal partners, completed the upgrade of the Combined Network to a hybrid fiber coaxial ("HFC") standard in 2002 that provides bi-directional capability, enabling us to transmit and receive digital signals. The Combined Network includes our high performance optical fiber backbone network which we constructed and which extends over 10,000 kilometers across Flanders and parts of Brussels. As part of the Telenet Solutions Acquisition, we acquired additional network assets that provide high capacity data transport across Belgium and parts of Luxembourg, where we own the electronic components and currently lease the fiber, the assets of which are also part of the Telenet Network. The fiber backbone of the Combined Network connects to the coaxial local loops of the Combined Network, which extend over 52,000 kilometers throughout Flanders. We use our network to transmit television signals in Flanders and the Combined Network to carry telephony and internet traffic to and from residential end users in Flanders. The network assets acquired from Telenet Solutions also provide us with access to business users across the rest of Belgium and Luxembourg. Our Strategy We intend to use our platform to increase the penetration of our existing services and to roll-out new products and services to our customers. We seek to maximize the value of our subscribers by providing appealing products, reasonable pricing and superior levels of customer service. At the same time, we seek to carefully manage our costs and capital expenditure in order to maintain our positive cash flow and to grow our earnings potential. To achieve these objectives, we are pursuing the following strategies:

• Transition Core Cable Subscriber Base to Digital. Our basic cable television business has generated a consistent revenue stream based on the high penetration rates, limited competition and low subscriber turnover that characterize the Belgian cable market. We plan to maintain our basic cable television customer base and to continue to promote our new iDTV service, which we launched across the Telenet Network on September 3, 2005. Based on the results of our own trials and market research, we believe that our market will be receptive to the increased control, choice, interactivity and quality that iDTV offers. As of December 31, 2005, we had generated 75,000 premium and premium-enabled iDTV RGUs, which contributed to a total of 161,000 premium and premium-enabled RGUs, including the premium RGUs we acquired from the former Canal+ service.

• Grow our Internet and Telephony Subscriber Base. From December 31, 2004 to December 31, 2005, we

increased the number of our residential broadband internet subscribers by 19%, from 506,000 to 601,000. During that same period, we increased the number of our residential telephony subscribers by 27%, from 281,000 to 358,000. According to Screen Digest, the broadband internet and digital television markets in Belgium are expected to grow over the five year period 2004-2009, from 36% to 60% penetration of homes passed for broadband internet. We aim to take advantage of this trend to continue to grow our internet and telephony subscriber base, and the percentage of customers who subscribe for both services from us, by utilizing a range of promotions, product innovations and brand marketing activities to attract new subscribers, including bundled internet and telephony offerings. We are also employing new technologies, such as wireless local area networks ("Wi-Fi"), to enhance the attractiveness and reach of our product and service offerings.

43

• Increase ARPU per Unique Customer. We aim to grow our ARPU per unique customer by increasing the number of customers who subscribe for combinations of our television, internet and telephony services. Our capital expenditure and cost structure are linked to the number of unique customers that we have, resulting in efficiencies as we increase the number of services we provide to each of them. As of December 31, 2005, 20% of the 1.6 million unique customers on the Telenet Network utilized at least two services from us, and 11% utilized all three. We expect to grow the average number of revenue generating units per unique customer from its current 1.4 RGUs per unique customer on the Combined Network by utilizing various promotions, including bundling multiple products to one customer, improving the quality and tiers of products we offer our subscribers and introducing new products. We aim to introduce premium products in our existing services for which we believe customers will be willing to pay higher amounts, including value added services, faster speed broadband internet packages and iDTV. We also plan to introduce new products and services to our customer base beyond our core television, telephony and internet products. For example, we are preparing the launch of a mobile service, based on certain agreements we recently reached with Mobistar, and also expect to continue marketing our existing Wi-Fi service to our current customer base.

• Continue to Grow Earnings while Maintaining Positive Free Cash Flow. We seek to increase our

earnings, whether measured by EBITDA or operating profit, and to maintain positive free cash flow, primarily by growing our subscriber base and maximizing the amount of revenue generated by each subscriber, in addition to continuing to focus on managing our operating costs. Our EBITDA increased from €309.0 million for the year ended December 31, 2004, to €337.9 million for the year ended December 31, 2005. Our operating profit increased from €104.7 million for the year ended December 31, 2004 to €131.6 million for the year ended December 31, 2005. Additionally, we seek to maintain positive free cash flow through prudent capital expenditures and aim, in general, to deploy proven technologies. We expect to spend the majority of our future capital expenditure on customer acquisitions. In 2005, an estimated 80% of our capital expenditure was growth related (with the majority of this amount related directly to installing equipment for new subscribers and the remainder to network investments to support our subscriber growth), with the balance of our capital expenditure on maintenance and non-growth related infrastructure. Excluding the impact of the interest component of our Senior Discount Note redemptions, our free cash flow (defined as cash flow from operating activities less capital expenditure and purchases of intangible assets) was €81.6 million in the year ended December 31, 2004, and €51.3 million in the year ended December 31, 2005.

• Develop and Exploit New Growth Opportunities. We aim to explore additional opportunities for revenue

and customer growth through new product introductions and increasing our geographical coverage. Since we began to offer telephony services in 1997, we have successfully introduced a range of broadband internet, telephony and cable television products and services. We continue to evaluate additional product opportunities. We believe that our strong customer relationships and brand name should enable us to sell additional products, such as mobile telephony, to our customer base. In addition, we continue to explore opportunities to expand our residential business into other parts of Belgium, which may offer significant potential for increasing revenue and realizing cost synergies in the future. We aim to further grow our business services revenues by offering attractive products and services to well targeted business segments. During 2005, we completed the development of our business services product suite and increased our sales pipeline, customer base and revenues.

• Continue to Focus on Operational Excellence, Quality and Customer Service. Our management plans to

continue to focus on key performance indicators and other metrics to improve our operational and financial performance. We have recently implemented a series of programs to adopt a consistent methodology to evaluate performance across our operations and where possible deploy well tested standards to manage implementation risks. We have implemented a Six-Sigma quality program to further refine our processes and promote increased efficiency and profitability. Additionally, we view customer satisfaction as essential to the maintenance of our existing subscriber base, pricing levels and future prospects. We rely on a number of metrics to evaluate the level of our customer service. In order to minimize churn and enhance the quality of services we provide our subscribers, we have customer retention teams that assist in the resolution of subscriber problems. In addition, we regularly conduct customer surveys using internal and third-party research organizations, and continuously monitor competitor activity. We also seek to attract and retain skilled and motivated individuals, and promote a dynamic and innovative work culture within our organization

44

Our Products and Services We offer a range of cable-based communications and broadcast services to residential customers in Flanders, and a choice of voice and data services to business customers across Belgium and in parts of Luxembourg. Our residential services comprise basic cable television, premium cable television, broadband and narrowband internet and telephony services. We offer all of these services to residential subscribers whose homes are passed by the Telenet Network, which covers approximately 68% of the homes and businesses passed by the Combined Network in Flanders, and offer our voice and data service to all of the businesses passed by the Telenet Network. In addition, we offer broadband internet and telephony services to the remaining 32% of homes and businesses passed by the Combined Network in Flanders through our 50-year right to use the Partner Network, of which 40 years remain, and which is renewable for successive 15-year periods unless terminated with ten years prior notice. We also offer certain premium cable television services pursuant to our 2003 acquisition of Canal+. Our residential subscribers include individuals and families living in homes and apartments as well as SoHos that receive our services through a coaxial connection. Residential subscribers access our services through a node on our fiber network that links via a coaxial connection to their residence. Cable Television The following chart sets forth certain information related to our cable television operations as of and for the periods indicated:

For the years ended December 31

2003 2004 2005

Basic Tier Homes passed (in thousands)(1) .................................................................. 1,683 1,683 1,699 RGUs (in thousands)................................................................................... 1,587 1,583 1,589 Penetration rate—Basic Cable(2)................................................................. 94.3% 94.1% 93.5% Average monthly revenue per user—Basic Cable (in euro)(3) ................... 9.4 10.3 10.4 Churn (annualized)(4) .................................................................................. — 5.1% 5.0% Premium/Premium EnabledTier Homes passed—Telenet Network (in thousands)(1)................................... 1,683 1,683 1,699 Homes passed—Partner Network (in thousands)(1) ................................... 801 801 801 Homes passed—Combined Network (in thousands)(1) .............................. 2,484 2,484 2,507 RGUs—Telenet Network (thousands) ....................................................... 100 96 124 RGUs—Partner Network (thousands)........................................................ 46 44 37 RGUs—Combined Network (thousands) .................................................. 146 140 161 Penetration rate—Telenet Network(2)......................................................... 6.0% 5.7% 7.6% Penetration rate—Partner Network(5) ......................................................... 5.7% 5.5% 4.6% Penetration rate—Combined Network(5) .................................................... 5.9% 5.6% 6.5% Average monthly revenue per user—Premium and premium-enabled

CATV (in euro)(3)..................................................................................... 33.7 33.3

28.8 Churn (annualized)(4) .................................................................................. 13.9% 12.1% 25.0%

(1) Homes passed represents our estimate of the number of potential residential, SoHo and SME subscribers to whom we

can offer our services. (2) Number of RGUs at the end of the relevant period as a percentage of the number of homes passed by the Telenet

Network at the end of the relevant period. (3) Revenue earned for the period divided by the number of months in the period and divided by the average number of

RGUs for the period (which average number of RGUs may vary from the number of RGUs presented above at the period end date). Includes copyright fees. Our ARPUs are not affected by the transition from US GAAP to EU GAAP.

(4) Total number of RGUs disconnected during the period divided by the average number of RGUs for the period. Churn

statistics do not include customers who move within the Combined Network and elect to receive the same services from us that they previously received at their prior location. Premium churn also excludes premium subscribers who migrate from the former Canal+ premium service to our iDTV service.

45

(5) Number of RGUs at the end of the relevant period as a percentage of the number of homes and businesses, as applicable, passed at the end of the relevant period by (a) the Partner Network, in the case of "Penetration rate—Partner Network;" or (b) the Combined Network, in the case of "Penetration rate—Combined Network."

We are the largest provider of cable television services in Belgium. Historically, we provided basic analog cable television services to homes passed by the Telenet Network and, following the Canal+ Acquisition, premium cable television services to all homes passed by the Combined Network, in both analog and digital formats, under the Canal+ brand (which we rebranded under the Prime brand name in conjunction with the recent launch of our iDTV services). On September 3, 2005, we launched our iDTV service, which includes both basic and premium offerings. In general, digital technology compresses video signals into a smaller amount of bandwidth than is currently used by analog transmissions, while also enhancing the audio and visual quality of the transmissions. We are able to broadcast a significantly greater number of channels by converting channels currently used for analog broadcasts into use for digital channels. Current and planned digital interactive capabilities enable subscribers greater flexibility in choosing what content to watch and when, to participate in certain types of programs, to communicate with others through the television and to review viewing options using facilities such as electronic program guides ("EPG"), among other features. Our iDTV preparations were part of a joint project with the Flemish government, broadcast channels VMMa and VRT (Vlaamse Radio- en Televisieomroep) and SBS. Our plans include the addition of features, content and functionality to our iDTV service over time. In addition, we may consider offering iDTV to other cable operators in Flanders, including the PICs. Subscribers who acquire a digital set top box currently are able to receive approximately 43 digital channels, and are also able to access premium content, marketed under the "Prime" brand, thematic content and interactive features, including services such as video on demand. All of our basic and interactive television services are now marketed under the Telenet brand name, with the Prime brand name used to market our packages of premium sports and film channels. Our full iDTV offering is currently only marketed to homes passed by the Telenet Network, although certain of Telenet's Prime channels are also broadcast in analog format to former Canal+ premium pay subscribers who reside in the area covered by the Partner Network. Although we currently only offer our iDTV offering over the Telenet Network, the Combined Network is capable of delivering our iDTV service across all of Flanders. Basic Tier Cable Television Basic cable television remains the principal means of television broadcasting in Belgium, with 97% of television households across Belgium passed by a cable network. Currently, traditional terrestrial broadcasting and direct-to-home satellite broadcasting are not widely used in Flanders or elsewhere in Belgium. We currently offer our 1.6 million subscribers 26 basic analog channels and 43 digital channels (including the majority of the 26 analog channels) in our basic digital offering. The basic cable tier is offered in two ways. Subscribers can receive 26 channels broadcast in analog format to their televisions without the need for any converters or set top boxes. In addition, using a digital to analog converter, known as a "cable tuner," subscribers can access an additional eight channels in digital format, which, combined with the first 26 channels, replicate the channel line-up previously offered in our basic analog package. Alternatively, subscribers using a digital set top box can access all channels, in digital format, in our expanded basic tier, which comprise 43 channels as of the date of publication of this annual report. Subscribers to our basic cable service pay a single fee, regardless of whether they receive analog or digital service and irrespective of the number of channels received in the basic tier, although subscribers using a digital set top box benefit from a lower VAT rate. Subscribers who purchase a digital set top box are also able to access certain interactive and premium content. We charge our basic tier cable television subscribers an average monthly fee of €8.50, excluding VAT and copyright fees described below. Over 90% of our subscribers pay for their basic cable service in advance on an annual basis, with the remainder paying on a monthly or quarterly basis pursuant to public welfare regulations. From 1994 until December 2002, our subscribers paid an average monthly basic cable television subscription fee of €6.67 (excluding VAT and copyright fees). Following approval from the Belgian Ministry of Economic Affairs (on the recommendation of the Pricing Commission) and the Program Council, we enacted a series of price increases in 2003 to the earlier fee. In general, our basic cable television business has traditionally represented a stable source of revenue. Subscribers have historically paid VAT of 21% to receive our basic analog cable television service, but those who subscribe for our basic digital offering are only required to pay VAT of 12% under applicable law.

46

Together with subscription fees, basic cable television subscribers are charged an annual copyright fee for the content received from public broadcasters that is broadcast over the Telenet Network. These fees contribute to the cost we bear in respect of copyright fees paid to copyright collection agencies for certain content provided by the public broadcasters. In August 2003, these fees increased from a monthly average of €1.08 per month (excluding VAT) and currently average approximately €1.85 per month (excluding VAT) as a result of certain litigation with the copyright collection agencies over how copyright fees should be calculated. See "—Legal Proceedings—Copyright Litigation." For a description of how we account for copyright fees, see Item 5, “Operating and financial review and prospects – Operating results —Factors Affecting Results of Operations—Revenues—Basic and Premium Cable Television." In addition to subscription and copyright fees, we collect carriage fees from certain content providers in exchange for carrying their content over the Telenet Network. We also charge activation fees to subscribers joining the iDTV service, though these may be waived under promotions. Basic Cable Programming Channel offerings for both basic analog and basic digital tiers include local, national, foreign, sports and movie channels. Prior to the launch of our iDTV services, we provided an average of 34 television channels to our basic analog subscribers. Since the launch of iDTV on September 3, 2005, our customers have access to a larger basic cable tier, comprising a minimum of 26 analog channels and 43 digital channels (which includes the majority of the 26 analog channels). The exact number of analog channels may be higher in certain regions, depending in part on regulatory minimum content requirements. An average of 20 radio channels (depending on region) are also provided in the basic analog offering. We anticipate adding up to eight further channels to the basic digital offering during 2006. Subscribers wishing to watch the eight channels that were moved from the former basic analog tier to our digital tier can do so by attaching a cable tuner to their television set, which does not, however, provide any interactive connectivity. We provide cable tuners to customers on request in exchange for payment of a €49 deposit (or €25 for those able to access social subscription rates). Subscribers using a cable tuner are thereby able to access all 26 analog channels plus the eight channels that had been moved. Subscribers who purchase a digital set top box instead of using a cable tuner are able to access up to 43 digital television channels (including the majority of the channels in the analog offering) and 22 digital music channels, and at the same time can continue to access the 26 television and 20 radio channels broadcast in analog format. Subscribers with digital set top boxes also have access to our interactive services, including our on-demand platform and electronic program guide, and premium offerings. See "—Premium Tier Cable Television." Under the Public Interest Guarantees that we entered into with the MICs at the time of our acquisition by Cable Partners Europe, LLC, we agreed to launch a digital platform within a certain timeframe. As currently amended, we are required under the Public Interest Guarantees to use our best efforts to comply with certain roll-out and installation requirements for our basic iDTV service. If we do not roll-out and install set top boxes in 54% of the homes passed by the Telenet Network by February 2008, the MICs have the option to request the return of six analog channels of 8 MHz, excluding channels used for our Prime premium service, that were given to Telenet by the MICs for the implementation of iDTV. The bandwidth used by these 6 channels could be used to provide 42 digital channels based on current digital compression technology. See Item 3, “Key information – Risk factors—Risk Related to Our Business—If we fail to successfully introduce new technologies or services, such as our recently launched iDTV service, or to respond to technological developments, our business and level of revenues may be adversely affected and we may not be able to recover the cost of investments that we have made." We are required to deliver some of these television channels and radio stations to our cable television subscribers pursuant to "must carry" rules. These requirements cover broadcasts of the Flemish and French-speaking public community broadcasters in Belgium, the relevant regional and the programs of the Dutch public broadcaster. Following the adoption of the decree of May 7, 2004 (the "2004 Decree"), the number of television channels subject to the must carry rules was reduced from 15 to eight. See "—Regulation—Broadcasting Regulation—Must Carry." The following chart lists the principal channels that we currently offer as part of our basic analog and basic digital services, and identifies those that we are required to carry pursuant to "must carry" regulations. We estimate that our basic cable television viewers spend approximately 75% of their viewing time watching five Dutch language channels, of which VTM and Kanaal2 were, until recently, only available over basic cable networks.

47

Basic Tier—Analog Broadcast Basic Tier With Digital Set Top Box ARD Nederland 3(1) ARD La Une(1) BBC1 Regionale(1) Arte La Deux(1) BBC2 RTL-TVI BBC1 MTV/Nickelodeon Canvas/Ketnet(1) TMF BBC2 National Geographic Cartoon/National Geographic VijfTV BBC World Nederland 1(1) Eén(1) Vitaya Canvas/Ketnet(1) Nederland 2(1) France 2 VT4 Cartoon/TCM Nederland 3(1) JIM VTM CNBC Regionale(1) Kanaal2 ZDF CNN RTL-TVI Kanaal Z Selected regions only Eén(1) Tel Sell La Deux(1) ITV France 2 TMF La Une(1) RAI 1 France 3 TVE Mosaic (barker channel) TRT Info Channel/Barker VijfTV MTV/Nickelodeon TF1 JIM Vitaya Nederland 1(1) TV5 Kanaal2 VT4 Nederland 2(1) WDR Kanaal Z VTM Analog radio: average of 20 channels Digital radio: 22 channels Basic Offering with Digital Cable Tuner Additional Channels with Digital Set Top Box Arte CNN AB3 Eurosport 2 BBC World France 3 Actua TV France 4(2) Cartoon/TCM Tel Sell Club RTL France 5(2) CNBC TVE Discovery RAI 1 Euronews TF1 Eurosport TV5 Selected Interactive Features Accessed with

Digital Set Top Box Interactive Electronic Program Guide News and premium content on demand(3) Broadcast on demand(3) Pay-per-view and special content programs(3) Telenet e-mail(4) "Teleportal" information services, including e-government

(1) Required to be carried on our basic cable television network pursuant to "must carry" regulations. Of the eight "must

carry" channels delivered to any region, four are national channels, three are foreign channels and one is a regional channel.

(2) Free until end of 2006.

(3) Accessed through digital set top box, but incurs incremental charges. See "—Premium Cable Programming."

(4) Not yet launched. Basic Tier Content Several different relationships govern the content that we provide our basic cable television subscribers. We pay copyright fees to the foreign, public national and regional broadcasters carried on our basic cable television network. In general, these fees are paid to copyright collection agencies and broadcasters based on a combination of per program fees and the number of subscribers to our basic cable service. Although specific arrangements vary, contracts governing the payment of these copyright fees generally have terms of between three and four years. These agreements with the copyright agencies and broadcasters have been the subject of significant litigation in recent years. See Item 8, "Financial information—Legal Proceedings—Copyright Litigation." We are required by law to carry the signals of the regional broadcasters at no charge and also do not charge a carriage fee to the public broadcasters. See “—Regulation —Broadcasting Regulation—Must Carry." We also enter into transportation and distribution agreements with the commercial broadcasters. Through transportation contracts, we agree to carry a commercial broadcaster's signal across our fiber backbone to our head end stations, where the signal is subsequently delivered to either our subscribers or the cable television subscribers on the Partner Network. Broadcasters who transmit their signal to us by satellite can elect to deliver their signal directly to our head end stations and, as a result, do not need to enter into a transportation agreement with us. We also enter into distribution contracts with all of the commercial broadcasters whose channels we carry on

48

the Telenet Network, pursuant to which we agree to carry the broadcaster's signal from the head end station to our basic cable television subscribers. The prices that we charge under distribution contracts are based on nondiscriminatory policies. In some situations, we do not charge the broadcasters any fee for transmitting their signal to our subscribers. Instead, the broadcasters benefit from increased advertising revenues they receive from reaching our basic cable television subscribers and we benefit by providing our subscribers added content. In certain situations, we pay broadcasters for the channels they transmit over the Telenet Network. In addition to these arrangements, we have also entered into contracts with certain broadcasters pursuant to which we currently pay a fee in order to have the right to broadcast their signal on any digital cable television service that we may offer in the future. In 2005, we incurred copyright fees of approximately €33.6 million to public national and regional broadcasters and related copyright agencies for both analog and digital content. Premium Tier Cable Television We launched our iDTV services on September 3, 2005 with a premium offering that is offered alongside our existing premium service which we acquired pursuant to the Canal+ Acquisition. Our combined premium service includes a combination of premium sports and film channels, a range of extended thematic channels, a selection of films and broadcast content available on an on-demand basis and a variety of interactive features. Our full premium offering is available to the subscribers passed by the Telenet Network. In addition, we offer a limited premium service, by way of Prime Sports and Prime Film channels in analog format, to former Canal+ customers who are passed by the Partner Network. In order to access our premium iDTV offerings, subscribers must purchase a digital set top box. These set top boxes act as an interface between the subscriber and the Telenet Network, and operate on the Multimedia Home Platform ("MHP") standard. MHP is an open standard platform that we expect will provide us with the flexibility to integrate applications from a variety of sources. There currently is no dominant standard used for digital set top box operating platforms, and the MHP standard has not yet been broadly adopted by other cable operators, which has contributed in part to a limited supply of set top boxes that operate on the standard. However, a number of European cable operators have recently started considering a platform similar to ours, and certain US cable operators are considering a platform known as OCAP, which shares a high degree of commonality with MHP. Both of these developments may contribute to providing a greater choice of set top boxes in the future. See Item 3, “Key information – Risk factors—Risks Related to Our Business—If we fail to successfully introduce new technologies or services, such as our recently launched iDTV service, or to respond to technological developments, our business and level of revenues may be adversely affected and we may not be able to recover the cost of investments that we have made." Initially, we offered a standard digital set top box (which we market as a “Digibox”) through retail channels or direct to subscribers for a price of €199 (including VAT) plus a one-time activation fee of €35. In January 2006, we started offering a set top box for €349, which includes digital video recording functions that allow viewers to record, pause and playback live television (we market this device as a “Digicorder”). During the second quarter of 2006, we plan to activate our Flexview platform, which will provide Digicorder users with a user-friendly interface with which to utilize the capabilities of the Digicorder. Although we may from time to time offer special promotions in which we bear a portion of the cost of a set top box or waive the activation fee in order to encourage customers to move to our iDTV offering, we do not expect to fully subsidize the required equipment. In addition, we may offer discounts to customers who wish to upgrade their digital set top boxes to boxes that offer digital video recording functionality. See Item 5, “Operating and financial review and prospects —Liquidity and capital resources—Capital Expenditure." Prior to the launch of our new premium offering, we had offered a package of premium pay television services to subscribers passed by the Combined Network under the Canal+ brand name. We acquired the right to provide this service directly to our subscribers through our December 2003 purchase of the premium pay cable television assets of Canal+ in Flanders. In order to encourage adoption of our new premium services by our existing Canal+ subscribers residing in areas passed by the Telenet Network, we offered to exchange the existing Canal+ set top boxes that our former Canal+ analog premium customers had for new iDTV set top boxes at no additional cost to them. As of December 31, 2005, under our prior Canal+ offering, we provided premium pay television services in digital format to approximately 49,000 of our cable subscribers in the Telenet Network area and analog services to approximately 37,000 subscribers residing in the Partner Network area. Analog broadcasts to approximately 6,000 former Canal+ customers in the Telenet Network area ceased in November 2005 since these customers did not elect to accept our offer of a free replacement set top box which is compatible with our new iDTV service.

49

Premium Cable Programming Prime. The core of our premium offering is now centered on our Prime premium channels, which are offered as a selection of up to 12 channels, including eight Prime Sports and Prime Film channels and four thematic channels, to subscribers on the Telenet Network that are charged in advance on a monthly basis. In the future, we also expect to begin broadcasting certain programs in an HDTV format, although we do not anticipate introducing such broadcasts before 2007. We also continue to offer an analog version of the Prime Sports and Prime Film channels to our former Canal+ customers who are passed by the Partner Network pursuant to an arrangement whereby we pay the PICs for access to three 8 MHz channels on the Partner Network. This analog service, however, does not include any of the interactive features or thematic channels that are available through the iDTV offering on the Telenet Network. Thematic Channels. Our new premium service also offers subscribers with access to themed groups of family, documentary, news, lifestyle, music and adult channels in exchange for a monthly subscription fee paid in advance. We currently offer 28 channels within these thematic packages, which are only offered to subscribers on the Telenet Network. Specialist and Other Channels. We currently also offer a selection of eight specialist channels covering adult content, music content and French language programming, including premium sports and movies, from BeTV. On-demand Content and Other Interactive Features. In addition, iDTV subscribers on the Telenet Network, but not on the Partner Network, are able to use interactive features that are charged on either a per-use or monthly basis. Our current interactive content offerings include 12 on-demand broadcast channels including many of the Flemish language channels and four offerings providing a wide selection of on-demand films, music and adult content. We have established ourselves in interactive television broadcasts, which have proved popular in various audience voting programs. In addition, we currently provide or plan to provide the ability to send e-mail, participate in on-line chat rooms and use short message services; and access to government services and programs through use of a secure local government supplied identification card that can be inserted into the customer's digital set top box. Prices for our premium and extended tier offerings vary from €4.95 per month (including VAT) for the least expensive of the single premium channel selections to a range of between €18.95 and €44.95 per month including VAT for our "Combo" packages of premium channels. Customers who purchase a Digicorder set top box, which became available in January 2006, in order to utilize its recording capabilities should be able to use our interactive Flexview capabilities for a monthly fee of €4.95 during the second quarter of 2006. The following chart provides a general overview of our premium iDTV offering. Prices include VAT. Premium Feature Price per month (€)Prime Prime Film Pack................................................................................................................... 19.95Prime Sports Pack ................................................................................................................ 14.95Prime Sports & Film Pack ................................................................................................... 26.95Theme Packs Documentary, News and Lifestyle ...................................................................................... 4.95Children & Music................................................................................................................. 4.95Theme Pack (also includes sports and adult) ...................................................................... 9.95Music.................................................................................................................................... 4.95Adult Passion A la carte Pack ........................................................................................................ 19.95X-Passion ............................................................................................................................. 14.95Gay-Passion.......................................................................................................................... 14.95French Be-TV ..................................................................................................................... 34.70Combo Packs Combo Sports & Film 1....................................................................................................... 44.95Combo Sports & Film 2....................................................................................................... 32.95Combo Sports....................................................................................................................... 22.95Combo Film.......................................................................................................................... 28.95

50

On Demand Price (€)TV on demand...................................................................................................................... From 0.50 per program “Just missed” broadcast on demand 5.95 per monthVideo on demand ................................................................................................................. From 2.95 per filmMusic on demand ................................................................................................................. From 1.95 per selectionAdult content on demand..................................................................................................... 4.95 per film or 19.95 per

month“Studio 100” children’s content........................................................................................... From 1.00 per program

Canal+ Acquisition Prior to our September 2005 launch of iDTV, we had offered customers a fixed premium offering through a proprietary set top box under the Canal+ name, first indirectly by granting Canal+ access to the Telenet Network and then directly following the Canal+ Acquisition in December 2003. We had offered these services under the Canal+ brand name pursuant to a license from the Canal+ group under which we paid Canal+ a pre-agreed amount based on revenues earned from this service through the end of August 2005, when we ceased to use the Canal+ name. We did not invest significant resources into marketing the Canal+ offering, however, in anticipation of our launch of premium iDTV services. As part of the Canal+ Acquisition, we were required to obtain the clearance from the Belgian competition authority (Raad voor de Mededinging / Conseil de la Concurrence), which approved the transaction, subject to certain conditions. Although we no longer offer a service under the Canal+ brand name, the competition authority's ruling continues to apply to our provision of the Prime premium service. The competition authority recently requested information regarding certain of our content contracts in order to evaluate our compliance with these requirements. These conditions require us, among other things, to:

• grant other premium television service providers access to the Telenet Network on commercially reasonable terms, taking into account, among other things, the available capacity on the Telenet Network;

• offer our premium service to other television network operators who want access to our premium content,

and charge end users on the Telenet Network and such other networks a uniform, nondiscriminatory price;

• not enter into contracts with premium television broadcasters and with certain free-to-air broadcasters (specifically VRT, VMMa and VT4) that make us the exclusive distributor of their signal and waive any existing exclusivity provisions;

• not invoice Prime subscribers served by other television network providers under the "Telenet" name and

not deliver any Telenet publicity with such invoices;

• list all television network providers to whom we provide the Prime service in any Telenet advertising for Prime; and

• provide the Belgian competition authority an annual compliance report and obtain its approval for any sale

or assignment of the content rights that we acquired in the Canal+ Acquisition. Premium Tier Content Through the Canal+ Acquisition, we acquired content rights, which we have repackaged into our current Prime offering. We have access to this content for our premium service through various studio contracts, including Universal Studios, MGM, Twentieth Century Fox, Paramount and Warner Brothers. These contracts, the earliest of which expires in 2008, generally require us to make payments on the basis of a minimum number of subscribers, with adjustments made on a sliding scale once minimum subscriber levels are satisfied. The success of our premium services depends on our ability to obtain attractive content on reasonable terms. Recently, competition for premium content in Belgium has increased, in large part due to the launch of a competing television service by Belgacom. Competition for the renewal of our soccer rights has been especially strong, and the amounts that we have paid to renew existing contracts has increased significantly compared to the rates previously paid. In addition, we were unsuccessful in our efforts to renew the rights to broadcast the games of the Belgian and Italian

51

national soccer leagues. We have submitted bids to renew of our rights to broadcast the Dutch, French and German national soccer leagues, and to the NBA basketball league, for the seasons beginning in August 2006. Furthermore, we are awaiting the start of the renewal process for the rights to the Spanish national soccer leagues. As a result of losing certain rights for premium content or paying higher prices for such content, our ability to attract and retain subscribers to our premium services may be adversely affected and our profitability may be impaired. In addition, most content agreements entered into by Telenet with the major studios do not allow Telenet to offer content via interactive means. These agreements will therefore need to be renegotiated and content prices may increase. See Item 3, “Key information – Risk factors—Risk Related to Our Business—The inability to ensure sufficient access to premium and basic programming could have an adverse effect on our operating results." Residential Internet We offer "always on" high-speed broadband internet services to residential subscribers throughout Flanders over the Combined Network. Using internet-only cable modems and dual purpose internet and telephony modems to connect subscribers to the Combined Network, our current residential offerings include multiple tiers, which range from Telenet "ComfortNet," which allows end users to receive data from the internet at a "downstream" data transfer speed of up to 512 Kbps, to "ExpressNet Turbo," which offers end users a downstream speed of up to 20 Mbps. We also offer an entry level narrowband internet product, FreeSurf, which is upgradeable post-installation to any one of our broadband ExpressNet internet services. We impose limits on the volume of data that may be uploaded and downloaded by a customer in any particular month. Should customers reach these limits, they are able to purchase blocks of additional upload or download data volumes. We believe that a combination of speed, brand recognition, customer service and features enabled us to gain an estimated 53% share of the Flemish residential broadband internet market as of December 31, 2005. Broadband internet services have reached high levels of acceptance in Flanders. This trend may be attributed to the high level of awareness of residential broadband internet service in Flanders, in part because of our marketing efforts and those of Belgacom. Our ability to continue to grow this market, however, will depend in part on increases in the number of households with a personal computer in Flanders. Based on recent external research sources, we estimate that as of the end of 2005, approximately 60% of households in Flanders contained a personal computer, which lags behind the rest of Western Europe. The following chart sets forth certain information related to our residential broadband internet service as of and for the periods indicated:

For the years ended December 31 2003 2004 2005

Homes passed (in thousands)(1) ................................................................. 2,484 2,484 2,507 RGUs (in thousands)(2) ............................................................................... 399 506 601 Penetration rate(3)...................................................................................... 16.8% 21.3% 24.9% Average monthly revenue per user (in euro)(4)....................................... 35.2 34.2 33.3 Churn (annualized)(5) ................................................................................. 7.3% 9.2% 8.5%

(1) Homes passed represents the number of potential residential, SoHo and SME subscribers to whom we can offer our

broadband internet services via a coaxial connection. (2) Our residential broadband internet and telephony RGUs include households and SoHos that receive our services

through a coaxial connection. (3) Penetration rates are calculated based on the number of RGUs at the end of the relevant period as a percentage of the

number of homes and businesses, as applicable, passed by the Combined Network at the end of the relevant period. See "Presentation of Financial and Other Data—Subscriber and Related Data." Includes SMEs that receive our broadband internet and telephony services through a coaxial connection. We had 18,000, 22,000 and 23,000 SME coaxial internet customers as of December 31, 2003, December 31, 2004 and December 31, 2005, respectively.

(4) Revenue earned for the period divided by the number of months in the period and divided by the average number of

RGUs for the period (which average number may vary from the number of RGUs presented at the period end date). (5) Total number of RGUs disconnected, excluding migrators to FreeSurf, during the period divided by the average number

of RGUs for the period. Statistics for FreeSurf are not disclosed. Churn statistics do not include customers who move

52

within the areas of the Combined Network offering the same service and who elect to receive the same services from us that they previously received at their prior location. Includes SMEs that receive our services through a coaxial connection.

We offer our subscribers several installation alternatives when they subscribe for internet access from us in order to maximize the convenience of the process for the customer. See “ –Residential Sales, Marketing, Installation and Customer Care-Installation and Customer Care.” The following table describes the principal features of the broadband internet services that we currently offer to new customers. We recently announced enhancements to our broadband internet services, doubling the download speeds of the ExpressNet, ExpressNet Plus and ExpressNet Turbo offerings. Our most popular internet offering is the ExpressNet offering, which connects up to two personal computers at a subscriber's residence to the internet. After installation, customers are able to amend the particular broadband service they subscribe to through their Telenet internet service. All prices are valid as of the date of publication of this annual report.

ComfortNet

ExpressNet ExpressNet

Plus Expressnet

Turbo

Number of computers (IP-addresses)............... 1 2 4 4 Number of mailboxes ....................................... 1 × 50 MB 4 × 50 MB 8 × 50 MB 8 × 50 MB Mailbox attachments (max per e-mail) ............ 10 MB 10 MB 10 MB 10 MB Webspace .......................................................... — 50 MB 50 MB 50 MB Speed

Downstream (maximum)............................... 512 Kbps 10 Mbps 15 Mbps 20 Mbps Upstream (maximum).................................... 128 Kbps 256 Kbps 512 Kbps 51 2Kbps

Permitted monthly volume Total peak data traffic(1) .................................... 400 MB 12 GB 18 GB 35 GB

of which upstream.......................................... 100 MB 2 GB 3 GB 5 GB Total off-peak data traffic(2).............................. 800 MB 24 GB 36 GB 70 GB

of which upstream.......................................... 200 MB 4 GB 6 GB 10 GB Monthly subscription fee (including VAT) ..... €29.95 €41.95 €51.95 €59.95

(1) Peak hours are from 10:00 a.m. to 12:00 midnight, seven days a week. (2) Off-peak hours are from 12:00 midnight to 10:00 a.m., seven days a week. As part of our strategy to offer packages of multiple services to our customers, we recently introduced a narrowband internet offering, "FreeSurf," which is available to subscribers of our "Telenet FreePhone" and "FreePhone Anytime" telephony plans, pursuant to which subscribers can receive an always-on narrowband internet connection that provides a maximum download speed of up to 64 Kbps. FreeSurf is currently offered on a promotional basis free of charge when sold as a bundle to new Freephone telephony customers, or on a standalone basis for €16.95 per month including VAT. The principal target market for the FreeSurf product is dial-up internet customers. We also offer a variety of optional features from which our broadband internet subscribers may select, as specified in the following chart. Prices include VAT.

53

Option Price

(Monthly, except where otherwise specified)

Telenet Internet Anti-Virus............................................................................................... Free Telenet Internet Anti-Spam............................................................................................... Free Telenet Internet Auto Response........................................................................................ Free Telenet EasyCare .............................................................................................................. Free ComfortNet Extra volume per 150MB (up to 2GB extra).................................................................... €1.00 per 150 MB Extra mailbox (up to 20 mail boxes extra) ....................................................................... €1.50 per mailbox Telenet Internet Security Pack

1 computer...................................................................................................................... €3.95 per computer 2-8 computers................................................................................................................. €2.95 per computer

ExpressNet, ExpressNet Plus and ExpressNet Turbo Extra volume per GB (up to 20 GB extra) .......................................................................

€1.00 per GB downstream €1.00 per 200 MB upstream

Extra mailbox (up to 20 extra mailboxes) ........................................................................ €1.50 per mailbox Telenet Internet Security Pack(1) ......................................................................................

€3.95 per computer (Free with ExpressNet Plus

and Turbo) 2-8 computers................................................................................................................. €2.95 per computer

Extra 10MB of webspace.................................................................................................. €2.00 per 10MB Subdomains ....................................................................................................................... €2.50 per domain Domain Names ........................................................................................................... .be €2.95 per domain

................................................................................................................. .com/.org/.net €4.95 per domain

(1) Includes firewall and parental controls. In February 2005, we launched our PCTV product, a service available to Telenet broadband internet customers offering music, film and television broadcasts for viewing over customers' personal computers. The service includes premium content such as films, which are available on an on-demand, pay per view basis at a cost of between €0.99 and €4.95 including VAT, depending on the genre and release date, and free content including certain films, general interest television, and music channels. A selection of broadcast on demand content has subsequently also been introduced to our PCTV offering at prices starting at €0.50 including VAT. Our PCTV offering is a niche product that does not offer the range of services associated with our iDTV offering. It was designed to introduce our broadband internet customers to some of the features available on iDTV. We offer selected promotions to our residential broadband internet customers to access our Wi-Fi broadband internet service. Separately, we offer Wi-Fi access to non-subscriber customers on the basis of timed access periods for various durations of between one hour and one day. Our Wi-Fi services are also available for longer periods on a subscription basis. As of December 31, 2005, we offer Wi-Fi services from approximately 750 so-called "hot-spots" located in Belgium and Luxembourg, and are continuing to roll-out our network. We plan to continue to increase the number of hot-spots in Belgium offering Wi-Fi service. Residential Telephony We offer our residential subscribers throughout Flanders local, national and international long distance telephony services together with a variety of related value-added services. As of December 31, 2005, we estimate that, based on total active telephone lines, Belgacom, Belgium's incumbent telephony provider, had an estimated 75% share of the fixed-line telecommunications market in Flanders. As of that same date, we had an estimated market share of 21% in Flanders, as measured by RGUs, representing 358,000 direct access subscribers. Our telephony subscribers are linked to the Combined Network, and we earn revenues from subscription and usage fees generated by these subscribers. We also offer telephony services on a carrier pre-select basis, although we no longer actively market this service. We had 8,000 carrier preselect subscribers as of December 31, 2005, not including those subscribers which we acquired through the Phone-Plus subsidiary of Telenet Solutions. We are able to offer our carrier preselection service,

54

either under the Telenet brand or through our Phone-Plus subsidiary across Belgium and earn revenues from this service only for usage. Currently, we are the largest alternative provider of residential telephony services in Flanders after Belgacom, the incumbent telephony operator.. We believe sales of our residential telephony services have been driven by a combination of attractive tariff rates, notably the “FreePhone” rate plans, cross sales from our broadband internet services and the high standards of customer service we seek to maintain. In addition, we use a range of promotions to attract new subscribers to our telephony services. Our "Telenet FreePhone" rate plan was launched in December 2004, providing subscribers unlimited national calls to fixed lines during off-peak hours for a monthly subscription fee of €16.95. In June 2005, we introduced "FreePhone Anytime," which offers subscribers unlimited national fixed-line calls during both peak and off-peak national calls in exchange for an additional monthly fee of €4.95. To encourage take up of multiple services, one of our current promotions offers our always-on FreeSurf internet product, usually priced at €16.95 per month, at no additional charge to new Telenet FreePhone or FreePhone Anytime customers. The introduction of the FreePhone and FreePhone Anytime tariff plans have been successful in increasing the penetration of this service, but have also reduced the ARPUs we earn from residential telephony. The following chart sets forth certain information related to our residential telephony service as of and for the periods indicated:

For the years ended December 31 2003 2004 2005

Homes passed (in thousands)(1) ................................................................. 2,484 2,484 2,507 RGUs (in thousands)(2) ............................................................................... 254 293 366

Direct access ............................................................................................ 231 281 358 Carrier preselect(2) .................................................................................... 23 12 8

Penetration rate(3)...................................................................................... 9.5% 11.5% 14.5% Average monthly revenue per user (in euro)(4)....................................... 36.1 37.1 33.3 Churn (annualized)(5) ................................................................................. 13.1% 13.6% 11.3%

(1) Homes passed represents the estimated number of potential residential, SoHo and SME subscribers to whom we can offer

our telephony services via a coaxial connection or a carrier preselect service. (2) Excludes the carrier preselect customers acquired with the Phone-Plus subsidiary of Telenet Solutions. (3) Penetration rates are calculated based on the number of RGUs at the end of the relevant period as a percentage of the

number of homes and businesses, as applicable, passed by the Combined Network at the end of the relevant period. See "Presentation of Financial and Other Data—Subscriber and Related Data." Includes SMEs that receive our telephony services through a coaxial connection. We had 5,000, 6,000 and 6,000 SME coaxial telephony customers as of December 31, 2003, December 31, 2004 and December 31, 2005, respectively.

(4) Revenue earned for the period divided by the number of months in the period and divided by the average number of RGUs

for the period (which average number may vary from the number of RGUs presented at the period end date). Excludes interconnection revenue, installation fees and revenue generated by RGUs that use our carrier preselection services.

(5) Total number of RGUs disconnected during the period divided by the average number of RGUs for the period. Excludes

RGUs that use our carrier preselection services and includes SMEs that receive our services through a coaxial connection. Churn statistics do not include customers who move within the areas of the Combined Network where the relevant service is available and who elect to receive the same services from us that they previously received at their prior location. We exclude RGUs that use our carrier preselection services from our residential telephony churn statistics because, for the most part, these customers subscribe to our direct access telephony services upon ceasing to subscribe to our carrier preselection services.

Our residential telephony subscribers are charged a combination of fixed monthly fees for their telephone line, variable fees based on actual usage and, for certain tariff plans, fixed fees for unlimited calling to national fixed lines at all times. Flat rate usage charges apply for calls placed to other fixed lines in Belgium. We seek to price our residential telephony products to provide a better value alternative to Belgacom. The following table sets out our basic fixed-line

55

and per minute telephony tariffs effective for new subscribers joining Telenet as of the date of publication (including VAT). Currently, subscribers are not generally charged an installation fee to receive residential telephony services. Monthly line rental fee – FreePhone tariff(1)(2)............................................................................... €16.95 Additional line rental fee................................................................................................................ €12.71 per line Additional monthly fee – FreePhone Anytime(3) ........................................................................... €4.95

Peak(4) Off-peak(5) Peak

Set-Up(4) Off Peak

Set-Up(5)

(euro cents

per minute) (euro cents per minute)

(euro cents per call)

(euro cents per call)

National fixed line calls(2) ........................ 5.20 0.00 5.20 0.00 International fixed line calls .................... 18.73 to 26.01 9.36 to 20.81 10.40 10.40 Belgacom Mobile mobile calls ................ 19.85 14.09 11.22 11.22 Mobistar mobile calls............................... 24.81 16.49 11.22 11.22 Base mobile calls ..................................... 29.23 19.89 11.22 11.22 International mobile calls ........................ 55.75 to 63.03 46.39 to 57.83 10.40 10.40

(1) Does not apply to carrier preselect subscribers.

(2) Subscribers to the Telenet FreePhone service are able to make unlimited national fixed-line calls during off-peak hours in exchange as part of their fixed monthly fee.

(3) Subscribers to the FreePhone Anytime service are able to make unlimited national calls to fixed lines during both peak and off-peak hours in exchange for payment of an additional monthly fee.

(4) Peak hours are from 8:00 a.m. to 7:00 p.m. during weekdays, except for mobile calls to Base, for which peak hours are from 10:00 a.m. to 10:00 p.m. during weekdays.

(5) Off-peak hours are from 7:00 p.m. to 8:00 a.m. during weekdays and all day during the weekend and on public holidays, except for mobile calls to Base, for which off-peak hours are from 10:00 p.m. to 10:00 a.m. during weekdays and all day during the weekend and on public holidays.

We also offer our residential subscribers enhanced telephony features for an additional fee. Enhanced offerings include packages of features and individual services such as voicemail and caller ID. The following table lists the prices (including VAT) for subscribing to some of the additional telephony features that we offer as of the date of this annual report:

Additional Feature Package/Service

Services

Monthly Charge (including VAT)

Top Line (Top-lijn™) ........................ Caller ID, voicemail, call forwarding and call waiting €4.00 Youth Line(1) (Jong-lijn™) ................ Separate phone number and monthly calling budget €4.00 Additional features............................. Caller ID, call detail €3.69 each Voicemail, call forwarding and call waiting €1.75 each

(1) Only available when subscribing for an extra line. Our subscribers currently receive residential telephony services through modems that operate on a combination of proprietary and open standards technologies. Prior to July 2004, all our telephony services used modems that operated on a proprietary Motorola standard. Partly in response to Motorola's decision to discontinue production of its telephony modems, in July 2004, we began to use modems that operate on a VoIP packet cable standard. These VoIP modems, which operate on an open standards EuroDOCSIS protocol, are able to provide both internet and telephony services and, once installed, services can be activated or deactivated without the need for a house call. As of December 31, 2005, approximately 47% of our telephony subscribers used VoIP technology. We continue to deliver telephony services through our legacy telephony modems alongside our VoIP offering, and expect to gradually transfer existing customers to VoIP modems through the natural equipment replacement process as their current equipment ages. We have not observed any difference in the features or service quality available to customers using VoIP modems instead of Motorola modems for their telephony service.

56

Interconnection Network operators, including us, charge interconnection termination fees to terminate telephone calls on their network that originated from a user on another network. Typically, the cost of interconnection fees that we pay is taken into account in the price we charge our subscribers. Interconnection fees that we receive to terminate calls originating domestically are higher than for calls originating from outside of Belgium and charges for interconnecting to a mobile network are substantially higher than charges for interconnecting to another fixed-line network. For the year ended December 31, 2005, we incurred interconnection fees of €52.9 million and received interconnection revenue of €31.1 million. For the year ended December 31, 2004, we incurred interconnection fees of €51.1 million and received interconnection revenue of approximately €28.9 million. Our interconnection practices are subject to comprehensive regulation by the Belgian Institute for Post and Telecommunications (Belgisch Instituut voor Postdiensten en Telecommunicaties / Institut Belge des Services Postaux et des Telecommunications) (the "BIPT"). See “ – Regulation—Telephony Regulation—Interconnection." In August 2002, we increased the rates we charge for inbound domestic calls that terminate on the Combined Network from an average of €0.009 per minute (which had been charged on a reciprocal basis) to an average of €0.0475 per minute. This price increase is the subject of legal challenges by Belgacom. See Item 8, “Financial information —Legal Proceedings—Interconnection Litigation" and Item 3, “Key information – Risk factors—Litigation Risks—We are currently involved in a significant dispute with Belgacom relating to the price we charge competitors to interconnect to our telephony network, and an unfavorable outcome for us in this dispute would reduce the profitability of our telephony business." Interconnection termination rates for inbound international calls remained at €0.009 per minute until the end of 2003 and since the beginning of 2005 have been reduced to €0.0076 per minute. We expect the average interconnection fees that we charge to terminate both international and domestic calls on the Combined Network to decrease in the coming years as our cost of terminating calls on the Combined Network decreases, to the point where we eventually revert to a reciprocal interconnection fee arrangement with other operators. However, in February 2006, the BIPT issued a consultation statement on the market for fixed voice termination in which it proposed that we, as well as other non-incumbent providers of fixed line telephony, should adopt a mandated path reducing the higher interconnection rate which we currently charge for calls terminated on our network to the lower rate that is charged by Belgacom over a three year period. The consultation statement is based on the BIPT’s findings that we possess significant market power in our network for the termination of calls. If the results of this consultation, which we are opposing through the European Commission and other regulatory bodies, are adopted, the interconnection revenues which we receive could decline at a faster rate than we currently anticipate, particularly if our telephony subscriber base does not achieve the growth rates we are seeking to attain. See Item 3, “Key information –Risk factors—Risks Related to Regulatory and Legislative Matters—The BIPT has issued a consultation statement regarding our interconnection rates, which, if adopted, could result in a significant reduction in our projected interconnection revenues in certain years” and Item 5, “Operating and financial review and prospects—Operating results—Recent Developments—BIPT Proposal Regarding Interconnection Termination Rates.” Our principal interconnection agreements are with Belgacom, Belgacom Mobile, Mobistar and Entreprise des P&T Luxembourg. Belgacom provides telephony services to an estimated 75% of the Flemish fixed line market, and the majority of the interconnection fees that we pay are to Belgacom. A provisional interconnection agreement governs our relationship with Belgacom. Pursuant to the terms of this agreement, we agree to terminate calls to users on our respective networks. Belgacom charges us its standard tariffs for these services, which is an average of €0.0076 per minute for fixed-line calls. We charge higher rates to terminate domestic calls on the Combined Network pursuant to certain decisions of the BIPT, which effectively modified our provisional interconnection agreement with Belgacom. See Item 8, “Financial information —Legal Proceedings—Interconnection Litigation." As of May 1, 2005, the term of our provisional interconnection agreement with Belgacom was extended for an indefinite term. Our agreement with Belgacom Mobile can be terminated by either party on eight-months advance notice. In July 2003, we entered into an interconnection agreement with Mobistar in order to reduce the average interconnection and transit charges we incurred when routing calls from the Combined Network to Mobistar via Belgacom's network. We are now able to interconnect directly with Mobistar and interconnect directly or indirectly with other mobile operators in Belgium. See Item 3, “Key information – Risk factors—Risks Related to Our Business—The Belgian internet, data and telephony industries are highly competitive and the television industry is likely to become more competitive in the future, which could result in higher content costs and marketing expenses, lower subscription rates and the loss of subscribers." We also have agreements with MCI, T-Systems, Colt, KPN International and Belgacom International Carrier Services that govern interconnection termination rates for international calls that originate on the Combined Network.

57

Residential Sales, Marketing, Installation and Customer Care Sales and Marketing We market our residential cable television, internet and telephony services under the "Telenet" brand name, which we support with extensive advertising and brand awareness campaigns. Previously, our basic cable television service was marketed under the MixtICS name and our premium cable television service under the Canal+ brand name. In July 2005, we rebranded our basic analog cable television service under the Telenet name, and, in conjunction with our launch of iDTV on September 3, 2005, now market our premium cable television services under the "Prime" brand name. We believe that our basic analog cable television service has historically been viewed as a utility service and therefore have not actively marketed it, although we have undertaken a substantial marketing effort to promote our new iDTV offering under the Telenet Digital TV name, together with the associated “Prime” brand for certain film and sports content. Our residential sales and marketing division manages all aspects of subscriber acquisition, installation and retention on a unified basis for our cable television, broadband internet and telephony businesses. We manage our marketing and promotional activities, sales channels and customer care initiatives to increase the degree of subscriber penetration and increase the numbers of services purchased by our subscribers. We use a combination of individual promotions and general brand marketing to attract and retain subscribers. Our marketing expenses include fixed costs, commissions paid to generate sales and subscriber incentives that can include free installation and reduced subscription costs. Post-installation, we engage third parties to conduct frequent surveys to determine whether subscribers are satisfied with us and our products. We also use "win-back" promotions and other programs to minimize voluntary churn and to persuade subscribers who seek to disconnect their service to change their decision. As an important part of our customer acquisition strategy, we actively seek to market multiple services to individual customers and offer promotional discounts to customers who receive multiple services from us. Internal studies that we have conducted indicate that customers who subscribe for more than one service from us are significantly more likely to continue to use Telenet in the future instead of switching to an alternative provider. Moreover, we believe that since the launch of iDTV, we have started to benefit from the opportunity to introduce additional customers to our internet and telephony offerings. Following a recent change in Belgian telecommunications law that made an exception to the general prohibition on bundling discounts, we launched our first combined internet/telephony offering, FreePhone/FreeSurf, on June 30, 2005. Going forward, we expect to increase the number of package offers we provide, including offering free activation and installation to customers who take combinations of our iDTV, broadband internet and telephony services. Despite the fact that bundling of products and services in our sector has been made possible, competition law remains applicable to our offerings. As a consequence, we expect that rebate options with our television offering will be allowed to a lesser degree due to our market share for television distribution. See “ – Regulation —Competition Law." We also seek to offer customers attractive introductory offers. In recent periods, promotions we have successfully deployed included reduced rate tariffs for a limited period and reduced tariffs for taking two services in combination. We also seek to attract customers through promotional activities and entry level offerings, such as our FreeSurf narrowband internet service, and then migrate the customer over time to services that offer higher access speeds and enhanced features for an increased subscription price. In addition, we offer "Member get Member" promotions, which are designed to encourage existing customers to refer new customers to subscribe to our services. Sales and marketing channels include media advertising, telemarketing, e-marketing, door-to-door marketing and targeted mail solicitation. We make direct sales through our customer call center at our head office in Mechelen. In addition to our call center, our agents, who are paid a commission based on the number of sales closed, also provide a significant source of sales. These agents include consumer electronics and other retail outlets, dealers and door-to-door marketers. In addition, approximately 12% of our sales for the year ended December 31, 2005 came through our Member get Member program. We continuously evaluate our marketing channels to allocate our resources most efficiently. Installation and Customer Care The installation process is an important element of our overall customer management process. We believe that the installation process can generate customer satisfaction and valuable cross-selling opportunities when properly implemented, or generate an adverse reaction, potentially resulting in a sales cancellation or customer churn, if not well managed. Currently, all residential services except for basic analog cable television require an installation by a trained

58

technician. All services except for basic analog cable television require that a network interface unit (“NIU”) be installed in the customer’s home in order to enable interactivity between our network and the end-user, and to prevent interference from entering the Combined Network. The connection from the NIU to the appropriate device or devices, e.g. television, personal computer or telephone, can be implemented using a combination of wired and wireless solutions. We are able to offer wireless ("Wi-Fi") installations, enabling our residential subscribers to limit the amount of wiring required in their homes for internet connections. We can also offer internet subscribers the option of transmitting internet signals through the existing electrical wiring network of a home, thereby also reducing the amount of in-home cabling required. The choice of modem or set top box depends on which services the customer plans to use and is also a function of current technology choices. We are able to optimize the cost we incur for customer equipment both at initial point of sale, and for future cross-sell opportunities, through our selection of type of modem and set top box. For example, new iDTV customers will typically be enabled for internet and telephony services also, which can be subsequently activated for a limited incremental cost. For our internet services, we offer a range of installation choices to suit the preferences of the subscriber: the "Basic Install" plan, where the Telenet installer installs only the cable internet modem; the "Basic Install Plus" plan, where the Telenet installer also provides required cables; the "Comfort Install" plan, where cables are not supplied but the Telenet installer also configures the subscriber's personal computer; and the "Comfort Plus Install" plan, where the Telenet installer addresses all aspects of the installation so that the subscriber is ready to use the internet immediately after the installation is completed. The overall customer care process, including the installation, is a significant priority of our management. We regularly conduct surveys and tests to analyze the effectiveness, efficiency and satisfaction of our customers in all aspects of their experience with us, from the initial sales and marketing effort, to installation and any required follow up. We pay close attention to the reasons why customers discontinue our services in an effort to minimize churn. We use a customized information technology platform to manage subscriber records from the point of sale, monitor product installation on a real-time basis and track and respond to subscriber queries. We have an upgraded customer service platform to provide our call center agents with, among other things, individual subscriber payment information and the ability to download network status data. In addition to our in-house call center, which addresses customer queries, we contract with outside providers who handle a majority of our call volumes. We offer an on-line program, Telenet EasyCare, which assists customers in resolving certain technical difficulties they experience, providing twenty-four hour support on a more cost-efficient basis. In addition, all of our installers have GPRS laptop computers that use proprietary technology to stay connected with the head office when they are conducting subscriber installations. We seek to improve the efficiency of our installation process to deploy our resources in a more effective manner. Business Services Our business customers include small and medium size enterprises ("SME") with between five and 100 employees; larger corporations; public, healthcare and educational institutions; and carrier customers that include international voice, data and internet service providers. For the year ended December 31, 2005, our business services operations generated €68.5 million in revenue, €29.9 million of which was generated by our corporate, public and health and educational customers, €20.7 million of which was attributable to SMEs and €17.9 million of which came from our carrier business. We market our business services under the Telenet Solutions brand name. Current corporate customers include AGFA, DHL, Concentra Media, AT&T, Shell and KBC Bank. Our corporate customers generally connect to the Telenet Network directly through a fiber optic connection and our SME customers connect to the Combined Network through a fiber, DSL or coaxial connection, depending on the scope of their needs and their location relative to our network. Through the Telenet Solutions Acquisition, completed in December 2003, we were able to substantially expand the products we offer to our business customers, especially in the data service segment and through provision of an IP-MPLS (multi protocol layer switching), complemented by the first IP-VPLS (virtual private LAN services) network in Belgium during 2005 for secure data transport and Ethernet VPN (virtual private network) services. As part of this Acquisition we also gained access to network assets of Telenet Solutions, which allowed us to provide service to business customers not only in Flanders, but throughout Belgium and parts of Luxembourg. With the subsequent addition of DSL services we have greater flexibility to target customers throughout Belgium because we are not

59

dependent on such customer's proximity to the Telenet Network. See "—The Combined Network." As a result of our expanded reach through our DSL capabilities, we are focusing efforts to target additional SME customers. Our business customers evaluate our offerings based on price, technology, security, reliability and customer service. Our offerings include internet, data and voice products that provide varying levels of service depending on the needs of the customer—ranging from residential-type products for SMEs that require internet access and professional support, to higher specification products for large customers. Internet products include i-Fiber, Wi-Fi services and internet over copper leased lines, DSL lines or coaxial connections. Voice products include a range of fiber, coaxial and DSL products matched to the capacity needs of customers, as well as other services. Data products consist primarily of various forms of leased lines, which are typically sold to corporate customers and to carriers. We also offer virtual private network ("VPN") customized services for customers. Our network coverage for business customers extends across the whole of Belgium and into Luxembourg, relying on the Combined Network, including the network assets of Telenet . We have dedicated sales and marketing teams for most of our large business customers, and use a combined regional and sector based approach for corporate and institutional account management. Our sales force is aligned to separately target business customers in government, health services, banking and financial services, and distribution industries. We use more traditional direct sales methods and business partners such as resellers who provide business customers complete IT solutions to reach the SME segment, on which we are focusing. Prices that we offer our corporate, public, healthcare, educational and carrier customers are usually negotiated within fixed parameters, whereas more standardized prices typically apply to our SME customers. For certain large corporates, we enter into individual agreements under which we must meet minimum service levels. As part of the integration of Telenet Solutions into our operations, we completed the merger of Telenet Solutions into Telenet NV on December 31, 2005, with effect from January 1, 2006, after completing the migration of voice customers from the network acquired from Telenet Solutions to the Telenet Network. As a result, our standard interconnect tariffs apply to calls to these customers, not the lower reciprocal rate that has historically been used on the network utilized by Telenet Solutions. Belgacom has disputed these increased interconnection tariffs, contending that we should apply the historic Telenet Solutions interconnect tariffs to former Telenet Solutions customers. Following their integration on the Telenet Network, the cost of terminating calls for our former Telenet Solutions customers is the same as terminating calls for other customers served by the Telenet Network, meriting the higher interconnection rates. Although Belgacom had indicated its objections to paying the higher interconnection charges resulting from this migration, it has not challenged any of the interconnection invoices presented since the migration occurred. Future Products and Services We aim to offer our customers new products and services in order to grow our business, develop the Telenet brand and increase customer satisfaction. See " —Our Strategy—Improve ARPU per Unique Customer." We generally seek to adopt new technologies only after appropriate standards have been successfully implemented on a commercial scale. This approach increases the likelihood that the cost of necessary equipment will decline over time and reduces performance, compatibility and supply risks. In addition to our recent launch of iDTV, we are also in the early stages of expanding and marketing a national footprint of public Wi-Fi hotspots, and anticipate that usage of this service will increase significantly in the future. Together with other partners, we are participating in the i-City project to establish contiguous hot spots throughout two towns in Belgium, Leuven and Hasselt. We also are in the process of deploying Wi-Fi services for several clients, including at the gas stations of Q8 and the train stations of Belgian National Railways. Although in very early stages of planning, it is possible that in future years a joint mobile-Wi-Fi telephony system may emerge that would enable mobile telephony customers to use handsets that would automatically switch from traditional mobile networks to lower-cost Wi-Fi systems when in a Wi-Fi hot-spot service area. In addition, we are considering new technologies, including VoIP products that offer a reduced specification telephony service at a potentially significantly lower cost than is currently deployed on the Telenet Network. Under certain circumstances, we may consider adopting certain additional technologies that have a limited deployment history, to the extent that we are able to do so with an appropriate consideration of the potential risks involved. In addition, we recently announced an agreement with Mobistar pursuant to which we will implement a Mobile Virtual Network Operator ("MVNO") operation later in the year. Under this agreement, we will purchase minutes and services on a wholesale basis from Mobistar and resell them under the Telenet brand name. See Item 3, “Key information—Risk factors—Risks Related to Our Business—If we fail to successfully introduce new technologies or services, such as our our recently launched iDTV service, or to respond to technological developments, our business and

60

level of revenues may be adversely affected and we may not be able to recover the cost of investments that we have made." We are investigating the feasibility of providing high definition television ("HDTV") broadcast services as part of our iDTV offering. HDTV provides an enhanced viewer experience, particularly in the form of a sharper image, but will require an upgrade of certain end user equipment in order to fully exploit the HDTV experience. We are evaluating potential responses to the BIPT’s announcements regarding their intended offering of two licenses to provide broadband communications using Wi-Max wireless technology. Belgium currently has two Wi-Max licenesees who have begun operations, focused initially principally on the Brussels area. We do not know yet the basis on which the BIPT will offer these licenses, if at all, nor whether we would be interested to seek an interest in these licenses in order to exploit them. If we choose not to exploit the Wi-Max licence opportunity, eventual licensees of this technology may compete against us in the future (see “– Competition”). In the future, we may also consider using DSL technology to access Belgacom's nation-wide network to provide our range of residential services to customers who reside in parts of Belgium that are not passed by the Combined Network, including those who reside in Brussels and Wallonia. Numerous factors would have to be considered before any such effort were undertaken, including, among other things, a careful examination of the rules governing the use of Belgacom's network, available technologies, the expenses associated with such a roll-out, and issues associated with expanding our services into the French-speaking areas of Belgium, including our ability to obtain sufficient levels of French-language content for our television offerings. For our business services customers, we seek to continue to develop products and services that leverage both our coaxial and fiber networks, with specific applications contemplated for our different classes of customer, such as SME, corporate and carrier customers. We plan to implement product development both in the near term as well as the longer term, with technology migration plans and service and value-added enhancements. However, these plans may evolve as we monitor the adoption of technologies, products and services and respective costs and market pricing. Supply and Installation We have relationships with several suppliers that provide us with hardware and software necessary to operate the Combined Network. Some of these supply agreements require that we satisfy minimum volume requirements. For network critical equipment, we have a dual vendor policy pursuant to which we seek to have at least two sources of supply for necessary equipment. Under a framework agreement with Motorola, we have designated Motorola as our preferred supplier of high-speed data modems and related head end equipment until the later of March 29, 2006, or such date of termination of any sub-agreement made under the framework agreement, provided that the products Motorola supplies continue to be competitive based on an overall combination of quality, availability, pricing, technical specifications, integration and support services and other supply terms. As of the date of publication of this annual report, we remain party to one or more sub-agreements subject to the terms of the framework agreement. We have agreed to purchase from Motorola on an annual basis at least 30%, and over the term of the framework agreement at least 50%, of our requirements for modems (including VoIP modems) and any set top boxes required for iDTV. Under the terms of the contract, we cannot use digital set top boxes from any other vendor until at least six months after we have deployed Motorola's boxes. Subject to certain terms and conditions, we had also agreed to exclusively deploy Motorola's proprietary conditional access system, which provides encryption and access control functions for the Telenet Network, unless we already possess a conditional access system of our own. We acquired our own conditional access system through the Canal+ Acquisition. Arris and Motorola supply us with all of our internet modems, and Motorola historically supplied us with the majority of the modems that we used to provide residential telephony service until Motorola discontinued production of the modems at the end of 2003. Following Motorola's recent tender to supply us with the combined telephony and internet modems that we use to provide VoIP telephony, we have agreed to begin purchasing the Motorola modems in addition to the modems provided by our existing supplier. Motorola has not yet tendered a proposal to supply us with digital set top boxes that meet our network specifications, and following production delays by a second set top box supplier, ADB is our sole supplier of digital set top boxes for our iDTV service. We are seeking, however, to add additional suppliers of digital set top boxes. Samsung provides us with the cable tuners that we use in conjunction with our basic digital offering. We have also entered into maintenance agreements with Motorola to provide necessary maintenance on Motorola head end equipment. In addition, we have supply and maintenance relationships with other entities, such as

61

Siemens, which is a supplier of amplifiers for our ExpressNet upstream upgrade project; and Nortel Networks Corp., from whom we purchased our telephone switches and who now provides us with switch maintenance services. Other significant suppliers include Alcatel and Juniper Networks, which provide equipment necessary for our internet protocol backbone and the transportation of our telephony traffic, and Cisco Systems, Inc., which supplies certain other network equipment. Teleste supplies us with network equipment which we are using for our upstream upgrade project. We currently use eleven different subcontractors to install internet, telephony and iDTV equipment in subscriber homes, in addition to having a small portion of installations performed by our own employees. Following the recent launch of our iDTV services, we have gradually increased the number of contract installers available to meet expected demand. Customers subscribing to our iDTV service are able to install set top boxes themselves to begin receiving the range of available downstream channels, but professional installation is required to activate the interactive features. Our agreements require that the subcontractors maintain certain quality levels and use trained personnel, and we monitor the efficiency and quality of service provided by the subcontractors on a regular basis. Infosys Technologies Limited provides our group with information technology ("IT") services. Pursuant to a framework agreement that we entered with Infosys in March 2001, Infosys designed our customized IT platform that manages our subscriber records and continues to provide us IT maintenance and other design and support services, including formal upgrades to our IT platform. Cronos provides us with support for our ERP system. See Item 3, “Key information—Risk factors—Risks Related to Our Business—The Combined Network and related systems depend on equipment and service suppliers that may discontinue their products or seek to charge us prices that are not competitive, either of which may adversely affect our business and profitability." We work with Artilium in several projects, and use its VoiceLink solution for a number of voice network features provided to our business telephony customers. These include a number of standard processes as well as customized solutions that were designed specifically for Telenet Solutions. Billing Initially, following our acquisition of the cable television assets of the MICs, billing for our basic cable television services was performed on our behalf in conjunction with local electricity bills issued by Electrabel. Following a transition period, we assumed responsibility for billing in December 2003 and in July 2005, we began billing these services directly under the Telenet name. As of December 31, 2005, we collected over 90% of our basic cable television subscriptions on an annual basis in advance. Subscribers receive their annual bill in different months of the year. Subscribers can ask that they be billed on a monthly, quarterly or half yearly basis pursuant to public welfare regulations, and we bill the remainder of our basic cable television customers on this basis. Each month we recognize a pro rata portion of our annual cable television subscription fees as revenue. Premium cable subscribers are billed monthly in advance for their subscription fees and monthly in arrears for their usage charges. Bills had previously been issued under the Canal+ name but, following the phasing out of that brand, billing is now conducted under the Telenet name. We anticipate that our billing arrangements for basic and premium cable television, including the frequency of billing, may change as our iDTV evolves or as a result of customer preferences. We bill basic telephony voice services (including line rentals) and broadband internet services in advance and telephony usage in arrears. All of our internet and telephony subscribers receive monthly billing statements that set out summary details on combined fixed charges and, for telephony, itemize per-usage charges for calls to mobile telephones and international locations. We generally send customers one monthly bill for both their internet and telephone use, unless they have requested separate invoices. Approximately one-half of our subscribers pay by means of direct debit, which is an option open to all subscribers. We promote the use of e-billing, through which we send bills to customers over the internet. We use the ARBOR system to manage our billing activities for both residential and business customers. We are in the process of upgrading our existing ARBOR systems, and anticipate migrating our business services billing to an updated ARBOR platform in 2006, followed by a migration of the residential services billing in 2007, after which we will benefit from a single integrated platform for all our billing. We have an extended maintenance program by way of our support for our existing ARBOR systems until the migrations are completed. See Item 3, “Key information—Risk factors—Risks Related to Our Business—A system failure or security breach on the Combined Network, or the malfunctioning of technical equipment, could have a material adverse effect on our operations and impair our financial condition."

62

The Combined Network We use the Combined Network to provide cable television, internet and telephony services to our residential customers. Our broadband HFC network consists of a fiber backbone with local loop connections constructed of coaxial cable with a minimum capacity of 450 MHz. The Telenet Network provides us with up to 48 8 MHz-equivalent downstream channels, which we allocate to a combination of analog cable television, digital television, internet and telephony transmissions. In the return path of the Telenet Network (also known as the upstream portion), we have 10 MHz of capacity which is used for digital television, internet and telephony communications. Through the Partner Network, we have access to 40 MHz of downstream capacity and 10 MHz of upstream capacity, which we use to provide broadband internet and telephony services to approximately 32% of the homes and businesses passed by the Combined Network. See "—Our Usage Rights on the Partner Network." Regardless of whether a customer is served by the Telenet Network or the Partner Network, the means by which the services available in the relevant franchise area reach the customer are the same. Our network assets include approximately 11,500 kilometers of fiber backbone, of which we own 6,000 kilometers, utilize 3,500 kilometers pursuant to long-term leases and access 2,000 kilometers through our agreements with the PICs. The fiber backbone connects to approximately 67,000 kilometers of coaxial local loops, of which 47,000 is in the Telenet Network and the balance in the Partner Network. We own the primary and secondary fiber backbone on the Combined Network and the fiber and coaxial cable on the Telenet Network. The PICs own the additional fiber and the coaxial cable included in the HFC access loops on the Partner Network. Fiber optic cable uses glass fibers to transmit signals over long distances with minimal signal loss or distortion. It has good broadband frequency characteristics, noise immunity and physical durability, and can carry hundreds of video, data and voice channels over extended distances. The deployment of coaxial cable is less expensive, but requires more extensive signal amplification in order to obtain the desired transmission levels for channel delivery. In addition to our HFC network, we offer services to business customers across Belgium and in parts of Luxembourg through the network assets acquired as part of the Telenet Solutions acquisition, which comprise the electronic equipment required to generate and receive transmissions from point to point, which we own, and the fiber connecting the electronic equipment, a substantial portion of which we currently lease. We have also installed equipment necessary to provide voice, data and internet services using digital subscriber line ("DSL") technology. DSL technology enables us to serve business customers that are not currently close to our network in a more cost effective manner through Belgacom's telephone network. Our fiber backbone currently runs several protocols, including internet protocol ("IP") for broadband internet, VoIP telephony and the return path for our iDTV services; the Synchronous Digital Hierarchy, or "SDH," protocol, which supports our legacy telephony network; and a video protocol used for our analog cable transmissions. Digital television transmissions use IP on the backbone and the digital video broadcasting ("DVB") format in the HFC access network. For business services, we also operate asynchronous transfer mode ("ATM") and dense wave division multiplexing ("DWDM") protocols, which are typically suited for data transmissions. We have also developed the ability to offer business customers a range of products using DSL technology. Following our recent introduction of VoIP telephony and iDTV service, we expect over time that IP will carry an increasing proportion of our communications traffic. Additional IP-based services may also be supported by our systems in the future. We are able to use multi-protocol label switching ("MPLS") to route our IP traffic, which enables us to more efficiently tag data to better manage traffic on the Combined Network. This means, for example, that voice packets can be given priority over data packets to avoid interruption to voice communications. On the Combined Network, these protocols run across our primary fiber backbone and ten secondary fiber rings, providing high-speed connectivity between our 47 head ends, five switching centers and the network operating center located in Mechelen, Belgium. The Combined Network connects to other third-party networks via one of 10 telephony switches, six of which operate as traditional telephony switches only, three are hybrid traditional/VoIP soft switches and one is a voice over ATM switch, for the provision of telephony services, or through various gateways for the provision of world wide web internet access. Analog cable television signals are either carried across the Telenet Network or enter the Telenet Network at head end stations, depending on the arrangement we have with the particular content provider. Digital television signals, including those that form part of our iDTV service, are encoded when they enter the Telenet Network, and are routed through our digital head end station in Mechelen, Belgium, where they are then directed across our fiber optic rings to the head end stations on our local loop. The portion of the network starting at the head end and terminating at the end user is referred to as the HFC access network or the "local loop." Unlike our larger business customers, who either connect directly to our fiber

63

network or through a DSL connection on the Belgacom network, our other subscribers, including our residential customers, connect to the Combined Network through a coaxial connection from one of our nodes. Amplifiers are used on the coaxial lines to strengthen both downstream and return path signals on the local loop. On average, approximately 1,100 homes are served by each of the approximately 2,255 nodes in the Combined Network. These nodes generally offer the homes they serve a total capacity of 2 Gbps. Network quality usually deteriorates as customer penetration rates on any particular node increase. When required, the scalability of our network enables us to address this problem, within limits, through node "splits" in which we install additional equipment at the node so that the same 2 Gbps capacity serves approximately 550 homes per node. We plan to use node splits, among other measures, to manage potential congestion in certain parts of the Partner Network and in addition are in negotiations with the PICs to provide additional capacity as a further means of managing potential congestion problems that may arise in certain areas of the Partner Network. See Item 3, “Key information—Risk factors—Risks Related to Our Business—Failure to maintain and upgrade the Combined Network or make other network improvements, could have a material adverse effect on our operations and impair our financial condition." Basic and premium cable television, broadband internet and telephony signals enter the premises of our subscribers who connect to the Combined Network over a coaxial connection through a wall socket. In the case of basic analog cable television, subscribers can attach an appropriate cable from their television set directly to the wall socket. For other services, such as broadband internet, telephony or our iDTV service, signals pass through a network interface unit, or "NIU." The NIU separates the signal into analog or digital television, internet or telephony streams; provides downstream and upstream amplification; and reduces signal distortions that are introduced back into the network. Our internet-only and combined telephony and internet EMTA modems communicate with the head end stations using versions of the EuroDOCSIS protocol, which is a defined interface specification that allows various network components to communicate with each other and which has been adopted as a common standard by numerous hardware manufacturers. Our telephony customers are connected through a combination of technologies. Earlier telephony customers are served by technology based on proprietary software that is unique to the manufacturer of the modem—for example, Motorola telephony modems can only communicate with Motorola head end equipment and Terayon telephony modems can only communicate with Terayon head end equipment. Our newer telephony customers are connected using the open standards EuroDOCSIS protocol which is capable of handling both internet and telephony transmissions using IP. Our VoIP offering operates on packet cable technology that tags VoIP traffic so that it receives priority on the Combined Network, enabling us to better manage network traffic. The local loop of the Partner Network uses a network architecture similar to that employed by the Telenet Network, but a majority of the Partner Network has been upgraded to provide a minimum capacity of 600 MHz. Our analog cable television subscribers can receive 26 analog channels without need for a set top box or tuner, or using a cable tuner, access a total of 34 channels in our basic package. In order to receive basic digital television, subscribers must attach a digital set top box. For our premium iDTV offerings, and to benefit from interactive features on our iDTV service, subscribers must also enable their set top box by means of a smart card which is inserted to the set top box, and through the installation of a return path internet connection, if not already installed. Those subscribers who continue to receive our former Canal+ premium cable television service must also attach a proprietary set top box between the wall socket and their televisions to receive the premium television signal. We are able to offer our residential and business customers both wired and wireless connections to the Combined Network, including the network assets acquired through the Telenet Solutions acquisition to provide flexibility in the way devices such as computers are connected. Our network operating center in Mechelen monitors performance levels on the Combined Network on a continuous basis to detect any outages or network irregularities as soon as possible. We have a separate disaster recovery site for back office systems, and our network has been designed to include redundant features to minimize the risk of network outages, with the fiber optic rings designed to reroute traffic in the opposite direction around the ring in the event that a section of the ring is cut. The performance management team analyzes the Combined Network and determines where expansions and upgrades may be required to accommodate increased traffic levels. We have insured our buildings, head end stations, nodes and related network equipment against fire, floods, earthquakes and other natural disasters. We carry insurance on our fiber optic network up to a capped amount, but do not carry property damage insurance for our coaxial network. See Item 3, “Key information—Risk factors—Risks Related to Our Business—Failure to maintain and upgrade the Combined Network or make other network improvements, could have a material adverse effect on our operations and impair our financial condition."

64

HFC Upgrade The Combined Network has been upgraded to an HFC standard that provides bi-directional digital transmission capabilities. Work on the upgrade started in 1996 and was substantially completed in 2002. Prior to the upgrade, we provided dial-up internet and telephony service through a carrier preselect service. As regions were upgraded to an HFC standard, we migrated these subscribers to direct broadband internet and telephony service. We were also able to perform maintenance on our head end stations and nodes as part of the upgrade process. Our Usage Rights on the Partner Network We have access to the Partner Network through an agreement between Interkabel, which is owned by the PICs and Telenet Vlaanderen. In connection with the creation of Telenet NV in 1995 and Telenet Vlaanderen in 1996, the PICs, through Interkabel, granted Telenet Vlaanderen usage rights to their cable networks in return for shares in Telenet Vlaanderen (which have since been exchanged for shares of Telenet Group Holding) (the "Interkabel Contribution Deed"). In turn, Telenet Vlaanderen licensed these rights to Telenet NV. The PICs granted the usage rights for a term of 50 years, of which 40 years remain. The usage rights automatically renew for consecutive terms of 15 years unless terminated with ten years notice. The usage rights, and the call option described below, are secured by a €3.7 million mortgage on Interkabel's co-ownership interest in the PICs. There is no rental charge payable to the PICs for the usage rights, although we are required to make payments to the PICs on an ongoing basis under the Annuity Agreement and Interkabel Clientele Agreement. See "—History and development of the company—Network Upgrade." In addition, we pay the PICs for maintenance and other costs associated with the operation of a two-way communications network over the Partner Network. See Item 7, “Major shareholders and related party transactions – Related party transactions”. Under the Interkabel Contribution Deed, our group has access to 40 MHz downstream and 10 MHz upstream capacity on the Partner Network. We have the exclusive right to provide point-to-point communication and are able to provide certain pay per view, near video on demand and multimedia services on the Partner Network on a nonexclusive basis. The PICs retain the right to offer DTV, and we do not currently provide our iDTV service over the Partner Network. See "—Competition—Basic Cable Television." The Interkabel Contribution Deed obligated the PICs to carry out the HFC upgrade to the Partner Network, which was pre-financed in full by the PICs. Pursuant to the Clientele Agreements, we agreed to reimburse a total of 40% of this upgrade cost for the PICs in exchange for access to their cable network customer database. This obligation will continue for as long as our usage rights under the Clientele Agreements exist. As part of the Interkabel Contribution Deed, we also agreed to pay the PICs an annuity fee that effectively covers the remaining 60% of the cost of the HFC upgrade incurred by the PICs. Payments under the Annuity Agreement are due over a period of ten or 20 years, depending on the useful life of the underlying assets that were part of the cost of the HFC upgrade, incurred by the PICs. Our outstanding obligations under the Clientele Agreements and the Annuity Agreement equaled €96.2 million as of December 31, 2005. Under the Syndicate Agreement entered into upon the closing date of our IPO, the principal companies of our group have agreed to bear the maintenance and operating costs attributable to our use of the Partner Network, and Interkabel and the PICs agreed to bear the costs associated with the Partner Network before the HFC upgrade. In addition, the principal companies of our group agreed that if the basic cable subscriber penetration rate for the Partner Network falls by 12.5% or more from the levels existing on January 1, 2001, as a result of increased competition from digital satellite television or other factors impacting the evolution of television distribution, they will agree to bear a portion of the maintenance costs paid by the PICs based on parameters to be agreed by the parties. Telenet Vlaanderen has pre-emptive rights, with certain exceptions, with respect to any proposed transfer by Interkabel of its co-ownership interests in the PICs, or transfers by the PICs of shares in Interkabel, at the price offered by a third party. Interkabel and the PICs have agreed not to dissolve their co-ownership structure voluntarily without the consent of Telenet Vlaanderen. Interkabel has also granted to Telenet Vlaanderen a call option on its co-ownership interests in the PICs, at the lower of book value or fair market value, in the event of a breach of its obligations or the obligations of the PICs under the Interkabel Contribution Deed. Under the terms of the Interkabel Contribution Deed, our usage rights over the Partner Network will automatically terminate if, among other things, (i) there is a unanimous and definitive decision of the board of Telenet Holding to cease any direct or indirect development, installation or exploitation of our telecommunications network in Belgium, (ii) either Telenet Holding, Telenet Vlaanderen or Telenet NV is declared bankrupt or put into liquidation, (iii) certain provisions of the Articles of Association (statuten/statuts) of Telenet Vlaanderen are amended in any way

65

that is detrimental to the rights of Interkabel without Interkabel's written consent, (iv) the director of Telenet Vlaanderen nominated by Interkabel is dismissed for any reason without Interkabel's written consent and such director is not replaced by another director nominated by Interkabel or (v) Telenet Vlaanderen ceases to be an affiliate of Telenet NV. Recent and Planned Network Investments In conjunction with our preparation for the launch of iDTV, we incurred gross capital expenditure during 2005 of €11.2 million, a portion of which was financed by a government grant to fund the development of digital television services in Belgium. Our overall expenditure on iDTV funded necessary research and development activities, the acquisition of equipment for our digital head end and other related costs. In 2005, we started upgrading the upstream capacity of our coaxial network as part of the ExpressNet project, which is designed to enable us to maintain our performance targets for our products and services as penetration levels increase and to simplify our residential installation. We expect this upgrade to increase our upstream capacity bandwidth from the 5-25 MHz range to the 5-65 MHz range. Concurrently, we will implement the necessary upgrades to enable our adoption of EuroDOCSIS 3.0. In 2005, we incurred €11.5 million on the ExpressNet project and anticipate expenditure of €25-30 million on ExpressNet and the EuroDOCSIS upgrade in 2006. A remaining €40 million of capital expenditure is anticipated to be spent on these projects during 2007 and 2008. Expected costs of these projects could vary, however, depending on market conditions, supply arrangements and numerous other factors. We regularly incur investment costs for network maintenance and network extensions. Since analog cable television is perceived as a universal utility in Belgium, we are expected to cooperate in extending the local loop of our coaxial network to serve newly constructed dwellings in Flanders. We are further expected to cooperate with other utilities that have undertaken a general program of gradually moving cables underground for safety or other reasons. In addition, we manage our own program of replacing worn out cables and other related equipment in the Telenet Network. In 2006, we anticipate that such costs will in aggregate amount to between €25 million and €30 million. Competition We face varying degrees of competition from established and new competitors in Flanders and the rest of Belgium. See Item 3, “Key information—Risk factors—Risks Related to Our Business—The Belgian internet, data and telephony industries are highly competitive and the television industry is likely to become more competitive in the future, which could result in higher content costs and marketing expenses, lower subscription rates and the loss of subscribers." Several competitors are now seeking to offer a "triple play" or "quad play" of services to customers, including television, internet and fixed and mobile telephony services. Belgacom has recently launched an interactive digital television offering, which we believe is not fully rolled-out throughout its service area. As this offering becomes more widely available, Belgacom will be able to offer customers a range of television, internet and telephony services that will compete with the services we offer our customers. Tele2, a carrier preselect provider of telephony and internet services, recently announced its intended acquisition (which remains subject to regulatory approval) of Versatel, which has significant business operations in addition to its residential internet service. Scarlet, which is also a carrier preselect provider of telephony services with whom we compete, also offers mobile services and has recently announced its intent to launch an interactive digital television service in the second half of 2006. In addition, we are starting to see niche competition in the form of convergent devices such as mobile telephones, which can offer a range of basic and premium television channels and personal music players, which can play back premium video content such as episodes of certain popular television series. Belgium’s two largest mobile operators have both recently launched mobile television services with large marketing campaigns and using introductory offers. Belgacom has recently signed an agreement with the iTunes service offered by Apple Computer in Belgium to provide on-demand music to Belgacom internet customers, integrating the content libraries of iTunes with Belgacom’s billing. We may also face competition from operators who seek to exploit Wi-Max licenses in Belgium. Currently, there are two such operators, operating principally in the Brussels area, and the BIPT has indicated its intent to offer a further two licences for this technology. Although Wi-Max technology is still evolving, it currently claims to offer users the potential to access data communication speeds of between 1 MB and 3 MB. Basic Cable Television Although we have historically faced limited competition in the provision of basic cable television service in Flanders, we expect competition to increase. The only direct competition we face from other cable providers is in the city of Leuven, where UPC offers a competing basic cable television service. Leuven accounts for approximately 31,000

66

homes connected out of the 1.7 million homes passed by the Telenet Network. Unlike in many other countries, traditional broadcast television stations that provide free programming that can be received using a roof-top antenna are not a significant source of competition due to the low price, early roll-out and wide availability of cable television service in Belgium and the clearer picture and wider variety of programming that cable television provides. Similarly, direct-to-home satellite program distributors and digital terrestrial broadcasting have not been deployed on a commercial scale in Belgium to date, although parties may seek to exploit it in the future. We expect competition to increase, however, as Belgacom continues to roll-out a comprehensive iDTV offering using DSL technology over its existing telephone network. After Belgacom completes required upgrades of its network, it will be able to offer iDTV throughout Belgium. As this service develops, it is expected to offer a full range of broadcast television and premium content, including video on demand. Belgacom has two of the most popular broadcast channels in Flanders, VTM and Kanaal2, on its service in Brussels and Flanders. Previously, these channels had only transmitted their signals over cable networks. Belgacom's service is likely to provide a substantial source of future competition, given the resources of Belgacom and the reach of its telephone network across Belgium. The recently launched satellite service TV Vlaanderen also offers certain Flemish language content. See "—Premium Cable Television." Scarlet and Tele2 have also indicated their interest to introduce iDTV services using ADSL2+ technology over existing copper telephone lines. In addition, the PICs have launched a digital offering over the Partner Network under the iN•Di brand name, which does not currently offer the interactive features that are available from our iDTV offering and that of Belgacom's. The iN•Di offering has potentially impacted our ability to reach an agreement with the PICs to offer our own iDTV offering over the Partner Network, however. The ability to provide our iDTV services over the Partner Network could provide certain efficiencies and make us more attractive to content providers looking to reach a wider audience. Nevertheless, we believe that our extensive cable network and the broad acceptance of basic cable television in Belgium will help us compete effectively in the television market. We are able to offer international, national, regional and local content, including Flemish language broadcasts, to our subscribers. We believe satellite and other providers would have difficulty providing this content in a cost-effective way because of the relatively small size of the Flemish market and their limited ability to carry local broadcasting. We also believe that subscribers prefer the convenience of plugging in to our basic cable network over purchasing and installing satellite dishes or other types of antennae, which would be required to receive the broadcasts of many of our potential competitors. Premium Cable Television The deployment of premium television services, via cable or other means, is currently less extensive in Belgium than in neighboring countries. We believe that our premium cable television service, despite its limited subscriber numbers, is currently the largest provider of premium television in Flanders. We expect, however, increasing competition from competitors including Belgacom's new iDTV offering. The Belgacom offering is expected to include a full range of basic and premium content and interactive features, including video on demand. In addition, the PICs' iN•Di offering may impact the content of our premium iDTV offering. See "—Basic Cable Television." We may also face increased competition from satellite operators, including the recently launched TV Vlaanderen satellite service, who are able to offer a mixture of general and niche programming with strong appeal to certain ethnic groups or who possess rights to certain sporting events which we are not able to offer to our customers. We consider that other forms of media, such as DVDs and on-line downloads, also constitute a source of competition in the premium television market. In addition to competition for subscribers to premium television services, we expect that we may face increasing competition from other parties seeking to secure access to premium content rights. Such other parties may include Belgacom or other parties who seek to aggregate premium content for the purpose of re-selling it to parties such as ourselves. Competition is particularly intense among operators seeking to secure rights to broadcast films and live sporting events. For example, in recent renewal auctions we have lost the rights to broadcast the games of the Belgian and Italian national soccer leagues to Belgacom, but have renewed the rights to broadcast games of the national soccer leagues in England and The Netherlands, and acquired the rights to broadcast the games of the national soccer leagues in Portugal, Scotland and Brazil, in addition to the games of the UEFA Champion's League. We have submitted bids to renew our rights to the Dutch, French and German soccer leagues and NBA basketball, and we are awaiting the start of the renewal process for rights to the Spanish soccer leagues. The rights to broadcast these games are generally for between one and three annual seasons, and there can be no assurance that we will be able to retain these broadcast rights when they come up for renewal.

67

Broadband Internet Competition in the provision of residential internet service focuses on speed, price, available features and customer service, among other factors. The relatively high margins available in the Belgian internet market may attract additional competitors into the market, leading to a higher level of price-based competition in a market where potential customers are limited to those who have a personal computer that is enabled for internet access. Our residential broadband internet service in Flanders currently competes principally with DSL based services, which are able in many areas to match the speeds offered by our most popular ExpressNet service. Following the implementation of the EuroDOCSIS 2.0 protocol over the Combined Network, we currently offer tiered internet offerings with download speeds that range up to 20 Mbps at varying prices that are designed to match the preferences of a broad portion of the potential market, enabling us to more effectively target subscribers with different capacity requirements. Competitors to our internet offerings also include leading mobile and carrier preselect operators in Belgium, including mobile operator Mobistar, which launched a DSL-based broadband internet service. A number of technologies are converging, which is expected to enhance competition in both the internet and telephony markets. These technologies include wireless ("Wi-Fi") networks and higher speed and longer-range "Wi-Max" networks, which allow for wireless internet access and may in the future be used to provide telephony service in combination with more traditional mobile telephony. The BIPT has already awarded two licenses in Belgium for the operation of Wi-Max networks, and has indicated its intent to offer a further two licenses for the operation of Wi-Max technology. In addition, there are improved mobile telephone technologies, such as third generation ("3G") mobile technology and portable personal digital assistant devices, which permit users to access internet-type content and use e-mail. DSL Services DSL services use existing copper wires to offer faster connections to the internet than dial-up services, and therefore more directly compete with our broadband internet over cable service. DSL services may be deployed in several forms. Standard ADSL services offered by Belgacom, our largest competitor, deliver download speeds of up to 9.0 Mbps, depending on location. ADSL services are also offered by other providers who buy access to Belgacom's local loop at bulk rates and re-sell this access to individual subscribers. ADSL connections are generally offered at a lower subscription price than our service and are marketed as a "plug & play" product that allows subscribers to purchase and install themselves the equipment required to establish an ADSL internet connection, obviating the need to schedule an installation appointment. Depending on the ADSL service provider, new ADSL subscribers can also opt for an installation service, if they prefer. Belgacom has announced its "Broadway" project, which involves an upgrade of its network to extend optical fiber to enable enhanced internet speeds and Belgacom TV services to a targeted 80% of homes passed by the end of 2006. Belgacom expects that this will enable it to offer download speeds of up to 15 Mbps and 5 Mbps in the upstream path. Pursuant to initial upgrades as part of the Broadway project, Belgacom has started marketing VDSL, a higher speed DSL product that offers download speeds of up to 9 Mbps for a price of €59.95 per month (including VAT). Belgacom is able to market its service to users of its fixed-line telecommunication services. Other providers of DSL services may provide internet as a stand-alone offering or seek to package it with another service they provide, such as mobile services or fixed telephony. In addition to Belgacom and other existing DSL providers, mobile operators may seek to enter the DSL market in the near future, using their existing wireless network and accessing customers through Belgacom's existing local loop, which could significantly increase the competition that we face. We believe that the higher average speed of our service and higher customer satisfaction ratings compared to most DSL operators provides an advantage in this competitive environment. We expect Belgacom and other DSL operators to start deploying faster ADSL2+ technology during 2006. We anticipate that ADSL2+ services will enable DSL operators to provide enhanced broadband internet and iDTV services. Telephony Competition in providing residential telephony service is intense, with providers introducing substantial price reductions in recent months in a market that has generally been declining in size over the past five years. Competition in this market is based on price, in addition to customer service, brand recognition, functionality and quality of service. Our principal competitors include:

68

• other operators of fixed-line services, including those that own their networks and those that employ carrier preselection and other services; and

• mobile telephone operators.

Fixed-line Operators Belgacom is the largest operator in the residential fixed telephony market in Belgium. As of December 31, 2005, Belgacom had an estimated 75% market share of the fixed-line telecommunications market in Flanders. Belgacom completed an initial public offering of its shares in March 2004. Following the completion of the initial public offering, the Belgian state retained a majority stake in Belgacom. Belgacom has an established market presence, a fully built-out network and resources that are substantially greater than ours. Belgacom has been utilizing "win back" programs for customers terminating their service. We primarily compete with Belgacom by seeking to offer our residential subscribers telecommunication services at lower prices on selected services than those available from Belgacom. The initial use of carrier preselection services and the implementation of number portability have helped us market our telephony products, but have also benefited our other competitors in the telecommunications market. New competitors have also entered the market, including Tele2, which offers a carrier preselection service. See "—Our Products and Services—Residential Telephony." These entrants often have substantial resources and experience from conducting telephony operations elsewhere in Europe. In addition, providers such as Skype, Microsoft, Google and Yahoo offering low specification VoIP service also present a possible future source of competition. The VoIP technology used by us to provide telephony service continues to pass calls through the public switched telephony network (the "PSTN"), pursuant to which we both pay and receive interconnect fees for calls. Some new entrants, including Skype, use a variant of VoIP to provide telephony service using only a broadband internet connection and bypassing the PSTN altogether, thereby avoiding the payment of interconnect fees. We refer to this service as "voice over the internet" or "VON." VON can be provided at a comparatively lower cost than Telenet's current VoIP service because it can avoid the payment of interconnect fees. However, due to the nature of the technology, VON services can also be of a lower quality than that available from a traditional VoIP service due to limitations in the types of features that can be supported by VON, the voice compression techniques that may be used with VON as opposed to VoIP telephony and the risk of call disruptions caused by internet congestion that can arise because VON services may not be able to prioritize voice over other data traffic on the internet (unlike the VoIP service we currently provide). As a result, VON may provide both a competitive opportunity and a threat to our business. Customers using VON still require a broadband connection, which may provide increased demand for our internet services and those of other broadband providers. Nevertheless, the introduction of lower cost telephony services could reduce telephony prices substantially, and reduce our market share and profitability. More generally, we believe that the extensive Combined Network and the other services we provide in Flanders are assets in the residential telephony market. Subscribers can have one point of contact for their telephony, internet and, where available, cable television services. In addition, other fixed line service providers (except Belgacom), do not have their own local loop, which means that they must pay other operators (typically Belgacom) for access to an existing network so that they can reach their own subscribers. This disadvantage may dissipate, however, as wholesale prices for unbundling of the Belgacom local loop continue to decrease and competitors gain more open access to the Belgacom local loop. Moreover, if the Belgian authorities determine under the New Framework that "wholesale broadband access" is a relevant market in which we have significant market power, we may be required to grant others access to the Telenet Network, including our local loop. See "—Regulation —The New Framework." Mobile Service Providers In addition to competing with fixed-line operators, we also compete with mobile service providers as users, especially in the residential market, increasingly substitute fixed lines with mobile telecommunication services. Some mobile operators are promoting this trend, launching "cut the line" campaigns to encourage customers with both fixed-line and mobile services to retain only their mobile services. These campaigns have been supported by some mobile operators who offer calls from mobile telephones that are less expensive than making a call from a Belgacom fixed line. As mobile technology improves with 3G and other products, this source of competition is expected to increase. The

69

recent legislative developments which further liberalize the Belgian mobile telephony business will likely increase participation by new mobile virtual network operators ("MVNOs") and, we expect will generate more competition from mobile services. Belgacom has a strong presence in this market, with an estimated market share of approximately 48% by number of active customers in Belgium as of December 31, 2005. Belgacom offers its mobile services through its 75% owned subsidiary Belgacom Mobile SA, which operates under the name Proximus for its postpaid mobile services and under the name Pay&Go for its prepaid mobile services. Other mobile telephone competitors include Mobistar and Base. We believe that our prices for fixed-line services, our focus on customer service and our ability to offer both broadband internet and telephony services to our subscribers, are assets in addressing competition from mobile service providers. Business Services Competition in the provision of internet, data and voice products to business customers is more intense than in residential markets. In this sector, our business services offering, which is marketed under the Telenet Solutions brand name, competes not only with Belgacom, our largest competitor, but also with Versatel, Mobistar and Scarlet and, to a lesser extent, international competitors active in Belgium including Colt, MCI and BT. In addition to strong competition for customers, we experience price erosion for many of the products we offer. There also are evolving end-user product and technology requirements that require us to maintain a range of product development initiatives. For historical reasons, the majority of our customers in this segment are in the Flanders region of Belgium. Following the Telenet Solutions Acquisition, however, we also market our business services to organizations with footprints across Belgium and also in parts of Luxembourg. We believe that the expanded reach of the Combined Network following the Telenet Solutions Acquisition has been a competitive asset in this market. Intellectual Property Our group does not possess any material patents or copyrights, nor do we believe that patents play a material role in our business. We have registered several trademarks with the Benelux Trademarks Office (Benelux- Merkenbureau / Bureau Benelux des Marques) including “Telenet”, “Telenet Solutions”, “Telenet Digital TV”, “Prime”, “Digibox”, “Digicorder”, “FreeSurf” and “ExpressNet” and their related logos and our service offerings. Pursuant to the Canal+ Acquisition, we obtained an exclusive, non-transferable license to use the Canal+ name in Flanders in connection with a provision of premium cable television service, which right expired at the end of August 2005, and we launched our premium Prime offering at the beginning of September 2005. We believe that innovation in products and technology are important to retain our market positioning. We do not have a dedicated research and development function, but maintain a continuous process of reviewing and testing new products and technologies, which we believe will enhance the services we provide to our customers. Seasonality We have limited exposure to seasonal trends. Revenues from our basic analog and premium cable television service, broadband internet and business services, which together represented 77.0% of our total revenues in 2005, are substantially based on fixed monthly rates and hence are not subject to seasonal variations in usage. Telephony revenues (which represented 23.1% of our total revenues in 2005) include a usage component and tend to exhibit lower usage in summer months. In the third quarter of 2005, we observed that usage component of our telephony ARPUs were approximately 8% lower than the average ARPUs for 2005, while the first quarter yielded usage ARPUs that were approximately 10% higher than the annual average. These differences in telephony ARPU also result in corresponding seasonality in the interconnect payments we make for terminating calls from our customers to other networks. See "—Regulation —Telephony Regulation—Interconnection." Regulation Both Belgian and EU authorities regulate the electronic communications services that we provide. "Electronic communications" comprise telecommunications and broadcasting. "Telecommunications" include telephony and internet and are regulated in Belgium by the national government. "Broadcasting" encompasses both television and radio broadcasting and is generally regulated by the regional governments of the Flemish, French and German Communities. Because of this division between telecommunications and broadcasting, both the national and the regional governments have jurisdiction over network infrastructure that is used for both telecommunications and broadcasting activities. In addition, network infrastructure can be subject to local planning and other regulations issued by local municipalities. See Item 3, “Key information—Risk factors—Risks Related to Regulatory and Legislative Matters—We

70

may be subject to conflicting regulations and inconsistent court judgments and regulatory rulings." The services we provide have recently come under increasing regulation. The New Framework On March 7, 2002, the European Parliament and the Council adopted the new Community Electronic Communications Regulatory Framework, which required significant reforms to the telephony, the internet and broadcasting regulations with which we must comply. This regulatory framework consists of the Framework Directive and five specific Directives: the Universal Service Directive, the Access Directive, the Authorization Directive, the Data Protection Directive on Privacy and Electronic Communications and the Competition Directive (collectively, the "New Framework"). The New Framework is intended to establish a harmonized framework for regulation in all electronic communications markets, and it defines relevant segments of the telephony, internet and broadcasting markets according to principles of EU competition law. It directs national regulatory authorities to examine markets where there is a lack of effective competition and to identify entities operating in those markets that possess significant market power ("SMP"). The European Commission has identified 18 relevant markets, and recommended that national regulatory authorities analyze them. The New Framework requires national regulatory authorities to remedy perceived market failures by imposing proportionate and objectively justifiable obligations on entities with SMP. It replaces the traditional licensing of covered activities by national regulatory authorities with a notification procedure (except in certain areas, including the grant of licenses to provide telephone numbers). See "—Telephony Regulation—Licenses and Authorizations" and "—Broadcasting Regulation—Licenses and Authorizations." The New Framework also requires member states to protect end users of electronic communication services in a number of specific ways, including by granting subscribers the right to withdraw from their contracts without penalty upon notice of proposed changes, and by imposing requirements for transparent invoices. See " —Telephony Regulation—Tariffs." The Law of June 13, 2005 (Wet betreffende de elektronische communicatie/Loi relative aux communications électroniques) (the "New Electronic Communications Law") implemented the New Framework at the national level for electronic communications other than radio and television broadcasting. Several provisions of this law require further implementation by royal and ministerial decree. With regard to broadcasting, the New Framework was implemented by a decree of May 7, 2004 in the Flemish Community (the "2004 Decree"), by a decree of February 27, 2003 in the French Community, and by a decree of June 21, 2005 in the German Community. The national legislature has jurisdiction to regulate broadcasting matters in Brussels, and a government bill amending the current Brussels Media Law of March 30, 1995 will soon be filed with the Parliament. Because the authorities of the national and regional governments with regard to network infrastructure are closely linked, Constitutional Court (Arbitragehof/Cour d'Arbitrage) case law requires the national and regional governments to enter into cooperation agreements before adopting legislation with regard to these networks. Because no such agreement was reached at the time of the adoption of the 2004 Decree, the Constitutional Court nullified substantial portion of the provisions in the 2004 Decree implementing the New Framework on July 13, 2005. The Constitutional Court, however, granted the Flemish government until December 31, 2005 to enter into a cooperation agreement with the national government, during which grace period, the provisions of the 2004 Decree will remain in force. After that date, the nullified part of the 2004 Decree will no longer be in force. The Flemish government did not reach a cooperation agreement by December 31, 2005, as a result of which the principles of the EU New Framework are applicable under a “direct effect” doctrine. However, we do not believe that this has any significant impact on the regulation applicable to Telenet, nor that there will be a significant impact of the applicable regulatory situation whenever a cooperation agreement is ultimately reached by the Flemish government and national government. In addition to the above regulations, we have signed several codes of good practice, such as the code of telecommunications operators and internet service providers concerning the offering of certain services through telecommunications, and the ISPA code of conduct. These codes contain provisions with regard to transparency on content and prices of services, data protection, games and fund raising through telecommunications, among other things. See "—Internet Regulation." For our services to business customers in Luxembourg, we comply with relevant Luxembourg regulations, which are similar to the Belgian regulations described herein, both being implementations of the New Framework.

71

Provisions Applicable to All Electronic Communications Entities with Significant Market Power (“SMP”) Under the Law of March 21, 1991 (the "1991 Law"), as amended, the BIPT published annually a list of operators who provide telecommunication networks or services to the public that have SMP in specific telecommunications markets. An operator was deemed to have SMP in a market if it had more than 25% of that market. The most significant obligations imposed on such operators included (i) a requirement to charge transparent and cost-oriented rates for fixed voice telephony, leased lines, interconnection, special access, local loop unbundling and bitstream access, (ii) accounting separation between the different telecommunication services for which an operator has SMP, (iii) meeting any reasonable request for interconnection and access, (iv) publication of reference offers, (v) obtaining prior BIPT approval for wholesale regulated rates and (vi) reporting retail rates to the BIPT. Belgacom has been designated as an operator with SMP in the voice telephony, public network and leased lines markets since 1999. Since that date, the BIPT has also determined that mobile operators Proximus (the mobile subsidiary of Belgacom) and Mobistar have SMP in the mobile and interconnection markets. Under the New Electronic Communications Law, the BIPT is responsible for defining relevant markets in the telecommunications sector, and since the 2004 Decree the Flemish Media Regulator (Vlaams Regulator voor de Media) (the "VRM") is responsible for defining relevant markets in the broadcasting sector. These regulators can impose certain requirements on entities with SMP in relevant markets that are not competitive. Whether an operator has SMP is now to be determined in accordance with the principles of competition law, which normally considers whether a party has over 40% of the relevant market. Among other things, the BIPT and the VRM can, under certain conditions, require SMP operators to (i) comply with certain obligations of non-discrimination and transparency with regard to access, (ii) separate accounting of different activities in which the operator has SMP, (iii) meet any reasonable request to access and use part of the provider's network and (iv) charge cost-oriented prices and follow other price restrictions. We believe three of the 18 relevant markets identified by the European Commission may potentially entail a risk for us. These markets are:

• "call termination on individual public telephone networks provided at a fixed location";

• "wholesale broadband access." Currently, the BIPT has proposed to exclude cable operators from the wholesale broadband access market on the basis they do not have SMP; and

• "broadcasting transmission services, to deliver broadcast content to end users." We may be designated as

an operator with SMP if the relevant market is defined as the Flemish market. Unbundling Networks One of the principal powers of the BIPT and the VRM is to require entities with SMP to grant other operators access to, or "unbundle," their networks. Under the previous telecommunications regime, the Belgian legislature had already implemented EC regulation No 2887/2000, which requires operators that have been designated by their national regulatory authorities as having SMP to give full or partial unbundled access to their local loop. Under this regulation, the BIPT has required Belgacom to provide other telephony service providers fully unbundled and shared access to its local loop, which delivers communication signals from central networks to the actual homes and businesses served by Belgacom. At the end of 2005, only 6,903 lines had been fully unbundled, and 1,880 lines have been shared by alternative operators. Thus, the number of unbundled lines represented a very small fraction of the number of lines available for unbundling under the regulation. Under the New Electronic Communications Law, the BIPT can require all operators with SMP to grant third parties unbundled access to the local loop. Following the outcome of the regulator’s analysis of access markets, the regulator has proposed not to include cable operators among the list of those with SMP and as a result not to impose any remedies such as mandated access to cable networks by third parties. The regulator has proposed to impose a wholesale access offer on Belgacom for all types of DSL networks, including ADSL2+ and VDSL. The BIPT has also proposed to impose wholesale line rental (enabling carrier pre-select operators to claim both subscription and usage charges) on Belgcom, but to modify the retail cost orientation on monthly subscription charges for access.

72

Under the New Framework, unbundling may also be required in the broadcasting sector. The Commission identified "broadcasting transmission services to deliver broadcast content to end users" as a candidate market in which national authorities may decide to regulate entities with SMP. If the VRM defines this sector as a relevant market, it must then consider whether that market is competitive. If it is not, and if we are identified as having SMP in that market, the VRM could, among other things, require us to negotiate in good faith with enterprises who request access to the Telenet Network and to comply with reasonable requests to access and use parts of the network and associated facilities. Even if the 2004 Decree were eventually replaced or amended it is expected that the New Framework's market definition approach would continue. See "—Provisions Applicable to All Electronic Communications—Entities with Significant Market Power." As part of its approval of the Canal+ Acquisition, the Belgian competition authorities required that we grant other pay television channels access to the Telenet Network to allow them to broadcast their services. We must grant them access based on non-discriminatory, commercial criteria, taking into account the available capacity on the Telenet Network. See “—Our Products and Services—Cable Television—Premium Tier Cable Television—Canal+ Acquisition." Bundled Sales As a rule, Belgian fair trade practices legislation prohibits the bundled sale of products and/or services for the residential market. Under certain conditions, the New Electronic Communications Law makes an exception for the bundled sale of telephony services, internet services, television services and/or intermediary interactive products that are offered through an integrated technology. However, competition law may limit this possibility to bundle our offerings. See "—Competition Law." Telephony Regulation Overview The telecommunications industry in Belgium was traditionally regulated by Title III of the 1991 Law and several royal decrees that implemented its provisions. In December 1997, significant amendments were made to the 1991 Law to comply with EC directives designed to liberalize the EC telecommunications market and increase competition. More recently, the 1991 Law was supplemented and amended by the New Electronic Communications Law. In addition, the 1991 Law ended the monopoly of the Belgian National Telephone and Telegraph Company (Regie der Telegraaf en Telefoon/Régie des télégraphes et des téléphones) ("RTT"), which had been the exclusive telecommunications operator in Belgium since 1930. Under the 1991 Law, the RTT was transformed into an autonomous public company (Autonoom Overheidsbedrijf/Entreprise Publique Autonome), which, in 1994, became a public law corporation (naamloze vennootschap van publiek recht/ société anonyme de droit public), Belgacom NV ("Belgacom"). The BIPT and the Advisory Committee The BIPT The 1991 Law also created the BIPT. The BIPT, which commenced its activities in 1993, is the supervisory and regulatory body that governs the postal and telecommunications industries in Belgium. Its operations are now governed by the Law of January 17, 2003. The BIPT is a public interest body supervised by the Minister responsible for telecommunications. It is led by a council of four officials (the "BIPT Council") who are appointed by a Royal Decree following deliberation in the Council of Ministers. The BIPT has broad powers to draft regulations, render advice, define strategies and supervise telephony operators to ensure compliance with the New Electronic Communications Law, the relevant parts of the 1991 Law, and the implementing decrees. Under the New Electronic Communications Law, telephony operators must notify the BIPT of the electronic communication services or networks that they intend to provide or resell in the telecommunications sector and of any change thereto. The BIPT also grants rights to use phone numbers and radio frequencies. In addition, the BIPT is responsible for defining relevant markets in the telecommunications sector, for examining whether those markets are competitive and, if not, for determining which entities possess SMP, and the restrictions to which those entities should be subject. See " —Provisions Applicable to All

73

Electronic Communications—Entities with Significant Market Power." The BIPT expects to finalize its decisions with regard to access and fixed and mobile telephony in 2006 and those with regard to leased lines in 2007. Finally, the BIPT may act as a mediator in disputes arising between telecommunications operators. In its judgment of July 14, 2004, the Constitutional Court nullified Article 14 of the Law of January 17, 2003 to the extent that the law authorized the BIPT to regulate radio and television broadcasting and electronic transmission infrastructure that is jointly used to provide telecommunication and broadcasting services because of the failure of the national government to enter into a cooperation agreement with the regional governments, which are responsible for regulating broadcasting activities. The Constitutional Court maintained the nullified provisions of the law in full force and effect until December 31, 2005 to provide the national and regional governments time to enter into the required agreement. The Flemish government did not reach a cooperation agreement by December 31, 2005, as a result of which the principles of the EU New Framework are applicable under a “direct effect” doctrine. However, we do not believe that this has any significant impact on the regulation applicable to Telenet, nor that there will be a significant impact of the applicable regulatory situation whenever a cooperation agreement is ultimately reached by the Flemish government and national government. The BIPT has substantial enforcement powers. It may issue a default notice if any telecommunications service provider breaches any of the telecommunication provisions of the 1991 Law, the New Electronic Communications Law, or their implementing royal decrees. Failure to remedy a default following receipt of a notice may result in administrative penalties ranging from 0.5% to 5% of the provider's annual revenue attributable to telecommunications, up to a maximum of €12.5 million. In case of serious or repeated infringements, the BIPT may ultimately prohibit the provider from exploiting the network or from rendering any further telecommunication services. Pursuant to a second Law of January 17, 2003, a new two-tier dispute resolution system applies to the review of BIPT actions:

• disputes regarding interconnection, leased lines, special access, unbundled access to the local loop and shared access must be brought before the Belgian competition authority; and

• decisions of the BIPT Council must be appealed to the Brussels' Court of Appeal.

The Advisory Committee The Advisory Committee is an independent entity whose secretary is appointed by the BIPT. The Advisory Committee also includes representatives of telephony operators (including representatives of the Telenet group), consumers, providers of universal services and manufacturers of telecommunications equipment. It makes non-binding recommendations to the ministers responsible for telecommunications on issues related to the telecommunications market, with a focus on the provision of universal service, general contract provisions between voice telephony operators and end users and end users' rights under the management contract between the Belgian State and Belgacom. Universal Service The New Electronic Communications Law mandates that a minimum set of "universal services" be offered at a certain price and quality level. These services include providing access at a fixed location to the public telephone network throughout Belgium, offering reduced telephony tariffs for specific categories of users ("social tariffs"), providing public pay telephones and offering a directory and a directory inquiry service. All providers of public telephony services in Belgium must offer social tariffs, by applying discounts and percentages as set out in the annex to the New Electronic Communications Law. See "—Telephony Regulation—Tariffs." The BIPT has issued a communication, however, which states that Belgacom will remain the only provider required to offer social tariffs until a database that includes the end users entitled to the social tariffs is fully operational. The Minister of Consumer Affairs, however, stated in 2005 that all operators should apply social tariffs immediately and as a result, we and other operators have started accepting requests for social tariff rates. For every universal service other than the social tariffs, a universal provider for each service will be selected based on an open process in which all providers can tender offers to provide the relevant service. The precise process will be determined by royal decree. If a universal service provider is not selected as a result of this process, a provider will be designated ex officio. In general, the providers of universal services are compensated through a Universal Service Fund, which is financed by contributions paid by telecommunication operators on the basis of their turnover. The New Electronic Communications Law, however, established a separate fund for the compensation for offering social tariffs. Whether

74

and how much an operator must contribute to this separate fund or receive from the fund is based on a comparison of the tariff reductions applied by every operator to the amount of tariff reductions that corresponds with that operator's share of turnover in the overall telephony market. The specifics of this formula will be determined by royal decree. Under the old regime, universal services were provided pursuant to a management contract between the Belgian state and Belgacom, which, among other things, required Belgacom to pursue certain corporate purposes and adopt a specific corporate structure. The contract also governed the fees that Belgacom could charge for providing these services. The old Law of December 19, 1997 also provided for a Universal Service Fund to finance the costs incurred by universal service providers in offering universal services to the public. The fund was to be financed by contributions from the companies that provide telephony services in Belgium. In 2002, the BIPT recommended that the Ministry of Telecommunications activate the fund, but action has yet to be taken by the Ministry. Once both funds have been activated, we do not believe that our group's annual contribution to the funds would exceed €1.5 million. In December 2005, following discussions among various constituencies in Belgium regarding the possible introduction of universal service obligations for internet access, the Council of Ministers approved an initiative of the Secretary of State to stimulate PC penetration in Belgium. Pursuant to this initiative, a package comprising a computer, software, broadband access, card reader and tutorial will be offered at a fixed low price to individuals, who will also benefit from tax advantages for purchases under this scheme. Telenet is one of three groups that have received approval of the Federal Government to offer this iniative, which is known as “the Citizen Package”. Telenet’s involvement in this initiative involves collaboration with the Brussels and Walloon cable operators. Interconnection General Interconnection is the means by which users of one telephony network are able to communicate with users of another telephony network. For a subscriber located on one telephony network to complete a telephone call to an end user served by another telephony network, the subscriber's network service provider must interconnect to the network serving the end user. Typically, the network serving the end user charges the subscriber's service provider a fee to terminate the communication, which is based on a call set-up charge and on the length of the telephone call. Interconnection costs and revenues have a significant impact on our financial results, and we have focused heavily on managing this cost. See “—Our Products and Services—Residential Telephony—Interconnection." Under the prior regulatory regime, organizations with SMP had to satisfy all reasonable interconnection requests on non-discriminatory terms that provided equal-access to their networks. They also had to publish the tariffs they charged to terminate calls that interconnected to their network. The BIPT had the right to supervise and, if necessary, amend the terms of those interconnection rates. In addition to entities with SMP, all public network operators and providers of public telecommunications services, voice telephony or leased lines (including us) who, as a result of those activities, controlled access to end users had to respond to interconnection requests from other providers of similar services and negotiate interconnection termination fees with them. The New Electronic Communications Law requires that providers of public communications networks in Belgium negotiate interconnection termination agreements with every requesting operator who is seeking to provide a publicly available electronic communication service. To the extent necessary to guarantee connections between end users, the BIPT can impose obligations upon operators who control access to end users. For instance, it can require operators to interconnect their networks if they have not already done so. When the BIPT requires operators with SMP to grant access to network elements and facilities, such as unbundled access, it can require those operators to publish their reference tariffs for interconnection, including relevant components thereof, in addition to additional information that will be required by royal decree. The BIPT can also require interconnection tariffs of operators with SMP to be cost oriented. See "—Provisions Applicable to All Electronic Communications—Entities with Significant Market Power." The New Electronic Communications Law, however, does not prescribe the model that the BIPT should use to evaluate whether interconnection prices are cost-oriented, but instead simply notes that costs associated with the efficient provision of services, including a reasonable rate of return, are to be taken into account. In a Commission Recommendation dated February 11, 2003, the European Commission indicated that, under the New Framework, the market for wholesale call termination on individual public telephone networks provided at a fixed location may be considered as a separate product market subject to regulation in the absence of competition. This

75

market definition, however, does not automatically mean that every network operator has significant market power to terminate calls on its own network. Whether such power exists depends on whether any users of the network account for a large portion of the calls terminated on the network, giving that user a countervailing position as a strong buyer. If the BIPT identifies the market for wholesale call termination as a separate product market, Telenet may at some future date be considered to have a dominant position when setting the fees it charges to terminate calls on its network. Such a determination would depend, among other things, on the number of voice telephony subscribers Telenet has—the more Telenet voice telephony subscribers, the lower Belgacom's countervailing buyer power, and the higher the risk of Telenet being considered to have significant market power to terminate calls on the Combined Network. If Telenet is considered to have significant market power to terminate calls and the interconnection rates that it charges are found to be above its costs, the BIPT could require Telenet to decrease its interconnection termination rates over time. In February 2006, the BIPT issued a consultation statement on the market for fixed voice termination in which it proposed that we, as well as other non-incumbent providers of fixed line telephony, should adopt a mandated path reducing the higher interconnection rate which we currently charge for calls terminated on our network to the lower rate that is charged by Belgacom over a three year period. The consultation statement is based on the BIPT’s findings that we possess significant market power in our network for the termination of calls. If the results of this consultation, which we are opposing through the European Commission and other regulatory bodies, are adopted, the interconnection revenues which we receive could decline at a faster rate than we currently anticipate, particularly if our telephony subscriber base does not achieve the growth rates we are seeking to attain. See Item 3, “Key information—Risk factors—Risks Related to Regulatory and Legislative Matters—The BIPT has issued a consultation statement regarding our interconnection rates, which, if adopted, could result in a significant reduction in our projected interconnection revenues”. Fixed-Mobile Interconnection In general, interconnection termination rates charged by mobile network operators are significantly higher than those charged by fixed-line operators. The BIPT has designated both Belgacom Mobile NV (which operates under the names "Proximus" and “Pay & Go”) and Mobistar NV as entities that have SMP in the national interconnection market. See "—Provisions applicable to all electronic communications—Entities with Significant Market Power." As a result, under the prior regulatory regime both mobile operators were required to charge interconnection tariffs that are based on their cost of providing services. In addition, their tariffs were required to be non-discriminatory and transparent. See Item 5, “Operating and financial review and prospects.” Under the New Electronic Communications Law, the designation of Belgacom’s Proximus service, Mobistar and Base as entities with SMP allows the BIPT to require these operators to charge tariffs on a cost-oriented basis. Following a recent market analysis, the BIPT issued a consultation statement in February 2006 in which it proposed that the interconnection termination rates charged by these mobile operators should decrease over a three year period at an average rate of 20% per year. For a description of our interconnection agreements with Proximus and Mobistar, see “—Our Products and Services—Residential Telephony—Interconnection." A third mobile operator in Belgium, Base, is not currently bound by these interconnect restrictions. Tromboning Because the rates we charge to terminate calls that interconnect to the Combined Network are higher for domestic than for international calls, some operators attempt to route domestic calls outside of Belgium so that when they enter the Combined Network they are charged the lower international tariff. This practice is known as "tromboning." In general, the BIPT has held that tromboning is sanctionable under existing law when used as a means of minimizing interconnection fees. The BIPT has, however, authorized Belgacom to trombone up to 6% of its domestic calls to allow it to compete more effectively with other telephony service providers. Belgacom is required to submit monthly audits of its tromboning activity to the BIPT. Belgacom is currently appealing the BIPT's tromboning cap to the Council of State, contending that it should be able to trombone much higher amounts. See Item 8, “Financial information—Legal Proceedings—Interconnection Litigation—Tromboning" and Item 3, “Key information—Risk factors—Risks Related to Our Business—The Belgian internet, data and telephony industries are highly competitive and the television industry may become more competitive in the future, which could result in higher content costs and marketing expenses, lower subscription rates and the loss of subscribers." Belgacom, in its capacity as the incumbent operator, negotiates necessary interconnection agreements with international operators. These negotiated rates then also indirectly apply to us because Belgacom provides the only transit service between us and the international operators. We have requested that the BIPT impose a deadline by which

76

Belgacom would have to renegotiate its international interconnect contracts to increase the tariffs charged such that the incentive for other operators to trombone on the Combined Network would be reduced. To date, no definitive action has been taken by the regulator with respect to our request. Tariffs Under the prior regulatory regime, the prices that telephony operators and other service providers charge their subscribers were not subject to any explicit legal constraints as long as the operators did not have SMP. Organizations with SMP had to offer tariffs in the leased line, interconnection and special access markets that were based on their actual cost of providing those services. Similarly, tariff provisions of the New Electronic Communications Law apply to operators with SMP. For access related to the provision of carrier selection and preselection services, operators with SMP must offer cost-oriented tariffs. In the absence of effective competition, operators with SMP in the market for the provision of part or all of the minimum set of leased lines must also offer cost-based tariffs. In addition, these operators must publish the terms and conditions of the lease of the minimum set of leased lines which can be modified only with the permission of the BIPT. The BIPT can require operators with SMP to publish a reference offer clearly describing the conditions and tariffs for every service they offer or to have reference offers for access approved by the BIPT. See " —Provisions Applicable to All Electronic Communications—Entities with Significant Market Power." When the imposition of these or other obligations would not achieve the goals of the New Electronic Communications Law, the BIPT can prohibit operators with SMP on an end user market from charging abnormally high prices. The BIPT can impose requirements relating to cost-based pricing and cost allocation systems when there is an absence of effective competition that allows an operator with SMP to maintain excessively high prices or to erode margins to the disadvantage of end users. The New Electronic Communications Law requires telecommunications operators to provide clear information to end users of their public telephony services on the components of the charges that they incur. Operators must provide subscribers with a specified "basis invoice" and, in case of a dispute, upon request, a more detailed invoice. As part of the applicable universal service obligations, the New Electronic Communications Law also obliges every operator to offer reduced affordable tariffs for specific categories of users, such as, under certain conditions, those 65 years of age or older, handicapped or hearing impaired users. The method of calculation of these tariffs and the categories of beneficiaries are set forth in an annex to the New Electronic Communications Law. See " —Telephony Regulation—Universal Service." Telephone Numbering System Both under the prior regime and under the New Electronic Communications Law, the BIPT also manages the national telephone numbering system for Belgium and allocates telephone numbers to network operators and service providers. More specific regulations remain to be promulgated by royal decree. Number Portability Since January 1, 2000, all Belgian fixed-line operators have been legally required to provide full geographic and non-geographic number portability. Fixed-line number portability allows subscribers to retain their number(s) independently of the operator providing the telephony service:

• in the case of geographic numbers, within the geographic zone; and

• in the case of non-geographic numbers, at any location. The New Electronic Communications Law preserves the number portability requirement for providers of public telephony services, but further details of the number portability requirement will have to be specified by royal decree. In the meantime, the old royal decrees on number portability remain in force. Carrier Selection and Pre-selection The Royal Decree of June 22, 1998 required fixed operators with SMP and operators controlling access to fixed line end users to offer carrier selection, beginning January 1, 1998, and carrier preselection, beginning January 1,

77

2000. Carrier selection enables subscribers to access the services of other providers (for example, long distance calling) on a call-by-call basis by dialing a carrier selection code. Carrier preselection allows subscribers to elect to receive certain services from a provider other than the provider who provides the fixed line connection to the subscriber on an ongoing basis without dialing a carrier selection code each time the service is used. Historically, we have used carrier preselection to provide telephony service to subscribers who have not yet elected to convert to our direct access service after the portion of the Combined Network passing their homes was upgraded to allow them to receive this direct access service. Currently, it is not commercially feasible for other service providers to offer carrier preselection services through the Combined Network because the fees we must charge to recover our costs are too high to allow for competitive retail offers. The New Electronic Communications Law requires entities with SMP in the offering of access to and use of public telephone networks at a fixed location to offer their subscribers at a cost-oriented basis the carrier selection and carrier preselection functions and also the ability to override any preselected choice on a call-by-call basis. Licenses and Authorizations Under the 1991 Law, we were required to obtain a voice telephony license and network infrastructure license from the BIPT in order to provide fixed-line telephony services to our subscribers in Flanders. These licenses enabled us to provide voice telephony service in Belgium on both a direct access and carrier preselect basis, in addition to providing related value added services like conference calling and other features. In connection with these licenses we were also required to satisfy minimum network quality requirements. Under the New Electronic Communications Law, these licenses have been replaced with a "general authorization" upon notification. General Authorization Under the New Electronic Communications Law, licenses are no longer required to provide electronic communication services or networks. Operators must only submit a notification to the BIPT, after which they may begin activity. The notification must mention identification data of the provider and its contact person for the BIPT, a description of the services or the network, and the date on which the activities will presumably start. The BIPT then provides the operator with a standard declaration confirming the submission of a notification. Providers of electronic communication services or networks, however, have a "general authorization" to start their activities as from the notification. They must then comply with certain requirements relating to the safety, efficient use, etc. of the network and the services. The New Electronic Communications Law stipulates that those who held an individual license at the time of the entry into force of the New Electronic Communications Law are deemed to have submitted this notification. We therefore do not need to notify the BIPT of our activities for which we were licensed under the prior regulatory regime. In July 2005, we notified the BIPT of our VoIP activities. We will also have to give notice to the BIPT if we enter into an MVNO arrangement, which qualifies as an electronic communications service. The New Framework lists categories of conditions that may be attached to this general authorization. These relate to, among other things, the funding of universal services (see "—Telephony Regulation—Universal Service"), administrative charges, interoperability of services and interconnection of networks, environmental requirements (see "—Property, plant and equipment—Environmental Matters"), personal data and privacy protection (see "—Telephony Regulation—Privacy Protection"), consumer protection rules (see " —Telephony Regulation"), enabling of surveillance activities by competent national authorities and measures regarding the limitation of exposure of the general public to electromagnetic fields caused by electronic communications networks. Electronic communications networks and the equipment attached to such networks are potentially susceptible to interference from the outside ("ingress") and alternatively may cause interference to others ("egress"). European and international directives and standards have been adopted to reduce interference between electronic products and services. We comply with the relevant European and international emission standards for our network. We also require equipment manufacturers to comply with applicable European and international emission standards for the network equipment that we use, including modems, telephones and set top boxes.

78

Privacy Protection In addition to applicable general privacy protection regulations, the New Electronic Communications Law contains several provisions that address privacy protection in the electronic communications sector. A first set of provisions concerns data processed for the purpose of the conveyance of a communication on an electronic communications network or for the billing thereof ("traffic data"). Operators must erase traffic data when it is no longer needed to transmit a communication, although certain traffic data may be processed for the purposes of subscriber billing and interconnection payments. Providers may process traffic data to market their own electronic communications services or for the provision of services with traffic data or location data, if the subscriber or user has consented to that processing. "Location data" are data processed in an electronic communications network, indicating the geographic position of the terminal equipment of a user of a publicly available electronic communications service. Operators of mobile networks may process location data other than traffic data, relating to subscribers or users, only when made anonymous or with the consent of the users or subscribers to the extent and for the duration necessary for the provision of a service with traffic data or location data. This provision will not apply to any MVNO activities in which we may engage, however, because we would not operate the relevant mobile network. See "—Our Products and Services—Future Products and Services." Finally, the New Electronic Communications Law provides that subscribers must be given the opportunity to opt out of telephone directories or to limit the extent of personal information included in the directories. Internet Regulation The prior Belgian telecommunications regulatory regime did not specifically address the provision of internet services. Most of these services, including the provision of internet access, however, qualified as telecommunication services under the 1991 Act, which required the internet service providers to register with the BIPT four weeks prior to launching internet services. According to the BIPT, internet voice telephony services were not subject to the regulation of telephony services, because it considered the quality of internet voice services not yet equivalent to that of telephony services.

In accordance with the technology neutral approach of the New Framework, the BIPT abandoned the above view, subject to possible amendments in light of future national and international developments. As a result, internet voice telephony services, including VoIP services that we offer, are subject to the same regulations that apply to traditional telephony. See "—Telephony Regulation." Indeed, the New Electronic Communications Law is applicable to all electronic communications other than the transmission of radio and television signals.

The Commission has identified wholesale broadband access, where it offers facilities equivalent to bit-stream access, as a market that national regulatory authorities should investigate. If the BIPT identifies this market as a relevant market in Belgium, it must then consider whether there is effective competition in that market. If the BIPT were to conclude that there was not effective competition, it could require operators with SMP in this market to provide access to their network at cost oriented prices to other Internet operators and service providers. We currently provide broadband access only to end users, but may become active in the wholesale broadband access market if we are required to grant access to our broadband network to other operators. In a draft market analysis of the wholesale broadband access market, the BIPT has concluded that the geographical scope of this market is national and further established that the retail broadband internet market in Belgium is competitive. Therefore, it has concluded in its draft that cable networks, including Telenet, should not be regulated at the wholesale level. Following the end of the consultation period for this analysis, the BIPT is in the process of receiving feedback from the Competition Council, the European Commission and from national regulators. A final conclusion is expected around the middle of 2006.

In addition, our activities as an ISP are subject to the Law concerning Legal Aspects of Information Society Services of March 11, 2003 (the "ISP Law"), which, in relevant part, sets forth the rights and duties of ISPs when their electronic communications network is used to transmit content that infringes relevant intellectual property rights. The ISP Law provides, as a general matter, that ISPs, such as us, cannot be held liable for information transmitted over an electronic communications network. ISPs must, however, deliver requested information to the judicial authorities upon their formal request. In addition, once an ISP has formal notice that illegal content is being transmitted over its network, it must inform the relevant enforcement authorities as soon as possible. The 1999 ISPA code of conduct sets out the procedure pursuant to which the ISP and the federal authorities work to address the transmission of illegal content over the ISP's network. See " —The New Framework."

79

Broadcasting Regulation Overview Unlike telecommunications, which is subject to comprehensive national regulation, radio and television broadcasting is generally regulated by the Flemish, French and German speaking Communities of Belgium. The Constitutional Court (Arbitragehof / Cour d'Arbitrage) has determined that the regulatory authority of the Communities applies to all relevant broadcasting technologies, and thus includes satellite, terrestrial, DSL and cable broadcasting. The Flemish and French Communities have adopted legislation (in the form of decrees) that governs the provision of broadcasting services in their respective jurisdictions. The national government retains authority to regulate broadcasting in Brussels. In addition, the national government can regulate certain non-broadcast aspects of radio communications, including limiting the power of broadcast emitters and establishing safety and technical requirements for radio receivers and other equipment. On February 10, 2006, the Flemish government formally established the office of the Flemish Media Regulator (Vlaamse Regulator voor de Media). The Flemish Media Regulator is composed of two judges, one of whom serves as the president, and three media experts. It is divided into a "general chamber" and a "chamber for ethics." The power that was previously vested in the VCM as well as that vested in certain other regulators in the media sector was transferred to the Flemish Media Regulator. The Flemish Media Regulator enforces media regulations in the Flemish Community, decides litigation regarding media regulation and grants media authorizations and licenses. Currently, our cable activities are located almost exclusively in Flanders. Formerly, they were governed by the Coordinated Media Decree of January 25, 1995 (the "Media Decree"). The new framework was implemented at the Flemish Community level by the 2004 Decree, which amended the Media Decree. The amended Media Decree was combined and consolidated on March 4, 2005 (the “Coordinated Media Decrees”). The VRM is now responsible for defining relevant markets in the sector of broadcasting networks and services, examining whether those markets are competitive and, if not, which enterprises possess SMP in those markets and determining what regulations are appropriate for those entities. The Media Decree authorized the VRM to:

• issue warnings with a request to cease and desist from any observed violation of the Media Decree;

• require providers of cable networks to broadcast any decision of the VCM in a form and at a time determined by the VCM;

• levy administrative fines for violations of the Media Decree and, if not paid, issue enforcement orders; and

• grant, suspend or withdraw licenses.

The BIPT requested that the Constitutional Court annul the 2004 Decree. Among other things, the BIPT argued that the Flemish legislature had exceeded its authority and violated the principle of proportionality by failing to enter into a cooperation agreement with the national government and instead unilaterally regulating electronic communications networks without distinguishing between broadcasting and telecommunications. In its judgment of July 13, 2005, the Constitutional Court agreed that the Flemish legislature could not regulate electronic communication network infrastructure in Flanders without cooperation with the national legislature. Therefore, it annulled a substantial portion of the 2004 Decree implementing the New Framework. The provisions concerned will, however, stay in force until the earlier of the time the national government and the regional governments conclude a coordination agreement and December 31, 2005. Licenses and Authorizations Under the previous regime, we held two types of license to transmit and distribute cable television signals to subscribers—licenses related to the delivery of signals to subscribers over our local loop and a license related to the transportation of signals over our fiber backbone to the head ends on the Telenet Network. These licenses were replaced with a general authorization by the 2004 Decree.

80

Prior Licenses Licenses to deliver signals to customers held by our former cable television subsidiary, MixtICS, defined its service area, broadcasting programs and the services it could transmit to end users. Telenet NV (then known as Telenet Operaties NV) held our infrastructure license that authorized us to construct and operate the infrastructure needed to transport program signals to and between cable networks and between head end stations. General Authorization The 2004 Decree replaced the requirement that cable network operators have licenses with a duty that operators notify the VRM that they were operating a cable network with a further requirement to notify the VRM if there is any transfer of that network to third parties. The 2004 Decree stipulates that those who held an individual license at the time the 2004 Decree entered into force will be deemed to have submitted the required notification. We therefore do not need to notify the VRM of our activities as long as no change to our operation occurs. Must Carry The Media Decree imposed certain must carry obligations on cable operators. These rules were to a large extent based on the language of the content broadcast—the Flemish community has stated that it is in the public interest for every citizen to receive information, education, culture and entertainment in his or her own language. These rules have an unlimited duration and effectively apply only to cable networks. The Media Decree provides a list of the radio stations and television channels that we are allowed to transmit over the Telenet Network. Other channels cannot be transmitted without the consent of the VRM. The Media Decree, as amended by the 2004 Decree, requires us to transmit the following radio stations and television channels:

• analog radio stations and the two television channels of VRT, the Flemish public broadcaster, that are directed to an audience located in the operational area of our cable network, provided the stations and channels carry programs that are partly in the Dutch language;

• the television channels of authorized regional broadcasters of the Flemish Community to the extent they

are being offered as part of a purchased digital package;

• two radio stations and two television channels of RTBF, the public broadcaster of the French Community, and the radio station of the public broadcaster of the German Community; and

• two radio stations and the television channels (NOS 1, NOS 2 and NOS 3), of the public broadcaster of

the Netherlands. Before the entry into force of the 2004 Decree, this list did not include the television channels of authorized regional broadcasters that are offered within a purchased digital package. Instead, it included the television channels of authorized private broadcasters, such as VTM, targeted to the entire Flemish Community, provided the channels carry programs that are partly in the Dutch language. As a result of the changes made by the 2004 Decree, the number of television channels that we must carry in Flanders was reduced from 15 to eight. We may charge commercial rates for carrying these stations and channels over the Telenet Network. However, we must carry for free the programs of the regional broadcasters that were already part of the must carry obligation under the Media Decree. We also carry free of charge the programs of the public broadcasters. The Flemish Community does not compensate us for broadcasting the regional broadcasters' channels over the Telenet Network. Pricing of Cable Package The Law of January 22, 1945 on economic regulation and pricing (the "Pricing Law") and the Ministerial Decree of April 20, 1993 regarding special regulation on prices (the "1993 Ministerial Decree") require television services distributors, among others, to receive the prior consent of the Minister of Economy before they can implement any price increase of their basic package. The 1993 Ministerial Decree, which is applicable in the French and Flemish communities as well as Brussels, specifies the procedures that television services distributors, including us, must follow in order to increase fees charged to subscribers. Pursuant to the Pricing Law and the Royal Decree of June 3, 1969, the Pricing Committee was established to advise the Minister of Economy on pricing policies and to administer the price

81

increase process. The Pricing Committee is a part of the national Ministry of Economy. It consists of a president, a vice-president, two reporters, a legal advisor and 88 members, of whom half are alternate members. Members of the Pricing Committee are drawn from various industry and user groups. Individual matters brought before the Pricing Committee are reviewed by a subcommittee consisting of the president, the vice-president, reporters, secretaries, representatives of the Ministries of Economy and Finance and ten members who come from the specific industries and user groups with knowledge of the subject matter under review. A television services distributor may not charge more for its services than the price approved by the Minister of Economy, whose decision is based on the recommendation of the Pricing Committee. Companies may, however, freely decide to charge amounts under this maximum. In the beginning of 2003, the Minister of Economy authorized us to increase the subscription fees for our cable television services by approximately 25%. Copyright fees charged to subscribers are not subject to these pricing restrictions, although the Ministry of Economy must be notified of increases in these fees. Prices for new products in, among others, the "teledistribution" sector, must be transmitted to the service of General Inspection of Prices and Competition, established by the 1993 Ministerial Decree, no later than ten days before they are implemented. Copyright and Retransmission Restrictions The EU directive of September 27, 1993, governing the coordination of certain rules concerning copyright applicable to satellite broadcasting and cable retransmission, has been implemented in Belgium by the national Law on Copyright of June 30, 1994. The national government, acting through the Ministry of Economy, regulates all issues related to copyright. These regulations apply to our basic cable television offerings, in both digital and analog format. Pursuant to case-law of the Belgian Supreme Court and the national Law on Copyright of June 30, 1994, cable companies must receive approval from the holders of the relevant copyrights and related rights to transmit protected works over the cable operators' networks, irrespective of whether the works are redistributed or directly generated by the cable company. We broadcast copyrighted works over our cable network pursuant to agreements with several broadcasters and agencies that represent the holders of various foreign and domestic copyrights. These agreements have been the subject of recent litigation. See Item 8, “Financial information—Legal Proceedings—Copyright Litigation." In our on-demand offerings we comply with the provisions of the Media Decree that limit the broadcasting of programs with restricted content through the use of encryption. Pay Television and Canal+ Acquisition On August 29, 2003, the VRM approved the transfer of the pay television and pay per view license held by the Canal+ group to our former subsidiary PayTVCo, contingent on the acquisition being approved by the Belgian competition authority. The Belgian competition authority approved the acquisition on November 12, 2003, subject to certain conditions, with which we are in full compliance. See "—Our Products and Services—Cable Television—Premium Tier Cable Television—Canal+ Acquisition." The Canal+ Acquisition closed in December 2003. PayTVCo was merged into Telenet NV on July 1, 2005 with effect from January 1, 2005. Historically, we provided our premium cable services in analog and digital format. Since September 2005, the premium pay channels of Canal+, renamed "Prime," are part of the premium iDTV services we provide. These services are governed by the Media Decree. Interactive Digital Television In September 2005, we began to offer iDTV to our cable television subscribers. In addition to a selection of digital cable television channels, as we develop the service, customers will also be able to access a variety of interactive features, including e-mail, text messaging and other internet services. See "—Our Products and Services—Cable Television—Premium Tier Cable Television."

82

When iDTV is also used for telecommunications purposes, such as e-mail and text messaging, both the national and the Community legislatures will have jurisdiction over it. Therefore, we expect this to be regulated through cooperation between these legislatures. Local Regulations We are subject to certain local regulations with respect to our networks, including network rights of way. For telecommunications networks, the 1991 Law explicitly provides that municipalities cannot charge network operators for the rights of way granted to them. Several municipalities have implemented a model regulation requiring payment for "the municipal services and the use of the municipal public domain as a result of works on permanent utilities on the municipal public domain." We have asked the Flemish province governors to suspend these regulations on the grounds that they violate the 1991 Law. Several province governors have confirmed that the regulations do not apply to our networks because they are superseded by the 1991 Law. Competition Law In addition to sector-specific regulations, we are also subject to EU and national competition rules. The EU competition rules, based on the EC Treaty, are directly applicable in Belgium. These provisions prohibit anticompetitive behavior by a company having a dominant position in the market, as well as collusion between competitors that could affect trade between Member States of the European Union and that has the objective or effect of restricting or preventing competition within the European Community. The Belgian competition rules contain identical provisions that are applicable from the time that the Belgian market, or a substantial part of it, is affected. The European Commission, the Belgian Competition Council and the Belgian civil courts have jurisdiction in cases involving any violation or suspected violation of these provisions. EU and national competition rules could limit our ability to offer bundled telephony services, internet services, television services and/or intermediary interactive products. See "—Provisions Applicable to All Electronic Communications—Bundled Sales." The market abuse prohibition could prevent us from bundling a service or product for which we have a dominant market position with a service or product for which we have no such position. In particular, it may be that bundled sales of our television offerings will be allowed to a lesser degree due to our market share for television distribution. See "—Our Products and Services—Residential Sales, Marketing and Customer Care." C. Organizational structure Under our current structure, Telenet Group Holding is the parent of our group and Telenet Communications, Telenet Bidco and Telenet Holding are intermediate holding companies of our group. Telenet NV provides the commercial services, marketing, customer service and network management for our basic and premium cable television service, broadband internet and data and telephony services. Telenet Vlaanderen holds a 50-year right to use the Partner Network, of which 41 years remain and which is automatically renewable for successive 15-year periods unless terminated with ten years prior notice. Telenet Vlaanderen has licensed this right to Telenet NV, providing Telenet NV access to the Partner Network to provide certain point-to-point telecommunications, video and multimedia services. Telenet Solutions together with its Luxembourg subsidiary, Telenet Solutions Luxembourg SA, provides services to our small and medium size business customers, in addition to our corporate, carrier and institutional customers. The following chart sets forth our corporate structure*:

83

Telenet Group Holding NV(1)

Telenet Communications NV(2)

Telenet Bidco NV(2)

Telenet Vlaanderen NV(5)Telenet NV(6)

Telenet Solutions Luxembourg SA(4) Phone Plus SPRL(4)

MerrionCommunications(3)

Telenet Group Holding NV(1)

Telenet Communications NV(2)

Telenet Bidco NV(2)

Telenet Vlaanderen NV(5)Telenet NV(6)

Telenet Solutions Luxembourg SA(4) Phone Plus SPRL(4)

MerrionCommunications(3)

* Telenet Holding, which was previously a subsidiary of Telenet NV, the parent company of Telenet Vlaanderen and a part shareholder in Telenet NV, is excluded from this chart. Telenet Holding was liquidated on January 31, 2006. (1) Parent company of our group and issuer of the Shares. (2) Intermediate group holding company. (3) Merrion Communications was established for the purpose of undertaking certain financing and business development

activities and is currently inactive. (4) We provide voice, data and internet services to our business customers previously offered through Telenet Solutions NV via

Telenet NV. Telenet Solutions’ subsidiary Telenet Solutions Luxembourg SA (now a subsidiary of Telenet NV) provides these same services to our business customers in parts of Luxembourg, and its subsidiary Phone-Plus SPRL provides residential telephony using a carrier preselection service, principally in Brussels and Wallonia. Telenet Solutions was merged into Telenet NV on December 30, 2005 with effect from January 1, 2006.

(5) Telenet Vlaanderen holds the 50-year rights, of which 40 years remain, pursuant to which we have the right to use the

Partner Network to provide certain point-to-point telecommunications, video and multimedia services. (6) We provide our basic and premium cable television offerings, in addition to our residential broadband internet and

telephony services, through Telenet NV. On July 15, 2005, we merged PayTVCo, the historic provider of our premium pay television service, into Telenet NV. On July 16, 2005, we merged MixtICS, through which we historically provided our basic cable television service, into Telenet NV. Both mergers had retroactive effect to January 1, 2005.

Telenet Group Holding and Telenet Communications are the issuers of the Senior Discount Notes and Senior Notes, respectively. Telenet Bidco, Telenet NV and Telenet Vlaanderen are the borrowers under the Senior Credit Facility

In order to simplify the internal corporate structure of the group, and to align the corporate structure with the operational functioning of the group, we recently merged PayTVCo NV, MixtICS NV and Telenet Solutions NV with Telenet NV, thereby resulting in a single operating entity, Telenet NV. As anticipated, these mergers resulted in a limited impairment to our overall carry-forward tax losses. In addition, we liquidated Telenet Holding in January 2006 without any material adverse impact on our carry-forward tax losses. D. Property, plant and equipment We lease our headquarters building pursuant to a sale-leaseback arrangement with KBC Bank NV ("KBC"), which is the security agent and a lender under our Senior Credit Facility. The lease expires on December 31, 2014. Pursuant to the terms of the agreement, we have an option to acquire the building from KBC at the end of the lease. As

84

part of the negotiations surrounding the initial acquisition by the Cable Partners consortium of an interest in our group in 2001, we granted our shareholder Investco Belgian Cable 1 S.à R.L. an option that would allow it to purchase our headquarters building on the same terms and conditions on which we can acquire it under our option from KBC. We retain the right to rent the building from Investco Belgian Cable 1 S.à R.L. on arm's length terms until the expiration of all surface rights (opstalrechten / droits de superficie). Our Board of Directors has approved plans involving the purchase of land, construction of buildings and the subsequent sale-leaseback of such properties to provide additional technical and office space that we require. The estimated total cost of this expansion is currently estimated to be approximately €30 million, which is expected to be funded approximately 20% by cash, and 80% by a proposed 15-year leasing contract that has not yet been finalized. The buildings are under construction adjacent to our existing head office in Mechelen. Telenet Solutions leases its headquarters in Diegem, Belgium for a period of 9 years, with renewal and rate reviews every three years. Our fiber and coaxial network runs through public and private rights of way. Substantially all of our rights of way are public. Although Article 99 of the 1991 Law (see "—Regulation—Telephony Regulation") grants us free rights of way on public land, we pay a relatively small amount of taxes to Flanders in connection with our cable lines that are laid next to regional routes. The 1991 Law also grants us a right to run our network lines over private land. As a general matter, we are not required to compensate the owner. Disputes concerning the location and the way the construction is performed with respect to the private rights of way are resolved by the BIPT. In general, our fiber optic cable runs in trenches shared with utilities and other service providers and our coaxial cable runs in trenches to which we alone have access. Approximately 40% of our local loop is above ground. We pay approximately €2.4 million a year to the MICs to rent space on their utility poles to bring coaxial cable connections to subscribers connected to the overground portion of our network. The buildings housing our switches and head end stations are a vital part of our network. We own two switch buildings, and have ownership rights (opstalrechten / droits de superficie) in two further switch buildings until June 30, 2046 and December 31, 2046, respectively. These switch buildings are located on land owned by two of the PICs. We also have usage rights with respect to one other switch building for a period of 30 years, which is owned by Electrabel. Some head end stations are located in stand alone structures and others are parts of larger utility and similar complexes. We own 22 of our head end stations and lease an additional 4 stations from Electrabel and 19 from several of the PICs. Three head end stations are part of switch stations in which we have usage or ownership rights. Our head end leases with Electrabel and the PICs expire on September 22, 2046, but are renewable for consecutive ten-year periods. Rent payments for these assets are included in our disclosures of payments to related parties in note 23 to our consolidated financial statements for the year ended December 31, 2005. We have also entered into lease agreements with various operators pursuant to which we grant them the right to install, operate and maintain their equipment on our antenna sites. We also lease space to install equipment to operate Wi-Fi hotspots in relevant locations. For the majority of our Wi-Fi locations, we do not pay rent, but rather enter into exclusivity agreements under which we agree to revenue sharing arrangements with the owner of the location. For certain locations where equipment is jointly owned, we incur a rental charge. It is possible we will be required to pay rent for additional locations in the future. In 2004, in conjunction with the termination of the Service and Transfer Agreement with Electrabel, we incurred capital expenditure of €1.9 million on information technology to acquire a digitized database of part of our cable network. Environmental Matters Our operations are subject to a variety of laws and regulations relating to land use and environmental protection. We believe that we are in substantial compliance with the applicable requirements. Several of the sites we operate were subject to soil surveys revealing that a number of sites are contaminated as a result of historical operations. However, the previous operators have assumed responsibility for the clean-up of this contamination. If future soil surveys reveal new or additional contamination, we, as operator of the sites on our Combined Network, may be obligated to conduct additional soil surveys or clean-up in accordance with the applicable legislation. We do not hold information regarding the condition of the soil or subsoil on sites that we operate that are owned by PICs.

85

Item 5. Operating and financial review and prospects A. Operating results Critical Accounting Policies Our consolidated financial statements and the accompanying notes contain information that is pertinent to this discussion and analysis of our financial position and results of operations. The preparation of financial statements in conformity with EU GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and the related disclosure of contingent assets and liabilities. Estimates are evaluated based on available information and experience. Actual results could differ from those estimates under different assumptions or conditions. We believe that, in particular, the critical accounting policies and estimates discussed below involve significant management judgment due to the sensitivity of the methods and assumptions necessary in determining the related asset, liability, revenue and expense amounts. For a detailed description of our significant accounting policies, see note 2 to our consolidated financial statements for the year ended December 31, 2005. Critical accounting policies relating to the summary financial data presented in US GAAP within Item 3A can be found in the annual report we published for the year ended December 31, 2004. For information regarding our transition from US GAAP to EU GAAP, see Annex C—First Time Adoption of EU GAAP”. Impairment of Tangible and Intangible Assets Excluding Goodwill Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Goodwill Goodwill arising on the acquisition of a subsidiary represents the excess of the cost of acquisition over our interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the subsidiary recognized at the date of acquisition. Goodwill is initially recognized as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill is tested for impairment annually, or more frequently when there is an indication that it may be impaired. We have identified one cash-generating unit to which all goodwill was allocated. If the recoverable amount of the cash-generating unit is less than the carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill and then to the other assets pro-rata on the basis of the carrying amount of each asset. An impairment loss recognized for goodwill is not reversed in a subsequent period. Financial Instruments The Company seeks to reduce its foreign currency exposure through the use of certain derivative financial instruments in order to manage its exposure to exchange rate and interest rate fluctuations arising from its operations and funding. The Company has identified certain agreements as cash flow hedges including foreign exchange forward contracts, interest rate swap agreements, cap options and combinations of such instruments. Changes in the fair value of derivative financial instruments that are designated and effective as hedges of future cash flows are recognised directly in equity and the ineffective portion is recognised immediately in the income statement. If the cash flow hedge of a firm commitment or forecast transaction results in the recognition of a non-financial asset or a liability, then, at the time the asset or liability is recognised, the associated gains or losses on the derivative that had previously been recognised in equity are included in the initial measurement of the asset or liability. For hedges that do not result in the recognition of an asset or a liability, amounts deferred in equity are recognised in the income statement in the same period in which the hedged item affects net profit or loss. Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised in the income statement as they arise.

86

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. At that time, any cumulative gain or loss on the hedging instrument recognised in equity is retained in equity until the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to net profit or loss for the period. Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of host contracts and the host contracts are not carried at fair value with unrealised gains or losses reported in the income statement. Revenue Recognition Subscription fees for telephony, internet and premium cable television are prepaid by subscribers on a monthly basis and recognized in revenue as the related services are provided i.e. in the subsequent month. Subscription fees for basic cable television are prepaid by subscribers predominantly on an annual basis and recognized in revenue on a straight line basis over the following twelve months. Revenue from telephone and internet activity is recognized on usage. Installation fees are recognized immediately only when they represent a separately identifiable service that is delivered for which the related costs are expensed as incurred and reliably measurable. Accordingly, telephony and internet installation fees are recognized immediately whereas cable television installation and activation fees are deferred and recognized over the estimated customer relationship period of 10 years. Together with subscription fees, basic cable television subscribers are charged a copyright fee for the content received from public broadcasters that is broadcasted over the Company’s network. These fees contribute to the cost we bear in respect of copyright fees paid to copyright collecting agencies for certain content provided by the public broadcasters and other copyright holders. We report copyright fees collected from cable subscribers on a gross basis as a component of revenue as we are acting as a principal as the arrangement with the public broadcaster and other copyright holders does not represent a passthrough arrangement. Indeed, we bear substantial risk in setting the level of copyright fees charged to subscribers as well as in collecting such fees. Income Taxes Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit. A deferred tax asset is recognised for the carryforward of unused tax losses to the extent that it is probable that future taxable profit will be available against which the unused tax losses can be utilized. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. In view of our history of losses, no net deferred tax assets have been recognized. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Factors Affecting Our Results Our revenues consist of basic and premium cable television revenue, residential broadband internet revenue, residential telephony revenue and business services revenue. Our residential business, including interconnection fees generated by both residential and business customers, generated 90.7% of our consolidated revenues for the year ended December 31, 2005. The remaining 9.3% of our consolidated revenues for the year ended December 31, 2005 was derived from providing business services. Our residential subscribers include individuals and families, as well as small businesses with between one and four employees ("SoHos") that receive our services through a coaxial connection.

87

Recent telecommunications legislation in Belgium now permits us to offer combinations of television, broadband internet and telephony services at prices that are less than those that we would charge for subscribing to each service individually. See Item 4, “Information on the company – Business overview—Our Strategy," Item 4, “Information on the company – Business overview – Regulation —Provisions Applicable to All Electronic Communications—Bundled Sales" and Item 4, “Information on the company – Business overview—Regulation —Competition Law." Going forward, we expect that more of our customers will subscribe for bundled offerings, which may reduce our churn rates and provide an important source of future revenue. See Item 4, “Information on the company – Business overview—Our Products and Services—Residential Sales, Marketing, Installation and Customer Care." We expect ARPU to decline for our telephony services and, to a lesser extent, for our broadband internet services. However, we expect that these declines may be offset through our strategy to increase services and revenue per unique customer, including through the use of bundling and the upselling of our new iDTV services to our existing basic cable subscribers. Basic and Premium Cable Television Our basic and premium cable television business generated 36.3% of our consolidated revenues for the year ended December 31, 2005. We derive the majority of our cable television revenues from fixed subscription fees for basic cable television, most of which are currently paid annually in advance by residential subscribers throughout the year. Basic subscription fees were responsible for 58% of our aggregate cable television revenues for the year ended December 31, 2005. In the future, we may seek periodic increases in subscription fees for basic television services in line with cost inflation and other factors. Our operating expenses include fees paid to collection agencies and certain broadcasters for copyrights, which are recorded under basic cable programming costs. We seek to recover these expenses from our cable television subscribers by charges added to their basic subscription fees for the content that they view, which accounted for 13% of our aggregate cable television revenues for the year ended December 31, 2005. Premium cable television revenues, which comprise subscription fees and usage fees for our broadcast and on-demand premium cable television services, were responsible for 19% of our aggregate cable television revenues for the year ended December 31, 2005. See Item 4, “Information on the company – Business overview—Our Products and Services—Cable Television." We also earn carriage fees, paid by broadcasters, to carry certain programs over the Telenet Network and to include them in our basic cable offering and record revenues resulting from sales of set top boxes for our iDTV service, which are identified in the line of our revenue breakdown labeled “Distributors/Other” . These carriage fees and set top box revenues were responsible for 6% of our aggregate cable television revenues for the year ended December 31, 2005. Since set top box revenues are linked to our iDTV service, which was launched on September 3, 2005, we expect that these will represent a more significant portion of our total cable television revenues in 2006. We generate revenues from activation fees for our iDTV service, although these have not been significant to date, nor do we anticipate that they will become significant in the future. Our basic cable television business has generated a stable revenue stream as the Belgian cable television market has been characterized by high and steady penetration rates, limited competition and low subscriber turnover (with most turnover and new subscriber additions resulting from house moves). As of December 31, 2005, cable television was available to approximately 97% of all television households across Belgium. We had approximately 1.6 million subscribers and a 94.4% penetration rate with respect to households passed by the Telenet Network as of that date. Belgacom has started introducing its iDTV broadcast service in areas where it has upgraded its existing telecommunications network, which will permit it to offer a combination of television, broadband internet, fixed-line telephony and, through a subsidiary, mobile telephony services not only in Flanders, where we operate, but across Belgium. Scarlet and Tele2, which provide telephony and internet services in Belgium, have indicated their interest in also providing iDTV services in Belgium. These and other competitive forces may create downward pressure on prices, which may result in a decrease in ARPU per service. While we have not yet experienced any meaningful increase in our churn rates as a result of these factors, this may change in the future. See Item 3, "Key information—Risk factors—Risks Related to Our Business—The Belgian internet, data and telephony industries are highly competitive and the television industry is likely to become more competitive in the future, which could result in higher content costs and marketing expenses, lower subscription rates and the loss of subscribers." Residential Broadband Internet Our residential broadband internet business generated 31.3% of our consolidated revenues for the year ended December 31, 2005. This business generates revenue primarily from fixed monthly subscription fees paid by

88

subscribers. We generate limited additional fees for multiple connections, incremental volume usage services and late payments. We may also earn installation revenue, although we have to date typically promoted our residential broadband internet service by offering discounted installation charges or waiving installation charges altogether. See Item 4, “Information on the company –Business overview—Our Products and Services—Residential Broadband internet" for a detailed description of our residential broadband internet fee structure. Revenue growth from our residential broadband internet business is driven primarily by net subscriber growth and ARPU, which in turn is a function of gross subscriber additions and churn. We define churn as the total number of subscribers disconnected during a relevant period, divided by the average number of subscribers during that period. As of December 31, 2005, we had approximately 601,000 residential broadband internet subscribers, which contributed to our estimated market share of approximately 53% and penetration rate of 25.1% in Flanders. Residential Telephony Our residential telephony business represented 23.1% of our consolidated revenues for the year ended December 31, 2005. Our residential telephony business generates revenue from a combination of fixed monthly line rental and usage fees (consisting of fixed call-set up fees and per-minute tariffs) and interconnection fees. Usage fees from our carrier pre-select telephony services are also included in these revenues. We charge additional monthly fees for value-added features and, when incurred, for late payments. Line rental and usage fees were responsible for 82% of our residential telephony and interconnection revenues for the year ended December 31, 2005. See Item 4, “Information on the company – Business overview—Our Products and Services—Residential Telephony" for a detailed description of our residential telephony tariff and pricing options. Revenue growth from line rental and usage fees in our residential telephony business is driven primarily by net subscriber growth, which in turn is a function of gross subscriber additions and churn. Since the end of 2004, the launch of our Telenet FreePhone and Telenet FreePhone Anytime telephony plans, which offer unlimited national fixed-line calls for a monthly fee, have provided a significant source of new subscribers. As of December 31, 2005, we had approximately 358,000 residential telephony subscribers, which contributed to an estimated market share of 21% in Flanders (based on number of RGUs) and a penetration rate of 14.7%. We earn interconnection revenue from other network operators, including fixed line and mobile operators, for the termination of inbound calls to subscribers on the Combined Network, whether residential or business. Our residential telephony business experiences moderate effects from seasonality, as is typical for our industry. We expect interconnection revenue to decrease over the coming years as our cost of terminating calls from other networks to end users on the Combined Network also declines. We typically do not charge subscribers an installation fee to receive residential telephony services. Interconnection revenues from both our residential and business telephony services represented 18% of our residential telephony revenues for the year ended December 31, 2005. Our increase in interconnection rates that we charge for the termination of calls on the Combined Network is currently the subject of regulatory and court proceedings with Belgacom. In March 2005, the Court of Appeals of Antwerp rejected Belgacom's appeal against the earlier judgment against Belgacom's original Commercial Court claim. Belgacom subsequently brought the case before the Belgian Supreme Court (Hof van Cassatie / Cour de Cassation), which will have the authority to review only whether there has been a mistake of law or breach of certain formal procedural requirements in the case. See Item 4, “Information on the company – Business overview—Legal Proceedings—Interconnection Litigation" and Item 3, "Key information—Risk factors—Litigation Risks—We are currently involved in a significant dispute with Belgacom relating to the price we charge competitors to interconnect to our telephony network, and an unfavorable outcome for us in this dispute would reduce the profitability of our telephony business." The higher interconnection rates that we charge for the termination of calls on the Combined Network is currently the subject of a proposal by the BIPT, which if adopted in its current form, would impose a three year transition period, starting in 2007, substantially reducing our interconnection rates to the same as those charged by Belgacom. Although we have always anticipated that our interconnection rates will decrease as our telephony subscriber base grows, the BIPT’s proposals would result in our interconnection revenues declining at a faster rate than what we currently anticipate. See Item 3, “Key information—Risk factors—Risks Related to Regulatory and Legislative Matters—The BIPT has issued a consultation statement regarding our interconnection rates, which, if adopted, could result in a significant reduction in our projected interconnection revenues in certain years”.

89

Our carrier preselect businesses continue to make positive contributions to our telephony business, although we have not actively marketed them in recent years. The Telenet carrier preselect business was formerly used to market telephony services to areas where our network was not yet upgraded for direct access telephony. As of December 31, 2005, we had 8,000 Telenet carrier preselect RGUs, compared to 12,000 on December 31, 2004. These statistics do not include the carrier preselect customers of Phone-Plus, which we acquired as a subsidiary of Codenet SA in December 2003. We expect the RGUs and ARPUs for our carrier preselect business to decline over time. Installation and activation fees are charged for certain types of installations of our telephony and internet services, or in some instances for upgrades such as the addition of a second telephony line. Typically, the installation charges are waived as part of a promotion and therefore we do not expect these fees to be a significant contributor to our revenues for 2006. Business Services Sales of business services generated 9.3% of our consolidated revenues for the year ended December 31, 2005. We generate revenue from these services primarily from fees paid by customers for internet, data and voice services, pursuant to standard conditions with smaller businesses and individually negotiated contracts with larger businesses and telecommunications carriers. Our business services operation is also responsible for the installation of wireless wi-fi base stations and the marketing of wi-fi services, although these do not represent a significant portion of business services revenues yet. Costs and Expenses Our principal expenses consist of costs of services provided and selling, general and administrative expenses. Both our costs of services provided and selling, general and administrative expenses include depreciation and amortization expenses, the significant majority of which are classified as costs of services provided. Costs of Services Provided Our costs of services provided consist of interconnection costs, personnel expenses and other operating expenses, which include network operating, maintenance and repair costs and cable programming costs. We also incur depreciation and amortization costs associated with our operating expenses, including amortization costs related to certain of our content costs, and capitalize most of our installation costs, including labor costs. The largest element of our costs of services provided are depreciation and amortization expenses. Depreciation and amortization expenses are principally related to the depreciation of our broadband network and capitalized installation, modem and network interface unit costs, and amortization of intangible assets. We capitalize installation costs associated with the addition of new subscribers. Costs associated with subsequent installations of additional services are capitalized to the extent that they are incremental and directly attributable to the installation of expanded services. Installation costs include direct labor costs. We depreciate capitalized installation costs on a straight-line basis over five to 20 year periods. We compute depreciation on a straight-line basis using estimated useful lives of 33 years (for buildings and improvements), three to 20 years (for operating facilities) and three to ten years (for other equipment). We amortize intangible assets with a finite life (comprised primarily of network user rights, software development for our network operations and acquisition costs, customer lists and trademarks) on a straight-line basis over their estimated useful lives, which range from three to 20 years. For our residential broadband internet and telephony businesses, we incur capital expenditure for internet and telephony modems and network interface units. Similarly, we currently incur capital expenditure for set top boxes required for delivery of our premium cable television services. We retain ownership of set top boxes for our prior Canal+ premium service and the former Canal+ analog customers that we migrated to our iDTV service, modems and network interface units, and currently do not charge customers rental fees for them. See “—Liquidity and capital resources—Capital Expenditure." We anticipate increases in depreciation and amortization expense in line with subscriber growth and following currently planned capital expenditure related to subscriber growth, the upgrade of the upstream capacity of our coaxial

90

network and other network and information technology investments. See “—Liquidity and capital resources" and Item 4, “Information on the company – Business overview—The Combined Network —HFC Upgrade." Network items in our fixed asset register represented over 90% of our gross fixed assets as of December 31, 2005 and are depreciated over a period of ten to 20 years. Our depreciation is therefore to a large extent predictable, although we do experience fluctuations in depreciation relating to smaller, shorter-lived assets such as modems and other subscriber equipment, but these do not generate material changes in our expected depreciation costs. Our recent investments related to the introduction of our iDTV service will have a limited impact on our overall depreciation costs. We therefore expect our depreciation costs in 2006 to be broadly comparable to the depreciation we charged in 2004 and 2005. Under EU GAAP, certain content costs are no longer reflected as operating expense when incurred (as was the case under our previous GAAP), but instead are capitalized and amortized subsequently. To facilitate recognition of this impact, we report these costs as a separate line in note 18 to our Consolidated Financial Statements. We anticipate that these costs will increase as take up of our iDTV service increases. Employee costs classified as operating expenses represent the most significant of our operating expenses, after depreciation expenses. We include the costs of all employees related to the provision of our services, including various content, network and maintenance activities within our operating expenses. As our business grows, we expect these employee costs to increase. In 2005, these employee costs grew in the latter half of the year in anticipation of and following the launch of our iDTV services. The third largest category of costs of services provided are network operating costs, which consist of infrastructure costs (including information technology, network and supplier maintenance costs, payments under network operating agreements with the PICs, costs to supply electricity to our networks and internet connectivity costs), building costs, expenses associated with disconnecting cable television services and pole rental fees paid to Electrabel. In addition, we incur expense for network repair and maintenance. We also include interconnect expense, basic and premium content costs, call centre costs related to customer care and bad debt expense within network operating expenses. In addition, since the launch of our iDTV service, we have started to incur non-recurring costs for the set top boxes for our iDTV service. Since we anticipate that we will continue to sell these set top boxes at margins which are significantly lower than the margins we seek to obtain from our other products and services, a large increase in set top box sales will result in a decrease in our overall profit margins. Interconnection fees for calls made by our residential subscribers and business customers that terminate outside the Combined Network constitute the largest of our operating expenses after employee costs. Interconnection rates for calls made to mobile networks are significantly higher than rates for calls that terminate on fixed lines. Although we expect mobile interconnection tariffs to fall over time, we anticipate that fees will increase both in absolute terms and as a percentage of our operating expenses in the future as our customer base grows and a greater proportion of calls are terminated on mobile networks. Basic cable programming costs consist primarily of copyright fees paid to copyright beneficiaries and their agents (usually copyright collection agencies). While we have concluded "all rights included" contracts with the private broadcasters (under which they are fully responsible for obtaining, and paying for, the required copyrights from and to the copyright beneficiaries), we, and other cable operators, are required to pay copyright fees on behalf of the public broadcasters directly to the copyright beneficiaries. This is usually done through conclusion of global contracts with the copyright collection agencies for groups of these public broadcasters. In addition, we sometimes must pay additional copyright fees for the broadcasting of certain programs directly to the broadcasters. Copyright fees were responsible for a substantial portion of our basic cable programming costs for the year ended December 31, 2005. Cable programming costs also consist of carriage fees paid to some commercial broadcasters to distribute their cable television content. In addition, we pay fees to various distributors of content for our premium cable services, which in many cases are calculated on the basis of a fixed minimum fee plus a variable component. For contracts concluded with US-based content providers, these programming costs also include the applicable copyrights attached to such content (except for musical compositions, for which copyright fees are paid directly to the relevant copyright collection agencies). For other agreements concluded with non-US based distributors of content, we pay separate copyright fees, in addition to the programming costs under such contracts, directly to the copyright collection agencies. Certain contracts concluded with the copyright collection agencies have reached their original expiry date but are deemed renewed unless otherwise agreed by the parties to the agreement.

91

The programming costs payable for premium cable content represent a higher proportion of premium cable revenues than the copyright fees we pay for basic cable programming. As a result, our cable programming costs increased, and our margins decreased, from 2004 to 2005, following the successful completion of the Canal+ Acquisition. We expect these fees to increase as competition for content from other providers of premium television services, including Belgacom, increases. Prices for rights to broadcast soccer matches of different leagues, for example, have increased substantially in recent years, and we anticipate increasing competition from Belgacom as rights to broadcast soccer matches are put up for auction upon expiry of the relevant contracts. From January 1, 2005 to August 30, 2005, expenses also included the fee we paid the Canal+ group in exchange for the use of the Canal+ brand name in our prior premium television offering. We stopped incurring these expenses when we launched our new premium digital offering under the Prime name in September 2005. See Item 4, “Information on the company—History and development of the company—Acquisitions and Integrations." To a large extent, the fees we pay for our premium content are related to the number of premium subscribers who subscribe to these services, and we therefore project that these fees should increase as our premium subscriber base grows. Furthermore, if, as contemplated, the usage of interactive premium cable programming such as on-demand and pay per view type services increases, the variable nature of the fees we pay for content programming will further increase. Other cash operating costs we incur are for bad debt, various costs related to our office buildings and facilities and foreign exchange costs related to operating activities. Our foreign exchange exposures arise principally from content programming costs denominated in US dollars. Our equipment supply contracts are predominantly denominated in Euros and therefore do not give rise to foreign exchange exposure. As of December 31, 2005, the majority of our foreign exchange exposures related to content programming costs was hedged. See Item 11, "Quantitative and Qualitative Disclosures about Market Risk—Foreign Currency Risk." Selling, General and Administrative Expenses Our selling, general and administrative expenses consist of personnel expenses, which represented the majority of selling, general and administrative costs in 2005 and which include sales commissions payable to our retail and door to door sales forces and other selling, general and administrative expenses, which include advertising, marketing, office, transport and external services costs (including, up to May 2005, management fees paid to Cable Partners Europe LLC and audit, consulting, legal and insurance fees) and customer billing and administration costs. We ceased paying management fees to Cable Partners Europe LLC following the acquisition of the Cable Partners interest in Telenet Group Holding by the Liberty Global Consortium in December 2004, and we do not currently pay any management fee to the Liberty Global Consortium. See Item 4, “Information on the company – History and development of the company." Sales and marketing expenses include the costs of external call centre operations which are involved in sales and marketing activities. Billing costs are netted against amounts we receive by way of late payment fees charged to customers who do not pay on time. Selling, general and administrative expenses also include certain depreciation and amortization costs. We incur limited depreciation costs but more significant amortization costs within our selling, general and administrative costs. The amortization costs are primarily related to our internal information technology costs (including software development and acquisition costs, customer lists and trademarks) on a straight-line basis over their estimated useful lives, which range from three to 20 years. We expect selling, general and administrative expenses to increase generally in the future as a consequence of both gross subscriber growth in any given period and net cumulative subscribers. In the second half of 2005, selling, general and administrative expenses increased in anticipation of and following the launch of our iDTV service, which resulted in significant additional sales and marketing costs. Although we anticipate that the level of our selling, general and administrative expenses (in particular sales commissions and customer care costs) will remain correlated with revenue and subscriber growth, we seek to leverage our overhead costs (including those associated with various management functions, general marketing costs and certain information technology costs) to achieve a more efficient scale. Therefore, while we expect our total selling, general and administrative expenses to increase over time, we expect them to decline slowly as a percentage of our total revenues. Finance Costs Finance costs include interest income (expense) and non-operating foreign exchange gain (loss). One-time costs related to prepayments or redemptions of our financing facilities are also recorded within finance costs. Interest income is generated by cash balances and short-term liquid investments. Interest expense represents amounts payable on

92

our various debt obligations including, primarily, variable interest payments under our Senior Credit Facility, payments under the Senior Notes and the Senior Discount Notes. Interest expense also includes the interest portion of payments to Interkabel under the Clientele Agreements and Annuity Agreement (and to the MICs under the Clientele Agreement prior to August 2002), the magnitude of which increased as the completion of the upgrade of the Partner Network to the HFC standard progressed. Following the completion of the HFC upgrade in 2002, we expect Clientele Agreement and Annuity Agreement interest expense to remain stable in the future. However, the interest component of such agreements is, to an extent, variable depending upon levels of inflation. See Item 4, “Information on the company – History and development of the company—Network Upgrade." We also report the interest component of our pensions obligations as part of finance costs. Our primary source of foreign exchange exposure is to fluctuations in the US dollar/euro exchange rate following the offering of the Senior Discount Notes, although the fully accreted principal value of this exposure has been hedged up to December 15, 2008. Recent Developments Redemption of Senior Notes Following Initial Public Offering On January 9, 2006, we applied the remaining net proceeds of our IPO towards a partial redemption of the Senior Notes of Telenet Communications. The principal amount redeemed was €124.8 million, in addition to which we paid a prepayment premium of €11.2 million and accrued interest of €0.7 million. After the IPO redemption and the change of control offer redemptions which were settled in November 2005, the outstanding balance of the Senior Notes was €368.4 million. Acquisition of Assets of Hypertrust On February 2, 2006, we announced the acquisition of the assets and rights of Hypertrust, a Belgian provider of on-line digital photography services. Hypertrust’s technology, which was previously marketed under the Pixagogo and Photoblog brand names, will allow Telenet broadband internet and iDTV customers to easily store, manage and share digital photographs. BIPT Proposal Regarding Interconnection Termination Rates On February 7, 2006, the regulator of the Belgian telephony industry, the Belgian Institute for Postal Services and Telecommunications (Belgisch Instituut voor Postdiensten en Telecommunicatie / Institut Belge des Services Postaux et des Telecommunications) (the “BIPT”) issued a consultation statement on the market for fixed voice termination in which it proposed that we, as well as other non-incumbent providers of fixed line telephony, should adopt a mandated path reducing the higher interconnection rate which we currently charge for calls terminated on our network to the lower rate that is charged by Belgacom over a three year period. The consultation statement is based on the BIPT’s findings that we possess significant market power in our network for the termination of calls. Although we have always projected a decrease in the interconnect termination rates we will receive as our telephony customer base grows, if the BIPT’s consultation is adopted we expect that our future interconnect termination revenue would decrease at a faster rate than we have projected. We believe that the BIPT’s basis for its position is not consistent with EU regulation and are contesting their proposal. See Item 3, “Key Information – Risk factors – Risks Related to Regulatory and Legislative Matters—The BIPT has issued a consultation statement regarding our interconnection rates, which, if adopted, could result in a significant reduction in our projected interconnection revenues in certain years.” Announcement of Mobile Services Venture with Mobistar On February 14, 2006, we announced a series of agreements with Mobistar, Belgium’s second largest mobile telephony operator, to establish a new mobile virtual network operator (MVNO). The MVNO will carry Telenet’s branding and use capacity on Mobistar’s network. We anticipate that Telenet mobile services will become available later this year.

93

Submission by Belgacom of Interconnect Case to the Belgian Supreme Court On February 24, 2006, Belgacom submitted its commercial case against Telenet regarding our interconnection termination rates to the Belgian Supreme Court (Hof van Cassatie / Cour de Cassation). This followed a decision on March 17, 2005, when the Court of Appeals of Antwerp dismissed Belgacom’s claim. The Belgian Supreme Court only has the authority to review whether or not there has been a mistake of law or breach of certain formal procedural requirements in the case. We expect a final decision may take up to three years to be reached, since the Supreme Court can refer the case back to the Court of Appeal. Results of Operations The following table sets forth certain summary operating information as of and for the periods indicated:

As of and for the years ended December 31, (unaudited)

2004 2005 % Change RGUs(1) (in thousands) Basic cable television ........................................ 1,583 1,589 - Premium cable television ................................. 140 161 15% Residential broadband internet(2)....................... 506 601 19% Residential telephony(2)(3) .................................. 281 358 28% Business(4) .......................................................... 28 29 5% Total, excluding basic iDTV RGUs.................. 2,538 2,663 5% Total, including basic iDTV RGUs .................. 2,538 2,738 8% Average monthly revenue per subscriber

(in Euro)(5)

Cable television(6) .............................................. 10.3 10.4 0% Premium cable television .................................. 33.3 28.8 -14% Residential broadband internet.......................... 34.1 33.3 -2% Residential telephony(7) ..................................... 37.1 33.3 -10% Churn (annualized)(8) Basic cable television ........................................ 5.1% 5.1% Premium cable television .................................. 12.1% 25.0% Residential broadband internet(9)....................... 9.2% 8.5% Residential telephony(10) .................................... 13.6% 11.3% Penetration(11) Basic cable television ........................................ 94.1% 93.5% Premium cable television ................................. 5.6% 7.6% Residential broadband internet(12) ..................... 21.3% 24.9% Residential telephony(12) .................................... 12.0% 14.5%

___________ (1) Each subscriber is counted as a revenue generating unit, or "RGU," for each service subscribed. Thus, a customer who

receives from us basic cable television, broadband internet and residential telephony services (regardless of its number of telephony access lines) would be counted as three RGUs. RGUs are presented as of the relevant period end date.

(2) Includes households and SoHos that receive our broadband internet and telephony services through a coaxial connection.

(3) These statistics also include approximately 12,000 and 8,000 RGUs who used our carrier preselection services at December 31, 2004 and December 31, 2005, respectively. Carrier pre-select customers of the Telenet Solutions subsidiary Phone Plus are not included in these statistics.

(4) Consists of SME RGUs that receive our broadband internet and telephony services through a coaxial connection. We had approximately 22,000 and 23,000 SME broadband internet subscribers, and 6,000 and 6,000 SME telephony subscribers, respectively, at December 31, 2004 and December 31, 2005, respectively. We also provide business services to SME and corporate RGUs that receive our services using a fiber connection and to those business customers acquired pursuant to the Telenet Solutions Acquisition, which RGUs are not included in the above RGU calculations.

94

(5) Revenue earned for the period divided by the number of months in the period and divided by the average number of RGUs for the period (which average number of RGUs may vary from the number of RGUs presented above at the period end date).

(6) Average monthly revenue per subscriber includes copyright fees and other revenue earned from carriage fees.

(7) Average monthly revenue per subscriber excludes interconnection revenue and installation fees but includes revenue generated by RGUs who use our carrier preselection services. See footnote 3.

(8) Total number of RGUs disconnected during the period divided by the average number of RGUs for the period.

(9) Includes SMEs that receive our services through a coaxial connection. The churn calculation excludes subscribers who migrate to our FreeSurf narrowband product. Statistics for FreeSurf are not disclosed.

(10) Excludes RGUs who use our carrier preselection services and includes SMEs that receive our services through a coaxial connection. See footnote 3. We exclude RGUs who use our carrier preselection services from our residential telephony churn statistics because, for the most part, these customers subscribe to our direct access telephony services upon ceasing to subscribe to our carrier preselection services.

(11) Number of RGUs at the end of the relevant period as a percentage of the number of homes and businesses, as applicable, passed by our network at the end of the relevant period (in the case of cable television) or by the Combined Network as of December 31, 2004 (in the case of residential broadband internet and telephony).

(12) Includes SMEs that receive our broadband internet and telephony services through a coaxial connection. The following table sets forth certain summary financial information for the periods indicated:

For the years ended December 31,

(Euro in millions, except percentages and per share amounts) 2004 2005 Revenues Basic cable television............................................................................................. 197.4 198.6 Premium cable television ...................................................................................... 58.8 51.8 Distributors / other ................................................................................................. 8.8 17.2 Residential broadband internet .............................................................................. 192.3 231.1 Residential telephony............................................................................................. 157.2 170.3 Business services ................................................................................................... 66.7 68.5 Total ....................................................................................................................... 681.1 737.5 Expenses Costs of services provided..................................................................................... (430.7) (459.0) Gross Profit ............................................................................................................ 250.5 278.5 Selling, general and administrative costs .............................................................. (145.8) (146.9) Operating income .................................................................................................. 104.7 131.6 Finance costs, net................................................................................................... (161.8) (193.2) Net loss before income taxes................................................................................. (57.2) (61.6) Income tax expense................................................................................................ (4.5) (15.1) Net loss................................................................................................................... (61.7) (76.7) EBITDA ................................................................................................................ 309.0 337.9 EBITDA margin .................................................................................................. 45% 46% Weighted average shares outstanding ................................................................... 86,527,257 89,503,387 Net loss per share................................................................................................... (0.71) (0.86)

95

The following table sets forth summary financial information as a percentage of revenues for the periods indicated:

For the years ended December 31, 2004 2005

Revenues Basic cable television .................................................................................... 29.0% 26.9% Premium cable television .............................................................................. 8.6% 7.0% Distributors / other......................................................................................... 1.3% 2.3% Residential broadband internet...................................................................... 28.2% 31.3% Residential telephony .................................................................................... 23.1% 23.1% Business services........................................................................................... 9.8% 9.3% Total............................................................................................................... 100.0% 100.0% Costs and Expenses Costs of services provided ........................................................................... 63.2% 62.2% Selling general and administrative expenses ................................................ 21.4% 19.9% Expenses by Nature Employee benefits ......................................................................................... 15.8% 14.9% Depreciation .................................................................................................. 23.4% 21.6% Amortization ................................................................................................. 5.2% 5.3% Amortization of broadcasting rights ............................................................. 1.4% 1.1% Network operating and service costs ............................................................ 26.3% 28.3% Advertising, marketing and dealer commissions.......................................... 6.5% 6.7% Other costs ..................................................................................................... 6.0% 4.3% Year Ended December 31, 2004 Compared to Year Ended December 31, 2005 The financial information for the years ended December 31, 2004 and December 31, 2005 included in the discussion set forth below is derived from Telenet Group Holding's consolidated financial statements included in this annual report. Because 2005 is the first year for which we are required to present EU GAAP financial statements, we present a discussion covering the years 2004 and 2005 only. For a discussion on prior years in US GAAP, please refer to previous annual reports which we have issued. Revenues Revenues increased by €56.4 million, or 8.3%, from €681.1 million for the year ended December 31, 2004 to €737.5 million for the year ended December 31, 2005. The principal drivers of our revenue growth were subscriber growth in our residential broadband internet business and to lesser degrees, growth in our other residential and business services operations. Cable Television We generated €198.6 million of basic cable television revenues for the year ended December 31, 2005, compared with €197.4 million for the year ended December 31, 2004. The steadiness of these revenues reflects the sustained high penetration of our basic cable services, and the absence of any price changes during 2005 to either our basic subscription charges or to the copyright fees we collect together with the basic subscription fee. Our premium cable television business, which combines both the former Canal+ business which we acquired in December 2003 and the new iDTV service we launched in September 2005, contributed €51.8 million to our aggregate cable revenues for the year ended December 31, 2005, compared to €58.8 million in the prior year. The decrease arose from a reduction in the ARPU for our premium cable services, which in turn was the consequence of the repositioning of our premium cable services to appeal to a wider potential audience. Our cable television revenues also include carriage fee revenues from the distribution of certain content on our network and set top box revenues. Set top box revenues were the principal factor resulting in an €8.4 million increase in distributor and set top box revenues, from €8.8 million in 2004 to €17.2 million in 2005.

96

Residential Broadband Internet Revenues generated by our residential broadband internet business continued to grow, by 20.2%, from €192.3 million for the year ended December 31, 2004 to €231.1 million for the year ended December 31, 2005. Increased residential broadband internet revenues were primarily the result of 19% net growth of residential broadband internet subscribers for the year ended December 31, 2005, combined with the steady ARPUs generated by these subscribers, which were €34.1 in 2004 for €33.3 in 2005. We believe that our ability to sustain these ARPUs in a highly competitive environment reflects the high level of customer acceptance of our broadband internet prices and specifications, combined with our strong customer service. Residential Telephony Residential telephony revenue (including interconnection revenue for both residential subscribers and business customers) increased for the year ended December 31, 2005, by 8.3%, from €157.2 million for the year ended December 31, 2004 to €170.3 million for the year ended December 31, 2005. This increase was primarily due to 28% net subscriber growth for the year ended December 31, 2005, the benefit of which was partially offset by a decline in the ARPUs, from €37.1 in 2004 to €33.3 in 2005. The decrease in ARPUs reflects the introduction of our Freephone tariffs at the end of 2004, which applied to new subscribers and which were also adopted by a significant portion of our existing telephony subscribers. The interconnect fee increase is the subject of litigation and a pending proposal by the BIPT. See Item 8, "Financial Information—Legal Proceedings—Interconnection Litigation" and Item 3, “Risk factors—Risks Related to Regulatory and Legislative Matters—The BIPT has issued a consultation statement regarding our interconnection rates, which, if adopted, could result in a significant reduction in our projected interconnection revenues in certain years”. Management believes that revenues were negatively affected by tromboning, a practice whereby certain telephony operators divert abroad calls that originate in Belgium and then route the calls back to Belgium in order to qualify for reduced international interconnection fees. Business Services Business services revenues increased by 2.8%, from €66.7 million for the year ended December 31, 2004 to €68.5 million for the year ended December 31, 2005. This increase reflects the stabilization and return to growth for this business, following the addition of new products and new customers, while operating in a highly competitive environment which is subject to strong price competition. In the latter half of 2005, we experienced accelerating revenue growth and witnessed improved sales development. Costs and Expenses Costs of Services Provided Costs of services provided increased by €28.3 million, or 6.6%, from €430.7 million for the year ended December 31, 2004 to €459.0 million for the year ended December 31, 2005. For the year ended December 31, 2005, operating expenses increased primarily as a result of an increase in costs arising from set top box sales related to our iDTV service, which was launched in September 2005, and an increase in maintenance costs. As a percentage of revenues, operating expenses were 63.2% for the year ended December 31, 2004 and 62.2% for the year ended December 31, 2005. Other factors contributing to the increase in operating expenses included the general growth in internet and telephony subscriber numbers, higher call center activity following the launch of our iDTV services, higher interconnection costs, network operating costs and programming costs. In addition, personnel and customer service costs rose in the latter half of 2005, also as a result of the iDTV launch. Depreciation charges, which represent the largest portion of costs of services provided, were steady in 2005 compared to 2004. Depreciation charges in 2005 included the impact of one-time write-off costs and accelerated depreciation rates associated with certain network components which we acquired in connection with the ExpressNet upstream upgrade. See Item 8, “Financial information—Legal Proceedings—Litigation with Equipment Supplier”.

97

Selling, General and Administrative Expenses Selling, general and administrative expenses increased by €1.1 million, or 0.8%, from €145.8 million for the year ended December 31, 2004 to €146.9 million for the year ended December 31, 2005. As a percentage of revenues, selling, general and administrative expenses were 21.4% in the year ended December 31, 2004 and 19.9% in the year ended December 31, 2005. Expenses remained steady compared to 2004 despite the growth of the business in 2005 partly as a result of temporarily higher costs incurred in 2004 related to the integrations of our Canal+, Telenet Solutions and MixtICS acquisitions. These included costs related to the integration of marketing, billing, customer care, finance, human resources and information technology functions, including severance costs that resulted from positions that became redundant as a result of these acquisitions. In addition, we incurred one-time costs of €4.3 million as a result of the early termination of obligations relating to a service contract in 2004. Other factors contributing to our selling, general and administrative expenses were the high level of sales activity in 2005 across all residential product lines, reflected both in higher personnel costs and in higher advertising and marketing costs. Prior to the launch of our iDTV service, we had not marketed our premium cable television services. Notwithstanding the growth of the overall growth of our business, we were successful in maintaining steady overhead non-payroll costs between 2004 and 2005 and our billing costs improved significantly with the implementation of reminder fees. Gross Profit Our gross profit increased 11.1%, from €250.5 million for the year ended December 31, 2004 to €278.5 million for the year ended December 31, 2005, reflecting the growth of our revenues and ability to control the growth of our costs of services provided. In particular, the slower growth of depreciation costs, which are the most significant portion of our costs of services provided, as compared to the growth in revenues over this period, helped to increase our gross margin from 36.8% for the year ended December 31, 2004 to 37.8% for the year ended December 31, 2005. EBITDA Our earnings before interest, tax, depreciation and amortization (EBITDA) increased by €28.9 million, from €309.0 million for the year ended December 31, 2004 to €337.9 million for the year ended December 31, 2005. Our EBITDA margin increased from 45.4% for the year ended December 31, 2004 to 45.8% for the year ended December 31, 2005. Operating Profit Operating profit increased by 26%, from €104.7 million for the year ended December 31, 2004 to €131.6 million for the year ended December 31, 2005, as a result of the factors described above. Our operating profit margin increased from 15.4% for the year ended December 31, 2004 to 17.8% for the year ended December 31, 2005. Finance Costs Net Interest Expense Net interest expense decreased from €163.8 million for the year ended December 31, 2004 to €139.3 million for the year ended December 31, 2005, primarily due to the reduction in our total debt following the prepayment of €105.0 million of the outstanding balance of our Senior Credit Facility in March 2005, lower average Euribor rates in 2005 compared to 2004, the lower margins we paid on our Senior Credit Facility as a result of the decreased leverage we attained following the repayment made in March 2005 and the growth of our EBITDA and our renegotiation of reduced margins in March 2005. Foreign Exchange Income (Expense) Net foreign exchange expense, which consists of net foreign exchange transaction gains or losses on financing transactions and gains or losses on derivative financial instruments, changed from a net gain of €2.0 million in 2004 to a net expense of €14.5 million in 2005, primarily as a result of fluctuations in the value of our US dollar denominated Senior Discount Notes.

98

Loss on Extinguishment of Debt In 2005, we incurred €39.5 million in one-time costs related to prepayments and redemptions of our financing facilities. These arose through the prepayments and cancellations of certain tranches of our Senior Credit Facility, the 1% premia payable on amounts redeemed under the Senior Discount Notes and Senior Notes following the change of control offers we initiated in October 2005 and the 11.5% and 9% premia payable on amounts redeemed under the Senior Discount Notes and Senior Notes respectively following our IPO. As a percentage of revenues, net finance costs were 23.8% for the year ended December 31, 2004 and 26.2% for the year ended December 31, 2005. Excluding the one-time debt prepayment costs we incurred, net finance costs as a percentage of revenues for the year ended December 31, 2005 were 20.8%. Net Loss Net loss increased by €15.0 million, from €61.7 million for the year ended December 31, 2004 to €76.7 million for the year ended December 31, 2005, as a result of the factors described above. Net Loss per Share Our basic loss per share equaled our diluted loss per share for the years ended December 31, 2004 and 2005 since we did not record a net profit in either of these two periods. Net loss per share increased from €0.71 per share for the year ended December 31, 2004 to a net loss of €0.86 for the year ended December 31, 2005 as a result of the factors described above. B. Liquidity and capital resources Historical Cash Flows The following table sets forth the components of our historical cash flows for the periods indicated:

For the years ended December 31

(Euro in millions) 2004 2005 (Audited) (Audited) Cash flows from (used in) operating activities................................. 234.3 212.6 Cash flows from (used in) investing activities ................................. (152.7) (184.0) Cash flows from (used in) by financing activities............................ (107.5) 36.6 Net increase (decrease) in cash and cash equivalents ...................... (25.8) 65.2

Cash Flows From (Used in) Operating Activities Net cash from operating activities decreased from €234.3 million for the year ended December 31, 2004 to €212.6 million for the year ended December 31, 2005. The decrease was caused by the redemption of the Senior Discount Notes following our IPO, the €22.7 million interest portion of which was accounted for as a use of cash from operating activities. Cash Flows From (Used in) Investing Activities Net cash used in investing activities increased from €152.7 million for the year ended December 31, 2004 to €184.0 million for the year ended December 31, 2005. This increase primarily reflects higher costs we incurred in 2005 for subscriber installations, which represented the largest portion of our investing activity, network investments to support our growth and the investments we are making to upgrade the upstream path of our network. Cash Flows From (Used in) Financing Activities Net cash used in financing activities was €107.5 million for the year ended December 31, 2004 and net cash from financing activities was €36.6 million for the year ended December 31, 2005. This movement primarily reflects

99

the repayments in 2004 and repayments, combined with our IPO, in 2005. In 2004, we repaid €100.0 million of our Senior Credit Facility in March 2004 and made partial repayments under our clientele and annuity fee obligations and capital leases. In 2005, we repaid a net €105.0 million of our Senior Credit Facility using cash on our balance sheet and raised net proceeds of €264.4 million in our IPO in October 2005, a portion of which was utilized to redeem €128.5 of the Senior Discount Notes (including redemption premium and accrued interest cost). We also prepaid a total of €9.3 million (including accrued interest and redemption premia) of our Senior Discount Notes and Senior Notes in November 2005 following a change of control offer we made following certain changes in the terms of our governance at the time of our IPO. Lastly, we made further partial repayments under our clientele and annuity fee obligations and capital leases during 2005. Capital Expenditure Our business is highly capital intensive. We incurred capital expenditure of €152.7 million for the year ended December 31, 2004 and €184.0 million for the year ended December 31, 2005. Management estimates that subscriber-related costs represented approximately 43% in 2004 and 36% in 2005. For the years ended December 31, 2004 and December 31, 2005, our capital expenditure was funded entirely from cash flows from operating activities. For previous periods, we funded capital expenditure from drawings under our Senior Credit Facility. A substantial portion of our capital expenditure is variable, being directly related to subscriber growth or related to the general increasing capacity requirements that accompany subscriber growth. In addition, a portion of our capital expenditure consists of specific non-recurring projects. The remainder is capital expenditure that we are not contractually committed to incur, but which we believe is appropriate for network quality reasons or in respect of new home builds. In 2006, we anticipate capital expenditure of between €190 million and €210 million. Of this amount, approximately 40% is for capital expenditure directly related to subscriber growth (including for modems, labor and other installation costs), while approximately 45% is for network and other infrastructure investments, which are indirectly related to growth of the business (including for voicemail, e-mail mailboxes, backbone capacity, IT, certain content acquisition costs and user licenses, which grow with our subscriber base). The remaining 15% is for the funding of network maintenance, replacement and extensions, office and administration costs and testing. These remaining costs include maintenance costs and network extension costs for which, because of the near universal provision of analog cable television in Flanders, we are expected to incur our share of the investment cost. We project that such maintenance, replacement and extension costs which we are expected to incur will amount to between €25 million and €30 million in 2006. In the short term, we believe we could defer a portion of these remaining costs if liquidity were limited before significant network performance issues would arise. In the longer term, we would need to continue such investment to maintain the level of service and performance we seek to offer our customers. Our capital expenditures also include the costs of acquiring certain programming content rights, which we capitalize on our balance sheet and subsequently amortize. Our anticipated capital expenditure for 2006 includes specific costs relating to the continuing upstream upgrade of our network, which represents an estimated €25-30 million of our anticipated capital expenditure in 2006 (including certain costs associated with the planned implementation of EuroDOCSIS 3.0). Our assumptions regarding the costs associated with maintenance and upgrades of the Combined Network and our coaxial network may prove to be inaccurate, including if we are unable in the future to effectively reduce the number of homes served by each node in our network, which should enable us to relieve local network capacity constraints. For purposes of the foregoing discussion, we have excluded from capital expenditure the cost of the acquisition of network user rights under the Clientele Agreements and Annuity Agreement, acquisitions of property and equipment utilizing capital leases and investments relating the the extension of our headquarters office building in Mechelen. Available Liquidity We maintain cash and cash equivalents to fund the day-to-day cash requirements of our business. We hold cash primarily in Euros. We held €210.5 million of cash and cash equivalents as of December 31, 2005, as compared with €145.2 million as of December 31, 2004. On March 31, 2005, we applied a net €105.0 million of our cash towards the full prepayment and cancellation of tranche C2 of our Senior Credit Facility. As of December 31, 2005, tranche D of the Senior Credit Facility, which is a €200.0 million undrawn revolving credit facility, was available to us subject to our being in compliance with certain financial covenants and

100

other conditions. In addition, an additional €150.0 million was available under tranche C of the Senior Credit Facility, which may be used to support acquisition or liquidity requirements, subject to certain conditions being fulfilled. On March 31, 2005, we amended the terms of our Senior Credit Facility and prepaid €100.0 million of the combined outstanding balance of tranches A and B of our Senior Credit Facility and a net €5.0 million of the combined outstanding balances of tranches C2 and E. We cancelled tranche C2 including its undrawn balance and increased the available committed revolving credit facility under tranche D from €100.0 million to €200.0 million. We increased the size of the tranche E facility from €100.0 million to €405.0 million, all of which is drawn. In addition, we have obtained an uncommitted facility, tranche C, in a maximum amount of €150.0 million from our senior lenders which may be used to support acquisition or liquidity requirements, subject to certain conditions being fulfilled. The Senior Credit Facility is discussed in greater detail in note 11 to our consolidated financial statements and elsewhere in this annual report. See Item 10, “Additional Information—Material Contracts—Senior Credit Facility" and Annex A—Summary of Certain Senior Credit Facility Covenants. The principal risks to our sources of liquidity are operational risks, including risks associated with decreased pricing, reduced subscriber growth, increased marketing costs and other consequences of increasing competition, the launch of our iDTV service and potentially adverse outcomes with respect to our interconnection dispute that is currently the subject of litigation. See Item 8, "Financial Information—Legal Proceedings—Interconnection Litigation." Our ability to service our debt (including payments on the Notes) and to fund our ongoing operations will depend on our ability to generate cash. We have not been profitable since the Telenet group was formed in 1996 and have a history of negative net cash flows after deducting interest and taxes. Although we anticipate generating positive cash flow after deducting interest and taxes, we cannot assure you that this will be the case. See Item 3, "Key Information—Risk factors—Risks Relating to Our Financial Profile—We may not generate sufficient cash flow to fund our capital expenditures, ongoing operations and debt obligations." Telenet Group Holding and Telenet Communications are holding companies with no source of operating income. They are therefore dependent on capital raising abilities and dividend payments from subsidiaries to generate funds. The terms of the Senior Credit Facility, our other outstanding debt and the indentures governing the Senior Notes and Senior Discount Notes contain a number of significant covenants that restrict our ability, and the ability of our subsidiaries to, among other things, pay dividends or make other distributions, make capital expenditure and incur additional debt and grant guarantees. See Item 3, "Key Information—Risk factors—Risks Relating to Our Financial Profile—The agreements and instruments governing our debt contain restrictions and limitations that could adversely affect our ability to operate our business" Furthermore, the ability of the subsidiaries of Telenet Group Holding and Telenet Communications to pay dividends and make other payments to Telenet Group Holding and Telenet Communications may be restricted by, among other things, other agreements and legal prohibitions on such payments. The cash portion of our interest expense has increased substantially following the Refinancing. We believe that our cash flow from operations and our existing cash resources, together with available borrowings under the Senior Credit Facility, will be sufficient to fund our currently anticipated working capital needs, capital expenditures and debt service requirements. C. Research and development, patents and licences, etc. We have registered important trademarks, such as “Telenet”, “Telenet Digital TV” and “Telenet Solutions” and their related logos. We have registered certain brand names that we use in our business, including Digibox, Digicorder, ExpressNet, Flexview, Freephone, FreeSurf and Prime. We do not own any registered patents or copyrights that are material to our business as a whole. Under the terms of the Canal+ Acquisition, we used the “Canal+” brand name and logo for a limited period, which ended on August 31, 2005. We believe that innovation in products and technology are important to retain our market positioning. We do not have a dedicated research and development function, but maintain a continuous process of reviewing and testing new products and technologies which we believe will enhance the services we provide to our customers. Among our current priorities are research on our iDTV offering, new telephony technologies and additional internet services. D. Trend information See "–Operating results" and "–Liquidity and capital resources" for information on this item.

101

E. Off-balance sheet arrangements Historically, we have not used special-purpose vehicles or similar financing arrangements. In addition, we do not have any off-balance sheet financing arrangements with any of our affiliates or with any unconsolidated entities. F. Tabular disclosure of contractual obligations Our aggregate contractual obligations as at December 31, 2005, excluding purchase commitments, were as follows (unaudited):

Payments due by period (Euro in millions)

Contractual obligations

Total Less than

1 year 2-3 years 4-5 years After

5 years Long-term debt(1)(2) ........................ 1,445.2 137.1 103.9 104.7 1,099.5Capital lease obligations................ 26.5 1.2 3.4 4.8 17.1Operating lease obligations........... 19.8 7.8 8.2 2.7 1.1Other contractual obligations........ 133.0 49.6 63.0 17.6 2.8 Total contractual obligations......... 1,624.5 195.7 178.4 129.8 1,120.6

___________ (1) In connection with the HFC upgrade, we entered into the Clientele Agreements and Annuity Agreement. See Item 4,

"Information on the company— History and development of the company – Network Upgrade." Fees payable under these agreements, which we account for as long-term debt, include an interest and principal component. With respect to the principal component, we capitalize the present value of fees paid under the Clientele Agreements (over the first 20 years of the agreement in line with the life of the longest lived assets that form part of the HFC upgrade) as network user rights. Likewise, we capitalize the present value of fees paid under the Annuity Agreement (which are due over periods of ten or 20 years) as network user rights. We amortize network user rights over ten or 20 year periods. We account for payments of the interest component under these agreements as interest expense. See "—Factors Affecting Our Results—Other Income (Expense)."

(2) The amortization of the Senior Credit Facility included in this table does not include the effect of the amendments we

made to our Senior Credit Facility on March 31, 2006. See Item 10, “Additional information – Material contracts— Senior Credit Facility”.

Item 6. Directors, senior management and employees A. Directors and senior management Directors The Board of Directors of Telenet Group Holding currently consists of 16 members, three of whom are independent members. Thirteen of these members also serve on the boards of Telenet Communications, Telenet Bidco, Telenet Holding and Telenet Vlaanderen and eleven of these members also serve on the board of Telenet NV, while the three independent directors of Telenet Group Holding only serve on the board of Telenet Group Holding. Three different independent directors serve on the boards of Telenet Communications, Telenet Bidco, Telenet Holding, Telenet Vlaanderen and Telenet NV. As of the date hereof, the members of the Boards of Directors of Telenet Group Holding and Telenet Communications (and their ages as of April 28, 2006) are set out in the chart below. All of these mandates expire at the annual general shareholders' meeting to be held in 2008.

102

Name Age Position(1) Frank Donck (2) ............................. 40 Chairman of the Board Duco Sickinghe ............................ 48 Chief Executive Officer and Managing Director Marcel Bartholomeeussen (3)(4) ..... 56 Director Alex Brabers (5) ............................. 40 Director Charles Bracken(6) ........................ 39 Director Julien De Wilde(7) ......................... 61 Independent Director, Telenet Group Holding Michel Delloye (8) ......................... 49 Independent Director, Telenet Group Holding Yvan Dupon (9).............................. 62 Director Saul D. Goodman (6) ..................... 37 Director Serge Grysolle(10).......................... 51 Director Patrick Moenaert (4)(10) .................. 56 Director Shane O'Neill(6)............................. 44 Director André Sarens(10) ............................ 53 Director Paul Van De Casteele(10)............... 63 Director Friso van Oranje(7) ........................ 37 Independent Director, Telenet Group Holding Freddy Willockx(10) ...................... 58 Director

Michel Allé (11) .............................. 55 Independent Director, Telenet Communications and certain subsidiaries Guido De Keersmaecker (12) ......... 63 Independent Director, Telenet Communications and certain subsidiaries Jozef Roos (13) ............................... 62 Independent Director, Telenet Communications and certain subsidiaries

___________ (1) Directors are appointed to the boards of Telenet Group Holding, Telenet Communications, Telenet Bidco, Telenet

Vlaanderen and Telenet NV unless otherwise specified. (2) Appointed upon nomination of the Financial Consortium pursuant to the Syndicate Agreement. (3) Appointed upon nomination by Interkabel pursuant to Syndicate Agreement. (4) Not a director of Telenet NV. (5) Appointed upon nomination by GIMV pursuant to the Syndicate Agreement. (6) Appointed upon nomination by the Liberty Global Consortium pursuant to the Syndicate Agreement (7) Appointed as an independent director of Telenet Group Holding pursuant to the Syndicate Agreement. (8) As permanent representative of Financière des Cytises NV (Cytifinance NV); appointed as an independent director of

Telenet Group Holding pursuant to the Syndicate Agreement. (9) Appointed upon nomination by Electrabel pursuant to the Syndicate Agreement. (10) Appointed upon nomination by the MICs pursuant to the Syndicate Agreement. (11) Appointed as an independent director of Telenet Communications pursuant to the Syndicate Agreement. (12) As permanent representative of Abaxon BVBA; appointed as an independent director of Telenet Communications and

certain subsidiaries pursuant to Syndicate Agreement. (13) As permanent representative of JRoos BVBA; appointed as an independent director of Telenet Communications and certain

subsidiaries pursuant to the Syndicate Agreement. Frank Donck, Chairman of the Board Frank Donck has served as a director of the Companies since 1996 and as Chairman of the Board since December 2004. Mr. Donck is a director of several other companies, the majority of which are privately held. His principal directorships are Ibervest NV, where he has served as an Executive Director since 1987; 3D NV, where he has served as an Executive Director since 1992; and Afinia Plastics NV, where he has served as Executive Chairman since

103

2000. He also serves as a member of the board or chairman of Atenor Group, KBC Group NV and Zenitel NV, among other companies. Michel Allé, Independent Director Michel Allé has served as a director of the Companies, with the exception of Telenet Group Holding, since May 2005. He is currently the Chief Financial Officer of NMBS/SNCB Holding, the state-owned company Belgian railways. Previously, he was the Chief Finance Officer of BIAC NV/SA (Brussels National Airport), a former state-owned company that was privatized in 2004. From 1987 until 2000, Mr. Allé was at the Cobepa Group, where he served as a member of the Group's Management Committee from 1995 until 2000. He is currently a member of, among other boards, Euroscreen, Syntigo (a subsidiary of NMBS-Holding), Eurofima and MobilExpense. Mr. Allé is also a Professor of Finance at the Solvay Business School (ULB), where he served as President from 1997 to 2001, and a Professor of Economics at the Ecole Polytechnique of the ULB. Marcel Bartholomeeussen, Director Marcel Bartholomeeussen has served as a director of the Companies since 1996. He resigned from the Board of Telenet NV in August 2005, but remains on the Boards of Directors of the other Telenet Companies. Mr. Bartholomeeussen is Chairman of the Board of Integan, Chairman of the Board of Interkabel, director of Antwerp Waterworks, Chairman of the Board of Digipolis and director of the Port of Antwerp. Alex Brabers, Director Alex Brabers has served as a director of the Companies since 1998. Mr. Brabers is Executive Vice President—Information and Communications Technology at GIMV, a Belgian-based investment company partly owned by the Flemish government. Mr. Brabers joined GIMV as Investment Manager in 1990. At GIMV, Mr. Brabers has been responsible for international venture capital investments in the field of information and communications technology. He is currently a member of, among other boards, Telos Technology, Language & Computing NV and Inside Contactless. Charles Bracken, Director Charles Bracken has served as a director of the Companies since July 2005. Since February 2004, he has been the Co-Chief Financial Officer of Liberty Global, Inc. ("Liberty Global"). Mr. Bracken has also served as the Chief Financial Officer of Liberty Global Europe and its predecessors since November 1999, and as a member of the UPC Board of Management from July 1999 to September 2003. From March 1999 to November 1999, Mr. Bracken served as the Managing Director of Strategy, Acquisitions and Corporate Development at UPC. Since 2000, Mr. Bracken has served as a director of Priority Telecom, a company listed on Euronext, and also serves as a member of the board of directors of UPC NV. In addition, Mr. Bracken serves as an officer and/or director of various European subsidiaries of Liberty Global. Guido De Keersmaecker, Independent Director (representing Abaxon BVBA) Guido De Keersmaecker is the permanent representative of Abaxon BVBA, a private limited Belgian company that serves as an independent director of the Companies, with the exception of Telenet Group Holding. Mr. De Keersmaecker was appointed as an independent director of Telenet Group Holding in 2003 until he resigned in March 2004 and was replaced by Abaxon. From 1993 until his retirement in 2003, Mr. De Keersmaecker served as a member of the Management Board and as a Managing Partner of consumer products manufacturer Henkel KGaA. Henkel focuses on offering home care products, toiletries, cosmetics and adhesives, and operates on a worldwide basis. Mr. De Keersmaecker currently serves as Chairman of the board of Henkel Belgium NV. Julien De Wilde, Independent Director Julien De Wilde has served as an independent director of Telenet Group Holding since May 2004. His experience includes 13 years at Alcatel where he served as President and Chief Executive Officer of Alcatel Bell, and as a member of its Management Committee. Mr. De Wilde has also served as Executive Vice President of Alcatel Europe, Middle East, Africa and India and as a member of the worldwide Alcatel Executive Committee. Prior to joining Alcatel, Mr. De Wilde held several senior posts at Texaco Belgium and on the European Management Board of Texaco Europe. Currently, Mr. De Wilde is Managing Director of the Bekaert Group. He is also Honorary Chairman of the Board of Directors of Agoria.

104

Michel Delloye, Independent Director (representing Financière des Cytises (Cytifinance) NV) Michel Delloye is the permanent representative of Cytifinance NV, a management and consulting company that has served as an independent director of Telenet Group Holding since May 2003. From 1998 to 1999, Mr. Delloye was Chief Executive Officer of Central European Media Enterprises, and from 1992 to 1996 he served as Chief Executive Officer of RTL Group, the European television and radio broadcaster. From 1984 to 1992, Mr. Delloye held numerous positions in both Belgium and the United States at Group Brussels Lambert, serving as General Manager prior to his departure. Mr. Delloye also serves on the boards of directors of, among other companies, EVS Broadcast Equipment NV, Brederode NV, TrustCapital NV and Sistecar SA. Yvan Dupon, Director Yvan Dupon has served as a director of the Companies since 1996. Since 2001, Mr. Dupon has served as the General Manager—Distribution in Flanders for Electrabel NV, the largest Belgian utility company. Mr. Dupon was General Manager in charge of distribution of cable television services at Electrabel from 1994 until these services were sold to the Telenet group in 2002. Mr. Dupon is a member of the board of directors of Electrabel, and a member of the board of directors and/or the management committee of Distrigas, Eco Flanders NV, Indaver NV, Soltech NV, Photovoltech NV and Limtra cvba and Teveo NV. Saul D. Goodman, Director Saul D. Goodman has served as a director of the Companies since March 2003. Mr. Goodman is currently a Senior Managing Director of Evercore Partners Inc., which he joined in May 1998. Prior to joining Evercore, Mr. Goodman was a Vice President in the Investment Banking Division of Lehman Brothers, where he focused on media and telecommunications. From 1999 to 2003, Mr. Goodman served on the board of directors of American Media, Inc. Serge Grysolle, Director Serge Grysolle has served as a director of the Companies since December 2004. He is currently chairman of the Program Council, which oversees certain cable content and pricing matters, and is deputy chairman of Intermixt, an association of mixed intercommunales, who are shareholders of Telenet Group Holding. Mr. Grysolle holds a number of senior local government positions and is also a director of Elva and Solva intercommunale associations. Patrick Moenaert, Director Patrick Moenaert has served as a director of the Companies since June 2004. In July 2005, he resigned from the board of Telenet NV. Mr. Moenaert has held a variety of positions in the local and national government. Positions with the national government have included advisor to the Belgian Ministry of Home Affairs and Private and Cabinet Secretary to the Minister for Social Affairs, Development Co-operation and Education. Mr. Moenaert's local government roles have included, among others, serving as Mayor of Bruges, a post which he has held since 1995. He is also holds directorships at MBZ (Port of Zeebrugge Board of Management), Distrigas NV, Fluxys NV and the College of Europe. Shane O'Neill, Director Shane O'Neill has served as a director of the Companies since December 2004. Mr. O'Neill currently serves as Chief Strategy Officer of Liberty Global and is responsible for strategic planning, mergers and acquisitions and corporate development activities. Previously, he held a variety of finance and operating roles at Macquarie bank, KPMG and, until 1999, Goldman Sachs. Mr. O'Neill also serves as President of chellomedia, Liberty Global's content and services division. While at Goldman Sachs, Mr. O'Neill worked in the New York, Sydney and London offices and advised on mergers and acquisitions and corporate financings to clients in the media and communications industry. Within the Liberty Global group, Mr. O'Neill is a director of various companies within the Liberty Global group. Jozef Roos, Independent Director (representing JRoos BVBA) Jozef Roos is the permanent representative of JRoos BVBA, a private limited Belgian company that has served as an independent director of the Companies, with the exception of Telenet Group Holding, since May 2005. Until his

105

retirement in 2003, he served as Executive Vice President of the steel company Arcelor and prior to that was Chief Executive Officer of ALZ NV from 1996. Currently, he is Chairman of KU Leuven, where he was a full professor for 18 years, and until 2004 served on the boards of several industrial and service companies including Distrigas NV, Fluxys NV, Haven Genk NV, Sidmar NV and ALZ NV (and several related steel companies). Currently, he is a director of Stichting De Tijd VZW and SD Worx NV. Previously, he also served as Chairman of VITO (Flemish Institute for Technology Research) and of the Flemish Science Policy Council. André Sarens, Director André Sarens has served as a director of the Companies since December 2003. Mr. Sarens is currently an advisor within the general management of Electrabel Belgium/Luxembourg for distribution activities, having previously held numerous senior finance and administration positions related to Electrabel's utility service distribution activities in Belgium. In these capacities, he has represented Electrabel and the mixed intercommunales in their business dealings with Telenet since 1999. Mr. Sarens serves on the boards of several of the mixed intercommunales in Flanders and on the board of Electrabel Netten Vlaanderen and Electrabel Green Projects Flanders. Paul Van De Casteele, Director Paul Van de Casteele has served as a director of the Companies since January 2005. He has held a number of senior positions with local and regional governments and in the service distribution sector. Currently, Mr. Van de Casteele is the President of Intergem, electricity and gas distributor and serves as the Mayor of Hamme. Prior to his current roles, Mr. Van de Casteele held the post of Inspector General of the Flemish Environmental Agency (Vlaamse Milieu Maatschappij) and was President of Intermixt, an association of mixed intercommunales. Friso van Oranje, Independent Director Friso van Oranje has served as an independent director of Telenet Group Holding since September 2004. From 1998 to 2003, Mr. van Oranje was an investment banker at Goldman Sachs in London, where he served as an Associate and Executive Director, and from 1995 to 1997 he worked as a consultant at McKinsey & Company in their Amsterdam office. His clients have principally included companies in the communications, media and technology sectors, including several cable companies which he advised on financing, mergers and acquisitions and related activities. Currently Mr. van Oranje is a director at the Netherlands Organization for Applied Research (TNO) in Delft and also serves as a director of Wizzair Limited, Logispring and Innoled. Freddy Willockx, Director Freddy Willockx has served as a director of the Companies since December 2004. Mr. Willockx has held a number of political posts in the national government and has served as Mayor of Sint-Niklaas since 2001. Mr. Willockx was elected as a member of parliament in 1979, and has served in numerous government positions, including as Minister, government commissioner, state clerk and a variety of local political positions. From 1994 to 1999, Mr. Willockx was also a member of the European Parliament. Prior to joining parliament, Mr. Willockx held a variety of local and national positions, including working on the staff of Minister Willy Claes. Executive Team Our executive team consists of the following individuals (including their ages as of April 28, 2006): Name Age Position Duco Sickinghe ............................ 48 Chief Executive Officer and Managing Director Leo Steenbergen........................... 53 Executive Vice President and Chief Financial Officer Hugo Lemmens ............................ 48 Executive Vice President—Telenet Solutions Philippe Lemmens........................ 41 Executive Vice President—Residential Markets Jo Van Gorp ................................. 41 Executive Vice President and General Counsel Jan Vorstermans ........................... 46 Executive Vice President—Technology and Infrastructure Tony Jossa .................................... 50 Executive Vice President—Human Resources and Organization Claire Martin ................................ 37 Vice President—Corporate Business Affairs

106

Duco Sickinghe, Chief Executive Officer and Managing Director Duco Sickinghe has worked for 20 years in the technology and media industry. He holds a Dutch Master's degree in Law and a Master's degree in Business Administration from Columbia University. His focus has been on finance, marketing, strategy and general management. Mr. Sickinghe started his career in finance with Hewlett Packard in its European headquarters in Switzerland. He then moved to Germany to head up the LaserJet product line for Europe. He concluded his tenure at HP Europe by building out its indirect sales channels. He served at NeXT Computer, first as Vice President Marketing Europe and then as General Manager for France. Mr. Sickinghe was co-founder and Chief Executive Officer of Software Direct, which later became a joint venture with Hachette in Paris. Mr. Sickinghe joined Wolters Kluwer in 1996, and as General Manager of Kluwer Publishing in the Netherlands oversaw its transition to electronic media and re-engineered the company's traditional business. He joined Cable Partners Europe in early 2001 and was appointed as Chief Executive Officer of Telenet in the summer of 2001. He subsequently left Cable Partners in 2004. Mr. Sickinghe has lived in Belgium, the United States, France, Germany, Switzerland and the Netherlands. Mr. Sickinghe is also a member of the board of directors of Zenitel NV. Leo Steenbergen, Executive Vice President and Chief Financial Officer Leo Steenbergen joined the Telenet group as its Chief Financial Officer in January 2002. From 2000 to 2002 he served as Chief Executive Officer of IP Globalnet, a provider of contact center services and software and was a member of the Board of Directors of IP Global Care & Contact Center until 2004. Prior to this he was Executive Vice President and Chief Financial Officer of the Bekaert group, a Belgian publicly listed multinational in the field of metal transformation and coating technologies. Prior to Bekaert, Mr. Steenbergen served as Managing Director of De Eik Trading Group, a privately held holding company with worldwide trading interests in the agri-food industry. Previously, Mr. Steenbergen worked for 17 years for Hewlett Packard in a variety of senior finance and administrative roles across Europe, including most recently as European Controller of HP's Computer Products Organization at HP Europe's headquarters in Geneva, Switzerland. He started his career with Touche Ross (presently Deloitte & Touche) in their Chicago practice. Hugo Lemmens, Executive Vice President—Telenet Solutions Hugo Lemmens joined Telenet in 2004 as Executive Vice President—Telenet Solutions. From 1994 to 2004, he held a number of positions working for internet services providers and telecommunications service providers in Europe, as either an employee or a consultant, including Level 3 Communications NV, Easynet and MCI Communications. Currently, he is also a non executive member of the board of Voka (West-Vlaanderen). Philippe Lemmens, Executive Vice President—Residential Markets Philippe Lemmens joined Telenet in 2004 as Executive Vice President—Residential Markets. From 1998 to 2004 he worked at Belgacom, initially as Chief Executive Officer of Belgacom's Skynet internet operation and later as Chief Executive Officer of Infosources, which is listed on the Paris Stock Exchange. In June 2003, he was appointed Executive Vice President of Belgacom SA in charge of the Consumer and Business Solutions division of the Wireline Business unit. Mr. Lemmens began his career with Andersen Consulting, now Accenture, in Brussels. Prior to joining Belgacom, Mr. Lemmens occupied several sales and marketing functions at Apple Belgium and Apple Benelux, and was promoted as General Manager of Apple Belgium and Luxembourg in 1997. Jo Van Gorp, Executive Vice President and General Counsel Jo Van Gorp joined the Telenet in 2004 as General Counsel. Prior to joining Telenet, Mr. Van Gorp served as Vice President and General Counsel of Level 3 Communications NV in Europe from 1998 to 2004, in which capacity he was responsible for all of Level 3's European legal, regulatory and corporate affairs. Mr. Van Gorp also served as Chief Executive Officer of Level 3 Communications NV between 2000 and 2004. Mr. Van Gorp also worked in similar executive positions for MCI International and MFS International. He started his career at BT plc in 1991. Jan Vorstermans, Executive Vice President—Technology and Infrastructure Jan Vorstermans joined the Telenet group as Senior Vice President—Technology, Engineering and Network Operations in February 2003. From 1994 to 2003, Mr. Vorstermans held several executive positions in British Telecom's Belgian operations, including as Director Customer Service Belgium, Director Operations Belgium and, most recently, Vice President Global Network Operations.

107

Tony Jossa, Executive Vice President—Human Resources and Organization Tony Jossa joined the Telenet group as its Senior Vice President—Human Resources and Organization in 2002. Prior to joining our group, he served as Executive Vice President of Human Resources at Sabena Group, the Belgian airline, from 2001 to 2002, and was at Belgacom from 1996 to 2001, serving as General Manager, Human Resources Management from 1998 to 2001. Claire Martin, Vice President—Corporate Business Affairs Claire Martin joined Telenet in 2003 as Manager – Regulatory and Strategy. Prior to joining Telenet, she was a senior consultant and expert in telecommunications working at McKinsey's Brussels office for three years. Previously, she worked at Alcatel from 1995 to 2000 where she had responsibilities for advanced systems development engineering and new access network technologies. From 1993 to 1995, Claire was an analyst at Morgan Guaranty Trust Company's Euroclear operation in Brussels. B. Compensation Remuneration of Directors As from January 1, 2005, the directors of Telenet Group Holding are paid a lump sum per year amounting to €24,000 per independent director and €12,000 for each of the other directors. In addition, all directors receive a fee of €2,000 for each board meeting that they attend. Directors are not paid for their service on, nor for their attendance at, the Boards of the other Telenet Companies, except for the three independent directors of Telenet Communications who are compensated in the same manner as the independent directors of Telenet Group Holding. For the 2005 fiscal year, we incurred a combined total of €470,000 in board of director fees for the company and €108,000 for Telenet Communications. The Chief Executive of the company waived his board remuneration. Remuneration of Executive Management Team In 2005, our Managing Director and Chief Executive Officer, Mr. Duco Sickinghe, received remuneration comprising a fixed remuneration of €650,000 (gross salary without employer’s contributions), variable remuneration of €162,500, paid premiums for group insurance of €29,455 and benefits in kind valued at €19,921, for a total remuneration package of €861,876. Mr. Sickinghe owns options to acquire 960,000 Class A profit certificates, all of which are vested as of April 28, 2006 However, Mr. Sickinghe has voluntarily undertaken not to exercise any of these options until October 11, 2006 at the earliest. Mr. Sickinghe has a contract that provides for termination compensation to be paid in the event he is terminated for other than serious cause. In those circumstances, termination compensation equals (i) an amount of 2 years of total compensation in the event of termination during the first 3 years of service and (ii) an amount of 2.5 years of total compensation in the event of termination as from year 4 of service. The other members of management are under an employment contract with Telenet (or its affiliates). Their entitlements in the event of termination are based on Belgian law, including the "Claeys formula." Although some members of management have additional protections under their employment contracts, these contractual provisions are not unusual and are in line with market practice for senior managers. In 2005, we paid a combined total remuneration of €2,320,958 to the seven members of the Executive Team other than our Managing Director. This amount comprises fixed salaries of €1,500,191 (gross salaries without employer’s contributions), variable salaries of €614,642, paid premiums for group insurance of €105,495 and benefits in kind valued at €100,630. As of December 31, 2005, the seven members of the Executive Team other than our Managing Director owned an aggregate 670,500 Class A and Class B options. A further 952,500 Class B options were granted to other employees in management positions. Between January 1, 2006 and April 27, 2006, members of the Executive Team (but not including the Managing Director) exercised 191,265 Class A and Class B options. These options bear the right for the receipients to exercise profit certificates which in turn can be converted into common shares under certain conditions. See “—Share Ownership”.

108

Under certain conditions, these Class A and Class B Profit Certificates can be converted into up to 1,500,000 and up to 1,083,000 shares of Telenet Group Holding respectively. Our management benefit from pension plans, which are described in general in note 15 to our consolidated financial statements included elsewhere in this report. C. Board practices Audit Committee The principal responsibility of the Audit Committee is to regularly convene meetings to assist and advise the Board of Directors with respect to the verification of: financial information prepared by the company; the internal audit systems established by the Board and the company’s management; the audit procedure; and the correct application of the rules of sound financial management and applicable corporate law. The Audit Committee comprises one independent director and three other directors, one of whom fulfils the role of chairman of the Audit Committee, as mandated by the terms agreed by the signatories to the Syndicate Agreement. The Board is of the opinion that the Audit Committee’s composition satisfies the appropriate objectives regarding the independence of the Audit Committee. Additionally, as of mid-2005, meetings of the Audit Committee have also been attended by Mr. Michel Allé, an independent director of Telenet Communications NV, whose presence furthers the independent nature of the Audit Committee. The Audit Committee has reviewed and discussed each of the company’s quarterly and annual financial reports prior to their public release. The Audit Committee has further addressed specific financial matters occurring during 2005 or raised by the company’s statutory auditor, including our transition to EU GAAP. In addition, the Audit Committee reviewed relevant disclosures made in respect of our IPO. Finally, the Audit Committee has, in cooperation with the company’s internal audit function, which is partially outsourced, reviewed our internal audit processes. Our Corporate Governance code recommends that our audit committee reviews the specific arrangements by which employees can confidentially raise concerns about possible improprieties in financial reporting or other related matters, and that arrangements be made whereby staff can contact the Chairman of the Audit Committee directly. The Audit Committee plans to review this recommendation and its implementation in 2006. The members of the Audit Committee as of December 31, 2005 were: Alex Brabers, Chairman, Michel Delloye (as permanent representative of Cityfinance), Charles Bracken, André Sarens and Michel Allé. Human Resources and Organisation (HRO) Committee The principal responsibilities of the HRO Committee including formulating proposals to the Board of Directors with respect to: the remuneration policy of non-executive directors and executive management; the hiring and retention policy; and assisting our Chief Executive Officer with the appointment and succession planning of his executive management team. The HRO Committee comprises four members. Two of these members, one of whom chairs the HRO Committee, are independent directors of Telenet Communications. As such, the HRO Committee acts as a combined committee for Telenet Group Holding and Telenet Communications, both of which are listed entities for Belgian corporate purposes. The Board of Directors is of the opinion that the qualifications of the HRO Committee’s independent directors provide the requisite requirements to assure the independence of the HRO Committee. During 2005, matters addressed by the HRO committee included the evolution of the headcount, the employee share purchase plan related to the IPO, long-term incentive plans, the organisation and the remuneration of management and remuneration policy for directors. The members of the HRO Committee as of December 31, 2005 were: Guido De Keersmaecker (as permanent representative of Abaxon BVBA), Chairman; Shane O'Neill; Yvan Dupon; and Jozef Roos (as permanent representative of JRoos BVBA).

109

Strategic Committee The Strategic Committee convenes periodically with the Chief Executive Officer to review the general strategy of Telenet Group Holding and its subsidiaries. The Strategic Committee is chaired by an independent director and is further composed of one other independent director and four directors. During 2005, the Strategic Committee convened twice, and was particularly focused on the strategic aspects of the company’s long term business plan. The members of the Strategic Committee as of December 31, 2005, were: Julien De Wilde, Chairman, Alex Brabers; Yvan Dupon; Serge Grysolle; Shane O'Neill and Friso van Oranje. Nomination Committee The Nomination Committee was established and composed at the Board of Directors meeting of February 24, 2006. It is comprised exclusively of six non-executive directors, three of whom are independent directors and from among whom a chairman is selected. The Board of Directors is of the opinion that the composition of the Nomination Committee sufficiently assures its independence. The responsibilities of the Nomination Committee include the development of an objective and professional procedure for the appointment and re-appointment procedure for members of the Board of Directors, instituting periodic evaluations of the scope and composition of the Board of Directors, seeking candidate members, submitting candidate members to the Board and providing recommendations with respect to candidate members. Corporate Governance Code The Board of Directors has established a Corporate Governance Charter in accordance with the Belgian Corporate Governance Code (the so-called "Lippens Code") as of January 1, 2006. The Lippens Code is a voluntary code adopted by Belgian companies which comprises a series of nine principles, considered as pillars of good governance that all companies should apply, provisions detailing how to apply the principles and guidelines providing interpretations of the provisions. The company has commenced reporting on its corporate governance compliance within the context of the Lippens Code in its 2005 annual report to shareholders. D. Employees The following chart details the number of full time equivalent employees ("FTEs") that were on our payroll (excluding temporary employees) as of the dates indicated:

As of December 31, 2003 2004 2005 Telenet Group..................................................................................... 751 818 1,406MixtICS(1) ........................................................................................... 387 351 -Telenet Solutions(2) ............................................................................ 120 80 62PayTVCo(3) ........................................................................................ 123 97 - Total ................................................................................................... 1,381 1,346 1,468

(1) Until April 2004, includes Electrabel employees who provided services for MixtICS pursuant to a services and transfer

agreement. MixtICS was merged into Telenet NV on July 16, 2005, and MixtICS employees became employees of Telenet NV on that date.

(2) Excludes employees of Telenet Solutions' subsidiaries. Telenet Solutions was merged into Telenet NV on January 1, 2006. (3) Consists primarily of employees who were previously employed by the Canal+ group. PayTVCo was merged into Telenet

NV on July 15, 2005, and PayTVCo employees became employees of Telenet NV on that date.

110

As of December 31, 2005, we had 1,468 FTEs. These employees include 318 active former employees of MixtICS, the majority of whom were transferred from Electrabel to our group in April 2004 in connection with the termination of our services agreement with Electrabel. See "—Electrabel Employees." In addition to our FTEs, we had 69 temporary employees as of December 31, 2005. We expect employment to increase in the future in line with subscriber growth. In December 2003, we increased our FTE numbers by approximately 120 in connection with the Telenet Solutions Acquisition and by approximately 123 in connection with the Canal+ Acquisition. As part of the integration of these two acquisitions, we subsequently reduced the number of full-time employees in Telenet Solutions and from the former PayTVCo to 62 and 86, respectively. Historically, four works councils, the Telenet Works Council (Ondernemingsraad Telenet), the ICS Works Council (Ondernemingsraad ICS), the Canal+ Works Council (Ondernemingsraad PayTVCo) and the Telenet Solutions Works Council (Ondernemingsraad Telenet Solutions), have represented the non-management employees of Telenet NV, MixtICS, PayTVCo and Telenet Solutions, respectively. The ICS Works Council has up to six employee representatives, the PayTVCo Works Council has up to four employee representatives, the Telenet Solutions Works Council has up to five employee representatives and the Telenet Works Council has up to ten employee representatives. We envisage merging the four works councils into a single body following the next elections, which are expected in 2008. As a rule, we meet with the works councils on a monthly basis to discuss a wide range of issues. By law, the works councils must approve certain decisions that we make related to working conditions, including work hours, and must be informed and/or consulted on a range of issues relevant for personnel. Following the merger of all the entities represented by these four Works Councils, meetings with the Works Councils are held concurrently with all representatives attending simultaneously, although the four Works Councils continue to exist and each maintains its own documentation. Alongside each of the four works councils there is a health and safety council (Comité Voor Preventie en Bescherming van de Werkplaats) on which non-management employees in Telenet NV and Telenet Solutions and the employees of Telenet NV who were formerly in MixtICS and PayTVCo are represented, with eight, four, six and four employee representatives, respectively. The health and safety council is consulted on matters affecting health, safety and working conditions through meetings that, as a rule, are held on a monthly basis. In addition to the works and health and safety councils, our employees are represented by local chapters of three national unions: the Christian Trade Union (Algemeen Christelijk Vakverbond), the Liberal Trade Union (Algemene Centrale van Liberale Vakbonden) and the Socialist Trade Union (Algemeen Belgisch Vakverbond). Our collective bargaining agreements with these unions are valid for an indefinite period of time, but subject to changes. We provide our employees with health and life insurance benefits, as well as a defined contribution pension plan (except former Electrabel employees (see "—Electrabel Employees") and certain employees who are members of our senior management team who are covered under defined benefit plans). In addition to benefits under State social security schemes, we offer private medical care, disability benefits and life insurance. Employees are currently also granted meal vouchers (maaltijdcheques / chèques-repas), pursuant to individual written agreements. We believe that our relationship with our employees is good. Electrabel Employees In connection with the MixtICS acquisition, we entered into a Services and Transfer Agreement with Electrabel. Pursuant to this agreement, Electrabel agreed to provide operational services, including cable installation, maintenance and call center services, with the employee base that had historically provided these services to the MICs prior to the acquisition. Up to the time these employees were transferred to our group, we paid Electrabel for the costs of these services pursuant to the Services and Transfer Agreement. For the year ended December 31, 2004, we paid Electrabel €7.9 million for the costs of these services under this agreement. Following the expiration of the Services and Transfer Agreement and as required therein, approximately 370 full-time employees were transferred to us in April 2004 (which included all the employees covered by the agreement other than those providing call center, legal and information technology services). The Services and Transfer Agreement required MixtICS to take over the Electrabel employees, with all rights and obligations existing at the date of transfer. As a result, these employees were transferred on the same terms and conditions pursuant to which they were employed by Electrabel, which is on a higher average pay and benefits base (including defined benefit pension plan and health and

111

life insurance benefits). Given its contractual obligations under the Services and Transfer Agreement, Telenet believes that the resulting difference in treatment is legitimate because it is based on objective criteria and justified on legal grounds. Pursuant to the terms of the transfer, Electrabel will make pension payments for transferred employees relating to employment periods prior to the transfer date and Telenet will assume pension liabilities for transferred employees relating to employment periods from the transfer date onwards. As a result of liabilities assumed by Telenet in conjunction with the transfer of these employees from Electrabel, we recorded a one-time charge of € 2.9 million, allocated between operating expenses and selling, general and administrative expenses, in the second quarter of 2004 and incurred a recurring service charge of €1.1 million per quarter, beginning in the second quarter of 2004 for employee benefit plans relating to these transferred employees. A portion of this quarterly charge had been previously included in the payments under the Service and Transfer Agreement with Electrabel. Telenet Solutions Employees We gained 120 FTEs through the acquisition of Telenet Solutions and its subsidiaries. These employees included sales and marketing staff, network and information technology specialists and personnel that perform administrative overhead functions such as human resources, finance, legal and management services. Following the integration of Telenet Solutions into our operations, we had 62 FTEs in Telenet Solutions and its subsidiaries as of December 31, 2005. We completed the process of harmonizing the terms of employment of these employees with the standard terms available to Telenet employees during the second half of 2005. PayTV Co Employees We gained approximately 123 full time equivalent employees through the Canal+ Acquisition. These employees included sales and marketing staff, programming and content specialists, technical specialists and personnel that perform administrative overhead functions such as human resources, finance, legal and management. Following the integration process resulting from the Canal+ Acquisition, we have retained 97 full time equivalents in PayTVCo. We completed the process of harmonising the terms of employment of the remaining employees previously employed by Canal+ with the terms available to Telenet employees during the second half of 2005. We have not assumed any additional liabilities for pensions or other employee benefits in relation to the employees acquired pursuant to the Canal+ Acquisition, other than those that we were aware of before the acquisition or which are otherwise covered by appropriate reserves. E. Share ownership 1998 and 1999 Telenet Holding Warrants Warrants giving the right to acquire Telenet Holding shares at €24.79 per share were granted to employees of Telenet under our 1998 and 1999 employee stock option plans. Following the corporate restructurings in 2001 and 2002, holders of Telenet Holding shares obtained through the exercise of some of their warrants became entitled to convert their Telenet Holding shares into Shares of Telenet Group Holding. 56,500 Telenet Holding shares were so converted in 2002 and 2003 on a one-for-one basis. In addition, with a view to the IPO, we requested the holders of the remaining Telenet Holding warrants to exercise their outstanding warrants and offered them to either sell the Telenet Holding shares they received from the exercise of the warrants to Telenet Bidco for cash or to convert them into Shares of Telenet Group Holding. All the warrant holders exercised their remaining Telenet Holding warrants and sold their Telenet Holding Shares to Telenet Bidco. 2003 Telenet Group Holding ESOP The 2003 ESOP which Telenet Group Holding adopted in September 2003 was cancelled in December 2004, before options had been granted under the ESOP 2003. 2004 Telenet Group Holding Profit Certificate Options Telenet Group Holding adopted an employee plan in May 2004 pursuant to which 1,500,000 rights (post split) were issued (the "Class A Options") (after giving effect to the stock split) which entitle the holders thereof to subscribe for Class A profit certificates of Telenet Group Holding (the "Class A Profit Certificates"). In December 2004, Telenet Group Holding adopted a second employee plan pursuant to which 1,350,000 rights (post split) were issued (the

112

"Class B Options") to subscribe for Class B profit certificates of Telenet Group Holding (the "Class B Profit Certificates"). The Class A and the Class B Options must be exercised in multiples of three, giving the right to acquire three Class A Profit Certificates against payment of €20 or three Class B Profit Certificates for €25. All 1,500,000 Class A Options have been granted to members of senior management. 1,083,000 Class B Options have been offered to and accepted by approximately 35 employees, mostly members of management. The remaining 89,000 Class B Options (prior to the stock split) were cancelled on September 20, 2005. The HRO Committee determines the vesting scheme of the options at the time of grant. The HRO Committee can decide that a certain percentage of the options or, in certain circumstances, all of the options, will immediately vest and become exercisable. The portion of the options that does not immediately vest will generally vest in equal installments over a period of time following the grant, being 36 equal installments in the case of Class A Options and 48 equal installments in the case of Class B Options. In accordance with the terms of the grants, the Board of Directors decided at its September 2, 2005 meeting, on the advice of the HRO Committee, to accelerate vesting of a portion of the Class B Options, bringing the vesting date forward to September 22, 2005 for 122,076 of the class B Options that had not yet vested. The Class A Options vesting scheme may be accelerated in the case of an initial public offering or a change of control. Footnotes (1) and (2) below summarize the vesting schemes for the outstanding Class A and Class B Options. The exercise period for the Class A and the Class B Options ends on June 15, 2009 and December 22, 2009, respectively. The Class A and the Class B Options are subject to standard provisions, such as non-transferability, "black-out" periods, annulment in the case of dismissal for cause and certain restrictions on exercise in other cases of termination of employment. The Class A and the Class B Profit Certificates obtained following exercise of the options do not represent the share capital of Telenet Group Holding and do not carry voting rights or give right to attend the general shareholders' meeting, except in certain limited circumstances provided by the Belgian Company Code. The certificates give a right to dividend, if any, and any other distribution on equal footing with other Telenet Group Holding Shares as from the year of exercise of the Class A or B Option. As a result of the IPO, holders of Class A and B Profit Certificates are entitled to convert their Class A and Class B Profit Certificates into Shares of Telenet Group Holding as from the fifth month following exercise of the relevant Class A or Class B Options. Each certificate gives right to one Share. Upon conversion of the Class A or Class B Profit Certificates into Shares, the share capital of Telenet Group Holding will be increased by the amount paid for the relevant Profit Certificates, being €20 or €25, respectively, for every three Shares. The following table provides information regarding our current option plans as of December 31, 2005.

Plan Category

Options Issued

Exercise Price per Three Profit Certificates

Options Available for Future Grants

Expiration Date

Telenet Group Holding

Class A Options(1).............. 1,500,000 €20.00 0 June 15, 2009

Telenet Group Holding Class B Options(2) ..............

1,083,000 €25.00 0 December 22, 2009

___________ (1) On December 31, 2005, a total of 1,395,807 Class A Options had vested. Additional Class A Options will vest as follows:

49,932 in 2006, 49,932 in 2007 and 4,329 in 2008. (2) On December 31, 2005, a total of 461,892 Class B Options had vested. Additional Class B Options will vest as follows:

206,388 in 2006, 206,388 in 2007 and 208,332 in 2008. As of December 31, 2005, 62,877 Class B options had been exercised. A further 191,265 Class A and Class B options were exercised between January 1, 2006 and April 27, 2006 by members of the Executive Team, but not including the Managing Director.

113

Item 7. Major shareholders and related party transactions A. Major shareholders The following chart identifies the principal and other holders of our registered shares, as of April 25, 2006.

Name of shareholder Number of

shares Percentage of

shares(1)

Liberty Global Consortium(1)........................................................................... 21,542,474 21.5%Mixed Intercommunales+Electrabel NV(2) ..................................................... 16,279,454 16.2%Financial Consortium(3) ................................................................................... 9,711,089 9.7%Pure Intercommunales/Interkabel Vlaanderen CVBA(4) ................................ 4,163,190 4.2%GIMV NV(5)..................................................................................................... 4,003,794 4.0%Fortis Investment Management SA(6).............................................................. 3,545,862 3.5%Other / Public Float.......................................................................................... 40,958,990 40.9%Total 100,204,853 100.0% ___________ (1) The Liberty Global Consortium includes two subsidiaries of Belgian Cable Investors LLC (“BCI”), InvestCo Belgian

Cable 1 S.à. R.L. and InvestCo Belgian Cable 2 S.à. R.L and Chellomedia Investments BV. BCI is ultimately controlled by Liberty Media International, Inc. Several affiliates of Evercore Partners, Inc. are also members of the consortium, including Evercore Capital Partners Cayman L.P., Evercore Capital Partners (NQ) Cayman L.P., Evercore Capital Offshore Partners Cayman L.P. and Evercore Co-Investment Partnership Cayman L.P. Additional members of the consortium are CDP Capital Communications Belgique Inc., a private investment subsidiary of the Caisse de dépôt et placement du Quebec, and Merrill Lynch Private Equity Associates, LLC.

(2) The MICs and Electrabel have combined their shareholdings for the purposes of the Syndicate Agreement. The ten

MICs are Intercommunale Maatschappij voor Gas en Electriciteit van het Westen CVBA, Intercommunale Maatschappij voor Energievoorziening Antwerpen CVBA, Intercommunale Vereniging voor Energieleveringen in Midden-Vlaanderen CVBA, Intercommunale Maatschappij voor Televisiedistributie CVBA, Intercommunale Vereniging voor de Energiedistributie in de Kempen en het Antwerpse CVBA, Intercommunale Vereniging voor Electriciteits distributies CVBA, Intercommunale Maatschappij voor Televisiedistributie in het Gebied van Kempen en Polder CVBA, Intercommunale Maatschappij voor Televisiedistributie op de Linker Schelde-Oever CVBA, Intercommunale Maatschappij voor Televisiedistributie in Oost-Vlaanderen NV and Intercommunale Maatschappij voor Televisiedistributie in West-Vlaanderen NV. Upon the Refinancing, the MICs exercised two Penny Warrants and subscribed for 283,821 Shares (the "Penny Warrant Shares").

(3) The "Financial Consortium" of regional financial institutions includes Finstrad NV, Gevaert NV, Ibel NV, KBC

Investco NV and Sofinim NV. In its role as an arranger under the Senior Credit Facility, KBC Bank NV directly holds 15,718 Shares which are not part of the Financial Consortium.

(4) The four PICs are Interelectra CVBA, Integan CVBA, WVEM CV and PBE CVBA. The PICs hold their Shares

through Interkabel, which is an entity owned by the PICs. (5) GIMV NV owns these Shares together with its affiliate Adviesbeheer GIMV Information & Communication

Technology NV. (6) Fortis Investment Management SA notified the company of its interest in our Shares in March 2006. In December 2004, Cable Partners Europe sold a majority controlling interest in its subsidiary CAHB to an entity controlled by Liberty Media International. Prior to this transaction, CAHB was the controlling shareholder of the Cable Partners Consortium, which represented 21.4% of the Shares. Following the transaction, CAHB was renamed Belgian Cable Investors LLC and the CAHB subsidiaries Callahan Associates Belgium 1 S.à R.L. and Callahan Associates Belgium 2 S.à R.L. were renamed InvestCo Belgian Cable 1 S.à R.L. and InvestCo Belgian Cable 2 S.à R.L. respectively. Together with the other shareholders in InvestCo Belgian Cable 1 S.à R.L. and InvestCo Belgian Cable 2 S.à R.L., and with the interest in Telenet Group Holding owned directly by Chellomedia Investments BV and several affiliates of Evercore Partners, Inc. (together, “InvestCo Belgian Cable”), Belgian Cable Investors LLC controls 21.5% of the Shares as majority shareholder of the Liberty Global Consortium.

114

Option Agreements Interkabel Call Option Interkabel has granted GIMV and the Financial Consortium options to purchase 20% of the Shares that Interkabel received when the Cable Partners initially acquired an interest in Telenet Holding in 2001. The call option may be exercised in certain circumstances, including in the event of an initial public offering. After giving effect to the three-for-one stock split, 414,015 Shares are covered by this agreement. The exercise price is €100 for three Shares and the options expire on March 30, 2006. BCI Call Options BCI, in which Liberty Global, Inc. indirectly holds a controlling interest, holds three classes of options that permit it to acquire Shares from the Belgian Shareholders, as set out in the table above. See "—Option and Warrant Agreements." The options were initially granted to a subsidiary of BCI, InvestCo Belgian Cable 1 S.à R.L., following the closing of the MixtICS Acquisition in 2002, to compensate for the surrender of certain warrants that had been issued in 2001, and in connection with the 2003 Refinancing. As summarized in the chart below, the options can be exercised at €25 and €20 per option, each giving the right to acquire one Share. The options (the "BCI Call Options") are subject to three different exercise periods: (i) an initial option period ending on August 9, 2007 and allowing BCI to acquire up to 10,093,041 Shares (the "Initial Period Options"), (ii) an extended option period expiring on August 9, 2009 and covering up to 8,575,785 Shares (the "Extended Period Options") and (iii) a new option period covering up to 6,750,000 Shares (the "New Period Options"). The exercise period for the New Option Period Shares expires on the earlier of (i) August 9, 2009, (ii) 18 months after the Shares have traded at or above €20 for 30 consecutive days following the IPO (iii) 18 months after a trade sale or a transaction or series of related transactions directly or indirectly consisting in the transfer of 15% of the outstanding Shares to a person at a consideration at or above €20 per Share, or (iv) 15 days after a trade sale as a result of which a person and its affiliates would own more than 50% of the outstanding Shares.

Class

Number of Shares to be Transferred

Upon Exercise of Option Exercise Period Exercise Price

Initial Option Period Options ................... 10,093,041 August 9, 2002-August 9, 2007 €25Extended Option Period Options ............. 8,575,785 August 9, 2002-August 9, 2009 €25New Option Period Options..................... 6,750,000 December 22, 2003-August 9, 2009(1) €20 25,418,826 __________ (1) The exercise period for the New Option Period Shares expires on the earlier of (i) August 9, 2009, (ii) 18 months after the

Shares have traded at or above €20 for 30 consecutive days following the IPO, (iii) 18 months after a trade sale or a transaction or series of related transactions directly or indirectly consisting in the transfer of 15% of the outstanding Shares to a person at a consideration at or above €20 per Share or (iv) 15 days after a trade sale as a result of which a person and its affiliates would own more than 50% of the outstanding Shares.

The options are expected to expire at the end of the exercise period, although the New Option Period Options can expire earlier under certain conditions. As of December 30, 2004, BCI had the right to transfer these options, under certain conditions, to any third party at any time. Penny Warrant Share Options Certain Syndicate Shareholders hold options in relation to 566,178 Shares (after giving effect to the stock split) (the "Penny Warrant Shares"). Although these are ordinary Shares, they are referred to as the Penny Warrant Shares because they were issued in December 2003 following the exercise by the MICs of two penny warrants. Upon exercise of the warrants, the MICs acquired 851,463 Penny Warrant Shares and granted a call option in relation to these Shares to Telenet Group Holding. On August 19, 2005, Telenet Group Holding transferred these call options to shareholders in proportion to their ownership on August 19, 2005 of Shares issued on August 9, 2002 in accordance with the terms of the then-existing shareholders' agreement.

115

Accordingly, as of the date of this annual report, the Liberty Global Consortium holds 183,600 options in relation to 183,600 Penny Warrant Shares, GIMV 129,057, the Financial Consortium 128,928, the PICs 79,728, Electrabel 41,973 and certain banks 2,877 and two employees 15, giving in total options in relation to 566,178 Shares. The call options that were transferred to the MICs, being options in relation to 285,285 Shares options, were cancelled since the Shares covered by these options are currently owned by the MICs. The exercise price of the options is €25 per option, the exercise period expires on November 30, 2006 and each option gives the right to acquire one Share. Subordinated Debt Warrants Telenet Group Holding has 3,426,000 subordinated debt warrants outstanding (the "Subordinated Debt Warrants"). Of these, 2,960,000 warrants relate to warrants that had previously been issued to the Cable Partners Consortium, GIMV, the Financial Consortium and the MICs and whose terms where restated and amended in conjunction with the Refinancing in 2003. The remaining 466,000 Subordinated Debt Warrants were issued to GIMV and the Financial Consortium in connection with the Refinancing in 2003. As of the date of this annual report, the MICs hold 900,000 Subordinated Debt Warrants, GIMV 472,000, the Financial Consortium 414,000 and the Liberty Global Consortium 1,640,000 (of which 1,600,000 are held by Evercore, CDPQ and MLPE, in their own names, being 731,768 by each of Evercore and CDPQ and 136,464 by MLPE). Each Subordinated Debt Warrant entitles the holder thereof to three Shares upon payment of an exercise price of €40. Alternatively, holders may opt for a "cashless" exercise of the Subordinated Debt Warrants. In such a case, they will be entitled to acquire a reduced number of Shares, using the value of their warrants (measured by the market value of the Shares at the time of exercise less the exercise price of the warrants) to acquire Shares at their market value. Transfers of the Subordinated Debt Warrants are subject to the same restrictions on transfers applicable to Shares under the Syndicate Agreement. The Shares obtained by Syndicate Shareholders (other than Evercore, CDPQ and MLPE) upon exercise of the warrants are subject to the terms of the Syndicate Agreement, including the restrictions on transfers. The warrants can be exercised at any time during the exercise period ending on August 9, 2009. B. Related party transactions We have in the past engaged and will continue in the future to engage in transactions with affiliated entities, primarily with our principal shareholders and affiliated companies. Set out below is a summary of all material transactions between or among us and related parties, excluding intercompany indebtedness:

• The Syndicate Agreement and previous shareholders' agreement, as amended, and related addendums, among the principal shareholders of Telenet Group Holding, including GIMV, the Financial Consortium, the MICs, Interkabel, Electrabel and InvestCo Belgian Cable, and, for the purposes of certain provisions, Telenet Group Holding, Telenet Communications, Telenet Bidco and Telenet Holding, relating to the general provisions with respect to shareholdings and shareholder activities, board representation, equity contributions, transfers of shares, certain operational aspects and other relevant provisions. See Item 10, “Additional information—Memorandum and articles of association—Board of Directors and Management" and "—Syndicate Agreement."

• The Senior Credit Facility Agreement dated July 12, 2002 (as amended on March 31, 2005) between Telenet

Bidco, Telenet NV, Telenet Vlaanderen and MixtICS, as borrowers, and Telenet Bidco, Telenet NV, Telenet Vlaanderen, Telenet Holding, Phone-Plus, Telenet Solutions, Telenet Solutions Luxembourg and Merrion Communications, as guarantors, with certain banks as lenders, European Investment Bank, GE Capital Structured Finance Group Limited, J.P. Morgan plc, KBC Bank NV, Lloyds TSB Bank plc, Brussels Branch, Merrill Lynch International, NIB Capital Bank, Belgium Branch, The Royal Bank of Scotland plc, Société Générale and WestLB AG as mandated lead arrangers, The Royal Bank of Scotland plc as facility agent and KBC Bank NV as security agent. This agreement provides various credit facilities for our group, each governed by different terms. See Item 10,"Material contracts—Senior Credit Facility."

• Subordinated Debt Warrants and related agreements among the principal shareholders of Telenet Group

Holding relating to 3,426,000 warrants of Telenet Group Holding exercisable at a price of €40 per three Shares (or, subject to an adjustment in the number of warrants, at €0.01 per Share) at any time up to August 9, 2009. See "Major shareholders—Subordinated Debt Warrants."

116

• Warrants and Options granted to certain of our employees and members of management. See Item 6, “Directors, senior management and employees – Share ownership."

• Registration Rights Amendment Agreements among the shareholders of Telenet Group Holding, Telenet

Communications and Telenet Bidco, whereby Telenet Group Holding may be obligated, under certain circumstances, to consummate an initial or secondary public offering.

• Strategic Services Agreement between Telenet Operaties (now Telenet NV) and Cable Partners, relating to the

provision of certain services to the Telenet group. This agreement was terminated on May 11, 2005.

• Agreements with affiliates of the Liberty Global consortium for the provision of certain content used in our cable television services.

• Interkabel Contribution Deed and related mortgage. See Item 4, “Information on the company– Business

overview—The Combined Network—Our Usage Rights on the Partner Network."

• Cooperation Agreements granting the PICs and Interkabel certain rights to provide local construction, sales, telephony installation and maintenance services to Telenet NV and Telenet Vlaanderen.

• Cooperation Agreement among the Flemish government, MixtICS, Interkabel and certain Flemish broadcasters

pursuant to which the parties agree to develop an iDTV offering based on an MHP or similar standard which meets our required specifications. See Item 4, “Information on the company – Business overview—Regulation – Broadcasting Regulation—Interactive Digital Television."

• Agreements between our group and the PICs to provide the Prime service over the Partner Network.

• Services and Transfer Agreement relating to the MixtICS Acquisition. See Item 5, “Operating and financial

review and prospects – Operating results—Factors Affecting Results of Operations—Expenses—MixtICS Integration" and Item 6, “Directors, senior management and employees—Employees—Electrabel Employees."

• Clientele Agreements and Annuity Agreement. See Item 4, “Information on the company—History and

development of the company—Network Upgrade."

• Fiber optic framework agreement and dark fiber leases between Electrabel and Telenet SolutionsNV.

• Framework Assistance Agreement between Trasys SA (an affiliate of Electrabel) and Telenet Solutions (now merged with Telenet NV), pursuant to which Trasys SA supplies specialized information system services to Telenet Solutions.

• Telecommunication Services Agreement between Electrabel and Telenet Solutions (now merged with Telenet

NV), whereby Telenet Solutions agrees to supply telecommunications services to Electrabel.

• Agreements between Telenet NV and Electrabel Customer Solutions NV for the nonexclusive supply of electric power to Telenet sites, which contain certain minimum use requirements.

• Agreements between Telenet NV and the MICs for the use of the MICs’ poles used for carrying electricity.

• Agreement between Telenet NV and Electrabel for operational services rendered in conjunction with the

transfer of the cable network in Bever.

• Lease of our headquarters building pursuant to a sale-leaseback arrangement with KBC, together with our related option to purchase all rights relating to the land and building from KBC, and further grant to Investco Belgian Cable of a similar option which would allow Investco Belgian Cable to purchase all such rights on the same terms and conditions as our option from KBC. See Item 4, “Information on the company—Property, Plant and Equipment."

• Lease of our headquarters extension under construction with an entity within the KBC group. See Item 4,

“Information on the company—Property, Plant and Equipment."

117

• Agreements between KBC Exploitatie NV and Telenet Solutions (now merged with Telenet NV) relating to the installation and lease of dark fiber.

• Agreement to supply internet, data and voice business services to KBC.

• Certain ownership rights (opstalrechten) in switch buildings located on land owned by two of the PICs, usage

rights with respect to a switch owned by Electrabel and leases of head end stations from Electrabel and several of the PICs. See Item 4, “Information on the company—Property, Plant and Equipment."

C. Interests of experts and counsel Not applicable. Item 8. Financial information Consolidated Statements and Other financial information For our financial information and for information on significant changes, please see the section entitled "Item 18 – Financial Statements". Dividend Policy All Shares participate equally in the profits of Telenet Group Holding. Shareholders can decide whether to distribute profits with a simple majority vote at the annual general shareholders' meeting and the Articles of Association also authorize the Board of Directors to declare interim dividends on profits of the current fiscal year, in each case in accordance with relevant provisions of the Belgian Company Code, including the requirement that dividends can only be distributed if, following such distribution, the net assets (as adjusted in accordance with applicable provisions of the Belgian Company Code) do not fall below the amount of paid-up capital and non-distributable reserves. As required by Belgian company law and Article 51 of Telenet Group Holding's Articles of Association, Telenet Group Holding must allocate each year at least 5% of its annual net profits to its legal reserve, until the legal reserve equals 10% of Telenet Group Holding's share capital. As of December 31, 2005, Telenet Group Holding's legal reserve equaled approximately €3,000 or 0% of Telenet Group Holding's share capital. In addition, we expect that the principal source of funds for the payment of dividends, if any, will be dividends paid by Telenet Group Holding's current and future subsidiaries and any repayments to Telenet Group Holding on any intercompany loans. Our group's Senior Credit Facility and the indenture governing the Senior Notes impose significant restrictions on the ability of our subsidiaries to make dividends or other distributions to Telenet Group Holding. The indenture governing the Senior Discount Notes similarly restricts the ability of Telenet Group Holding to make any distributions on its Shares. As a result, our ability to pay dividends in the future relies on numerous factors. We are not in a position to forecast when we will be able to achieve these factors given our inability to predict with certainty the success of our iDTV rollout, our cost structure going forward or the future performance of the rest of our business. Legal Proceedings We are involved in a number of legal proceedings that have arisen in the ordinary course of our business. We discuss below certain pending lawsuits in which we are involved, which may or have had in the recent past significant effects on our financial position or profitability. 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. We note, however, that the outcome of legal proceedings can be extremely difficult to predict with certainty, and we offer no assurances in this regard. Interconnection Litigation We have been involved in regulatory and court proceedings with Belgacom related to the increased interconnection fees that we began charging telephone operators to terminate calls made to end users on the Combined Network in August 2002. See "—Our Products and Services—Residential Telephony—Interconnection." Traditionally,

118

interconnection fees between fixed line telephony operators had been charged on a reciprocal basis—the interconnection termination rates that Belgacom charged us were the same as the interconnection termination rates we charged Belgacom. This fee arrangement made it difficult for us to provide telephony services at a profitable level, however, because we did not have the benefit of scale to be able to achieve the same unit cost as Belgacom. As a result of our different cost structure and because of a continued high rate of fees charged for fixed-to-mobile interconnection (where the reciprocity principle is not applied), we requested permission from the BIPT to increase our domestic and international interconnection rates. In a series of rulings in the summer of 2002, the BIPT decided that we could increase our average interconnection rates for inbound domestic calls from €0.009 to €0.0475 per minute but that the interconnection rates for inbound international calls would remain the same. We began charging increased interconnection termination rates for inbound domestic calls on August 13, 2002. On August 12, 2002, Belgacom increased the tariffs that it charges its telephony subscribers calling Telenet numbers to reflect our increased termination rates. Challenges by Belgacom Belgacom challenged our increased interconnection termination rates for inbound domestic calls before the commercial court of Mechelen (Rechtbank van Koophandel) on the grounds that our termination rate increase represented abusive pricing. On January 20, 2004, the court found no indication that Telenet's interconnection tariffs constituted a breach of the unfair trade practices law, competition law or pricing regulations, as had been alleged by Belgacom. As a result, the judge who heard the case was not competent to rule because of the nature of the procedure initiated by Belgacom. The court therefore dismissed the claim. On March 17, 2005, the Court of Appeals of Antwerp dismissed Belgacom's appeal of the commercial court's ruling. In February 2006, Belgacom subsequently brought the case before the Belgian Supreme Court (Hof van Cassatie / Cour de Cassation), which will have the authority to review only whether there has been a mistake of law or breach of certain formal procedural requirements in the case. We expect a final decision may take up to three years to be reached, since the Supreme Court can refer the case back to the Court of Appeal. Belgacom has also challenged the BIPT's June 2002 approval of our increased domestic interconnection termination rates before the Council of State (Raad van State / Conseil d'Etat), the highest administrative court in Belgium. The council may affirm the BIPT's decision or return the case to the BIPT for reconsideration. On July 3, 2002, the Council of State rejected an emergency request from Belgacom to suspend the implementation of the increased interconnection termination rate. We do not expect a decision from the Council of State on the merits of the case before 2006. A decision reducing the interconnection termination rates that we can charge could have a material adverse effect on our telephony business. Although we do not consider such an outcome probable, we estimate that if the Council of State, the Belgian Court of Appeals (in case of a successful appeal to the Supreme Court) or the BIPT were to require us to charge the original average interconnection rate of €0.009 per minute (which has been lowered to €0.0076 since January 1, 2005), our annual revenues from interconnection termination in 2004 would have been reduced by approximately €22 million. We do not think it is likely that either the relevant courts or the BIPT would require us to repay amounts that we have received under the higher interconnection termination rates for periods before ruling requiring us to reduce our rates because of the difficulty that Belgacom would have in demonstrating that it suffered any harm from paying the increased rates—it was able to pass the higher interconnection termination rates through to its subscribers in the form of a higher tariff structure. In addition, it would be difficult for Belgacom to refund its subscribers the increased telephony tariffs that it has been charging them since August 12, 2002. If such a retroactive payment were ordered, our liability would be substantial. In addition to these proceedings, Belgacom has recently disputed a planned increase in the interconnection rates that we apply to Telenet Solutions customers as part of our migration of voice customers from the network we acquired through the Telenet Solutions Acquisition to the Telenet Network. Historically, calls to these customers have been subject to the reciprocal interconnect rates charged on the network used by Telenet Solutions, but now those customers are migrating to the Telenet Network, which charges higher interconnect rates. See Item 4, “Information on the company —Business overview—Our Products and Services—Residential Telephony—Interconnection." We do not, at this time, believe that Belgacom's dispute will have any impact on the interconnect rates that we charge. See Item 4, “Information on the company – Business overview "—Our Products and Services—Business Services." Tromboning The BIPT only permitted us to increase termination rates for domestic, not international, calls to Telenet numbers. We have appealed the BIPT's decision to the Council of State (Raad van State / Conseil d'Etat). We have argued that international interconnection rates should match our domestic rates in order, among other things, to restrict

119

the practice of tromboning, which arises when inbound domestic calls are rerouted outside of Belgium and then back to Belgium so that they can take advantage of the lower international interconnection termination rates. In addition, we have noted that the cost to us of terminating calls on the Combined Network is independent of the call's origin, whether domestic, mobile or international. We do not expect a decision from the Council of State before 2006. In the meantime, this disparity between domestic and international termination rates has provided increased incentives for tromboning. See Item 3, “Key Information – Risk factors—Risks Related to Our Business—The Belgian internet, data and telephony industries are highly competitive and the television industry is likely to become more competitive in the future, which could result in higher content costs and marketing expenses, lower subscription rates and the loss of subscribers." We believe that almost all of our telephony competitors trombone on the Telenet Network, with international calls and tromboning together representing approximately 24% of all calls terminated on the Combined Network for the year ended December 31, 2005. The BIPT has imposed limits on Belgacom's ability to trombone because of its market power, but has authorized Belgacom to trombone up to 6% of its domestic calls to allow it to compete with other telephony service providers. Belgacom must submit monthly reports on its tromboning activity to the BIPT. If Belgacom engages in substantial amounts of tromboning, it may face action from Belgian or EU competition authorities for abuse of its dominant market position. Belgacom is currently appealing the BIPT's decision to the Council of State. No decision in this matter is expected before 2007. Copyright Litigation As of December 31, 2005, we retained an accrual of €22.9 million for liabilities arising from settlements of copyright litigation in which we have been involved. Together with other Belgian cable television operators, we pay fees to copyright collection agencies and broadcasters for the content that we distribute to end users on our network. In September 1995, copyright collection agencies and broadcasters began to dispute the terms for the payment of these fees. These disputes expanded over the following years, and ultimately resulted in extensive litigation between the majority of the copyright collection agencies and broadcasters and the Belgian cable television operators, including us, represented through the Belgian Radio and Television Distributors Association (Beroepsvereniging voor Radio- en Televisiedistributie / Union professionnelle de radio et de télédistribution) (the "RTD"). Disputes focused on whether copyright charges under new copyright contracts should be based on actual viewer ratings for specific programs and reflect increased competitive forces, as we, through RTD, advocated, or should instead be based on the number of potential viewers and increased to reflect inflation and higher production costs, as the agencies and broadcasters argued. Pursuant to a court order, during this litigation we, through RTD, paid the copyright agencies and broadcasters 70% of the amounts agreed to be paid under the copyright contracts in force in 1995. In November 2002, we, together with other Belgian cable operators, began to reach settlements with the copyright agencies and broadcasters pursuant to which we agreed to make certain upfront payments as well as to make increased payments over time, with payments going forward usually based on a combination of per program prices and the number of our overall basic cable subscribers. As a further consequence of the court rulings and settlements related to these copyright payments, in August 2003, we increased the copyright fee we charge our subscribers. See Item 5, “Operating and financial review and prospects – Operating results —Factors Affecting Results of Operations—Revenues—Basic and Premium Cable Television" and Item 4, “Information on the company – Business overview —Our Products and Services—Cable Television—Basic Tier Cable Television—Basic Cable Programming." We formally notified the Ministry of Economic Affairs of this increase, as required by Belgian law, on July 29, 2003. The amounts that we expect to pay as a result of these settlements and new agreements have been provisioned for in our financial statements. See note 16 to our consolidated financial statements for the two years ended December 31, 2005. We remain involved in one further case involving copyright claims. In July 2004, the Association for the Collection, Distribution and Protection of the Rights of the Artists, Interpreters and Performers (CVBA Vereniging voor de inning, repartitie en de verdediging van de vertolkende en uitvoerende kunstenaars) ("Uradex") filed a claim against RTD for €55 million plus interest concerning neighboring rights owed by the members of the RTD to artists and performers represented by Uradex during the period from August 1994 through the end of July 2004 (the "Period"). Based on our market share during the Period, we estimate that we would be liable for approximately €24 million plus interest if Uradex received a judgment for the full amount of its claim. We dispute Uradex's claims and intend to defend the lawsuit vigorously through the RTD. Although we cannot provide assurance that this claim will be unsuccessful, based on our assessment of our potential liability, we have not accrued or reserved any amounts for this claim. Furthermore, the Ministry of Economic Affairs recently gave notice of the termination of Uradex’s license, which we believe further supports our defence of this lawsuit.

120

Equipment Supplier Litigation On November 31, 2005 we terminated our agreement with M-Tec NV, a network equipment supplier, for the delivery of amplifiers for use in our Expressnet upstream upgrade project, following persistent issues with the quality of the equipment delivered by M-Tec. Separately, we provisioned expenses resulting from our decision to write off certain equipment delivered by M-Tec during the 2005. Following our termination of M-Tec’s contract, M-Tec filed litigation against Telenet, claiming €1.6 million for unpaid invoices and €5.0 million in damages for unlawful termination. The Court of First Instance has awarded M-Tec €287,356 plus interest and costs, which Telenet paid into a blocked account. We have filed for an appeal against this judgement. In a second proceeding before the Court of First Instance, M-Tec is claiming a further €396,520 for unpaid invoices, the judgement for which remains pending. Separately, M-tec filed for protection against its creditors, which was granted by the Court on February 27, 2006. Item 9. The offer and listing A. Offer and listing details Not applicable. B. Plan of distribution Not applicable. C. Markets The Notes trade on the Luxembourg Stock Exchange and are eligible to be traded in the Private Offerings, Resales and Trading through Automatic Linkages ("Portal") Market. D. Selling shareholders Not applicable. E. Dilution Not applicable. F. Expenses of the issue Not applicable. Item 10. Additional information A. Share Capital As of April 27, 2006, the share capital of the company amounts to €1,647,364,634.04 and is represented by 100,204,853 shares, without nominal value. All shares are common shares, listed on the Eurolist (by Euronext Brussels) exchange, with the exception of 30 Golden shares and 2,164,911 liquidation dispreference shares, to which certain specific rights or obligations are attached. Our share capital increased significantly in 2005 as a result of the primary issue of our IPO, in which we raised gross proceeds of €280 million. In conjunction with our IPO, we implemented a three-for-one stock split shortly before the IPO. Approximately 56% of our shares were held by our principal shareholders as of December 31, 2005 and the remainder constituted public float. B. Memorandum and articles of association General Telenet Group Holding NV is a limited liability company (naamloze vennootschap / société anonyme) organized and existing under the laws of Belgium.

121

Telenet Group Holding was incorporated under the laws of Belgium on June 3, 2002 for an indefinite period of time. Its registered office is located at Liersesteenweg 4, 2800 Mechelen, Belgium. The company is registered with the register of enterprises of Belgium under number 0477.702.333. This section summarizes the corporate purpose and share capital of Telenet Group Holding, and gives an overview of the corporate governance rules applicable to Telenet Group Holding. It is based on Telenet Group Holding's Articles of Association, as last amended by the extraordinary shareholders meeting of December 27, 2005, on the relevant provisions of the Belgian Company Code and on certain other Belgian laws regarding the incorporation, organization and operation of limited liability companies. This summary is of a general nature and does not purport to give an exhaustive overview of Telenet Group Holding's Articles of Association or of the relevant provisions of Belgian law. In addition, important provisions related to the governance of our group are included in the Syndicate Agreement and our corporate governance charter. See "—Memorandum and articles of association – Board of Directors and Management and "—Memorandum and articles of association—Syndicate Agreement." Corporate Purpose Telenet Group Holding's corporate purposes are set out in article 4 of its Articles of Association. Its principal corporate purposes include:

• To acquire by means of subscription, contribution, merger, co-operation, financial intervention or in any other way, an interest or a participation in all companies, businesses, enterprises and associations, whether already existing or still to be incorporated, without any distinction, both in Belgium and abroad.

• To manage, increase the value of, and liquidate such participations or interests.

• To directly or indirectly participate in the management, administration, supervision and liquidation of the

enterprises, companies, business activities or associations in which it holds a participation or an interest.

• To advise and assist in any field of the conduct of business the management and the direction of the enterprises, companies, business activities or associations in which it holds an interest or a participation, and in general to undertake all actions that wholly or partially, directly or indirectly, belong to the activities of a holding company.

• To conceive, work out, establish, adapt, maintain, supply, manufacture and operate existing and new cable

networks, wholly or partially. These cable networks are considered in the broadest sense of the word, including, but not limited to, the cable networks for distribution of broadcasting services.

• To conceive, work out, establish, adapt, maintain, supply, manufacture and operate existing and new

telecommunication networks, wholly or partially, for both fixed line and mobile communications. These telecommunication networks are considered in the broadest sense of the word, including, but not limited to, telephony.

• To render all services on these or other networks both to intermediaries and end-users, whether private

individuals, public authorities or businesses; both to closed user groups and to the public or to other interested users of telecommunication services.

• To develop, gather, structure, manage and exploit multimedia data and other information, be it data, text,

graphics, sound or a combination thereof.

• The distribution and delivery of information and communication signals, including provision and delivery of audio-visual and television signals and the exploitation of a cable television network.

• The transport of information and communication signals, including digital audio and television signals.

• The installation, maintenance and operation of systems for two-way communication, and any applications

thereof that are in accordance with the prevailing legal regulations.

• To realize all possible applications of the infrastructures (installations, main and distribution networks) that relate directly to the aforementioned activities.

122

• The management and exploitation of, and the ensuring of all services for, the aforementioned installations,

main and distribution networks. The above list is not restricted and should be construed in the widest possible sense. We may not, however, engage in any referenced activity if we do not have any required permit or license.

Summary of the Provisions of the Articles of Association, Syndicate Agreement and Other Matters

The sections below provide a summary, for information purposes, of the rights attached to our shares and

certain other rights of certain shareholders. It is based on the relevant provisions of the Belgian Company Code, and certain other Belgian laws with regard to the incorporation, organization and operation of limited liability companies, our articles of association, the Syndicate Agreement and certain other agreements with our principal shareholders.

Syndicate Agreement

Our principal shareholders are the MICs and Electrabel (together the “MICs/Electrabel Group”), Interkabel (a shareholder group representing the PICs), a shareholder group represented as GIMV and the shareholder group of financial investors referred to as the Financial Consortium (together, the "Belgian Shareholders"); and the shareholder group referred to as the Liberty Global Consortium (together with the Belgian Shareholders, the "Syndicate Shareholders"). The Syndicate Shareholders entered into an agreement (the "Syndicate Agreement") on the closing date of the IPO, thereby amending the then existing shareholders' agreement. For the purposes of the Syndicate Agreement, the shares represented by each shareholder group are aggregated and their specific rights within the Syndicate Agreement are based on the aggregate shares within each shareholder group.

The Syndicate Agreement sets forth provisions that govern the composition of our boards of directors and the

board of directors of certain of our subsidiaries, and special supermajority voting requirements that apply in order for the boards of directors or the general shareholders’ meeting to make certain decisions. It further restricts the transferability of shares of the parties to the Syndicate Agreement and provides a mechanism for future capital increases of our company. Certain provisions of the Syndicate Agreement have also been set forth in our articles of association.

The term of the Syndicate Agreement expires on September 23, 2026 and, to the extent permitted by law, is

renewed for consecutive periods of ten years unless a termination notice is given at least five years prior to the expiration of the current term. Aspects of the agreement which can be construed as voting agreements have a duration of ten years and are renewed each year for a further period of ten years up to, but not beyond the term of, the Syndicate Agreement itself, unless notice of non-renewal is given at least one year before any renewal date. The foregoing is without prejudice to the term of the provisions of our articles of association.

Board of Directors and Management Composition of the boards of directors General The Board of Directors of Telenet Group Holding currently consists of 16 members, three of whom are independent directors. See "—Independent Directors." The Articles of Association provide that the board can be composed of a maximum of 17 directors, three of which must be independent directors. Directors appointed upon the resignation of a director resigning before the end of the normal term period continue to serve only the remaining portion of the original appointed term before requiring re-election. The mandates of all current directors will expire at the annual general meeting to be held in 2008. New directors appointed as of January 1, 2006 will be appointed for terms of up to four years. Five of the 16 directors that are currently on our Board of Directors have been appointed upon designation by the MICs, three upon designation by the Liberty Global Consortium and one Board member has been nominated by each of the PICs, GIMV, the Financial Consortium and Electrabel. The remaining directors are our Chief Executive Officer and the independent directors.

123

Upon the IPO, our previous shareholders' agreement was amended by the Syndicate Agreement that provided for certain rights with respect to the nomination of directors by the shareholders that are party to the Syndicate Agreement. Thus, following the IPO, firstly, Syndicate Shareholders have the right to nominate one director (a "Qualified Director") for each block of 7% of the Shares of Telenet Group Holding that they own. Syndicate Shareholders that own between 3% and 7% of the Shares of Telenet Group Holding also have the right to nominate one director. In addition, if the MICs and Electrabel together own less than 21% but more than 6% of the Shares of Telenet Group Holding they have the right to nominate one additional director (the "Extra Electrabel Director"). Secondly, the Syndicate Shareholders are obligated under the Syndicate Agreement to nominate and support the election of the individual then acting as Chief Executive Officer as a director. Thirdly, the vacancies on the Board of Directors that remain open after giving effect to these nomination rights and the election of the independent directors (see also below "—Independent Directors") may be nominated for election by Syndicate Shareholders owning individually or together the majority of the Shares subject to the Syndicate Agreement (the "Syndicate Shares"). If a Syndicate Shareholder owns more than 50% of the Syndicate Shares, but is not able to nominate the majority of the Board of Directors (other than independent directors), the MICs and Electrabel will no longer have the right to nominate an Extra Electrabel Director, but will instead have the right to nominate one observer. If after application of this rule the Syndicate Shareholder owning more than 50% of the Syndicate Shares is still not able to nominate the majority of the Board of Directors (other than independent directors), the Syndicate Shareholder owning the lowest percentage among the Syndicate Shareholders having between 3% and 7% of the Shares of Telenet Group Holding no longer has the right to nominate one director, but will instead have the right to nominate one observer. If a Syndicate Shareholder owns more than 50% of the Shares of Telenet Group Holding, it has the right to nominate candidates for at least a majority of the directors. Furthermore, the Syndicate Agreement and the Articles of Association provide that, for so long as a Syndicate Shareholder does not transfer more than 10% of the Shares that it held on August 9, 2002 (except for certain permitted transfers), it has the right to designate at least one director. Finally, the Extra Electrabel Director can, upon request of the Liberty Global Consortium, be removed if it determines that but for the service of such director it would be able to consolidate Telenet Group Holding under U.S. GAAP. A result of these nomination rights under the Syndicate Agreement is that the Liberty Global Consortium is able to nominate, and likely to be able to have elected at a general assembly of the Shareholders a majority of our Board of Directors even if it did not own a majority of the Shares, provided it owned a majority of the Shares held by the Syndicate Shareholders. The composition of our Board of Directors is currently based on the respective share ownership of each of the Syndicate Shareholders prior to our IPO. The composition could, however, change, in particular if the stake of a Syndicate Shareholder that is a Selling Shareholder were to fall below the 3% threshold or would result in fewer blocks of 7%, as each block of 7% entitles to nominate one director. The composition of the Board could further change if Liberty were to exercise the BCI Call Options, as this would further reduce the stake of the Belgian Shareholders. See also Item 7, “Major shareholders and related party transactions – Major shareholders—Options on Existing Shares—BCI Call Options." Independent Directors Pursuant to the Articles of Association, the independent directors are appointed by a majority of the shareholders from among candidates nominated by the Board of Directors or the Nomination Committee. The Articles of Association further provide that, in the event that any shareholder owns more than 50% of the Shares, the independent directors will be elected from among the candidates nominated by the majority of the votes present or represented at the general shareholders' meeting other than the votes represented by the shareholder owning more than 50% of the Shares of Telenet Group Holding. Independent directors must satisfy the criteria of the Articles of Association and the Belgian Company Code. Following the listing of the Senior Discount Notes on the Luxembourg Stock Exchange, the number of independent directors was increased to three, in order to be able to comply with Belgian corporate law requirements applicable to Belgian companies that have securities, such as debt instruments, listed on a regulated market in the European Union. Similarly, three independent directors have been appointed to the Board of Directors of Telenet Communications, as it also has debt listed on the Luxembourg Stock Exchange. The latter also serve on the boards of each of Telenet Bidco, Telenet Holding, Telenet Vlaanderen and Telenet NV, but are not members of the Board of Directors of Telenet Group Holding. Observers and Advisors The Articles of Association and the Syndicate Agreement permit Syndicate Shareholders to designate observers to our Board of Directors in the following circumstances. Firstly, Liberty Global Consortium has the right to

124

designate up to two observers so long as it is entitled to nominate at least one director. Secondly, if they lose the right to nominate the Extra Electrabel Director, the MICs/Electrabel Group is entitled to appoint an observer instead of such Extra Electrabel Director. Thirdly, a Syndicate Shareholder whose ownership of between 3% and 7% no longer entitled to nominate one director has the right to nominate one observer. The observers have the right to attend meetings of the Board and receive all information provided to Board members, but are not entitled to vote. See “—Shareholders rights—Voting Rights Attached to the Shares." In addition, each of Interkabel and the MICs/Electrabel Group have the right to nominate two permanent advisors who can assist the directors appointed by them in the Board and in the Audit Committee, HRO Committee, Strategic Committee and any other committees of the Board of Directors. These permanent observers receive all information provided to board members, but cannot vote. Other Companies In general, the Boards of Directors of Telenet Communications, Telenet Bidco, Telenet Vlaanderen and Telenet NV are composed and conduct business in the same way as the Board of Directors of Telenet Group Holding, with the exception of the three independent directors. Telenet Group Holding has its own three independent directors and the three independent directors of Telenet Communications also serve on the boards of the other Companies. In addition, the Board of Directors of Telenet NV is composed in a slightly different manner as a result of applicable media regulations and Interkabel always has the right to appoint one director to the Board of Directors of Telenet Vlaanderen for so long as Telenet Vlaanderen has rights to use the Partner Network pursuant to the terms of the Interkabel Contribution Deed. Votes of the Boards of Directors General In principal, the Boards of Directors of our Companies take their decisions by simple majority of the directors present or duly represented. For votes on certain matters, however, the Articles of Association and Syndicate Agreement impose special voting requirements, consisting of certain increased majorities and affirmative votes by certain directors. These are further discussed below. Increased Majorities The Articles of Association and Syndicate Agreement provide for three categories of matters that are subject to increased voting majorities within the Board of Directors.

• 81% majority decisions. The first category of matters with special voting requirements covers decisions relating to: (i) the relocation of the head office or of the registered office of the Telenet Companies; (ii) the acquisition of businesses outside our core business; (iii) transactions between a Telenet Company and any of the shareholders which controls more than 5% of the Shares or the directors or any affiliate of any such shareholder; and (iv) sales of a substantial part of a Telenet Company's assets, including the shares of certain subsidiaries. These decisions require the affirmative vote of 81% of the directors present or duly represented.

• 60% majority decisions. The second category of matters with special voting requirements covers decisions

relating to: (i) the appointment of the Chief Executive Officer; (ii) changes to the development plans; (iii) acquisitions of assets, businesses or companies primarily engaged in the communications business that are not an affiliate of or owned or controlled by an affiliate of a Shareholder which controls more than 5% of the Shares of Telenet Group Holding, (iv) debt incurrence by Telenet Vlaanderen above a one to one debt/equity ratio and (v) most shareholders' decisions in respect of Telenet Vlaanderen. These decisions require the affirmative vote of 60% of the directors present or duly represented.

• 62.5% majority decisions. The third category of matters with special voting requirements covers decisions

relating to: (i) the approval of the annual budget and increases in expenditures of more than 10% per calendar quarter above the amount incorporated in the annual budget and (ii) the approval of indebtedness for borrowed money other than any individual borrowing above €2.5 million so long as the cumulative amount of all borrowings does not exceed €10 million. These decisions require the affirmative vote of 62.5% of the directors present or duly represented.

125

The increased majorities referred to above will not apply in the following circumstances, and hence a simple majority will apply:

• if the Liberty Global Consortium has the right to nominate a majority of the Board of Directors, if another person which is not a Syndicate Shareholder (a "New Shareholder") has nominated a majority of the Board of Directors, or if a Syndicate Shareholder other than Liberty Global Consortium owns the majority of the Shares;

• if all of the BCI Call Options are exercised;

• if the MICs, the Financial Consortium, GIMV, Interkabel and Electrabel (the "Belgian Shareholders") do not

have the right to nominate three or more Qualified Directors, but limited to the following decisions (the "Special Decisions"): (i) the appointment of the Chief Executive Officer, (ii) sales of a substantial part of a Telenet Company's assets, including the shares of certain subsidiaries, but limited to transactions constituting less than 20% of the fair value of Telenet Group Holding's assets, (iii) acquisitions of assets, businesses or companies primarily engaged in the communications business that are not an affiliate of or owned or controlled by an affiliate of a Shareholder which controls more than 5% of the Shares of Telenet Group Holding, but limited to transactions constituting less than 20% of the fair value of Telenet Group Holding's assets, (iv) the approval of the annual budget and increases in expenditures of more than 10% per calendar quarter above the amount incorporated in the annual budget and (v) the approval of ordinary course of business indebtedness. As set forth below, in that event there will also be no requirement that one or more directors who were not nominated by Liberty Global Consortium vote in favor of such Special Decision.

Special Votes In addition to the majorities referred to above, decisions by the Board of Directors relating to certain matters also require the affirmative vote of certain directors.

• Special Vote (A). The category of matters that require an 81% majority decision and the appointment of our Chief Executive Officer, which requires a 60% majority decision, also require the affirmative vote of between one and three directors nominated by the MICs/Electrabel Group, the Financial Consortium, GIMV and Interkabel (the "Belgian Shareholders") (other than the Extra Electrabel Director), depending on the number of directors the Belgian Shareholders have nominated (other than the Extra Electrabel Director). If Liberty Global Consortium has the right to nominate the majority of the Board of Directors, if a New Shareholder has nominated the majority of the Board of Directors, or if a Syndicate Shareholder other than Liberty Global Consortium owns the majority of the Shares, and the Belgian Shareholders do not have the right to nominate at least three directors (other than the Extra Electrabel Director), then the above decisions require the affirmative vote of at least two directors (which may include our Chief Executive Officer and one or more independent directors) in addition to the directors nominated by Liberty Global Consortium, by such New Shareholder or by such Syndicate Shareholder (other than Liberty Global Consortium), as applicable. These special affirmative votes are referred to as the "Special Vote (A)." If a New Shareholder has nominated the majority of the Board of Directors, the required number of directors to constitute the Special Vote (A) will be increased by one director, unless at least one director nominated by Liberty Global Consortium votes in favor of the decision requiring approval by a Special Vote (A).

• Special Vote (B). The category of matters that require a 60% majority decision (other than the appointment of

our Chief Executive Officer) also require the affirmative vote of between one and two directors nominated by the Belgian Shareholders (other than the Extra Electrabel Director), depending on the number of directors the Belgian Shareholders have nominated (other than the Extra Electrabel Director). If Liberty Global Consortium has the right to nominate the majority of the Board of Directors, if a New Shareholder has nominated the majority of the Board of Directors, or if a Syndicate Shareholder other than Liberty Global Consortium owns the majority of the Shares, and the Belgian Shareholders do not have the right to nominate at least three directors (other than the Extra Electrabel Director), then the above decisions require the affirmative vote of at least one director (which may include our Chief Executive Officer or an independent directors) in addition to the directors nominated by Liberty Global Consortium, by such New Shareholder or by such Syndicate Shareholder (other than Liberty Global Consortium), as applicable. These special affirmative votes are referred to as the "Special Vote B." If a New Shareholder has nominated the majority of the Board of Directors, the required number of directors to constitute the Special Vote (B) will be increased by one director, unless at least one director nominated by Liberty Global Consortium votes in favor of the decision requiring approval by a Special Vote (B).

126

• Special Vote (C). The category of matters that requires a 62.5% majority decision also requires the affirmative

vote of one director appointed by the Belgian Shareholders (other than the Extra Electrabel Director), if the Belgian Shareholders have nominated at least three or more directors (other than the Extra Electrabel Director). This special affirmative vote is referred to as the "Special Vote C." If a New Shareholder has nominated the majority of the Board of Directors, the required number of directors to constitute the Special Vote (C) will be increased by one director, unless at least one director nominated by Liberty Global Consortium votes in favor of the decision requiring approval by a Special Vote (C).

For the Special Decisions listed above, only directors who are Qualified Directors are taken into account to determine whether the Special Vote (A), the Special Vote (B) or the Special Vote (C) shall apply to the Special Decisions. If the Belgian Shareholders do not have the right to nominate three or more Qualified Directors, there is no requirement that one or more directors who were not nominated by Liberty Global Consortium vote in favor of any of the Special Decisions. In addition, if all of the BCI Call Options are exercised, the Special Vote (A), the Special Vote (B) and the Special Vote (C) no longer apply, including that one or more directors who were not nominated by Liberty Global Consortium vote in favor of any of the Special Decisions. Other Voting Requirements Apart from the foregoing rules, changes to the Public Interest Guarantees require the approval of the majority of the ten Class A directors on our Regulatory Board. See "—Regulatory Board." Furthermore, certain decisions with respect to Telenet Vlaanderen will in any event require a majority of the Board which majority must include all directors nominated by Interkabel. Finally, a definitive decision not to pursue any longer, directly or indirectly, the development, installation and operation of a second fixed infrastructure telecommunications network in Belgium would require the approval of all the directors. Regulatory Board The Regulatory Board is intended to oversee the compliance of our group with the Public Interest Guarantees, which relate to our offering of digital television. The Regulatory Board consists of a maximum of ten Class A directors and ten Class B directors. The Class A directors are appointed by the holders of our Golden Shares, which are the ten MICs, and must include the members of the Telenet Group Holding Board of Directors nominated by the MICs/Electrabel Group. The Class B directors are nominated by the Board of Directors of Telenet Group Holding. If the MICs/Electrabel Group together are entitled to elect half of our Board of Directors, then the Board of Directors excluding those directors nominated by MICs/Electrabel Group shall appoint the ten Class B directors to serve on the Regulatory Board. If the MICs cease to have the right to be represented on the Board of Directors, then they, as holders of the Golden Shares of Telenet Group Holding are entitled to appoint one observer to the Board of Directors for as long as the Golden Shares are outstanding. All decisions of the Regulatory Board may only be taken by a majority of each of the Class A directors and Class B directors voting as a separate class. Shareholder Rights Voting rights attached to our shares

Each shareholder is entitled to one vote per share, without prejudice to the specific limitations to voting rights by virtue of the Syndicate Agreement, our articles of association, and Belgian company law.

Voting rights may be suspended by Telenet Group Holding on Shares that are subject to co-ownership until one person is appointed as beneficiary of the relevant rights. Voting rights in relation to Shares subject to usufruct are exercised by the usufructuary. Voting rights Shares subject to a pledge are exercised by the owner-pledgor. Telenet Group Holding's shareholders have the sole authority to appoint and remove directors of Telenet Group Holding by simple majority, provided, however, that the Articles of Association or the Syndicate Agreement reserve the right to nominate certain directors for Syndicate Shareholders. Moreover, the Syndicate Shareholders have in

127

effect agreed to allocate Board seats among themselves. See "Management and Governance—Directors—Composition of the Boards of Directors."

Right to participate at our general shareholders’ meetings Annual General Shareholders' Meeting Telenet Group Holding's annual general shareholders' meeting is held at its registered office or at the place otherwise specified in the notice convening the shareholders' meeting. The meeting is held every year on the last Thursday of May at 3:00 p.m. Brussels time, unless such date falls on a public holiday, in which case the shareholders’ meeting will be held on the first following working day. Special and Extraordinary General Shareholders' Meeting Either the Board of Directors or the statutory auditor may, at any given time in the event the interest of Telenet Group Holding so requires, convene a special or extraordinary general shareholders' meeting. Shareholders' meetings must also be convened every time one or more shareholders holding at least 20% of Telenet Group Holding's share capital so demands. Notice Convening the General Meeting The notice convening the general shareholders' meeting must indicate the place, date, and time of the meeting, and the proposed resolutions that will be submitted to the meeting. The meeting cannot deliberate or vote on items that were not included on the agenda, unless all Shares are present or represented and decide unanimously to place the items on the agenda. The notice must be published in the Annexes to the Belgian Official Gazette at least 24 days prior to the meeting (or, if a second meeting is required and if the date of the second meeting was included in the notice convening the first meeting, at least 17 days prior to the second meeting). Unless the annual shareholders' meeting is held at the place, date and time mentioned in the Articles of Association (see "—Annual General Shareholders' Meetings"), and the agenda is limited to the deliberation of the annual accounts, the annual report, the statutory auditor's report, and the discharge of the directors and the statutory auditor, the notice must also be published in a national gazette at least 24 days prior to the meeting (or, if a second meeting is required and if the date of the second meeting was included in the notice convening the first meeting, at least 17 days prior to the second meeting). The holders of Telenet Group Holding's registered Shares, warrants and bonds are individually notified by letter at least 15 days prior to the meeting. Holders of profit certificates must also be notified by letter at least 16 days prior to the meeting, but only in cases where they have voting rights. Participation at the General Shareholders' Meeting The holders of Telenet Group Holding's registered Shares, warrants and bonds have the right to attend the shareholders' meetings. Only Telenet Group Holding's shareholders can vote at shareholders' meetings, however, and the holders of Telenet Group Holding's warrants and bonds have only an advisory vote. Telenet Group Holding's Board members and statutory auditor also attend shareholders' meetings. The holders of profit certificates will have voting rights in the circumstances provided for by the Belgian Company Code. Formalities to Participate in the General Shareholders' Meeting In order to attend the general shareholders' meeting, holders must comply with the procedure specified by the Board of Directors in the convocation notice. If the Board requires that Shares be deposited, holders of bearer Shares in book-entry form must arrange for and deposit a certificate issued by a recognized account holder or the clearing agency of Telenet Group Holding's Shares, stating that these Shares are blocked until after the date of the general meeting. The certificate must be deposited at the place indicated in the notice convening the shareholders' meeting by no later than the third business day prior to the meeting (excluding Saturday and Sunday). Holders of bearer Shares in physical form must deposit their Shares at the place indicated in the convocation notice within the same term. Holders of registered Shares must be registered in the relevant register book and, if applicable, may be required to inform the Board that they will attend the meeting. The Articles of Association also allow the Board of Directors to specify a record date in the notice convening the shareholders' meeting. If the Board of Directors decides to set a record date in the notice, only persons who have shares at 24:00 hours (Central European Time, GMT+1) on the record date may participate and vote with such shares at

128

the shareholders meeting, regardless of the number of shares that they hold on the actual date of the shareholders' meeting. The specified record date can be no earlier than 15 calendar days, and no later than five business days, before the date of the shareholders' meeting. If the Board of Directors decides to set a record date, the notice convening the shareholders' meeting must be published in the annexes to the Belgian Official Gazette and a newspaper with nationwide distribution in Belgium at least 24 days prior to the record date (or, if a second meeting is required and if the date of the second meeting was mentioned in the notice convening the first meeting, at least 17 days prior to the record date for the second meeting). Power of Attorney Each shareholder has the right to attend a shareholders' meeting and vote at such shareholders' meeting in person or through a power of attorney granted to another person. The holder of a power of attorney need not be a shareholder. Telenet Group Holding's Board of Directors can request that shareholders use a model power of attorney (with voting instructions), which must be deposited at Telenet Group Holding's registered office at least five days prior to the meeting. Telenet Group Holding's Articles of Association also allow shareholders to vote by written letter, which must be sent no later than five days prior to the meeting by registered letter, with acknowledgement of receipt.

Right to vote at our general shareholders’ meetings Quorum and majorities. In general, there is no quorum requirement for a general shareholders' meeting. Changes to Telenet Group Holding's share capital, decisions with respect to the dissolution and liquidation of Telenet Group Holding (unless court ordered) and mergers, splits and certain asset and other transfers based on an exchange of shares, amendments to the Articles of Association (other than an amendment of Telenet Group Holding's corporate purpose), and certain other matters referred to in the Belgian Company Code require both the presence or representation of at least 50% of Telenet Group Holding's share capital, and also the approval of at least 75%, or 80% if supermajority requirements apply, of the votes cast at the meeting. An amendment to Telenet Group Holding's corporate purpose requires the approval of at least 80% of the votes cast at the relevant shareholders' meeting, which in principle can only validly pass such resolution if at least 50% of Telenet Group Holding's share capital and at least 50% of the profit certificates, if any, are present or represented. In the event the quorum requirement is not complied with, a subsequent meeting must be convened by way of a new notice. The second general shareholders' meeting can validly deliberate and decide on the matters presented regardless of the number of Shares present or represented. Special Majorities. The Articles of Association impose an increased shareholders' majority of 81.4% in respect of all decisions for which the Belgian Company Code requires the affirmative vote of 75% or more of the shareholders, for so long as the Liberty Global Consortium owns at least 21.18% of the outstanding Shares. The supermajority requirement falls away, however, whenever the Liberty Global Consortium owns less than 21.18% or more than 25% of the outstanding Shares. This in effect allows the Liberty Global Consortium to block certain decisions, such as amendments to the Articles of Association, including increases in the share capital of Telenet Group Holding, and changes to its corporate purpose, as long as it owns at least 21.18% of the Shares. In addition, the Articles of Association specify that Telenet Group Holding is not entitled to sell or authorize the sale of the shares of Telenet Communications, Telenet Bidco, Telenet NV or Telenet Vlaanderen, or to issue or authorize the issuance of shares in any such companies to any third party, without the affirmative vote of 80% of the shareholders that are present or duly represented at the general shareholders' meeting. In the case of Telenet Vlaanderen, any such sale or issuance of shares requires in addition the approval of Interkabel for so long as it owns one Share and the usage rights have not been terminated. The foregoing does not preclude a pledge of any such shares for the purpose of any financing of the business of such Telenet Companies, without prejudice to the prohibition to a pledge of the shares of Telenet Vlaanderen. Notwithstanding the foregoing, if the Belgian Shareholders do not have the right to nominate three or more directors per block of 7% of the Shares of Telenet Group Holding, a sale or other transfer of shares of the above Telenet Companies (other than Telenet Vlaanderen) or an issue of shares (in consideration of a contribution in kind of assets or rights in or of a business) by such Telenet Companies (other than Telenet Vlaanderen) will only require the approval of a simple majority of the Board of Directors of the relevant Telenet Company in all cases where such sale or issuance represents less than 20% of the fair value of the assets of Telenet Group Holding. In general, for the purpose of calculating the above 21.18%, the following Shares will be deemed not to be outstanding: (i) the shares issued or issuable upon the conversion of the Class A Profit Certificates and Class B Profit Certificates and upon the exercise of the Subordinated Debt Warrants; and (ii) any other Shares, warrants on Shares,

129

options on Shares or securities convertible into Shares issued or to be issued in the future by Telenet Group Holding with respect to which Liberty Global Consortium does not have preferential subscription rights or is not granted the ability to acquire additional Shares (through subscription to newly issued Shares or otherwise) sufficient to maintain the same ownership percentage in the Shares as existed before the issuance of such Shares, warrants, options or convertible securities to other Persons, at an issuance price equal to the higher of (a) the price to be paid by other Persons acquiring Shares or the price to exercise warrants or options or convert convertible securities into Shares and (b) the value required by the Belgian Company Code. Distribution of Profits All Shares and profit certificates participate in Telenet Group Holding's profits equally. Pursuant to the Belgian Company Code, the shareholders can decide whether to distribute profits with a simple majority vote at the annual general shareholders' meeting, based on the most recent audited statutory financial statements prepared in accordance with Belgian GAAP and a non-binding recommendation of Telenet Group Holding's Board of Directors. The Articles of Association also authorize the Board of Directors to distribute interim dividends on profits of the current fiscal year subject to the terms and conditions of the Belgian Company Code. Like the Belgian Company Code, Article 51 of Telenet Group Holding's Articles of Association requires that Telenet Group Holding allocate, each year, at least 5% of its annual net profits to its legal reserve, until the legal reserve equals 10% of Telenet Group Holding's share capital. With regard to distributable profits over and above the required allocation to the legal reserve, the Articles of Association of Telenet Group Holding provide that those profits can be distributed for the reimbursement of the capital, in accordance with Article 615 of the Belgian Company Code. In accordance with Belgian law, dividends can only be distributed if following the declaration and distribution of the dividends the amount of Telenet Group Holding's net assets on the last day of the most recently completed fiscal year (i.e., the total amount of assets as recorded in the balance sheet, less provisions and liabilities), decreased by (i) the non-amortized amount of the costs of incorporation and expansion and (ii) the non-amortized amount of research and development costs, does not fall below the amount of the paid-up capital, increased by the amount of non-distributable reserves. In relation to bearer Shares, the Belgian Act, dated July 24, 1921, provides that, in the event the payment of dividends on bearer shares has not been claimed by the legal holder thereof, the company has the right to deposit those dividends with the Deposito en Consignatiekas / Caisse de Dépots et Consignation. The right to demand the distribution of dividends so deposited expires after thirty years, at which time the related dividends become the property of the Belgian State. With regard to registered shares, the right to payment of dividends expires five years after the Board of Directors declared the dividend payable. See also Item 8, “Financial information – Dividend Policy."

Rights regarding liquidation If, as a result of losses incurred, the ratio of Telenet Group Holding's (statutory) net assets (determined in accordance with Belgian legal and accounting rules) to share capital was less than 50%, Telenet Group Holding's Board of Directors would have to convene a special shareholders' meeting within two months of the date the Board of Directors discovered or should have discovered the under capitalization. At the meeting, the Board of Directors would have to propose either to dissolve Telenet Group Holding or to take such measures as may be appropriate to continue Telenet Group Holding's operations. The same procedure would have to be followed if, as a result of losses incurred, the ratio of Telenet Group Holding's net assets to share capital were less than 25%. If net assets drop below €61,500 (the minimum amount of share capital a Belgian limited liability company can have), any interested party would be able to petition a competent court to dissolve Telenet Group Holding. In that event, Telenet Group Holding could present a plan to continue its activities. The court could order the dissolution of Telenet Group Holding or grant a grace period within which to remedy the situation. In the event of Telenet Group Holding's dissolution and liquidation, the assets or the proceeds of the sale of the remaining assets, after payment of all debts, costs of liquidation and taxes, must be distributed on an equal basis to the shareholders and to holders of Profit Certificates, taking into account any preferential liquidation rights that may exist for any particular class of security. In addition, pursuant to the Articles of Association, 2,164,911 shares of Telenet Group Holding are subject to a liquidation dispreference as long as they have not been converted into ordinary Shares on the basis of the ratio of 1.04 dispreference shares for one ordinary Share. In case of a liquidation of Telenet Group Holding, the liquidation

130

dispreference applies if (i) Telenet Holding, Telenet Vlaanderen or Telenet NV is declared bankrupt or put in liquidation, or (ii) there is a unanimous and definitive decision of the Board of Telenet Holding to cease any direct or indirect development, installation or exploitation of our telecommunications network in Belgium and, in either case, Interkabel has terminated the Partner Network usage rights granted to us. In such a case, the shares subject to the dispreference will only entitle the holders thereof to liquidation proceeds, if any, above €8.02 per share. Except for the dispreference, these shares have otherwise the same rights and participate in the capital and distributions in the same manner as ordinary Shares.

Changes to Share Capital Pursuant to the Belgian Company Code, Telenet Group Holding may increase or decrease its share capital through action taken at a shareholders' meeting provided that at least 50% of Telenet Group Holding's share capital is present or represented at the meeting and that the change is approved by at least 75% of the votes cast. In the event a quorum does not exist, a subsequent meeting must be convened through a new notice. Valid deliberations and decisions can be made in the subsequent meeting, irrespective of the number of Shares present or represented. In certain circumstances, the Articles of Association require an 81.4% majority for capital increases. See "—Right to Participate at our General Shareholders' Meetings—Right to Vote at General Shareholders' Meetings—Special Majorities." Telenet Group Holding's current Articles of Association do not authorize the Board of Directors to increase the company's capital without approval from the shareholders, except for the purposes of issuing the Shares to the employees on a recurrent basis in a tranche with terms similar to the terms of the first tranche under the employee offering in our IPO, subject to fulfillment of certain conditions precedent, and not exceeding the five-year time limit of the Board's authorization. Preferential Subscription Rights In the event of a cash capital increase, existing shareholders have preferential subscription rights to subscribe to the new Shares, pro rata to the share capital represented by their existing Shares. Such right can be exercised during a period of at least fifteen days from the start of the subscription period. Shareholders may decide to restrict or waive their preferential rights in accordance with the Belgian Company Code. The Syndicate Agreement protects the Syndicate Shareholders against dilution. In particular, it contains restrictions on increases of the share capital and provides that, in circumstances where the Belgian Company Code does not grant existing shareholders preferential subscription rights, the Syndicate Shareholders will only vote in favor of the capital increase if they are given the ability to subscribe for shares sufficient so as to maintain their stake. See "—Syndicate Agreement." Transfer Restrictions All Shares are freely transferable, except for the Golden Shares and subject to compliance by Syndicate Shareholders with the provisions of the Syndicate Agreement. Certain Shares owned by certain Syndicate Shareholders, although listed, will not be traded on Eurolist, the Regulated Market of Euronext Brussels, as long as they remain earmarked as being subject to the Interkabel call option, the BCI Call Options and the call option on the Penny Warrant Shares. See Item 7, "Major Shareholders and Related Party Transactions—Major Shareholders—Option Agreements" and "—Subordinated Debt Warrants". Similarly, the Shares that are subject to a dispreferential treatment in the case of a liquidation of Telenet Group Holding cannot be traded on the Regulated Market prior to their conversion into ordinary Shares. See "—Share Capital." The Syndicate Agreement contains various rights of first offer and a tag along right which can have the effect of restricting transferability. First, all Syndicate Shareholders have rights of first offer in respect of transfers of Shares and Subordinated Debt Warrants by Syndicate Shareholders to third parties that are not effected through market sales, being sales via Euronext or another internationally recognized market, including a block trade or a cross trade, or through a public or private offering. Second, sales through the market or via public or private offering by Syndicate Shareholders other than the Liberty Global Consortium are subject to rights of first offer in favor of the Liberty Global Consortium, subject to certain conditions and exceptions, including an exemption for market sales of up to 300,000 Shares per group per quarter. The rights of first offer on market sales remains valid until the earlier of the Liberty Global Consortium acquiring more than 50% of the outstanding Shares, the Liberty Global Consortium exercising the BCI Call Options and expiration of the relevant exercise periods of these options. See Item 7, "Major Shareholders and Related Party Transactions—Major Shareholders—Option Agreements" and "—Subordinated Debt Warrants". Sales on the Regulated Market by the Liberty Global Consortium are, finally, also subject to rights of first offer for the benefit of the Liberty Global Consortium members.

131

Pursuant to the Syndicate Agreement, a Syndicate Shareholder that contemplates transferring Shares is also contractually obligated to arrange for the purchase of the remaining Shares and Subordinated Debt Warrants of the other Syndicate Shareholders, if, as a result of such transfer, a third party or a Syndicate Shareholder would acquire more than 50% of the Shares. Shareholder Registration Rights Agreement Telenet Group Holding has entered into a registration rights agreement with its principal shareholders, pursuant to which it is obligated to assist in the preparation of any secondary offering of the Shares if so requested by parties to the agreement and provided that the contemplated offer is for at least $100 million. Telenet Group Holding will also be required to bear certain of the costs incurred in connection with such offering. The other shareholders that are party to the registration rights agreement will have the right to have their Shares included in the secondary offering. Disclosure of important shareholdings Under Belgian transparency rules, any entity or group of entities holding 5% or more of the shares of a company whose voting securities are admitted to trading on a regulated market, such as Telenet Group Holding following our IPO, must notify the company and the Belgian financial regulator, the Banking, Finance and Insurance Commission (the “CBFA”) of its Share ownership. Pursuant to the Articles of Association, the reporting threshold has been lowered to 3%. Accordingly, reporting is required as soon as a party holds 3% of Telenet Group Holding's Shares.

Exchange controls and other provisions relating to non-Belgian shareholders

There are no Belgian exchange control restrictions on investments in, or payments on, our shares. From time to time, the Belgian authorities may proceed to implement embargoes promulgated at European and/or United Nations level. Such embargoes may have an impact on the continued capacity of investors falling within the scope of the embargo to hold our shares, and to exercise the corresponding rights, as well as on the payment flows relating to our shares.

Other than as described above, there are no special restrictions under Belgian law or in our articles of

association that limit the right of shareholders who are not citizens or residents of Belgium to hold, or to exercise the rights attached to, our shares.

C. Material contracts Set forth below is a description of the principal contracts and ionstruments out of the Telenet group’s oridinary course of business to which we are a party. In addition, in the ordinary course of our business, we are party to a number of agreements with, among others, equipment and programming suppliers, network access providers, installation subcontractors and telephony interconnection counterparties. Senior Credit Facility Telenet Bidco, Telenet NV and Telenet Vlaanderen, as borrowers, and Telenet Bidco, Telenet NV, Telenet Vlaanderen, Telenet Holding, Phone-Plus, Telenet Solutions, Telenet Solutions Luxembourg and Merrion Communications, as guarantors, are party to a credit agreement, originally dated July 12, 2002, with certain banks as lenders, European Investment Bank, GE Capital Structured Finance Group Limited, J.P. Morgan plc, KBC Bank NV, Lloyds TSB Bank plc, Brussels Branch, Merrill Lynch International, NIB Capital Bank, Belgium Branch, The Royal Bank of Scotland plc, Société Générale and WestLB AG as mandated lead arrangers, The Royal Bank of Scotland plc as facility agent and KBC Bank NV as security agent (as amended, the "Senior Credit Facility"). The debt outstanding under the Senior Credit Facility was drawn, together with other sources of funding and drawing that have since been repaid or refinanced, for various purposes, including financing and refinancing capital expenditure, funding operating losses, paying costs and consideration payable in connection with the MixtICS Acquisition and the acquisitions we made during 2003 (see Item 4, “Information on the company – History and development of the company— Acquisitions and Integrations"), and other general corporate purposes.

132

The following is a summary of some of the provisions of the Senior Credit Facility, and is qualified in its entirety by reference to the Senior Credit Facility and the other documents entered into in connection with it. This summary takes into account amendments we agreed with our lenders on March 31, 2005 pursuant to which reduced the outstanding balance of our Senior Credit Facility by €105.0 million to €635.0 million and increased the size of our undrawn revolving credit facility from € 100.0 million to €200.0 million. Structure The Senior Credit Facility consists of the following facilities:

• the Tranche A Facility and the Tranche B Facility are amortizing term loan facilities of €230 million, which are currently drawn in full;

• the Tranche C Facility is an uncommitted term loan facility of up to €150.0 million, all of which is currently

undrawn;

• the Tranche D Facility is a revolving credit facility in an amount of up to €200.0 million, all of which is currently undrawn; and

• the Tranche E Facility is a non-amortizing term loan facility of €405.0 million, which is currently drawn in full.

The Tranche D Facility, which is available as a committed facility to the borrowers except Telenet Bidco or Telenet Vlaanderen until November 30, 2011, can be applied toward the general corporate purposes of such borrowers. Tranche C is an uncommitted facility that may be applied toward the general corporate purposes of such borrowers (including financing potential acquisitions). Tranche A Facility and Tranche B Facility The Tranche A Facility and the Tranche B Facility are amortizing term loan facilities. The outstanding amount under these facilities is required to be repaid in full in the installments and on the dates specified in the Senior Credit Facility pursuant to an amortization schedule that requires 2.55% of the total amount drawn under the Tranche A and Tranche B Facilities to be repaid on December 31, 2006 and 4.8725% of the facilities to be repaid on the last day of each calendar quarter thereafter until the outstanding balance under the facilities is required to be repaid in full on December 31, 2011. The schedule is subject to adjustment for any prepayments. Tranche C Facility Tranche C was established on March 31, 2005 as a €150 million uncommitted facility to be applied toward general corporate purposes of the borrowers including acquisition financing. The interest rate applicable to the Tranche C Facility will be determined when drawn by Telenet. Up to 50% of the capacity under the Tranche C Facility may be drawn in the form of a bullet loan. Not more than €75 million of Tranche C may be repayable before the maturity date of the Tranche E Facility. No Tranche C loans are permitted to amortize at a rate faster than the amortization schedules for Tranche A. Tranche C-2 Facility The outstanding balance of €100 million under Tranche C-2 was prepaid in full and cancelled on March 31, 2005. Tranche D Facility The Tranche D Facility is a revolving credit facility. The facility is available to the borrowers except Telenet Bidco and Telenet Vlaanderen until November 30, 2011. The full amount of the Tranche D Facility is required to be repaid by December 31, 2011.

133

Tranche E Facility The Tranche E Facility is a non-amortizing term loan facility which is available to Telenet Bidco and Telenet NV in the same proportion that Telenet Bidco and Telenet NV respectively participate in the Tranche A Facility and Tranche B Facility. The principal amount of the Tranche E Facility is required to be repaid on December 31, 2011. Prepayment In addition to the scheduled repayments described above, the Senior Credit Facility must be prepaid upon the occurrence of certain events. For example, in certain circumstances, the Senior Credit Facility requires prepayments from, among other things, the net proceeds of asset sales, insurance claims (subject to de minimis exceptions), certain percentages of issuances of additional equity or 50% of Excess Cash Flow (as defined in the Senior Credit Facility) in respect of the financial year ending December 31, 2005. Indebtedness under the Senior Credit Facility may be voluntarily prepaid by the borrowers in whole or in part (but in a minimum amount of €10 million), on giving at least five business days' prior notice to the facility agent, without premium or penalty (although prepayment fees are required for certain Tranche E Facility prepayments) and subject to break funding costs if any such prepayment is not made on an interest payment date. Interest Rate and Fees Advances under the Tranche A Facility, the Tranche B Facility, the Tranche D Facility and the Tranche E Facility bear interest at rates per annum equal to EURIBOR plus the applicable margin and plus any applicable reserve asset costs. The applicable margins in relation to the Tranche A Facility, the Tranche B Facility and the Tranche D Facility range, are subject to certain exceptions, from 1.50% to 2.75% per annum, depending on a margin adjustment mechanism based on the ratio of Net Total Debt (which under the Senior Credit Facility includes net total cash pay Financial Indebtedness (as defined in the Senior Credit Facility), excluding the clientele and annuity fees, and capitalized leases, of Telenet Bidco and its subsidiaries) to Annualized EBITDA (as defined in the Senior Credit Facility) for the relevant period. The current margin for such facilities is 2.0% per annum for Tranches A and B and 2.5% for Tranche E. The applicable margin in relation to the Tranche E Facility is 2.75% per annum up to and including the accounting date on which the ratio of Net Total Debt to Annualized EBITDA is less than 3.25:1 for the relevant period, after which it becomes 2.5%. We are required to pay to the facility agent for each lender a commitment fee equal to the lower of: (i) 0.75% per annum of the undrawn and uncancelled amount of such lender's commitment under the facility to which the relevant commitment relates and (ii) 50% of the applicable margin on the undrawn and uncancelled amount of the facility to which the relevant commitment relates. There are no commitment fees in respect of the Tranche E Facility. The commitment fee for each Tranche C Facility will be as set out in the relevant Tranche C agreement. Guarantees and Security Telenet Bidco, Telenet Holding, Telenet NV, Telenet Vlaanderen, Merrion Communications, Phone-Plus, Telenet Solutions and Telenet Solutions Luxembourg guarantee the obligations of the borrowers under the Senior Credit Facility, to the extent permitted by law. In addition, the Senior Credit Facility requires under certain circumstances additional material subsidiaries of Telenet Bidco to become guarantors under the Senior Credit Facility. The guarantors under the Senior Credit Facility have also granted security over substantially all their assets for the borrowers' obligations under the Senior Credit Facility through a combination of guarantees, share pledges, charges (including floating charges), real estate mortgages and related arrangements. Substantially all of the assets of our group below the Telenet Bidco level, including our operating companies, are therefore subject to these security interests, which include, among other things, granting rights in shares of our subsidiaries, our network assets and many of our bank accounts and other receivables.

134

Covenants The Senior Credit Facility contains certain negative covenants, restricting, but not necessarily prohibiting, the borrowers, the guarantors and their respective subsidiaries from (subject to certain agreed exceptions), among other things:

- creating or allowing to exist security interests over their assets;

- entering into contractual arrangements on non-arm's length terms;

- incurring indebtedness and guarantees (including loans to third parties);

- engaging in mergers, consolidations and acquisitions and making investments, with provisions that cap any single acquisition at €200 million and all acquisitions during the term of the Senior Credit Facility at €300 million;

- disposing of assets and entering into sale-leaseback transactions;

- paying management, technical and consulting fees to related parties;

- changing their business and/or business plan;

- amending or waiving of terms of the relevant transaction documents; and

paying dividends and repurchasing shares.

The Senior Credit Facility also requires the borrowers, guarantors and their respective subsidiaries to observe certain customary covenants and representations, including covenants relating to legal status, regulatory approvals, material licenses, compliance with laws (including environmental laws), litigation, financial statements, ownership of assets and intellectual property rights, insurance and payment of taxes. In addition, the Senior Credit Facility requires the borrowers and guarantors to maintain certain specified financial ratios, as set out in "Summary of Certain Senior Credit Facility Covenants." These financial ratios test the creditworthiness of Telenet Bidco and its subsidiaries (the "Telenet bank group") and are intended to give the banks rights in the event that the financial performance of the Telenet bank group deteriorates relative to the financial performance that was projected at the time the ratios were set. The key measure used in these ratios is "Consolidated EBITDA," which is designed to represent the cash operating income generated by the Telenet bank group. Accordingly, it excludes items that would be included in income according to applicable accounting principles, such as depreciation and amortization, and items that relate to financial rather than operating transactions, such as interest. This measure is used in the financial ratio known as the Total Debt Interest Cover ratio to test the ability of the Telenet bank group to service the cash interest payments on its debt. That ratio requires the Telenet bank group to maintain Consolidated EBITDA of at least twice the amount of cash interest included in Total Interest Payable. There is a similar test for the ability to service both interest and principal repayments, defined as the Pro Forma Debt Service Cover ratio. The other financial ratios, specifically the Net Senior Debt to Annualized EBITDA and Net Total Debt to EBITDA ratios, also require the Telenet bank group to keep its net senior and total financial debt below specified multiples of Consolidated EBITDA. If the Telenet bank group does not satisfy the financial ratios in the Senior Credit Facility, the lenders have the rights that lenders typically have when an event of default occurs, which include the right to call for immediate repayment of all or some of the debt outstanding under the Senior Credit Facility or to declare that they have the right to call for immediate repayment on demand at any time. Certain of the events that constitute events of default under the Senior Credit Facility are described under "—Events of Default" below. Events of Default The Senior Credit Facility contains events of default customary for senior secured leveraged financings, including non-payment of principal or interest thereunder, misrepresentation, breach of covenants, insolvency and insolvency proceedings, unlawfulness or repudiation of the financing or transaction documents, cessation of business,

135

regulatory intervention or loss of material licenses or approvals, expropriation, cross default to other debt of our group, an event of default under the Senior Notes, documentation held unenforceable, change in control or ownership, material adverse change and audit qualification. In addition, an event of default will occur upon the termination of the usage rights granted to Telenet Vlaanderen by Interkabel Vlaanderen CVBA. Intercreditor Agreement General To establish the relative rights of certain of their creditors under their financing arrangements, Telenet Communications, Telenet Bidco and the guarantors under the Senior Credit Facility have entered into an intercreditor agreement (as amended, the "Intercreditor Agreement") with, among others, the lenders under the Senior Credit Facility and The Bank of New York, as the trustee under the indenture governing the Notes, and KBC Bank NV as the security agent for the holders of the Notes. The Intercreditor Agreement restricts, among other things, the ability of each Subsidiary Guarantor: • if there is a payment default under the Senior Credit Facility or if there is an outstanding payment

blockage notice, to make payments on;

• to grant security for;

• to defease; or

• otherwise to provide financial support in relation to the Subsidiary Guarantees, the Proceeds Loans and the guarantee by MixtICS of the Operaties Proceeds Loan for so long as any indebtedness under the Senior Credit Facility remains outstanding. The postponement, subordination, blockage or prevention of payment on the Proceeds Loans is not a waiver by Telenet Communications, Telenet Bidco or Telenet NV, as applicable, of its claims and other rights under the applicable Proceeds Loan. Payments on the Proceeds Loans shall remain due and payable, and interest shall continue to accrue. Payment Blockage While a payment blockage is in effect, the Subsidiary Guarantors will not be permitted to make any payment in respect of the Subsidiary Guarantees or the Proceeds Loans and MixtICS will not be permitted to make any payment in respect of the MixtICS Proceeds Loan or its guarantee of the Operaties Proceeds Loan. A payment blockage notice may be served and become outstanding if there is an event of default, other than a payment event of default, under the Senior Credit Facility; provided that a payment blockage notice is only permitted to be served on or before the date falling 45 days after the date on which notice of such event of default has been received by the facility agent under the Senior Credit Facility. A payment blockage notice will remain outstanding, unless cancelled, until: • 179 days after receipt by Telenet Bidco of such payment blockage notice;

• the event of default under the Senior Credit Facility is no longer outstanding and continuing or has been waived by the holders of 662/3% of the outstanding loans under the Senior Credit Facility;

• the expiration of any standstill period in existence on the date of the service of such payment blockage notice; or

• all amounts outstanding under the Senior Credit Facility are paid and the lenders no longer have any obligations under the Senior Credit Facility.

Only one payment blockage notice is permitted to be served in any consecutive 360-day period, and only one blockage notice is permitted to be served in respect of a particular event or circumstance. Standstill on Enforcement The Trustee under the indenture and the holders of Notes may bring an action to enforce the obligations of Telenet Communications and the Subsidiary Guarantors under the Notes and Subsidiary Guarantees and the security

136

interest granted in respect of the collateral securing the Notes and Subsidiary Guarantees. Enforcement in respect of the Notes against Telenet Communications is not restricted by the Intercreditor Agreement. However, action may not be taken against the Subsidiary Guarantors or to enforce the security interest in respect of the collateral securing the Notes and Subsidiary Guarantees, and Telenet Communications and Telenet Bidco may not take any enforcement action in respect of the Proceeds Loans or the guarantee of the Operaties Proceeds Loan by MixtICS, unless a default has occurred under the indenture governing the Notes, the Trustee under the indenture has notified the facility agent under the Senior Credit Facility of such default and:

• holders of 662/3% of the outstanding Senior Debt (as defined below) have consented to such enforcement action;

• any Senior Debt has been declared due and payable or due and payable on demand under the Senior Credit

Facility, or the lenders under the Senior Credit Facility have taken any action to enforce any security interest or lien against a Subsidiary Guarantor or MixtICS;

• an insolvency event has occurred in relation to a Subsidiary Guarantor or MixtICS;

• a standstill period of 179 days has expired; or

• a previously outstanding standstill period has expired.

For the purpose of this discussion of the Intercreditor Agreement, "Senior Debt" means obligations under the Senior Credit Facility, hedging obligations contemplated by the Senior Credit Facility and obligations to the European Investment Bank contemplated by the Senior Credit Facility. Subordination on Insolvency In the event of an insolvency of a Subsidiary Guarantor or MixtICS, the Intercreditor Agreement provides that all obligations in respect of the Subsidiary Guarantees, the Proceeds Loans and the guarantee by MixtICS of the Operaties Proceeds Loan will be subordinated to the prior payment in full of the Senior Debt, and any payments of any kind, including by way of set-off or otherwise on the Subsidiary Guarantees, the Proceeds Loans and the guarantee by MixtICS of the Operaties Proceeds Loan must be paid over to the creditors under the Senior Debt. Senior Discount Notes The Senior Discount Notes are senior unsecured obligations of Telenet Group Holding and are effectively subordinated to the obligations of Telenet Group Holding's subsidiaries, including the obligations of Telenet Communications and the Subsidiary Guarantors under the Notes and the guarantees of the Notes. The Senior Discount Notes accrete at a rate of 11.5% per annum, compounded semiannually on each interest payment date for the Notes to, but not including, December 15, 2008. Thereafter, cash interest on the Senior Discount Notes accrues at a rate of 11.5% and is payable on each interest payment date for the Notes, commencing on June 15, 2009. Under certain circumstances, Telenet Group Holding is obligated to redeem the Senior Discount Notes in the case of certain asset sales and changes of control. In addition, subject to the terms of the Senior Credit Facilities and the indenture for the Senior Notes, Telenet Group Holding may choose to redeem the Senior Discount Notes as follows: • at any time at the redemption prices (expressed in percentages of accreted value of the Senior

Discount Notes) if redeemed during the 12-month period commencing on December 15 of the years set forth below:

Redemption Year Redemption Price

2008........................................................................................................... 105.750% 2009........................................................................................................... 103.833% 2010........................................................................................................... 101.917% 2011 and thereafter ................................................................................... 100.000%

137

• at any time before December 15, 2008, at a redemption price equal to 100% of the accreted value of

the Senior Discount Notes to be redeemed, plus a "make-whole" premium; • at any time before December 15, 2006, in an aggregate principal amount not to exceed 35% of the

accreted value of the Senior Discount Notes with the proceeds of one or more public equity offerings at a redemption price equal to 111.5% of the accreted value of the Senior Discount Notes redeemed; and

• at any time at 100% of the accreted value if changes in tax law impose certain withholding taxes on

amounts payable on the Senior Discount Notes. On November 23, 2005, Telenet Group Holding redeemed $191.8 million of the face value equivalent outstanding principal under its Senior Discount Notes pursuant to the initial public offering of Telenet Group Holding on October 11, 2005. This amount was equivalent to $136.2 million in accreted value on the date of redemption and €115.2 million in accreted value at the exchange rate at which the redemption was funded on the date of redemption. In addition, on November 22, 2005, $3.6 million of Senior Discount Notes ($2.5 million accreted value) were redeemed pursuant to a change of control offer made following certain changes in the terms of Telenet Group Holding’s governance. Following these two redemptions, the outstanding face value equivalent principal under the Senior Discount Notes is $362.7 million, being the maximum permissible redemption of 35%. Senior Notes The Senior Notes mature on December 15, 2013. Interest accrued from December 22, 2003 and is paid on June 15 and December 15 of each year, commencing on June 15, 2004. The Senior Notes are senior obligations of Telenet Communications and rank equally with all of Telenet Communications' existing and future senior debt. As indebtedness of a subsidiary of Telenet Group Holding, the Senior Notes are effectively senior in right of payment to the Notes offered hereby. Certain subsidiaries of Telenet Communications guarantee the Senior Notes on a senior subordinated basis. Telenet Group Holding is guaranteeing the Senior Notes on a senior basis, which guarantee ranks equally with Telenet Group Holding's obligations under the Notes offered hereby. In addition, MixtICS is guaranteeing the obligations of Telenet Operatories under the intercompany loan made by Telenet Bidco to Telenet Operatories. The subsidiary guarantees and the MixtICS guarantee are subject to a standstill period on enforcement and may be released in certain circumstances. The Senior Notes and the guarantees of the Senior Notes are secured by a second priority security interest in the shares of Telenet Bidco, Telenet Operatories and MixtICS pursuant to shares pledges and by a second ranking pledge of certain intercompany loans. The guarantee by Telenet Group Holding of the Senior Notes is secured by a first ranking pledge of the Junior Subordinated Parent Intercompany Loan between Telenet Group Holding and Telenet Communications. Under certain circumstances, Telenet Communications is obligated to redeem the Senior Notes in the case of certain asset sales and changes of control and in the event of specified developments affecting taxation, subject to the ability to make such redemption under the Senior Credit Facility and the Intercreditor Agreement. Subject to the terms of the Senior Credit Facility and the Intercreditor Agreement, prior to December 15, 2008, Telenet Communications may redeem all or part of the Senior Notes by paying a "make-whole" premium. Telenet Communications may also redeem any of the Senior Notes at any time on or after December 15, 2008, at a redemption price in 2008 equal to 104.5%, which redemption price thereafter declines to 100% in 2011 based on annual stepdowns of equal amounts, plus accrued and unpaid interest, if any, to the date of redemption. In addition, prior to December 15, 2006, Telenet Communications may redeem up to 35% of the Senior Notes using proceeds from certain equity offerings. On January 9, 2006, Telenet Communications redeemed €124.6 million of the outstanding principal under its Senior Notes pursuant to the initial public offering of Telenet Group Holding on October 11, 2005. In addition, on November 21, 2005, €6.8 million of Senior Notes were redeemed pursuant to a change of control offer made following certain changes in the terms of Telenet Group Holding’s governance. Following these two redemptions, the outstanding principal under the Senior Notes is €368.4 million.

138

D. Exchange controls There are no foreign exchange controls currently in force that restrict the import or export of capital or that affect the remittance of interest or other payments to holders of Notes who are non-residents of Belgium. E. Taxation Belgian Tax Considerations: Noteholders The following is a summary of the principal Belgian tax consequences for investors of receiving interest in respect of, and disposing of, Notes and is of a general nature based on our understanding of current law and practice. Except as otherwise indicated, this summary only addresses the position of investors who do not have any connection with Belgium other than the holding of Notes. The present section does not address the tax situation of natural persons residing in Belgium. Belgian Withholding Tax Notes in Book-Entry Form The interest component of payments on Notes is, as a rule, subject to Belgian withholding tax at the rate of 15%, subject to such relief as may be available under applicable domestic or tax treaty provisions. All payments of interest by or on behalf of Telenet Communications or Telenet Group Holding shall be made without deduction of withholding tax for Notes held in book-entry form by eligible investors (the "Eligible Investors") in an exempt securities account (an "X-Account") with the X/N System or with a participant or sub-participant in such system (a "Participant"). Eligible Investors are those persons referred to in Article 4 of the Royal Decree of May 26, 1994, including, inter alia: • Belgian resident companies subject to corporate income tax within the meaning of Article 2, §2, 2° of

the Income Tax Code 1992 ("ITC 1992"); • without prejudice to Article 262, 1° and 5° of ITC 1992, Belgian insurance or pension undertakings

within the meaning of Article 2, §3 of the Law of July 9, 1975 on supervision of insurance companies (other than those referred in points 1° and 3° of said Article);

• State-linked social security organizations and institutions assimilated therewith within the meaning of

Article 105, 2° of the Royal Decree of August 27, 1993 implementing ITC 1992; • non-residents of Belgium within the meaning of Article 105, 5° of said Royal Decree of August 27,

1993; • mutual funds within the meaning of Article 115 of said Royal Decree of August 27, 1993; • companies, entities or partnerships within the meaning of Article 227, 2° of ITC 1992 which are

subject to non-resident income tax in Belgium in accordance with Article 233 of ITC 1992 and whose Notes are held as part of a taxable business activity in Belgium;

• the Belgian State, with respect to its investments exempted from withholding tax in accordance with

Article 265 of ITC 1992; • mutual funds organized under foreign law which are structured as an undivided estate managed by a

management company on behalf of certificateholders, provided that their certificates are not publicly offered or otherwise marketed in Belgium; and

• Belgian resident companies not referred to in point 1 above whose sole or principal activity consists

in granting credits or loans.

139

Eligible Investors do not include natural persons residing in Belgium or not-for-profit organizations (other than those referred to in points 2 and 3 above). Participants to the X/N System must keep the Notes they hold for non-Eligible Investors in a non-exempt securities account (an "N-Account"). All payments of interest on such Notes will be made subject to deduction of withholding tax at the rate of 15%. In addition, the transfer of Notes by holders of an N-Account is subject to withholding tax at the rate of 15% on the pro rata interest accrued since the last preceding interest payment date. Upon opening an X-Account with the X/N System or with a Participant, an Eligible Investor is required to certify its eligible status on a standard form approved by the Minister of Finance. There are no ongoing certification requirements for Eligible Investors, but direct Participants are required to annually report to the X/N System as to the eligible status of each holder for whom they hold Notes in an X-Account. In addition, an X-Account may be opened with a Participant by an intermediary (an "Intermediary") in respect of Notes that such Intermediary holds for the account of its clients (the "Beneficial Owners"), provided that each Beneficial Owner is an Eligible Investor. In such a case, the Intermediary is required to certify on a standard form approved by the Minister of Finance that (i) it is an Eligible Investor, and (ii) the Beneficial Owners holding their Notes through it are also Eligible Investors. A Beneficial Owner is also required to certify its eligible status on a standard form approved by the Minister of Finance and to be delivered to the Intermediary. However, none of these certification or reporting requirements apply in respect of Notes held in Euroclear or Clearstream, Luxembourg in their capacity as Participants to the X/N System, provided that Euroclear or Clearstream, Luxembourg must be able to identify each holder for whom they hold notes in an Exempt Account. In accordance with rules and procedures of the X/N System, a Noteholder who is withdrawing Notes from an X-Account may, following payment of interest accrued on such Notes from the last preceding interest payment date, be entitled to claim an indemnity from the Belgian tax authorities of an amount equal to the withholding tax, if any, applied on interest payable on the Notes for the period running from the last preceding interest payment date through the date of withdrawal of the Notes from the X/N System. Definitive Registered Notes Definitive Registered Notes will not be eligible for clearing and settlement through the X/N System. Payments of interest on Definitive Registered Notes will in principle be subject to Belgian withholding tax at the rate of 15%, subject to such relief as may be available under domestic or tax treaty provisions. Payments of interest by or on behalf of Telenet Communications or Telenet Group Holding will be made without deduction of withholding tax in respect of Definitive Registered Notes held by non-residents of Belgium or certain Belgian financial institutions (and assimilated entities) or certain state-linked social security organizations (and institutions assimilated therewith), subject to the following requirements: • interest payments on Definitive Registered Notes are exempt from Belgian interest withholding tax if

made to non-residents of Belgium, provided that such a non-resident investor certifies on each interest payment date in a form delivered to Telenet Communications or Telenet Group Holding, as appropriate, that (i) it was the legal owner, or held the usufructus of the Definitive Registered Notes during the entire interest period to which the interest payment relates, (ii) it is a non-resident for Belgian income tax purposes, (iii) Definitive Registered Notes are not held as part of a taxable business activity in Belgium, and (iv) the Definitive Registered Notes have been registered with Telenet Communications or Telenet Group Holding, as appropriate, in the name of such non-resident investor during the entire interest period to which the interest payment relates;

• interest payments on Definitive Registered Notes are exempt from Belgian interest withholding tax if

made to Belgian financial institutions or assimilated entities within the meaning of article 105, 1° of the Royal Decree of August 27, 1993 implementing ITC 1992, provided that such a financial institution or assimilated entity certifies on each interest payment date in a form delivered to Telenet Communications or Telenet Group Holding, as appropriate, that (i) it was the legal owner, or held the usufructus of the Definitive Registered Notes during the entire interest period to which the interest payment relates, and (ii) the Definitive Registered Notes have been registered with Telenet

140

Communications or Telenet Group Holding, as appropriate, in the name of such investor during the entire interest period to which the interest payment relates; and

• interest payments on Definitive Registered Notes are exempt from Belgian interest withholding tax if

made to state-linked social security organizations and institutions assimilated therewith within the meaning of Article 105, 2° of the Royal Decree of August 27, 1993 implementing ITC1992, provided that such an organization or institution certifies on each interest payment date in a form delivered to Telenet Communications or Telenet Group Holding, as appropriate, that (i) it was the legal owner, or held the usufructus of the Definitive Registered Notes during the entire interest period to which the interest payment relates, and (ii) the Definitive Registered Notes have been registered with Telenet Communications or Telenet Group Holding, as appropriate, in the name of such investor during the entire interest period to which the interest payment relates.

Guarantee Payments A Belgian resident Guarantor making payments under its Guarantee to non-residents of Belgium should be able to make such payment without withholding for or on account of Belgian tax, although this is not free of uncertainty given the limited availability of guidelines from the Belgian tax authorities or case law in this regard. EU Savings Directive Under European Council Directive 2003/48/EC on the taxation of savings income (the “Savings Directive”), Member States will beof the European Union are required to provide to the tax authorities of another Member State details of payments of interest (or similar income) paid by a person within its jurisdiction to an individual resident in that other Member State. However, for a transitional period, Belgium, Luxembourg and Austria are instead required (unless during that period they elect otherwise.) to operate a withholding system in relation to such payments (the ending of such transitional period being dependent upon the conclusion of certain other agreements relating to information exchange with certain other countries). A number of non-EU countries and territories have agreed to adopt similar measures. A paying agent (within the meaning of the Savings Directive) established in Belgium that is required to withhold tax on interest and similar income under the Savings Directive and the Law of May 17, 2004 implementing the Savings Directive, must withhold tax at a rate that is initially 15%, increasing steadily to 20% as from July 1, 2008 and to 35% as from July 1, 2011. Capital Gains Capital gains realized with respect to the Notes are subject to Belgian tax only if the Notes are held as part of a taxable business activity in Belgium. For natural persons residing in Belgium and for Belgian legal entities subject to the Belgian income tax on legal entities (impôt des personnes morales/rechtspersonenbelasting), the pro rata interest included in a capital gain on the Notes is taxable as interest at a rate of 15%. Transfer Taxes A stamp tax may be levied at the rate of 0.07% on the sale and on the purchase of Notes in Belgium, provided that such transactions are carried out through intermediation of a professional intermediary in Belgium. Such tax will be limited to a maximum amount of €500 per taxable transaction and per party. An exemption from this tax is available under Article 126/1, 2° of the Code on Taxes assimilated with Stamp Tax as regards parties to securities trades who are intermediaries within the meaning of Article 2, 9° and 10° of the Law of August 2, 2002 on the supervision of the financial sector and financial services, acting for their own account, insurance undertakings within the meaning of Article 2, §1 of the Law of July 9, 1975 on supervision of insurance companies, provident institutions (voorzorgsinstelling/institution de prévoyance) within the meaning of Article 2, §3, 6° of the Law of July 9, 1975 on supervision of insurance companies, collective investment schemes, or non-residents. A stamp tax may also be levied at the rate of 0.6% on the physical delivery of definitive Notes issued in bearer form in connection with their purchase through intermediation of a professional intermediary in Belgium. An exemption from this tax is available under Article 159 of the Code on Taxes assimilated with Stamp Tax as regards parties to securities trades who are intermediaries within the meaning of Article 2, 9° and 10° of said Law of August 2, 2002. This tax does not apply to the subsequent trading of Notes in book-entry form and to Definitive Registered Notes.

141

US Federal Income Tax Considerations: Note Holders The following discussion summarizes the material US federal income tax consequences for a US holder of purchasing, owning, and disposing of the Notes. You will be a US holder if you are a citizen or resident of the United States, a US domestic corporation, or otherwise subject to US federal income tax on a net income basis in respect of income from the Notes. This summary deals only with US holders that purchase Notes at their issue price as part of the initial distribution and that hold Notes as capital assets. It does not address considerations that may be relevant to you if you are an investor that is subject to special tax rules, such as a bank, thrift, real estate investment trust, regulated investment company, insurance company, dealer in securities or currencies, trader in securities or commodities that elects mark-to-market treatment, person that holds Notes as a hedge against currency risk or as a position in a "straddle" or conversion transaction, tax-exempt organization, or person whose "functional currency" is not the US dollar. The US federal tax treatment of a partner in a partnership generally will depend on the status of the partner and the activities of the partnership. A partner of a partnership holding the Notes should consult its tax advisors. This summary was originally written to support the marketing of the Notes. It was not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding U.S. federal income tax penalties. Investors should consult their own tax advisors in determining the tax consequences to them of investing in the Notes, including the application to their particular situation of the U.S. federal income tax considerations discussed below, as well as the application of state, local, foreign or other tax laws. This summary is based on laws, regulations, rulings, and decisions in effect as of the date hereof, all of which may change. Any change could apply retroactively and could affect the continued validity of this summary. The paragraphs below entitled “Interest on the Senior Notes” and “Purchase Sale and Retirement of the Senior Notes” relate to the Senior Notes only. Senior Discount Noteholders should consult their own tax advisors on these matters. Interest on the Senior Notes Payments or accruals of interest on the Senior Notes will be taxable to you as ordinary interest income from foreign sources at the time that you receive or accrue such amounts (in accordance with your regular method of tax accounting). If you use the cash method of tax accounting, the amount of interest income you will realize will be the US dollar value of the payment in Euro, calculated based on the exchange rate in effect on the date you receive the payment, regardless of whether you convert the payment into US dollars. If you are an accrual-basis US holder, the amount of interest income you will realize will be based on the average exchange rate in effect during the interest accrual period (or, with respect to an interest accrual period that spans two taxable years, during the partial period within the taxable year). Alternatively, as an accrual-basis US holder, you may elect to translate all interest income on the Senior Notes at the spot rate on the last day of the accrual period (or the last day of the taxable year, in the case of an accrual period that spans more than one taxable year) or on the date that you receive the interest payment if that date is within five business days of the end of the accrual period (or taxable year). If you make this election, you must apply it consistently to all debt instruments from year to year and you cannot change the election without the consent of the US Internal Revenue Service ("IRS"). If you use the accrual method of accounting for tax purposes, you will recognize foreign currency gain or loss on the receipt of an interest payment in Euro if the exchange rate in effect on the date the payment is received differs from the rate applicable to a previous accrual of that interest income. This foreign currency gain or loss will be treated as ordinary income or loss, but generally will not be treated as an adjustment to interest income received on the Senior Notes in Euro. Purchase, Sale and Retirement of the Senior Notes Initially, your tax basis in a Senior Note generally will equal the US dollar value of the purchase price for the Senior Note in Euro, calculated at the exchange rate in effect on the date of purchase. If you sell or exchange a Senior Note, or if a Senior Note that you hold is retired, you generally will recognize gain or loss equal to the difference between the amount you realize on the transaction (less any accrued interest, which will be subject to tax in the manner described above under "—Interest on the Senior Notes") and your tax basis in the Senior Note. If you sell a Senior Note for Euro, or receive Euro on the retirement of a Senior Note, the amount you will realize for US tax purposes generally

142

will be the US dollar value of the Euro that you receive, calculated at the exchange rate in effect on the date the Senior Note is sold or retired. Except as discussed below with respect to foreign currency gain or loss, any gain or loss that you recognize on the sale, exchange or retirement of a Senior Note generally will be capital gain or loss, and will be long-term capital gain or loss if you have held the Senior Note for more than one year on the date of disposition. Net long-term capital gain recognized by an individual US holder generally will be subject to taxation at a reduced rate. The ability of US holders to offset capital losses against ordinary income is limited. Despite the foregoing, gain or loss that you recognize on the sale, exchange or retirement of a Senior Note generally will be treated as ordinary income or loss to the extent that the gain or loss is attributable to changes in exchange rates during the period in which you held the Senior Note. This foreign currency gain or loss will not be treated as an adjustment to interest income that you receive on the Senior Note. US Information Reporting and Backup Withholding Rules Payments in respect of the Notes that are made within the United States or through certain US-related financial intermediaries are subject to information reporting and may be subject to backup withholding unless you (i) are a corporation or other exempt recipient or (ii) provide a taxpayer identification number and certify that no loss of exemption from backup withholding has occurred. Holders that are not US persons generally are not subject to information reporting or backup withholding; however, such holders may be required to provide a certification to establish their non-US status in connection with payments received within the United States or from certain US-related payors. Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against a holder's US federal income tax liability. A holder may obtain a refund of any excess amounts withheld 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. Belgian Tax Considerations: Shareholders Belgian Income Tax Considerations The following is a summary of the principal Belgian tax consequences for investors in our Shares, purchasing, disposing of and receiving dividends on the Shares. This summary is based on our understanding of tax laws as in effect in Belgium as of the date of this annual report and is subject to subsequent changes in Belgian law, including changes that could have a retroactive effect. It does not purport to address all material tax consequences in connection with an investment in the Shares. Except as otherwise indicated, this summary only addresses the position of investors who hold the Shares as capital assets and does not discuss the tax consequences for investors who are subject to specific regulation, such as banks, insurance undertakings, collective investment schemes, dealers in securities or currencies, persons who hold Shares as a position in a straddle, share repurchase transactions, conversion transactions, or synthetic security or other integrated financial transactions. This summary does not address local taxes that may be due in connection with an investment in the Shares. Non-resident investors in our Shares should consult their professional advisors on the possible tax consequences of purchasing, holding or disposing of the Shares under the laws of their countries of citizenship, residence, ordinary residence or domicile. For purposes of this summary, a resident investor is (i) an individual subject to Belgian personal income tax (personenbelasting / impôt des personnes physiques), i.e., an individual having his domicile or seat of wealth in Belgium or assimilated individuals (for purposes of Belgian tax law) (ii) a company subject to Belgian corporate income tax (vennootschapsbelasting / impôt des sociétés), i.e., a company having its registered seat, principal establishment or effective place of management in Belgium; or (iii) a legal entity subject to the Belgian legal entities tax (rechtspersonenbelasting / impôt des personnes morales), i.e., an entity other than a company subject to corporate income tax having its registered seat, principal establishment or effective place of management in Belgium. A non-resident is a person that is not a resident investor.

143

Direct Income Taxes Dividends Dividends distributed on Shares are, as a rule, subject to Belgian withholding tax at a rate of 25% upon payment or attribution, subject to such relief as may be available under applicable domestic or tax treaty provisions. Dividends include all benefits paid on or otherwise attributed to the Shares, irrespective of their form and the way they are distributed, as well as repayments of statutory capital except repayments of fiscal capital made in accordance with the Belgian Company Code. Fiscal capital generally includes stated capital and paid-up share premiums. The 25% dividend withholding tax rate may be reduced to 15% with respect to dividends distributed on shares issued in a public offering after January 1, 1994. VVPR Strips are issued with eligible shares and represent the right of the holder to receive dividends on the shares subject to the reduced withholding tax rate of 15%. See "—VVPR Strips." Redemption and liquidation bonuses distributed on shares are, in principle, subject to Belgian withholding tax at a rate of 10% at the time of payment or other attribution, subject to such relief as may be available under applicable domestic or tax treaty provisions. Such withholding tax is calculated on the excess of the distribution over the fiscal capital (as defined above). Redemptions of shares traded through Euronext or any other similar stock exchange market will not trigger withholding taxes. Resident private investors. For resident private investors holding the Shares as a private investment, the Belgian dividend withholding tax is a final tax, and dividends need not be reported in the investor's personal income tax return. If such investors opt to report the dividends in their personal income tax returns, the dividends will, in principle, be taxable at the flat rate of 25% (or 15% if the reduced withholding tax rate described above applies), plus local taxes (which vary, as a rule, from 0% to 10% of the investor's income tax liability). If this tax liability exceeds the tax that would otherwise be due if the dividends and other reported income were subject to the ordinary progressive income tax rates (plus local tax) the latter rates would apply instead. In either case, the Belgian withholding tax paid can be credited against the final income tax liability of such resident investor. The withholding tax may also be refunded to the extent that it exceeds the final income tax liability of the investor. To qualify for this credit and possible refunds the dividend distribution must not entail a reduction in value of, or capital loss on, the Shares. The reduction in value/capital loss restriction is not applicable if the investor shows that he had full ownership of the Shares during an uninterrupted period of twelve months prior to the attribution of the dividends. For resident private investors whose Shares are connected with their business, dividends must be reported in the investor's personal income tax return and are taxable at the ordinary progressive income tax rates, which currently range from 25% to 50%, plus local taxes (which vary, as a rule, from 0% to 10% of the investor's income tax liability). The Belgian withholding tax paid can be credited against the final income tax liability of such investor and can be refunded to the extent it exceeds the investor's final income tax liability. To qualify for this credit and possible refund, the investor must have full ownership of the Shares at the date the dividend is paid or otherwise attributed to the Shares and the dividend distribution must not entail a reduction in value of, or capital loss on, the Shares. The reduction in value/capital loss restriction is not applicable if the investor shows that he had full ownership of the Shares during an uninterrupted period of twelve months prior to the attribution of the dividends. Resident companies. For resident companies, dividends distributed on Shares will, in principle, be subject to corporate income tax at the rate of 33%, plus a 3% crisis surcharge, i.e., 33.99%, unless the progressive corporate income tax rates apply. Resident companies may be able to deduct 95% of the dividends received from their taxable income if the dividends qualify for the so-called "dividends received deduction" (definitief belaste inkomsten / revenus définitivement taxés). For the dividends received deduction to apply, shares held by a Belgian resident company must, upon payment or attribution of the dividends, (i) be equal to at least 10% of our share capital or have an acquisition value of at least €1,200,000, (ii) qualify as fixed financial assets under Belgian GAAP and (iii) have been or will be held in full ownership during an uninterrupted period of at least one year. Irrespective of whether these conditions are met, the dividends received deduction applies to all dividends received by investment companies as defined in Article 2, 5º, f) of the Belgian Income Tax Code of 1992 ("ITC 92"). The requirement that the investor

144

own a certain amount of our shares does not apply to dividends received by credit institutions referenced in Article 56, §1 of ITC 92, by insurance companies referenced in Article 56, §2, 2º, h) of ITC 92, or by broker dealers referenced in Article 47 of the Law of April 6, 1995. The Belgian withholding tax paid can be credited against the final corporate income tax liability of the equity investor, provided that he has full ownership of the Shares at the date the dividend is paid or otherwise attributed to the Shares, and the dividend distribution does not entail a reduction in value of, or capital loss on, the Shares. The reduction in value/capital loss restriction is not applicable if the equity investor shows that he had full ownership of the Shares during an uninterrupted period of twelve months prior to the attribution of the dividends, or that, during that period, the Shares never belonged to a taxpayer who was not a resident company or who was not a non-resident company having attributed the Shares in an uninterrupted manner to a Belgian establishment. Dividends distributed to resident companies will be exempt from Belgian withholding tax provided that the Shares held by the resident company at the time the dividends are attributed to the Shares equal at least 20% of our share capital and are held for an uninterrupted period of at least one year. In order to benefit from this exemption, the equity investor must provide us with a certificate confirming its resident status and the fact that it satisfies the two required conditions. If the investor holds the Shares for less than one year at the time the dividends are attributed to the Shares, we will deduct the withholding tax but will not transfer it to the Belgian Treasury provided that the investor certifies its resident status, the date from which the equity investor has held the shareholding, and the investor's commitment to hold the Shares for an uninterrupted period of at least one year. The equity investor must also inform us if the one-year period has expired or if its shareholding will drop below 20% of our share capital before one year will have lapsed. Upon satisfying the one-year shareholding requirement, the deducted withholding tax will be refunded to the equity investor. The 20% minimum participation requirement will be reduced to 15% for dividends paid on or attributed to Shares from January 1, 2007 and to 10% for dividends paid on or attributed to Shares from January 1, 2009. Resident legal entities. For resident legal entities, the Belgian withholding tax is a final tax. Non-residents. For non-resident individuals holding the Shares as a private investment and non-resident legal entities not holding the Shares through a permanent establishment or a fixed base in Belgium, the Belgian dividend withholding tax is a final tax, subject to such relief as may be available under applicable tax treaty provisions (see below). For non-residents whose Shares are connected with a fixed base or a permanent establishment in Belgium, dividends received must be reported in the equity investor's non-resident income tax return and are subject to the non-resident individual or corporate income tax, as appropriate (see above). The Belgian withholding tax can be credited against the final non-resident income tax liability of such investor, and can be refunded to the extent it exceeds the equity investor's final income tax liability. To qualify for this credit and possible refund the investor must have full ownership of the Shares and the dividend distribution must not entail a reduction in value of, or capital loss on, the Shares. The capital loss/reduction in value restriction is not applicable (i) if the non-resident individual or non-resident company shows that such equity investor had full ownership of the Shares for an uninterrupted period of twelve months prior to the attribution of the dividends or (ii) if the non-resident company shows that, during that period, the Shares never belonged to a taxpayer who was not a resident company or who was not a non-resident company having attributed the Shares in an uninterrupted manner to a Belgian establishment. Non-resident companies may be able to deduct 95% of the dividends received from their taxable income if the dividends qualify for the so-called "dividends received deduction" (definitief belaste inkomsten / revenus définitivement taxés). For the dividends received deduction to apply, shares held by a non-resident company must, upon payment or attribution of the dividends, (i) amount to at least 10% of our share capital or have an acquisition value of at least €1,200,000, (ii) qualify as fixed financial assets under Belgian GAAP and (iii) have been or will be held in full ownership during an uninterrupted period of at least one year. Dividends distributed to non-resident companies established in a Member State of the EU and qualifying under the EU Parent Subsidiary Directive of July 23, 1990 (90/435/EEC) as amended by Directive 2003/123/EC of December 22, 2003, will be exempt from Belgian withholding tax provided that the Shares held by the non-resident company, upon attribution of the dividends, amount to at least 20% of our share capital and are held during an uninterrupted period of at least one year. In order to benefit from this exemption, the equity investor must provide us with a certificate confirming its qualifying status and the fact that it meets the two required conditions. If the equity investor holds the Shares for less than one year, at the time the dividends are attributed to the Shares, we will deduct

145

the withholding tax but will not transfer it to the Belgian Treasury provided that the equity investor certifies its qualifying status, the date from which the equity investor has held the shareholding, and the equity investor's commitment to hold the Shares for an uninterrupted period of at least one year. The investor must also inform us if the one-year period has expired or if its shareholding will drop below 20% of our share capital before one year will have lapsed. Upon satisfying the one-year shareholding requirement, the deducted withholding tax will be refunded to the investor. The 20% minimum participation requirement will be reduced to 15% for dividends paid on or attributed to Shares from January 1, 2007 and to 10% for dividends paid on or attributed to Shares from January 1, 2009. Dividends distributed to non-resident equity investors who are not engaged in a trade or business or any other profit making activity and who are exempt from income taxes in their country of residence, will be exempt from Belgian withholding tax provided that such non-resident investor is not required by contract to transfer the dividends it receives to any ultimate beneficiaries. In order to benefit from this exemption, the equity investor must provide us with a certificate confirming its qualifying status and confirming its full ownership of or usufruct over the Shares. The Belgian dividend withholding tax is subject to such relief as may be available under applicable tax treaty provisions. Belgium has entered into tax treaties with approximately 70 countries. These tax treaties generally reduce the Belgian dividend withholding tax rate to 15%, 10% or 5% for residents of those countries, depending on the size of their shareholding and certain certification requirements. Such reduction may be obtained either directly at source or through a refund of the taxes withheld in excess of the applicable tax treaty rate, both subject to the timely filing of a Form 276 Div.-Aut. with the Belgian tax authorities. Such Form may be obtained from the Centraal Taxatiekantoor Brussel Buitenland / Bureau Central de Taxation Bruxelles Etranger, North Galaxy, 33 Boulevard du Roi Albert II, bte 2, B-1030 Brussels. Under the ordinary refund procedure, we will withhold the Belgian dividend withholding tax at a rate of 25%, possibly reduced to 15% (see above), and the equity investor should make a claim for refund of the taxes withheld in excess of the applicable tax treaty rate. The investor should duly complete and sign Form 276 Div.-Aut. in duplicate and send it to the tax authorities of his state of residence with the request to return one copy properly stamped. The equity investor may then send this copy within 3 years from January 1 of the year following the year of payment or attribution of the dividends to the Centraal Taxatiekantoor Brussel Buitenland / Bureau Central de Taxation Bruxelles Etranger at the address referenced above, with proper documentation that the dividend has been cashed. The reduction of the Belgian dividend withholding tax may be obtained directly at source by treaty beneficiaries holding registered Shares or holding a significant shareholding of bearer Shares. Such equity investor should send us the duly completed Form 276 Div.-Aut., properly stamped by the tax authorities of his state of residence, and the relevant coupons attached to the bearer Shares, within 10 days following the payment or attribution of the dividends. We will review and complete such Form if necessary and will file it, together with the withholding tax return, with the Belgian tax authorities. Equity investors should consult their professional advisors to determine whether they qualify for a reduced dividend withholding tax rate under the applicable tax treaty and, if so, which procedural requirements must be met in order to obtain a reduction. Capital Gains and Losses Resident private equity investors. For resident private equity investors holding the Shares as a private investment, capital gains realized with respect to the Shares should not be subject to income tax. Conversely, capital losses incurred on the Shares are not tax deductible. If, however, a resident private equity investor's capital gains arise from transactions going beyond the daily course of management of private property, the equity investors will be subject to income tax at a rate of 33% (plus local taxes). Capital losses arising from such transactions and incurred during the five previous fiscal years are deductible against the taxable income received from similar transactions. Capital gains realized upon direct or indirect transfer of the Shares to a non-resident company by a resident private equity investor, who holds directly or indirectly more than 25% of the Shares during the five year period preceding the transfer (a "substantial shareholding") will be subject to income taxes at a rate of 16.5% (plus local taxes). This rate applies to transfers of substantial shareholdings by resident private equity investors who hold their Shares in their own capacity or together with their spouse or other relatives. On June 8, 2004, the European Court of

146

Justice ruled that this Belgian tax law provision is incompatible with the free movement of capital and the freedom of establishment set forth in the EC treaty. Although the Belgian legislator has not yet indicated how it will amend this Belgian tax law provision in order to make it compatible with the EC treaty, the Belgian tax authorities have recently stated that they will follow the ECJ ruling. For resident private equity investors whose Shares are connected with their business, capital gains realized on the Shares are taxable at the ordinary progressive income tax rates, which are currently in the range of 25% to 50%, plus local taxes. Capital gains realized on the Shares acquired more than five years prior to their disposal are taxable at a rate of 16.5% (plus local taxes). Capital losses incurred by such investors are tax deductible. Resident companies. For resident companies, capital gains realized with respect to the Shares will in principle be tax exempt. Capital losses incurred by such investors are not tax deductible with the exception of capital losses incurred as a result of the liquidation of Telenet Group Holding to the extent of the loss of fiscal capital represented by the Shares. Resident legal entities. For resident legal entities, capital gains realized with respect to the Shares are in principle not subject to income tax. Capital gains realized upon the transfer of a substantial shareholding may be subject to income taxes at a rate of 16.5%. See "—Resident private investors." Capital losses incurred by such investors are not tax deductible. Non-residents. For non-resident individuals holding Shares as a private investment and non-resident legal entities not holding the Shares through a permanent establishment or a fixed base in Belgium, capital gains realized with respect to the Shares should not be subject to income tax. If, however, the capital gains arise from transactions going beyond the daily course of management of private property, such investors will be subject to a final professional withholding tax at a rate of 30.28%, subject to such relief as may be available under applicable tax treaty provisions. Capital gains realized upon the transfer of a substantial shareholding will be subject to income tax at a rate of 16.5%, subject to such relief as may be available under applicable tax treaty provisions. See "—Resident Private Investors." For non-resident individuals whose Shares are connected with a fixed base in Belgium, capital gains realized with respect to the Shares are subject to the non-resident individual income tax, subject to such relief as may be available under applicable tax treaty provisions. For non-resident companies whose Shares are connected with a permanent establishment in Belgium, capital gains realized with respect to the Shares will in principle be tax exempt. Tax Reduction with Respect to the Investment in Shares—Monory-bis Law A tax reduction is available for our Belgian resident employees or Belgian resident employees of qualifying subsidiaries if they purchase the Shares on the primary market. Cash payments up to a maximum amount of €640 qualify for the reduction. The tax reduction is limited to Belgian resident employees who are, at the time they subscribe for the Shares, working for us or qualifying subsidiaries under an employment contract and who receive salary as described in Articles 30, 1º and 31 of ITC 92. Accordingly, directors, even if they work under an employment contract, are not eligible for this tax reduction. Qualifying subsidiaries are subsidiaries which we are irrefutably deemed to control. We control a subsidiary if we possess (i) the majority of voting rights in such subsidiary, either as a result of shareholding or pursuant to an agreement; (ii) the right to appoint and remove the majority of the members of the board of directors of such subsidiary; (iii) the authority to control the subsidiary, by virtue of the subsidiary's Articles of Association or a contract concluded with such subsidiary; or (iv) joint control of such subsidiary. An employee must claim this tax reduction in the employee's income tax return. This tax reduction cannot be cumulatively claimed with the tax reduction for pension savings. In order to benefit from this tax reduction, the employee must show that the Shares were acquired and held through the end of the applicable fiscal year. The Shares must be held by the employee for five successive fiscal years.

147

Indirect Taxes Transfer Taxes A stamp tax may be levied at the rate of 0.17% on the sale and purchase of Secondary Shares on the secondary market in Belgium if the transaction is carried out through a professional intermediary established in Belgium. Such tax will, however, be limited to a maximum amount of €500 per taxable transaction and per party. An exemption from this tax is available under Article 126/1, 2º of the Code on Taxes assimilated with Stamp Tax for parties to securities trades who are intermediaries within the meaning of Article 2, 9º and 10º of the Law of August 2, 2002 on the supervision of the financial sector and financial services who are acting for their own account; insurance undertakings within the meaning of Article 2, §1 of the Law of July 9, 1975 on supervision of insurance companies; provident institutions (voorzorgsinstelling / institution de prévoyance) within the meaning of Article 2, §3, 6º of the Law of July 9, 1975 on supervision of insurance companies; collective investment schemes; or non-residents. A stamp tax may also be levied at the rate of 0.6% on the physical delivery of bearer Shares acquired on the secondary market in connection with their purchase through a professional intermediary in Belgium. An exemption from this tax is available under Article 159 of the Code on Taxes assimilated with Stamp Tax for parties to securities trades who are intermediaries within the meaning of Article 2, 9º and 10º of said Law of August 2 2002. This tax also applies to the physical delivery of bearer Shares in connection with the conversion of registered Shares into bearer Shares or with the withdrawal of Shares from open custody (open bewaargeving / depôt à découvert). VVPR Strips The Shares offered in the primary offer of our IPO met the conditions pursuant to which shares are eligible for the reduced withholding tax rate of 15% under the Verminderde Voorheffing / Précompte Réduit regime, and were issued with VVPR Strips. Coupons representing the right of the holder to receive dividends on the Shares subject to the ordinary withholding tax rate of 25% are attached to each Share issued in the primary offering of our IPO. In addition, each of these Shares has a second coupon representing the right of the holder to receive dividends on the Shares subject to the reduced withholding tax rate of 15%. The second coupon must bear the same number as that of the ordinary coupon and must bear the legend "Strip-VV" / "Strip-PR". The VVPR Strips are listed on Eurolist by Euronext Brussels and trade separately. The reduced withholding tax rate of 15% can be obtained by presenting us both coupons with the same number. Capital Gains and Losses Resident private equity investors. For resident private investors holding the VVPR Strips as a private investment, capital gains realized with respect to the VVPR Strips should not be subject to income tax. Conversely, capital losses incurred on the VVPR Strips are not tax deductible. If, however, a resident private investor's capital gains arise from transactions going beyond the daily course of management of private property, the investors will be subject to income tax at a rate of 33% (plus local taxes). Capital losses arising from such transactions and incurred during the five previous fiscal years are deductible against the taxable income received from similar transactions. Resident companies. For resident companies, capital gains realized with respect to the VVPR strips will be taxable at the ordinary corporate income tax rate. Capital losses incurred by such investors should be tax deductible. Resident legal entities. For resident legal entities, capital gains realized with respect to the VVPR Strips should in principle not be subject to income tax. Non-residents. For non-resident individuals holding the VVPR Strips as a private investment and non-resident legal entities not holding the VVPR Strips through a permanent establishment or a fixed base in Belgium, capital gains realized with respect to the VVPR Strips should not be subject to income tax. If, however, the capital gains arise from transactions going beyond the daily course of management of private property, such investors will be subject to a final professional withholding tax at a rate of 30.28%, subject to such relief as may be available under applicable tax treaty provisions.

148

For non-resident individuals whose VVPR Strips are connected with a fixed base in Belgium, capital gains realized with respect to the VVPR Strips are subject to the non-resident individual income tax, subject to such relief as may be available under applicable tax treaty provisions. For non-resident companies whose VVPR Strips are connected with a permanent establishment in Belgium, capital gains realized with respect to the VVPR Strips are subject to the non-resident corporate income tax, subject to such relief as may be available under applicable tax treaty provisions. Bearer Shares According to the law of December 14, 2005 with respect to the abolition of bearer securities, all bearer securities must be converted into dematerialized or registered securities. From January 1, 2008, no new bearer securities may be issued or physically delivered. Securities issued prior to the publication of the proposed law and listed on a stock exchange will be converted by law into dematerialized or registered securities as from January 1, 2008. Certain US Federal Income Tax Considerations: Shareholders This section is a summary, under current law, of certain US federal income tax considerations relevant to an investment by a US shareholder in the Shares and, where applicable, the VVPR Strips. This summary applies to prospective purchasers only if they are eligible for benefits as a US resident under the current income tax convention between the United States and Belgium (the "Treaty") in respect of their investment in the Shares ("US shareholders"). In general, a shareholder will be eligible for such benefits if the shareholder:

(i) is: • an individual US citizen or resident; • a US corporation; or • a partnership, estate, or trust to the extent the shareholder's income is subject to taxation in the United

States as the income of a resident, either in the shareholder's hands or in the hands of the shareholder's partners or beneficiaries;

(ii) is not also a resident of Belgium for Belgian tax purposes; (iii) is the beneficial owner of the Shares (and the dividends paid with respect thereto); (iv) holds the Shares as a capital asset for tax purposes; (v) does not hold the Shares in connection with the conduct of business through a permanent establishment,

or the performance of personal services through a fixed base, in Belgium; and (vi) is not subject to an anti-treaty shopping provision in the Treaty that applies in limited circumstances.

This summary does not purport to be a comprehensive description of all of the tax considerations that may be relevant to any particular investor, and does not address the tax treatment of investors who are subject to special rules. It is based upon the assumption that prospective shareholders are familiar with the tax rules applicable to investments in securities generally and with any special rules to which they may be subject. Prospective purchasers should consult their own tax advisors concerning the US federal, state, local and other national tax consequences of purchasing, owning and disposing of the Shares in light of their particular circumstances. Taxation of Dividends US shareholders must include the gross amount of cash dividends paid on the Shares, without reduction for Belgian withholding tax, in ordinary income on the date that they receive them, translating dividends paid in euro into US dollars using the exchange rate in effect on the date of receipt.

149

Subject to certain exceptions for short-term and hedged positions, the US dollar amount of dividends received by a non-corporate US shareholder with respect to the Shares before January 1, 2009 will be subject to taxation at a maximum rate of 15% if the dividends are "qualified dividends." Dividends received with respect to the Shares will be qualified dividends if Telenet Group Holding was not, in the year prior to the year in which the dividend was paid, and is not, in the year in which the dividend is paid, a passive foreign investment company ("PFIC"). Based on Telenet Group Holding's audited financial statements and relevant market and shareholder data, Telenet Group Holding believes that it was not a PFIC for US federal income tax purposes with respect to its 2005 taxable year. In addition, based on its audited financial statements and its current expectations regarding the value and nature of its assets, the sources and nature of its income, and relevant market and shareholder data, Telenet Group Holding does not anticipate becoming a PFIC for its 2006 taxable year. Belgian tax withheld from dividends will be treated, up to the 15% rate provided under the Treaty, as a foreign income tax that, subject to generally applicable limitations under US tax law, including limitations that generally are applicable in the case of qualified dividends, is eligible for credit against the US federal income tax liability of US shareholders or, if they have elected to deduct such taxes, may be deducted in computing taxable income. Taxation of Capital Gains Dispositions by US shareholders of Shares or VVPR Strips generally will give rise to capital gain or loss equal to the difference between the US dollar value of the amount realized on the disposition (using the exchange rate in effect on the date of the disposition) and the US shareholder's US dollar basis in the Shares or the VVPR Strips, as the case may be. Any such capital gain or loss will be long-term capital gain or loss, subject to taxation at reduced rates for non-corporate taxpayers, if the Shares or the VVPR Strips, as the case may be, were held for more than one year. US shareholders that do not receive VVPR Strips in the Offering generally will have a tax basis in the Shares equal to their purchase price. Although not entirely free from doubt, US shareholders that receive VVPR Strips in the Offering should allocate their purchase price (determined in US dollars) between the Shares and the VVPR Strips, based on their fair market value as of the date of the purchase, for purposes of determining their basis in the Shares and VVPR Strips for US federal income tax purposes. Taxation of Foreign Currency Gains Fluctuations in the dollar-euro exchange rate between the date that US shareholders receive a dividend and the date that they receive a related refund of Belgian withholding tax may give rise to foreign currency gain or loss, which generally is treated as ordinary income or loss for US tax purposes. F. Dividends and paying agents Not applicable. G. Statement by experts Not applicable. H. Documents on display Not applicable. I. Subsidiary information Not applicable. Item 11. Quantitative and qualitative disclosures about market risk We are exposed to market risks relating to fluctuations in interest rates and foreign exchange rates, primarily as between the US dollar and Euro, and use financial instruments to manage our exposure to interest rate and foreign exchange rate fluctuations.

150

Interest Rate and Related Risk Historically, and following the Refinancing, only borrowings under the Senior Credit Facility and the lease of the building bear interest at variable rates. We are therefore exposed to changes in interest rates because the Senior Credit Facility represents a large portion of our total borrowings and our debt service obligations under such indebtedness fluctuate as interest rates change. In order to mitigate this exposure, we have entered into interest rate swap agreements, caps and interest rate collars. Pursuant to interest rate swap agreements, at specified intervals, we pay a fixed interest rate and receive a variable interest rate calculated by reference to an agreed-upon notional principal amount. Our hedging strategy was based on a close to 100% coverage of the anticipated outstanding senior bank debt in the period 2002-2005. As a result of lower than anticipated cash flow needs, the restructuring of the Senior Credit Facility in April 2003 and finally net reductions of the senior debt in December 2003, March 2004 and March 2005, the total notional amount of interest derivative instruments effective December 31, 2005 were €6 million lower than the amount of debt carrying variable interest (compared to an excess hedging amount of €352 million on December 31, 2004). As of December 31, 2005, we had entered into interest rate swap agreements for a notional principal amount of €180.8 million, of which €130.8 were effective, and we paid fixed interest on the Senior Credit Facility at a blended rate of 2.93% (plus the appropriate margin for each tranche), resulting in additional cash interest expense given the fact that such rate was in excess of the variable rate applicable to the respective borrowings. Caps are used to limit our exposure to interest rates rising above a capped rate. As of December 31, 2005, we had entered into cap agreements for a notional principal amount of €48.3 million and an average cap interest rate of 4.0%. As of December 31, 2005, we have entered into interest rate collar agreements for a notional principal amount of €450 million and will pay interest rates ranging from 2.5% to 5.5%, of which the majority replace the previously outstanding best of swap and cap combination. We have revised our hedging policy and have qualified for hedge accounting in accordance with EU GAAP as from the beginning of July 2004. Interest Rate Sensitivity Testing The following table summarises our outstanding indebtedness which carries a floating rate of interest, as well as the aggregate installments due under such indebtedness, including the impact of the recent amendments to our Senior Credit Facility, as of December 31, 2005:

Expected Maturity Date (Amounts expressed in thousands of euro) Debt Reimbursements 2006 2007 2008 2009 Thereafter Total Senior Credit Facility.....................................................

Tranche A/B (Euribor +2.00%)................................ 5,865 44,815 44,815 44,815 89,690 230,000Tranche C - - - - - -Tranche D (Euribor +2.00%) ................................... - - - - - -Tranche E (Euribor +2.50%).................................... - - - - 405,000 405,000

Capital Lease Buildings (Euribor + 0.25%).................. 808 1,092 1,463

1,965 14,499 19,827Clientele Fee Obligations 1,530 1,711 1,913 2,139 35,085 42,378Annuity Fee Obligations 4,947 5,187 5,426 5,519 32,745 53,824Total Reimbursements on Floating Rate Debt .. 13,150 52,805 53,617 54,438 577,019 751,029 Interest payments (1) (2) Senior Credit Facility..................................................... 36,241 34,908 32,444 29,482 52,082 185,159 Interest Payment Sensitivity Interest rate increase of 0.25% ...................................... 37,490 36,128 33,605 30,612 54,030 191,867Interest rate increase of 1.00% ...................................... 41,349 39,896 37,178 34,093 59,911 212,428______________________ (1) Interest payments on the Senior Credit Facility are based on outstanding balances as of December 31, 2005 and do not

take into account any possible effects of the margin ratchet provisions that are included in the Tranche A and Tranche B Margin. See Item 10, “Additional information – Material Contracts – Senior Credit Facility”.

151

(2) Pro forma interest calculations are based on a 2.797% three month Euribor as of March 31, 2006, and include net

payments due under the outstanding interest rate derivative instruments as of that date. Taking into the account the effects of our interest rate hedges, we have calculated the impact of interest rate increases of 0.25% and 1.00%. The equivalent total net cashflow impact is €6.7 million in the 0.25% interest rate increase example and €27.3 million in the 1.00% interest rate increase example, in both cases over the remaining lifetime of the Senior Credit Facility. For 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. At December 31, 2005, we had outstanding fixed rate debt and other obligations of €721.0 million. Foreign Currency Risk Our functional currency is the Euro. However, we conduct, and will continue to conduct, transactions in currencies other than the Euro, particularly the US dollar. Less than 5% of our costs of operations (primarily the costs of network hardware equipment and software, premium cable television rights, management expenses under our strategic services agreement with Cable Partners) for the year ended December 31, 2004 were denominated in US dollars, while all of our revenues were generated in Euros. The strategic services agreement with Cable Partners was terminated in May 2005. Following the Canal+ Acquisition, we also have significant US dollar obligations with respect to the contracts we are party to for the supply of premium content. Decreases in the value of the Euro relative to the US dollar would increase the cost in Euro of our US dollar denominated costs and expenses, while increases in the value of the Euro relative to the US dollar would have the reverse effect. As at December 31, 2005, the Euro had depreciated approximately 12.5% against the US dollar since December 31, 2004. We have historically covered a portion of our US dollar cash outflows arising on anticipated and committed purchases through the use of foreign exchange derivative instruments. Although we take steps to protect ourselves against the volatility of currency exchange rates, there is a residual risk that currency risks due to volatility in exchange rates could have a material adverse effect on our financial condition and results of operations. In order to hedge the foreign exchange exposure resulting from the issuance of the $558 million Senior Discount Notes by Telenet Group Holding, we entered into a series of foreign exchange forward contracts (FECs) (for the purchase of US dollars in exchange for Euros) for a total nominal amount of $558 million with a maturity at the end of accretion period of the Senior Discount Notes on December 15, 2008 (the "Full Accretion Date"). These FECs were dealt with an effective date close to the issuance of the Senior Discount Notes. The underlying rationale of our hedging strategy is that the maximum accreted nominal amount is hedged given that our functional currency is the Euro. Following the partial redemptions of our Senior Discount Notes on November 22, 2005 and November 23, 2005 for a total of $195,300,000 in fully accreted value, we unwound forward exchange contracts for an equivalent amount. Beginning in 2009, Telenet Group Holding will be required to make cash interest payments in US dollars on the Senior Discount Notes. We have hedged our initial exposure in respect of the accreted principal amount of the Senior Discount Notes up to and as at the fifth anniversary of their issuance and intend to review at a later stage our hedging strategy with respect to cash interest and principal payments payable under the Senior Discount Notes after such date. During the last quarter of 2005, we entered into foreign exchange contracts which cover a significant portion of our US dollar obligations in respect of our agreements for the supply of content for our premium cable television service. Our policy is to enter into such foreign exchange hedging arrangements for periods of up to 18 months at any one time, and as we approach the expiration of each foreign exchange contract, we will review our hedging strategy with respect to future US dollar obligations relating to our premium content agreements. As a consequence of the 100% cash flow hedge on the remaining outstanding principal of the $558 million Senior Discount Notes, we do not have exposure to changes in the US dollar/Euro exchange rate relating to these notes until December 15, 2008. We are considering the further use of derivate instruments to hedge the US dollar

152

cash outflow related to the cash interest payments under the Senior Discount Notes which are payable from June 15, 2009 until the maturity of the Senior Discount Notes. Credit Risk Credit risk relates to the risk of loss that we would incur as a result of non-performance by counterparties. We maintains credit risk policies with regard to its counterparties to minimize overall credit risk. These policies include an evaluation of a potential counterparty's financial condition, credit rating, and other credit criteria and risk mitigation tools as deemed appropriate. The largest share of the gross assets subject to credit risk is accounts receivable from residential and small commercial customers. The risk of material loss from nonperformance from these customers is not considered likely. Reserves for uncollectable accounts receivable are provided for the potential loss from non-payment by these customers based on historical experience. In regards to credit risk on financial instruments, we maintain a policy of entering into such transactions only with highly rated European and US financial institutions. Item 12. Description of securities other than equity securities Not applicable.

153

Part II Item 13. Defaults, Dividends Arrearages and Delinquencies Not applicable. Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds Not applicable. Item 15. Controls and Procedures None of our securities are registered under the US Securities Exchange Act of 1934, as amended, and we are not required to file periodic reports with the US Securities and Exchange Commission, pursuant to that Act. Accordingly, we are not subject to the provisions of the US Sarbanes-Oxley Act of 2002 or the rules promulgated thereunder, and hence were not required by Section 404 of the Sarbanes-Oxley Act to carry out an evaluation by December 31, 2004 of the effectiveness of the design and operation of our disclosure controls and procedures. In the normal course, our management remains focused on continually improving our general controls and procedures. On January 1, 2006, we adopted the Lippens Code of conduct as used by other Belgian companies and report on our compliance with the Lippens Code in our annual report to shareholders. Item 16A. Audit committee financial expert

Our board of directors and audit committee have not appointed an “audit committee financial expert” within the meaning of Item 16A. Item 16B. Code of Ethics We do not have a code of ethics. However, all employees are required to sign a code of conduct as part of the employment contract, which provides guidelines on business conduct. Item 16C. Principal Accountant Fees and Services

We paid the following fees for professional services to our independent auditors, for the years ended December 31, 2004 and 2005: (Euro millions) Year ended

December 31, 2004

Year ended December 31,

2005 Audit services...................................................................................... Audit related services .......................................................................... Tax services......................................................................................... Other (IPO)..........................................................................................

0.4 0.1 0.3 -

0.5 0.1 0.4 0.7

Total.................................................................................................... 0.8 1.6 The fees of our independent auditors were significantly higher in the year ended December 31, 2005 compared to the prior year primarily as a result of the additional work involved with the preparation for our IPO and the transition from US GAAP to EU GAAP accounting standards.

Audit Services are defined as the standard audit work that needs to be performed each year in order to issue an opinion on the consolidated financial statements of the Group and to issue reports on the local statutory financial statements. It also includes services that can only be provided by the auditor such as auditing of non-recurring transactions and application of new accounting policies, audits of significant and newly implemented system controls, pre-issuance reviews of quarterly financial results, consents and comfort letters and any other audit services required for US Securities and Exchange Commission or other regulatory filings.

Audit Related Services include those other assurance services provided by auditors but not restricted to those that can only be provided by the auditor signing the audit report. They comprise amounts for services such as

154

acquisition due diligence, audits of pension and benefit plans, contractual audits of third party arrangements and consultation regarding new accounting pronouncements.

Tax Services represent tax compliance and other services related to tax matters. We currently do not have a formal pre-approval process for work carried out by our auditor. However, quotations for work to be executed are nevertheless presented to the audit committee in advance in order that any questions arising from such quotations may be properly addressed. Item 16D. Exemptions from the Listing Standards for Audit Committees Not applicable. Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers Not applicable.

155

Part III Item 17. Financial Statements Not applicable. Item 18. Financial Statements See F-pages. Item 19. Exhibits 1.1 Articles of Association and bylaws, or comparable instruments, for Telenet Group Holding. 1.2 Item 10.C contains summaries of the terms of the 11.5% Senior Discount Notes due 2014 and the 9% Senior

Notes due 2013. Copies of the indentures for each of the Senior Discount Notes and the Senior Notes can be viewed at the offices of The Bank of New York (Luxembourg) SA, the Luxembourg listing agent for the notes, whose address is Aerogolf Centre, 1A Hoehenhof, L-1736 Sonningerberg, Luxembourg.

Item 10.C also contains a summary of the general terms of the Senior Credit Facility, as amended on March

31, 2005. Annex A contains a summary of the covenants contained in the Senior Credit Facility. 8.1 List of subsidiaries of Telenet Group Holding.

156

THIS PAGE INTENTIONALLY LEFT BLANK

A-1

ANNEX A SUMMARY OF CERTAIN SENIOR CREDIT FACILITY COVENANTS

The following Annex sets forth certain financial covenants and certain related definitions in our Senior Credit Facility, as amended on March 31, 2005. This Annex A is not a complete recitation of the financial covenants in our Senior Credit Facility. While we have included definitions of financial terms in this summary, certain defined terms from our Senior Credit Facility are not set forth herein. Importantly, our compliance with the financial covenants is measured by reference to financial statements that we prepare for Belgian legal and statutory purposes in accordance with Belgian GAAP. Belgian GAAP differs from US GAAP, under which our audited consolidated financial statements and unaudited condensed consolidated financial statements included in this annual report are prepared. The differences may be material to calculations under the financial covenants. Financial Covenants Our financial covenants require, among other things: • Maintenance of a minimum ratio of Consolidated EBITDA to Total Interest Payable at the end of

each Measurement Period ending on an Accounting Date ("Total Debt Interest Cover") • Maintenance of a maximum ratio of Net Senior Debt to Annualized EBITDA at the end of each

Measurement Period ending on an Accounting Date ("Net Senior Debt/Annualized EBITDA") • Maintenance of a minimum ratio of Annualized EBITDA for the period ending on an Accounting

Date to Estimated Total Debt Service for the period of 12 months commencing on such Accounting Date ("Pro-Forma Debt Service Cover Ratio")

• Maintenance of a maximum ratio of Net Total Debt to Annualized EBITDA at the end of each

Measurement Period ending on an Accounting Date ("Net Total Debt to EBITDA")

Accounting Date

Total DebtInterest

Cover

Net SeniorDebt/Annualize

dEBITDA

Pro-Forma Debt Service Cover Ratio

Net Total Debtto Annualized

EBITDA 31st March, 2005.................................. 2.25:1 2.80:1 2.00:1 4.75:130th June, 2005 .................................... 2.25:1 2.70:1 2.00:1 4.60:130th September, 2005 .......................... 2.30:1 2.55:1 2.00:1 4.50:131st December, 2005............................ 2.40:1 2.35:1 2.00:1 4.25:131st March, 2006.................................. 2.45:1 2.25:1 2.00:1 4.05:130th June, 2006 .................................... 2.50:1 2.10:1 1.80:1 4.00:130th September, 2006 .......................... 2.50:1 2.05:1 1.75:1 4.00:131st December, 2006............................ 2.65:1 2.00:1 1.75:1 3.50:131st March, 2007.................................. 2.70:1 2.00:1 1.80:1 3.50:130th June, 2007 .................................... 2.80:1 2.00:1 1.80:1 3.50:130th September, 2007 .......................... 2.90:1 2.00:1 1.85:1 3.50:131st December, 2007............................ 3.00:1 2.00:1 1.90:1 3.00:131st March, 2008.................................. 3.10:1 2.00:1 1.80:1 3.00:130th June, 2008 .................................... 3.15:1 2.00:1 1.70:1 3.00:130th September, 2008 .......................... 3.20:1 2.00:1 1.65:1 3.00:131st December, 2008............................ 3.15:1 2.00:1 1.60:1 3.00:131st March, 2009.................................. 2.00:1 2.00:1 1.60:1 3.00:130th June, 2009 .................................... 2.00:1 2.00:1 1.60:1 3.00:130th September, 2009 .......................... 2.00:1 2.00:1 1.60:1 3.00:131st December, 2009............................ 2.00:1 2.00:1 1.60:1 3.00:131st March, 2010.................................. 2.00:1 2.00:1 1:55:1 3.00:1

A-2

30th June, 2010 .................................... 2.00:1 2.00:1 1.40:1 3.00:130th September, 2010 .......................... 2.00:1 2.00:1 1.45:1 3.00:131st December, 2010............................ 2.00:1 2.00:1 1.30:1 3.00:131st March, 2011.................................. 2.00:1 2.00:1 1:40:1 3.00:130th June, 2011 .................................... 2.00:1 2.00:1 1.50:1 3.00:130th September, 2011 .......................... 2.00:1 2.00:1 1.65:1 3.00:131st December, 2011............................ 2.00:1 2.00:1 2.00:1 3.00:1

Provided that in calculating Annualized EBITDA in respect of: (a) The ratio of Net Senior Debt to Annualized EBITDA and the ratio of Net Total Debt to Annualized

EBITDA shall be Consolidated EBITDA for the Measurement Period ending on that Accounting Date multiplied by four;

(b) Annualized EBITDA shall be Consolidated EBITDA for the six months ending on the relevant

Accounting Date multiplied by two; and (c) Pro-Forma Debt Service Cover Ratio, Annualized EBITDA shall be, up to and including the

Accounting Date on 30th September, 2008, Consolidated EBITDA for the Measurement Period multiplied by four, and thereafter the aggregate of Consolidated EBITDA for the Measurement Period multiplied by four plus the Consolidated Cash and Cash Equivalents at that time.

Financial Definitions "Accounting Date" means the last day of a financial quarter of Telenet Bidco. "Acquired Business" means the cable business to be contributed by the MICs to MixtICS under the terms of the Acquisition Documents. "Acquisition" means the acquisition by Telenet Bidco of 100 per cent. of the issued share capital of MixtICS, following the contribution of the Acquired Business from the MICs to MixtICS pursuant to the Acquisition Documents. "Acquisition Deferrals" means any cash element of the consideration payable in respect of the Acquisition (which includes, for the avoidance of doubt, the HFC Upgrade Invoice Deferral) subject to an aggregate maximum amount (including interest) of €165,000,000 payment of which is deferred under the Acquisition Document and any cash element of the consideration payable in respect of the Acquisition, subject to an aggregate maximum principal amount of €198,000,000, payment of which is deferred under the Acquisition Documents. "Annual Clientele Fee" means, in any financial year of the Group, the aggregate of all Clientele Fees paid or to be paid by the Group in that financial year. "Annuity Fees" means the amounts payable by Telenet Vlaanderen to Interkabel Vlaanderen CVBA pursuant to Sections 5, 6 and 7 of the contribution deed dated 23rd September, 1996 pursuant to which Interkabel Vlaanderen CVBA effected a contribution in kind of usage rights to a cable network to Vlaanderen, as amended on 28th May, 1998. "Business Plan" means: (e) the business plan of the Group delivered to the Facility Agent by Telenet Bidco dated on or about the

date of this Agreement and initialed by Telenet Bidco and the Facility Agent for the purposes of identification on or before the date of this Agreement; or

(f) any revised business plan of the Group delivered to the Facility Agent by Telenet Bidco after the date

of this Agreement and includes the business plan prepared in relation to the issue of the Original High Yield Notes.

"Clientele Fees" means the fees payable by Telenet NV to Interkabel Vlaanderen CVBA pursuant to a clientele fee agreement dated 23rd September, 1996 as amended on 28th May, 1998.

A-3

"Consolidated Cash and Cash Equivalents" means, at any time: (a) cash in hand or on deposit with any acceptable bank which, in either case, is remittable to the

Kingdom of Belgium; (b) certificates of deposit, maturing within one year after the relevant date of calculation, issued by an

acceptable bank; (c) any investment in marketable obligations issued or guaranteed by the government of the United States

of America, the U.K. or the Kingdom of Belgium or by an instrumentality or agency of the government of the United States of America, the U.K. or the Kingdom of Belgium having an equivalent credit rating;

(d) open market commercial paper: (i) for which a recognized trading market exists; (ii) issued in the United States of America, the U.K. or the Kingdom of Belgium; (iii) which matures within one year after the relevant date of calculation; and (iv) which has a credit rating of A-1 by Standard & Poor's and P-1 by Moody's, or, if no rating is

available in respect of the commercial paper or indebtedness, the issuer of which has, in respect of its long-term debt obligations, a rating of AA by Standard & Poor's and Aa2 by Moody's; or

(e) any other instrument, security or investment approved by the Majority Lenders, in each case, to which any member of the Group is beneficially entitled at that time and is capable of being

applied against Consolidated Total Borrowings. An acceptable bank for this purpose is a commercial bank or trust company which has a rating of A or higher by Standard & Poor's and A-2 or higher by Moody's or a comparable rating from a nationally recognized credit rating agency for its long-term debt obligations.

"Consolidated EBITDA" means the consolidated net pre-taxation profits (which shall include a deduction for any management fees payable under the Strategic Services Agreement) of the Group for a Measurement Period: (a) including the net pre-taxation profit or loss of a member of the Group or business or assets acquired

during that Measurement Period for the part of that Measurement Period when it was not a member of the Group and/or the business or assets were not owned by a member of the Group; but

(b) excluding the net pre-taxation profit or loss attributable to any member of the Group or to any

business or assets sold during that Measurement Period, and all as adjusted by (to the extent included in paragraph (a) or (b) above): (i) adding back all interest and periodic finance charges, including acceptance commission,

commitment fee and the interest element of rental payments on finance or capital lease payments (whether, in each case, paid, payable or accrued) incurred by the Group in that period;

(ii) adding back or deducting any exceptional or extraordinary loss or gain including accruals

for severance payments (determined by reference to generally accepted accounting principles in Belgium as at December 31, 2003);

(iii) adding back the actual cost of severance payments relating to business restructuring,

acquisitions and disposals of businesses and collective dismissals net of the amount of any accrual for such severance payments previously made;

A-4

(iv) adding back or deducting any loss or gain attributable to minority interests; (v) adding back depreciation, amortization and any other non-cash charges; (vi) adding back, in the case of the financial year of the Group ended 31st December, 2002, the

Transaction Costs associated with the Acquisition; and (vii) adding back all government subsidies that any member of the Group receives to cover one

off, non-recurring expenses, including without limitation government subsidies to be used in connection with developing new products or new product trials, to the extent that such subsidies have reduced consolidated net pre-taxation profits and to the extent that such subsidies have not been accounted for so as to increase consolidated net pre-taxation profits (without double-counting).

"Consolidated Interest Payable" means: (a) all interest and periodic financing charges including acceptance commission, commitment fee and the

interest element of rental payments on finance or capital leases whether, in each case, paid, payable or accrued (in each case, if required to be paid in cash), incurred by the Group in effecting, servicing or maintaining Senior Debt during a Measurement Period; and

(b) for the purpose of calculating Total Interest Payable only, the Quarterly Clientele Fee for that

Measurement Period. "Consolidated Total Borrowings" means, in respect of the Group, at any time, the aggregate of the following: (a) the outstanding principal amount of any moneys borrowed (including, without limitation,

Subordinated Borrowings); (b) the outstanding principal amount of any acceptance under any acceptance credit; (c) the outstanding principal amount of any bond, note, debenture, loan stock or other similar instrument; (d) the capitalized element of indebtedness under any Finance Lease entered into after the date of this

Agreement; (e) the outstanding principal amount of all moneys owing in connection with the sale or discounting of

receivables (otherwise than on a non-recourse basis); (f) the outstanding principal amount of any indebtedness arising from any deferred payment agreements

arranged primarily as a method of raising finance or financing the acquisition of an asset other than any trade credit on normal commercial terms deferred for no more than 90 days;

(g) any fixed or minimum premium amount on the scheduled repayment or scheduled redemption of any

instrument referred to in paragraph (c) above; (h) the outstanding principal amount of any indebtedness arising in connection with any other transaction

(including any forward sale or purchase agreement) which has the commercial effect of a borrowing; and

(i) the outstanding principal amount of any indebtedness of any person other than a member of the

Group of a type referred to in paragraphs (a)—(h) above which is the subject of a guarantee, indemnity or similar assurances against financial loss given by a member of the Group,

and so that where any amount falls within more than one of the preceding paragraphs, that amount shall be

included only once.

A-5

For the avoidance of doubt, Consolidated Total Borrowings shall not include the HFC Upgrade Invoices. "Consolidated Total Debt Service" means, for any period ending on an Accounting Date (without double counting): (a) Consolidated Interest Payable; (b) all Consolidated Total Borrowings which fall due for repayment or prepayment during that period,

other than: (i) any principal amount repaid or prepaid under a revolving credit or overdraft or similar

facility and which is or may be available for redrawing; or (ii) any amount mandatorily prepaid under this Agreement; plus (c) Subordinated Interest Payable. "Credit" means a Loan, an EIB Guarantee or an EIB Guarantee Step-up. "Deferral" means an Acquisition Deferral or an HFC Upgrade Invoice Deferral as repaid or prepaid from time to time, and any refinancing thereof. "Estimated Total Debt Service" means, on any date Telenet Bidco's estimate (acting reasonably) of Consolidated Total Debt Service for the next 12 months provided to the Facility Agent with a certificate signed by an authorized officer of Telenet Bidco. “Existing Intercompany Loan Agreement” means the loan agreement dated August 12, 2002 (as amended and restated in two separate agreements on or about the date of the Original High Yield Indenture) between Telenet Communications as lender and Telenet Bidco as borrower recording the amended terms of the Existing Intercompany Loans. “Existing Intercompany Loan” means each loan made by Telenet Communications to Telenet Bidco pursuant to the Existing Intercompany Loan Agreement. "Finance Lease" means any contract treated as a finance or capital lease in accordance with US GAAP, as the same are from time to time in force or applied, or IFRS. "Financial Indebtedness" means any indebtedness for or in respect of: (a) moneys borrowed;

(b) any acceptance credit;

(c) any bond, note, debenture, loan stock or other similar instrument;

(d) any Finance Lease;

(e) receivables sold or discounted (otherwise than to the extent they are sold or discounted on a non-recourse basis);

(f) the acquisition cost of any asset to the extent payable after its acquisition or possession by the party liable where the deferred payment is arranged primarily as a method of raising finance or financing the acquisition of that asset (other than in respect of HFC Upgrade Invoices);

(g) any derivative transaction protecting against or benefiting from fluctuations in any rate or price (and at any time the then marked to market value of the derivative transaction will be used to calculate its amount);

A-6

(h) any other transaction (including any forward sale or purchase agreement) which has the commercial effect of a borrowing;

(i) any counter-indemnity obligation in respect of any guarantee, indemnity, bond, letter of credit or any other instrument issued by a bank or financial institution; or

(j) any guarantee, indemnity or similar assurance against financial loss of any person in respect of any item referred to in paragraphs (a) to (i) above.

"Group" means Telenet Bidco and its Subsidiaries other than a Non Recourse Subsidiary. "HFC Upgrade" means the upgrade of the hybrid fiber and coaxial networks of Telenet Vlaanderen by the MICs and PICs. "HFC Upgrade Invoices" means invoices received by Telenet Vlaanderen payable to the MICs for payment to Electrabel in connection with the HFC Upgrade not paid prior to the date of this Agreement. "HFC Upgrade Invoice Deferral" means any amount payable under the HFC Upgrade Invoices, payment of which is deferred under the Acquisition Documents and which is subordinated to the rights of the Lenders under the Finance Documents on terms satisfactory to the Facility Agent in a maximum principal amount of €81,000,000. "Junior Proceeds Loan" means: (a) in relation to the Original High Yield Indenture:

(i) the Bidco Proceeds Loan;

(ii) the Existing Intercompany Loan; or

(iii) the Operaties Proceeds Loan;

(iv) the MixtICS Proceeds Loan; and

(b) in relation to the Original High Yield Indenture or any Additional High Yield Indenture, any loan to a member of the Group of any proceeds of issue of Original High Yield Notes or Additional High Yield Notes.

"Material Subsidiary" means, at any time: (a) each Obligor other than Telenet Bidco;

(b) any Subsidiary of Telenet Bidco other than a Non-Recourse Subsidiary whose gross assets, earnings before depreciation, amortization, interest and taxes or turnover (excluding intra-Group items) equal or exceed, respectively, 10 per cent. of the gross assets, earnings before depreciation, amortization, interest and taxes or turnover (as appropriate) of the Group (excluding intra-Group items); and

(c) any other Subsidiary of Telenet Bidco other than a Non-Recourse Subsidiary which, in the opinion of the Facility Agent (acting reasonably), has assets or performs a function fundamental to the business carried on by the Group.

For this purpose: (i) the gross assets, earnings before depreciation, amortization, interest and taxes or turnover of

a Subsidiary of Bidco will be determined from its financial statements (unconsolidated if it has Subsidiaries) upon which the latest audited financial statements of the Group are based;

(ii) if a Subsidiary of Telenet Bidco becomes a member of the Group after the date on which the latest audited financial statements of the Group have been prepared, the gross assets, earnings before depreciation, amortization, interest and taxes or turnover of that Subsidiary will be determined from its latest financial statements;

A-7

(iii) the gross assets, net assets, earnings before depreciation, amortization, interest and taxes or turnover of the Group will be determined from its latest audited financial statements, adjusted (where appropriate) to reflect the gross assets, earnings before depreciation, amortization, interest and taxes or turnover of any company or business subsequently acquired or disposed of; and

(iv) if a Material Subsidiary disposes of all or substantially all of its assets to another member of the Group, it will immediately cease to be a Material Subsidiary and the other Subsidiary (if it is not already) will immediately become a Material Subsidiary; the subsequent financial statements of those Subsidiaries and the Group will be used to determine whether those Subsidiaries are Material Subsidiaries or not.

If there is a dispute as to whether or not a company is a Material Subsidiary, a certificate of the auditors of

Telenet Bidco will be, in the absence of manifest error, conclusive. "Measurement Period" means a period of three months ending on an Accounting Date. "Net Senior Debt" means Senior Debt less Consolidated Cash and Cash Equivalents. "Net Total Debt" means Total Debt less Consolidated Cash and Cash Equivalents. "Non-Recourse Subsidiary" means a company or partnership: (a) which is in the same business as the business of the Group or a related business;

(b) is a limited liability company or a limited liability partnership in which no member of the Group is the general partner;

(c) none of whose indebtedness or any other obligations benefits from any recourse whatsoever to any member of the Group in respect of the repayment or payment thereof; and

(d) which has been designated as such by an Original Borrower by written notice to the Facility Agent on or prior to its becoming a Subsidiary of that Original Borrower which notice shall be accompanied by evidence satisfactory to the Facility Agent that the requirements of paragraph (c) above will be complied with at all times in respect of that Subsidiary,

provided that the relevant Original Borrower may, having obtained the prior consent of the Majority Lenders

and having submitted a Business Plan referred to in paragraph (b) of that definition, give written notice to the Facility Agent at any time that any Non-Recourse Subsidiary is no longer a Non-Recourse Subsidiary, whereupon it shall cease to be a Non-Recourse Subsidiary and shall, if it would be a Material Subsidiary immediately after its redesignation as a member of the Group, accede to this Agreement as an Additional Guarantor in accordance with Clause 30.8(a) (Additional Guarantors).

"Original High Yield Indenture" means the indenture pursuant to which the Original High Yield Notes are issued, between Telenet Communications as issuer, Telenet Bidco, Telenet NV, Telenet Holding and Telenet Vlaanderen as guarantors, the Original Notes Trustee as paying agent, registrar and trustee, and any entities that from time to time are added as additional note guarantors. "Original High Yield Notes" means the high yield notes issued by Telenet Communications as issuer pursuant to the Original High Yield Indenture. "Permitted Discount Notes Payment" means a payment by way of payment under an Existing Intercompany Loan Agreement, dividend or otherwise, in amount up to the amount of each payment (other than a payment in respect of principal) require by the original terms of the indenture referred to below to be made in cash by Telenet Group Holding in respect of its 11.5% Senior Discount Notes due 2014, issued pursuant to an indenture dated December 22, 2003 between Telenet Group Holding and The Bank of New York as trustee, provided that such payment is made by a member of the Group no more than 5 Business Days prior to the date on which Telenet Group Holding is required to make such payment.

A-8

"Permitted Notes Payment" has the meaning given to it in the Intercreditor Agreement. "Permitted Payment" means any payment, lawful distribution, lawful dividend, return on capital or other lawful distribution (in cash or in kind), loan or payment of interest by a member of the Group (as the case may be): (a) in an amount equal to any Permitted Notes Payment to the extent such payment is permitted under the

Intercreditor Agreement; and

(b) in an amount sufficient to pay:

(i) the administrative costs and expenses to any Holding Company of Bidco, up to a maximum aggregate amount of €250,000 (or its equivalent) in any financial year; or

(ii) to any Holding Company of Telenet Bidco, amounts payable up to a maximum aggregate amount of US$5,000,000 in any financial year;

(iii) taxes incurred and payable as a result of any inter-company loans made between any Telenet Holding Company subject to an aggregate maximum amount of €750,000 in any financial year;

(iv) loans to or guarantees of loans to directors, officers or employees of Telenet Communications or any Holding Company of Telenet Communications up to a maximum aggregate amount of €25,000,000; or

(v) a Permitted Discount Notes Payment.

"Quarterly Clientele Fee" means, in respect of any Measurement Period in any financial year, one quarter of the Annual Clientele Fee. "Senior Debt" means Consolidated Total Borrowings but excluding any indebtedness subordinated (pursuant to the Intercreditor Agreement, a Subordination Agreement or otherwise on terms satisfactory to the Facility Agent) to and having a longer tenor than the indebtedness incurred under the Finance Documents and excluding the capitalized element of indebtedness under the Clientele Fees and the Annuity Fees and any Finance Lease entered into after the date of the amendment of the Senior Credit Facility. "Subordinated Borrowings" means, at any time, the aggregate Total Debt less Senior Debt. "Subordinated Interest Payable" means, for a period ending on an Accounting Date, all periodic financing charges (whether paid, payable or accrued but excluding any charges which are not payable in cash), including interest, acceptance commission or commitment fees incurred by the Group in servicing or maintaining Subordinated Borrowings during that period and any Permitted Discount Notes Payments made during that period. "Subsidiary" means an entity of which a person has direct or indirect control or owns directly or indirectly more than 50% of the voting capital or similar right of ownership and control for this purpose means the power to direct the management and the policies of the entity whether through the ownership of voting capital, contract or otherwise. "Total Debt" means, at any time, without double counting the aggregate of Senior Debt and any indebtedness of an Obligor in respect of the High Yield Notes or any Additional High Yield Notes, but excluding any other indebtedness of an Obligor that is subject to the terms of the Intercreditor Agreement or Subordination Agreement. "Total Interest Payable" means, for any period, Consolidated Total Debt Service excluding any amount falling within paragraph (b) of that definition. "Transaction Costs" means any financing fees, costs and expenses incurred by the Group relating directly to the Acquisition.

B-1

ANNEX B SUMMARY GUARANTOR FINANCIAL INFORMATION

The following unaudited condensed consolidated financial information presents the financial information of

Telenet Group Holding, Telenet Communications, the Subsidiary Guarantors of the 9% Senior Notes due 2013 issued by Telenet Communications (consisting of Telenet Bidco, Telenet Holding, Telenet NV and Telenet Vlaanderen) and the non-guarantor subsidiaries in the Telenet group (consisting of Telenet Solutions NV and its subsidiaries and Merrion Communications) on a non-consolidated basis, accounting for the investments in subsidiaries under the equity method. The financial information may not necessarily be indicative of the financial position or the results of operations had Telenet Group Holding, Telenet Communications, the Subsidiary Guarantors or non-guarantor subsidiaries operated as independent entities as of and for the year ended December 31, 2004. The obligations of Telenet NV under the senior credit facility included within the ‘‘Unconsolidated Subsidiary Guarantors’’ column have been guaranteed by certain Subsidiary Guarantors.

In order to simplify the internal corporate structure of the group and to align the corporate structure with the

operational functioning of the group, we completed the mergers of MixtICS and PayTVCo with Telenet NV during July 2005 with effect from January 1, 2005. MixtICS and PayTVCo were previously reported as non-guarantor subsidiaries but are included in Telenet NV with the Subsidiary Guarantors with effect from January 1, 2005 as a result of the merger. For the year ended December 31, 2005

(Euro in millions)

Telenet Group

Holding

Telenet

Communi-cations

Unconsoli-dated

Subsidiary Guarantors

Unconsoli-dated Non- Guarantor

Subsidiaries

Eliminations

Consolidated

Income Statement Revenues - - 697.5 40.0 - 737.5 Costs of services provided (0.2) - (426.2) (32.6) - (459.0)

Gross Profit (0.2) - 271.3 7.4 - 278.5

Selling, general and administrative (3.3) - (139.3) (4.3) - (146.9)

Operating profit (loss) (3.5) - 132.0 3.1 - 131.6

Finance costs, net (59.6) (60.4) (73.1) (0.1) - (193.2)Finance costs, net -

intercompany 36.4 40.6 (74.1) (2.9) - - Equity in subsidiaries (50.0) (30.2) - - 80.2 -

Total other income (expense) (73.2) (50.0) (147.2) (3.0) 80.2 (193.2)

Net income (loss) before income taxes (76.7) (50.0) (15.2) 0.1 80.2 (61.6)

Income tax expense - - (15.0) (0.1) - (15.1) Net loss (76.7) (50.0) (30.2) - 80.2 (76.7)

B-2

As of December 31, 2005

(Euro in millions)

Telenet Group

Holding

Telenet

Communi-cations

Unconsoli- dated

Subsidiary Guarantors

Unconsoli- dated Non- Guarantor

Subsidiaries

Eliminations

Consolidated

Balance Sheet Information

Assets Property and equipment, net....... - - 927.7 16.2 - 943.9 Goodwill, net .............................. - - 1,012.5 - - 1,012.5 Intangible assets, net ................... - - 278.4 - - 278.4 Other assets ................................. - - 0.8 0.1 - 0.9 Investments in subsidiaries ......... 493.0 522.2 (37.6) - (977.6) - Total non-current assets ....... 493.0 522.2 2,181.8 16.3 (977.6) 2,235.7

Accounts receivable.................... 0.3 - 88.2 10.2 - 98.7 Other receivables ........................ 0.3 - 25.8 0.6 - 26.7 Cash and cash equivalents 138.7 0.1 69.8 1.7 - 210.3 Intercompany receivables and

short term loans ....................... - - 9.1 7.1 (16.2) - Total current assets ............... 139.3 0.1 192.9 19.6 (16.2) 335.7 Total assets ............................. 632.3 522.3 2,374.7 35.9 (993.8) 2,571.4 Liabilities and Shareholders'

Equity Shareholders' equity ............ 709.1 493.0 522.2 (37.6) (977.6) 709.1

Long-term debt, less current portion...................................... 215.6 357.6 715.7 (0.1) - 1,288.8

Other noncurrent liabilities ......... 10.9 - 44.0 0.8 - 55.7 Intercompany loans, net ............. (313.6) (469.0) 722.8 59.8 - - Total non-current

liabilities.................................. (87.1) (111.4) 1,482.5 60.5 - 1,344.5

Current portion of long term debt .......................................... - 140.5 15.6 - - 156.1

Accounts payable........................ 4.6 - 163.9 6.2 - 174.7 Accrued expenses and other

current liabilities ..................... 0.1 - 71.6 2.4 - 74.1 Intercompany payables and

short term debt......................... 5.6 0.2 7.1 3.3 (16.2) - Unearned revenue ....................... - - 111.8 1.1 - 112.9 Total current liabilities ....... 10.3 140.7 370.0 13.0 (16.2) 517.8 Total liabilities..................... (76.8) 29.3 1,852.5 73.5 (16.2) 1,862.3 Total liabilities and

shareholders' equity .............. 632.3 522.3 2,374.7 35.9 (993.8) 2,571.4

C-1

ANNEX C FIRST-TIME ADOPTION OF EU GAAP

In accordance with the European Union Regulation 1606/2002 of July 19, 2002 on the application of International Accounting Standards (“IAS,” later renamed International Financial Reporting Standards, “IFRSs”) as endorsed by the European Union (referred to in our annual report as “EU GAAP” and in our consolidated financial statements as “IFRSs as adopted by the EU”), we have prepared our consolidated financial statements for the year ending December 31, 2005 using standards and interpretations published by the International Accounting Standards Board (the “IASB”) and the International Financial Reporting Interpretations Committee (the “IFRIC”), respectively, to the extent that they have been endorsed by the European Commission. The December 31, 2005 consolidated financial statements under IFRSs as adopted by the EU includes reconcilations of our consolidated equity equity as of January 1, 2004 and December 31, 2004 and profit and loss for the year ended December 31, 2004. During the year ended December 31, 2005, we prepared and issued our interim financial statements under US GAAP. In line with the recommendation included in the circular FMI/2004-01 issued by the Belgian Banking, Finance and Insurance Commission (the “CBFA”) as well as with recommendation CESR/03-323e published by the Committee of European Securities Regulators (“CESR”), we decided to present the quantified impact of the change to IFRSs as adopted by the EU on our consolidated equity and on the net result for the interim periods in 2005. The balances reported under IFRSs as adopted by the EU will be used for the comparative balances of the 2006 interim financial statements. Exemptions from full retrospective application of IFRSs as adopted by the EU and our accounting policies are described in the December 31, 2005 consolidated financial statements. Measurement and Recognition Differences Between IFRSs as Adopted by the EU and US GAAP A. Deferred Taxes Historically under US GAAP, 100% valuation allowances were recorded against tax losses carried forward by subsidiaries acquired in previous business combinations. We started using these tax losses carried forward in 2004 and reduced goodwill using the current tax rate of 33.99%. IFRSs as adopted by the EU requires us to utilize the tax rate in effect at the time of the acquisition, or 40.17%, to reduce goodwill while using the current tax rate of 33.99% to establish the deferred tax asset resulting in additional deferred tax expense as these tax loss carryforwards are utilized. B. Share-Based Payment Under US GAAP, we use the intrinsic value method to account for our stock option plans. Accordingly, the excess of the grant date fair value of our ordinary shares over the exercise price of the stock options is recognized as compensation expense over the vesting period of the options. Under IFRS as adopted by the EU, warrants granted after November 7, 2002 that had not vested before January 1, 2005 are recorded at the fair value of each option granted as estimated on the date of grant using the Black-Scholes option-pricing model. The total cost calculated is expensed over the vesting period of the respective warrants. C. Copyright Fees Under US GAAP, we retained an accrual in other liabilities for the gross amounts that we expect to pay as a result of settlements with certain of the broadcasters and copyright collection agencies. Under IFRSs as adopted by the EU, we are required to record these amounts at the present value of the expenditures expected to be required to settle the obligation. Presentation Differences Between IFRSs as Adopted by the EU and US GAAP D. Depreciation and Amortization Expense Under US GAAP, we reported depreciation and amortization expense as separate line items on the face of the statement of operations. Under IFRSs as adopted by the EU, we are required to allocate these expenses to costs of services provided and selling, general and administrative expenses.

C-2

E. Broadcasting Rights Under US GAAP, we recorded a current asset for prepaid content and amortized the cost to operating expenses over the related life. Under IFRSs as adopted by the EU, broadcasting rights are capitalized as an intangible asset when the value of the contract is measurable upon signing and are amortized to costs of service provided on a straight-line basis over contractual life. The change in treatment results in a reclassification of certain assets to intangible assets and an accrual for unbilled broadcasting rights on the balance sheet and classification as amortization expense on the income statement under IFRSs as adopted by the EU. F. Foreign Exchange Gains and Losses Under US GAAP, we reported all foreign exchange gains and losses within other income and loss on the statement of operations. Under IFRSs as adopted by the EU, we have allocated all foreign exchange gains and losses related to operations to the costs of services provided and selling, general and administrative expenses. G. Employee Benefit Plans Under US GAAP, we reported all expenses related to the employee benefit plans within operating income on the statement of operations. Under IFRSs as adopted by the EU, we have allocated the expected return on plan assets and the interest cost related to the employee benefit plans to finance costs. Reconciliation of equity and net result from US GAAP to IFRSs as Adopted by the EU: The impact of the above adjustments on our consolidated equity as of January 1, 2005, March 31, 2005, June 30, 2005, September 30, 2005 and December 31, 2005 and on the net result for the three months ended March 31, 2005, June 30, 2005, September 30, 2005 and December 31, 2005 is summarized below:

Effect of Transition to IFRS as adopted by the EU

US GAAP

Deferred

Taxes Share-based

Payments

Copyright

Fees

IFRSs as adopted by

the EU

Equity January 1, 2005 ............ 490,226 (684) - 1,418 490,960 Net result (3 months)............ (22,878) (479) (411) (317) (24,085) Other changes in equity........ 11,236 - 411 - 11,647 Equity March 31, 2005 478,584 (1,163) - 1,101 478,522 Net result (3 months)............ (6,332) (1,008) (230) (2) (7,572) Other changes in equity........ 6,699 - 230 - 6,929 Equity June 30, 2005 478,951 (2,171) - 1,099 477,879 Net result (3 months)............ (6,124) (652) (231) (275) (7,282) Other changes in equity........ 3,660 - 231 - 3,891 Equity September 30, 2005...... 476,487 (2,823) - 824 474,488 Net result (3 months)............ (37,491) (155) (493) 411 (37,728) Other changes in equity........ 271,845 - 493 - 272,338 Equity December 31, 2005 ...... 710,841 (2,978) - 1,235 709,098

C-3

Reconciliation of profit and loss for the quarter ended March 31, 2005: Effect of Transition to IFRSs as adopted by the EU

US GAAP

Measurement

and

Recognition

Note Presentation Note

IFRSs as adopted

by the EU

Revenues.......................... 177,274 - - 177,274 ................................Revenues Operating (excluding

depreciation and amortization)................

(63,659) (10)

B (42,415) D E F G (106,084)

....Costs of services provided

71,190 ..................GROSS PROFIT Selling, general and

administrative...............

(31,090) (401)

B (3,831) D E G (35,322)

Selling, general and ........................ administrative

Depreciation..................... (36,423) - 36,423 D Amortization.................... (9,677) - 9,677 D

OPERATING PROFIT............................

36,425 (411)

(146) 35,868

.........OPERATING PROFIT

Finance costs, net ............ (56,627) (317) C 146 F G (56,798) .................. Finance costs, net

NET LOSS BEFORE INCOME TAXES...........

(20,202) (728)

- (20,930)

NET LOSS BEFORE ................ INCOME TAXES

Income tax expense ......... (2,676) (479) A - (3,155) .............. Income tax expense

NET LOSS....................... (22,878) (1,207) - (24,085) .............................NET LOSS

Basic and diluted net loss per share................

(0.26) (0.28)

Basic and diluted net ....................... loss per share

Reconciliation of profit and loss for the quarter ended June 30, 2005: Effect of Transition to IFRSs as adopted by the EU

US GAAP

Measurement and

Recognition


IFRSs as adopted

by the EU

Revenues..........................

181,555 -

- 181,555 ................................. Revenue

s Operating (excluding


(62,659) (10)

B (43,248) D E F G (105,917)




(31,472) (220)

B (3,721) D E G (35,413)




40,389 (230)

66 40,225


Finance costs, net ............ (41,154) (2) C (66) F G (41,222) .................. Finance costs, net


(765) (232)

- (997)


Income tax expense ......... (5,567) (1,008) A - (6,575) .............. Income tax expense

NET LOSS....................... (6,332) (1,240) - (7,572) .............................NET LOSS


(0.07) (0.09)


C-4

Reconciliation of profit and loss for the quarter ended September 30, 2005: Effect of Transition to IFRSs as adopted by the EU

US GAAP

Measurement and

Recognition


IFRSs as adopted

by the EU

Revenues.......................... 185,383 - - 185,383 ................................Revenues Operating (excluding


(70,766) (10)

B (44,411) D E F G (115,187)




(33,943) (221)

B (3,433) D E G (37,597)




32,718 (231)

112 32,599


Finance costs, net ............ (35,256) (275) C (112) F G (35,643) .................. Finance costs, net


(2,538) (506)

- (3,044)



NET LOSS....................... (6,124) (1,158) - (7,282) .............................NET LOSS


(0.07) (0.08)


Reconciliation of profit and loss for the quarter ended December 31, 2005: Effect of Transition to IFRSs as adopted by the EU

US GAAP

Measurement

and

Recognition


IFRSs as adopted

by the EU

Revenues..........................

193,280 -

- 193,280 ................................. Revenue



(78,791) (112)

B (52,890) D E F G (131,793)




(34,283) (381)

B (3,941) D E G (38,605)




23,127 (493)

248 22,882


Finance costs, net ............ (59,689) 411 C (248) F G (59,526) .................. Finance costs, net


(36,562) (82)

- (36,644)


Income tax expense ......... (929) (155) A - (1,084) .............. Income tax expense

NET LOSS....................... (37,491) (237) - (37,728) .............................NET LOSS


(0.38) (0.38)


C-5

Presentation of the quarterly and year to date income statements under IFRSs as adopted by the EU for the year ended December 31, 2005:

For the quarter ended For the year to date period ended

March 31,

2005 June 30,

2005 September

30, 2005 December 31, 2005

June 30, 2005

September 30, 2005

December 31, 2005

Revenues .................. 177,274 181,555 185,383 193,280 358,829 544,212 737,492 Costs of services

provided ................ (106,084)

(105,917) (115,187) (131,793) (212,001) (327,188) (458,981)

Gross profit ............. 71,190

75,638 70,196 61,487 146,828 217,024 278,511

Selling, general and administrative........ (35,322)

(35,413) (37,597) (38,605) (70,735) (108,332) (146,937)

Operating profit ..... 35,868

40,225 32,599 22,882 76,093 108,692 131,574

Finance costs, net ..... (56,798) (41,222) (35,643) (59,526) (98,020) (133,663) (193,189)

Net loss before income tax ............ (20,930)

(997) (3,044) (36,644) (21,927) (24,971) (61,615)

Income tax expense.. (3,155) (6,575) (4,238) (1,084) (9,730) (13,968) (15,053)

Net Loss ................... (24,085) (7,572) (7,282) (37,727) (31,657) (38,939) (76,667)

Basic and diluted net loss per share... (0.28)

(0.09) (0.08) (0.38) (0.37) (0.45) (0.86)

C-6

Reconciliation of equity at December 31, 2005:

Effect of Transition to IFRSs as adopted by the EU

U.S. GAAP Measurement

and Recognition

Note

Presentation

Note IFRS as adopted

by the EU

ASSETS NON-CURRENT ASSETS:

Property and equipment ............. 943,919 - - 943,919 Goodwill ..................................... 1,015,522 (2,978) A - 1,012,544 Other intangible assets................ 271,065 - 7,282 E 278,347 Deferred finance fees.................. 44,650 - (44,650) H - Other assets ................................. 780 - 80 I 860

Total non-current assets .............. 2,275,936 (2,978) (37,288) 2,235,670

CURRENT ASSETS: Trade receivables ........................ 98,677 - - 98,677 Other current assets .................... 28,950 - (2,282) E I 26,668 Cash and cash equivalents.......... 210,359 - - 210,359

Total current assets...................... 337,986 - (2,282) 335,704 TOTAL............................................ 2,613,922 (2,978) (39,570) 2,571,374 EQUITY AND LIABILITIES EQUITY:

Contributed capital...................... 2,574,803 (3,024) B (39,275) B K 2,532,504 Deferred stock compensation..... (151) 151 B - - Other reserves ............................. - 3,860 B - 3,860 Hedging reserves ........................ 1,078 - - 1,078 Retained loss ............................... (1,864,889) (2,730) A B C 39,275 B K (1,828,344)

Total equity.................................. 710,841 (1,743) - 709,098

NON-CURRENT LIABILITIES: Long-term debt ........................... 1,333,435 - (44,650) H 1,288,785 Other liabilities ........................... 48,545 (1,235) C 8,346 I J 55,656

Total non-current liabilities ........ 1,381,980 (1,235) (36,304) 1,344,441

CURRENT LIABILITIES: Current portion of long-term

debt .......................................... 138,300 - 17,829

L 156,129 Accounts payable........................ 169,354 - 5,347 E 174,701 Accrued expenses and other

current liabilities ..................... 100,571 - (26,442)

I J L 74,129 Unearned revenue....................... 112,876 - - 112,876

Total current liabilities ................ 521,101 - (3,266) 517,835 Total liabilities............................. 1,903,081 (1,235) (39,570) 1,862,276 TOTAL............................................ 2,613,922 (2,978) (39,570) 2,571,374

F-1

REPORT OF INDEPENDENT AUDITORS

In accordance with legal and regulatory requirements, we are pleased to report to you on the performance of the audit mandate which you have entrusted to us. We have audited the accompanying consolidated financial statements set forth on pages F-2 to F-47 which have been prepared in accordance with IFRSs as adopted by the EU. These financial statements comprise the consolidated balance sheet of Telenet Group Holding NV and its subsidiaries as of December 31, 2005 and the related consolidated statements of income, cash flows and changes in shareholders’ equity for the year then ended. It is the responsibility of the company's Board of Directors to prepare the consolidated financial statements Our responsibility is to examine those documents in accordance with Belgian generally accepted auditing standards, as issued by the "Institut des Reviseurs d'Entreprises/Instituut der Bedrijfsrevisoren". Unqualified audit opinion on the consolidated financial statements The aforementioned standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. In accordance with those standards, we considered the group’s administrative and accounting organisation, as well as its internal control procedures. We have obtained all explanations and information required for our audit. We examined, on a test basis, evidence supporting the amounts in the consolidated financial statements. We assessed the accounting principles used, the basis of consolidation and significant estimates made by the enterprise, as well as the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. In our opinion the accompanying consolidated financial statements set forth on pages F-2 to F-47 give a true and fair view of the net worth and financial position of the Group as of December 31, 2005 and of its results of operations and cash flows for the year then ended, in accordance with IFRSs as adopted by the EU. April 21, 2006 PricewaterhouseCoopers Bedrijfsrevisoren represented by Bernard Gabriëls Bedrijfsrevisor

F-2

TELENET GROUP HOLDING NV CONSOLIDATED BALANCE SHEET

As of December 31, 2005

Notes December 31,

2005 December 31,

2004 (in thousands of Euro) ASSETS NON-CURRENT ASSETS: Property and equipment......................................................................... 4 943,919 960,776 Goodwill................................................................................................. 5 1,012,544 1,027,461 Other intangible assets ........................................................................... 6 278,347 280,776 Other assets ............................................................................................ 860 1,009 Total non-current assets .................................................................... 2,235,670 2,270,022 CURRENT ASSETS: Trade receivables ................................................................................... 7 98,677 84,787 Other current assets................................................................................ 8 26,668 20,850 Cash and cash equivalents ..................................................................... 9 210,359 145,188 Total current assets............................................................................ 335,704 250,825 TOTAL ASSETS...................................................................................... 2,571,374 2,520,847 EQUITY AND LIABILITIES

EQUITY: Contributed Capital................................................................................ 10 2,532,504 2,268,124 Other reserves ........................................................................................ 3,860 1,140 Hedging reserves.................................................................................... 12 1,078 (26,627) Retained loss .......................................................................................... (1,828,344) (1,751,677) Total equity ....................................................................................... 709,098 490,960 NON-CURRENT LIABILITIES: Long-term debt, less current portion ..................................................... 11 1,288,785 1,560,755 Derivative financial instruments............................................................ 12 20,364 72,800 Unearned revenue .................................................................................. 17 11,537 7,965 Other liabilities....................................................................................... 14 23,755 31,428 Total non-current liabilities............................................................... 1,344,441 1,672,948 CURRENT LIABILITIES: Current portion of long-term debt ......................................................... 11 156,129 20,009 Accounts payable................................................................................... 174,701 149,477 Accrued expenses and other current liabilities...................................... 16 74,129 73,618 Unearned revenue .................................................................................. 17 112,876 113,835 Total current liabilities ...................................................................... 517,835 356,939 Total liabilities................................................................................... 1,862,276 2,029,887 TOTAL EQUITY AND LIABILITIES................................................... 2,571,374 2,520,847 See notes to the consolidated financial statements.

F-3

TELENET GROUP HOLDING NV CONSOLIDATED INCOME STATEMENT

For the year ended December 31, 2005

For the years ended

Notes December 31,

2005 December 31,

2004 (in thousands of Euro) Revenues................................................................................................... 17 737,492 681,125 Costs of services provided........................................................................ 18 (458,981) (430,652)

Gross profit.............................................................................................. 278,511 250,473

Selling, general and administrative .......................................................... 18 (146,937) (145,820)

Operating profit...................................................................................... 131,574 104,653

Finance costs, net...................................................................................... 19 (193,189) (161,839)

Net loss before income tax ..................................................................... (61,614) (57,186)

Income tax expense .................................................................................. 20 (15,053) (4,521)

Net Loss.................................................................................................... (76,667) (61,707)

Basic and diluted net loss per share: 21 Weighted-average shares outstanding................................................... 89,503,387 86,527,257

Basic and diluted net loss per share ...................................................... (0.86) (0.71)

See notes to the consolidated financial statements.

TELENET GROUP HOLDING NV

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY For the year ended December 31, 2005

F-4

Notes Number of

Shares Share CapitalOther

Reserves Hedging Reserves

Retained Loss Total

January 1, 2004 .................. 86,527,257 2,268,124 - (1,765) (1,689,970) 576,389

Unrealized net gain (loss) on derivative contracts recognized directly in equity ................................ 12 - - - (24,862) - (24,862)

Net loss for the year ............. - - - - (61,707) (61,707) Total recognized loss for

2004 .................................. - - - (24,862) (61,707) (86,569)

Recognition of share-based compensation .................... 10 - - 1,140 - - 1,140

December 31, 2004 ............. 86,527,257 2,268,124 1,140 (26,627) (1,751,677) 490,960

Unrealized net gain (loss) on derivative contracts recognized directly in equity ................................ 12 - - - 27,705 - 27,705

Net loss for the year ............. - - - - (76,667) (76,667) Total recognized loss for

2005 .................................. - - - 27,705 (76,667) (48,962)

Recognition of share-based compensation .................... 10 - - 2,196 - - 2,196

Ordinary shares issued upon exercise of the Bank Warrants .................. 10 329,994 - - - - -

Proceeds received upon exercise of the Class B options............................... 10 - - 524 - - 524

Issuance of share capital through IPO, net of offering costs .................... 1 13,347,602 264,380 - - - 264,380

December 31, 2005 ............. 100,204,853 2,532,504 3,860 1,078 (1,828,344) 709,098 See notes to the consolidated financial statements.


CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended December 31, 2005

F-5

For the year ended December 31, 2005 2004

(in thousands of Euro) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss .......................................................................................................................... (76,667) (61,707) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation, amortization and impairment ............................................................ 206,314 204,329 Income taxes............................................................................................................. 15,052 4,521 Provision for liabilities and charges......................................................................... 1,698 616 Increase in allowance for bad debt........................................................................... 3,550 5,365 Amortization of financing cost ................................................................................ 9,165 11,269 Write-off of financing cost on extinguishment of debt ........................................... 11,527 - Interest income ......................................................................................................... (3,420) (4,552) Interest expense ........................................................................................................ 142,676 162,139 (Gain)/loss on derivative instruments, net ............................................................... (30,757) 25,494 Unrealized foreign exchange (gain)/loss, net .......................................................... 38,202 (21,241) Share based compensation ....................................................................................... 2,196 1,140 (Gain)/loss on disposal of fixed assets..................................................................... (147) 685 Changes in operating assets and liabilities: Accounts receivable ................................................................................................. (17,440) (5,369) Other assets............................................................................................................... (5,513) 5,753 Unearned revenue..................................................................................................... 2,613 17,654 Accounts payable ..................................................................................................... 26,770 15,126 Accrued expenses and other current liabilities ........................................................ 10,964 (11,498) Cash generated from operations .......................................................................... 336,783 349,724 Interest paid .............................................................................................................. (123,984) (115,420) Taxes paid................................................................................................................. (177) - Net cash generated from operating activities....................................................... 212,622 234,304 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment ........................................................................... (141,088) (128,836) Proceeds on disposal of property and equipment.......................................................... 453 - Purchases of intangibles ................................................................................................ (41,925) (23,828) Acquisition of Telenet Holding shares.......................................................................... (1,444) - Net cash used in investing activities ........................................................................ (184,004) (152,664) CASH FLOWS FROM FINANCING ACTIVITIES: Repayments of long-term borrowings........................................................................... (317,660) (106,512) Proceeds from long-term borrowings............................................................................ 105,000 - Payments of redemption premiums............................................................................... (13,341) - Repayments of finance leases........................................................................................ (853) (966) Proceeds from the issuance of capital, net of offering costs ......................................... 264,380 - Proceeds received upon exercise of the Class B options .............................................. 524 - Payments for debt issuance costs .................................................................................. (1,497) - Net cash provided by (used in) financing activities................................................... 36,553 (107,478) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ................. 65,171 (25,838) CASH AND CASH EQUIVALENTS: Beginning of period ...................................................................................................... 145,188 171,026 End of period ................................................................................................................ 210,359 145,188 NON CASH INVESTING AND FINANCING ACTIVITIES: Acquisition of network user rights in exchange for debt .............................................. 1,311 16,515

See notes to the consolidated financial statements.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2005

(in thousands of Euro, except per share amounts, unless otherwise stated)

F-6

1. GENERAL INFORMATION The accompanying consolidated financial statements present the operations of Telenet Group Holding NV (“Telenet Group Holding”) and its subsidiaries (hereafter collectively referred to as the “Company”). Through its broadband network the Company offers cable television, including premium television services, broadband internet and telephony services to residential subscribers in Flanders as well as broadband internet, data and voice services in the business market throughout Belgium. Telenet Group Holding and its principal subsidiaries are limited liability companies organized under Belgian law. The Company is managed and operates in one operating segment, broadband communications. These consolidated financial statements have been authorized for issue by the Board of Directors on April 25, 2006. Initial Public Offering On October 11, 2005, shares in Telenet Group Holding commenced trading on the Brussels Euronext stock exchange pursuant to an initial public offering (“IPO”) of the Company’s shares by the Company (the “Primary Offering”) and certain of its shareholders (the “Secondary Offering”). In addition, shares were offered to qualifying employees (the “Employee Offering”) at a discounted price. The initial price of the shares was €21.00. The Company issued and sold 13,333,333 shares of its common stock pursuant to the Primary Offering and approximately 14,269 shares pursuant to the Employee Offering. Net of the underwriting discount and other expenses of the offering, the Company received €264,380 for the common stock it issued and sold under the Primary and Employee Offerings. The net proceeds from the Primary and Employee Offerings were used to partially redeem Telenet Group Holding’s Senior Discount Notes and Telenet Communications’ Senior Notes (Note 11). Telenet Group Holding did not receive any proceeds from the sale of shares by the selling shareholders. Stock Split On September 20, 2005, the Company’s shareholders approved a share split pursuant to which three new shares were issued in respect of each share outstanding on that date. The stock split became effective on the closing date of the IPO and, as of such date, the total number of Telenet Group Holding Shares was 86,857,251 immediately prior to the IPO. In addition, certain amendments were made to the outstanding employee plans, option agreements and warrants to give effect to such share split in the same three-for-one proportion. All share and per-share information included in these consolidated financial statements have been adjusted to retroactively reflect the stock split for all periods presented. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES In accordance with the EU Regulation 1606/2002 of July 19, 2002, the consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the EU (“IFRSs as adopted by the EU”). The financial statements have been prepared on the historical cost basis, except for certain financial instruments. The principal accounting policies are set out below. First-time Adoption of IFRS as adopted by the EU Publication of the December 31, 2005 consolidated financial statements under IFRSs as adopted by the EU requires that the comparative information for the year ended December 31, 2004 as well as the opening balance sheet as of January 1, 2004 be prepared in accordance with IFRSs as adopted by the EU. The disclosures required by IFRS 1 – First-time Adoption of International Financial Reporting Standards, concerning the transition from Accounting Principles Generally Accepted in the United States of America (“U.S. GAAP”) to IFRSs as adopted by the EU are given in Note 26.




F-7

Use of the Exemptions from Full Retrospective Application of IFRS as adopted by the EU As a first-time adopter in 2005, the Company has prepared its opening balance sheet under IFRSs as adopted by the EU as of January 1, 2004 (date of transition to IFRS as adopted by the EU) and has elected to use the following exemptions provided by IFRS 1 for the implementation of IFRSs as adopted by the EU at the date of transition. - Business Combinations Business combinations that occurred before the date of transition to IFRSs as adopted by the EU have not been restated retrospectively in accordance with IFRS 3 – Business Combinations. Assets acquired and liabilities incurred have thus been maintained, at the date of acquisition, at the value determined under U.S. GAAP. Goodwill arising on acquisitions before the date of transition to IFRSs as adopted by the EU has been retained at the previous U.S. GAAP amount and was tested for impairment at that date. - Share-based Payment The Company utilized the share-based payment exemption and, therefore, applied IFRS 2 – Share-based Payment only to warrants granted after November 7, 2002 that had not yet vested at January 1, 2005. Warrants granted on or before November 7, 2002 were not modified subsequent to this date and, as a result, these warrants have not been recognized in the financial statements. Basis of Consolidation The consolidated financial statements incorporate the financial statements of Telenet Group Holding and all of the entities that it directly or indirectly controls. Control is achieved where Telenet Group Holding has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. All intercompany accounts and transactions among consolidated entities have been eliminated. Management's Use of Estimates The preparation of financial statements in accordance with IFRSs as adopted by the EU requires the use of certain critical accounting estimates and management judgement in the process of applying the Company’s accounting policies that affects the reported amounts of assets and liabilities and disclosure of the contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 3. Property and Equipment Property and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is charged so as to write off the cost of assets, other than land and assets not yet ready for use, on a straight-line basis over their estimated useful lives. Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the lease. The following useful lives are used for the depreciation of property and equipment: Buildings and improvements........................................................................................................................... 10-33 yearsOperating facilities .......................................................................................................................................... 3-20 yearsOther equipment .............................................................................................................................................. 3-10 years The assets’ useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.




F-8

Depreciation charges in 2005 included the impact of one-time write-off costs and accelerated depreciation rates associated with certain network components which we acquired in connection with the ExpressNet upstream upgrade (Expressnet depreciated over 8 years and M-Tec amplifiers depreciated over 5 years). The costs associated with the construction of cable transmission and distribution facilities and also internet and telephony service installations are capitalized and depreciated over 3 to 20 years. Costs include all direct labor and materials as well as certain indirect costs. Government grants related to assets are recorded as a deduction from the cost in arriving at the carrying amount of the asset. The grant is recognised as income over the life of a depreciable asset by way of a reduced depreciation charge. Expenditures for repairs and maintenance are charged to operating expense as incurred. Borrowing costs are recognized in profit and loss in the period in which they are incurred. Intangible Assets Intangible assets are measured at cost and are amortized on a straight-line basis over their estimated useful lives as follows: Network user rights .............................................................................. 10 or 20 years Trade name ........................................................................................... 15 years Customer lists and supply contracts ..................................................... 5 or 15 years Broadcasting rights ............................................................................... Life of the contractual right Software development costs................................................................. 3 years Costs associated with maintaining computer software programmes are recognized as an expense as incurred. Costs that are directly associated with the production of identifiable and unique software products controlled by the Company, and that will probably generate economic benefits exceeding costs beyond one year, are recognised as intangible assets. Capitalized internal-use software costs include only external direct costs of materials and services consumed in developing or obtaining the software and payroll and payroll-related costs for employees who are directly associated with and who devote time to the project. Capitalization of these costs ceases no later than the point at which the project is substantially complete and ready for its intended purpose. Internally-generated intangible assets are amortised on a straight-line basis over their useful lives. Where no internally-generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it is incurred. Broadcasting rights are capitalized as an intangible asset when the value of the contract is measurable upon signing and are amortized on a straight-line basis over contractual life. Impairment of Tangible and Intangible Assets Excluding Goodwill Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Goodwill Goodwill arising on the acquisition of a subsidiary represents the excess of the cost of acquisition over the Company’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the subsidiary recognized at the date of acquisition. Goodwill is initially recognized as an asset at cost and is subsequently measured at cost less any accumulated impairment losses.




F-9

Goodwill is tested for impairment annually, or more frequently when there is an indication that it may be impaired. The Company has identified one cash-generating unit to which all goodwill was allocated. If the recoverable amount of the cash-generating unit is less than the carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill and then to the other assets pro-rata on the basis of the carrying amount of each asset. An impairment loss recognized for goodwill is not reversed in a subsequent period. Foreign Currency Transactions The Company's functional and presentation currency is Euros (“€”), which is also the functional currency of each of the Company's subsidiaries. Transactions in currencies other than Euros are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are translated at the rates prevailing on the balance sheet date. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Gains and losses arising on translation are included in profit or loss for the period, except for exchange differences arising on non-monetary assets and liabilities where the changes in fair value are recognised directly in equity. In order to hedge its exposure to certain foreign exchange risks, the Company enters into forward contracts and options (see below for details of the Company’s accounting policies in respect of such derivative financial instruments). Financial Instruments Financial assets and financial liabilities are recognized on the Company’s balance sheet when the Company becomes a party to the contractual provisions of the instrument. Cash and Cash Equivalents Cash equivalents consist principally of commercial paper and certificates of deposit with maturities of three months or less when purchased. Trade Receivables Trade receivables do not carry any interest and are stated at their fair value as reduced by appropriate allowances for estimated irrecoverable amounts. Financial Liabilities and Equity Instruments Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out below. Trade payables Trade payables are not interest bearing and are stated at their fair value. Bank borrowings Interest-bearing bank loans are recorded at the proceeds received, net of direct issue costs. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accrual basis to the profit and loss account using effective interest method and are recorded as a component of the related debt to the extent that they are not settled in the period in which they arise. Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.




F-10

Equity instruments Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. Warrants When issued in connection with detachable warrants to purchase shares, the fair value of debt securities is determined using a market interest rate for an equivalent debt instrument. Any resulting discount or premium on the debt securities is recognized using the effective interest rate method over the contractual term of the debt. The remainder of the proceeds is allocated to the detachable warrants and is recognized and included in shareholders’ equity, net of any income tax effects. The Company assesses whether freestanding warrants are to be classified within shareholder's equity or as a liability. Warrants accounted for as permanent equity are recorded at their initial fair value and subsequent changes in fair value are not recognized unless a change in the classification of those warrants occurs. Warrants not qualifying for permanent equity accounting are recorded at fair value as a liability with subsequent changes in fair value recognized through the income statement. Derivative financial instruments and hedge accounting The Company’s activities are exposed to changes in foreign currency exchange rates and interest rates. The Company seeks to reduce its foreign currency exposure through the use of certain derivative financial instruments in order to manage its exposure to exchange rate and interest rate fluctuations arising from its operations and funding. The Company has identified certain agreements as cash flow hedges including foreign exchange forward contracts, interest rate swap agreements, cap options and combinations of such instruments. The use of derivatives is governed by the Company’s policies approved by the board of directors, which provide written principles on the use of derivatives consistent with the Company’s risk management strategy described in Note 12. Changes in the fair value of derivative financial instruments that are designated and effective as hedges of future cash flows are recognised directly in equity and the ineffective portion is recognised immediately in the income statement. If the cash flow hedge of a firm commitment or forecast transaction results in the recognition of a non-financial asset or a liability, then, at the time the asset or liability is recognised, the associated gains or losses on the derivative that had previously been recognised in equity are included in the initial measurement of the asset or liability. For hedges that do not result in the recognition of an asset or a liability, amounts deferred in equity are recognised in the income statement in the same period in which the hedged item affects net profit or loss. Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised in the income statement as they arise. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. At that time, any cumulative gain or loss on the hedging instrument recognised in equity is retained in equity until the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to net profit or loss for the period. Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of host contracts and the host contracts are not carried at fair value with unrealised gains or losses reported in the income statement.




F-11

Fair Values The Company has estimated the fair value of its financial instruments in these consolidated financial statements using available market information or other appropriate valuation methodologies. Considerable judgment, however, is required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company would realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. The carrying amount of cash, accounts and other receivables, and accounts and other payables approximates fair value because of the short maturity of those instruments. Revenue Recognition Subscription fees for telephony, internet and premium cable television are prepaid by subscribers on a monthly basis and recognized in revenue as the related services are provided i.e. in the subsequent month. Subscription fees for basic cable television are prepaid by subscribers predominantly on an annual basis and recognized in revenue on a straight line basis over the following twelve months. Revenue from telephone and internet activity is recognized on usage. Installation fees are recognized immediately only when they represent a separately identifiable service that is delivered for which the related costs are expensed as incurred and reliably measurable. Accordingly, telephony and internet installation fees are recognized immediately whereas cable television activation fees are deferred and recognized over the estimated customer relationship period of 10 years. Together with subscription fees, basic cable television subscribers are charged a copyright fee for the content received from public broadcasters that is broadcasted over the Company’s network. These fees contribute to the cost the Company bears in respect of copyright fees paid to copyright collecting agencies for certain content provided by the public broadcasters and other copyright holders. The Company reports copyright fees collected from cable subscribers on a gross basis as a component of revenue as the Company is acting as a principal as the arrangement with the public broadcaster and other copyright holders does not represent a passthrough arrangement. Indeed, the Company bears substantial risk in setting the level of copyright fees charged to subscribers as well as in collecting such fees. Operating Expenses Operating expenses consist of interconnection costs, network operating and maintenance and repair costs and cable programming costs, including employee costs and related depreciation and amortization charges. The Company capitalizes most of its installation cost, including labor cost. Copyright and license fees paid to the holders of these rights and their agents are the primary component of the Company's cable programming costs. Other direct costs include costs that the Company incurs in connection with providing its residential and business services, such as interconnection charges as well as bad debt expense. Network costs consist of costs associated with operating, maintaining and repairing the Company's broadband network and customer care costs necessary to maintain its customer base. Provisions Provisions are recognized when the Company has a present obligation as a result of a past event, it is probable that the Company will be required to settle that obligation and the amount can be reliably measured. Provisions are measured at the Company’s best estimate of the expenditure required to settle its liability and are discounted to present value where the effect is material. Leases Leases are classified as finance leases whenever the terms of the lease transfer substantially all of the risks and rewards of ownership to the Company. Property and equipment acquired by way of finance lease are stated at an amount equal to the lower of their fair value and the present value of the minimum lease payments at inception of the lease, less accumulated depreciation and any impairment losses. Each lease payment is allocated between the liability




F-12

and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in long-term debt. The interest element of the finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. All other leases are classified as operating leases and are charged to profit or loss on a straight-line basis over the lease term. Income Taxes The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on taxable profit for the year using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. A deferred tax asset is recognised for the carryforward of unused tax losses to the extent that it is probable that future taxable profit will be available against which the unused tax losses can be utilized. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. In view of the Company's history of losses, no net deferred tax assets have been recognized. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Employee Benefits Pension Obligations The Company provides both defined benefit and defined contribution plans to its employees, directors and certain members of management. The defined benefit pension plans pay benefits to employees at retirement using formulas based upon years of service and compensation rates near retirement. The schemes are generally funded by payments from the participants and the Company to insurance companies as determined by periodic actuarial calculations and include the plans assumed from Electrabel SA (“Electrabel”) during 2004 (see Note 15). For defined benefit retirement benefit schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date. The corridor approach is applied to actuarial gains and losses. Such gains and losses are the result of changes in actuarial assumptions on retirement and similar commitments. Accordingly, all gains and losses exceeding 10 % of the greater of the present value of the defined benefit obligation and the fair value of any plan assets are recognized over the expected average remaining working life of the employees participating in the plan. Past service cost is recognised immediately to the extent that the benefits are already vested, and otherwise is amortised on a straight-line basis over the average period until the benefits become vested.




F-13

The retirement benefit obligation recognized in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost, and as reduced by the fair value of plan assets. Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due. Payments made to state-managed retirement benefit schemes are dealt with as payments to defined contribution schemes where the Company’s obligations under the schemes are equivalent to those arising in a defined contribution retirement benefit scheme. Other Employee Benefit Obligations Some entities provide long term service awards, health care premiums, early retirement plans and death benefits, among others, to their employees and/or retirees. The entitlement to these benefits is usually conditional on the employee remaining in service up to retirement age and the completion of a minimum service period. The expected costs of these benefits are accrued over the period of employment using an accounting methodology similar to that for defined benefit pension plans. Actuarial gains and losses arising from experience adjustments, and changes in actuarial assumptions, are charged or credited to income over the expected average remaining working lives of the related employees. Share-based Payments The Company issues equity-settled share-based payments to certain employees which are measured at fair value at the date of grant. The fair value is determined at the grant date using the Black-Scholes pricing model and is expensed on a straight-line basis over the vesting period, based on the Company’s estimate of shares that will eventually vest. The model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations. At each balance sheet date, the Company revises its estimates of the number of options that are expected to become exercisable. It recognises the cumulative impact of the revision of original estimates, if any, in the income statement, and 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. Standards, interpretations and amendments to published standards that are not yet effective Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the Company’s accounting periods beginning on or after January 1, 2006 or later periods but which the Company has not early adopted, as follows: – IAS 19 (Amendment), Employee Benefits (effective from January 1, 2006). This amendment introduces the option of

an alternative recognition approach for actuarial gains and losses. It may impose additional recognition requirements for multi-employer plans where insufficient information is available to apply defined benefit accounting. It also adds new disclosure requirements. As the Company does not intend to change the accounting policy adopted for recognition of actuarial gains and losses and does not participate in any multi-employer plans, adoption of this amendment will only impact the format and extent of disclosures presented in the accounts. The Company will apply this amendment from annual periods beginning January 1, 2006.

– IAS 39 (Amendment), Cash Flow Hedge Accounting of Forecast Intragroup Transactions (effective from January 1,

2006). The amendment allows the foreign currency risk of a highly probable forecast intragroup transaction to qualify as a hedged item in the consolidated financial statements, provided that: (a) the transaction is denominated in a currency other than the functional currency of the entity entering into that transaction; and (b) the foreign currency risk will affect consolidated profit or loss. This amendment is not relevant to the Company’s operations, as the Company does not have any intragroup transactions that would qualify as a hedged item in the consolidated financial statements as of December 31, 2005 and 2004.

– IAS 39 (Amendment), The Fair Value Option (effective from January 1, 2006). This amendment changes the

definition of financial instruments classified at fair value through profit or loss and restricts the ability to designate




F-14

financial instruments as part of this category. The Company believes that this amendment should not have a significant impact on the classification of financial instruments, as the Company should be able to comply with the amended criteria for the designation of financial instruments at fair value through profit and loss. The Company will apply this amendment from annual periods beginning January 1, 2006.

– IAS 39 and IFRS 4 (Amendment), Financial Guarantee Contracts (effective from January 1, 2006). This amendment

requires certain issued financial guarantees to be initially recognized at their fair value and subsequently measured at the higher of: (a) the unamortized balance of the related fees received and deferred, and (b) the expenditure required to settle the commitment at the balance sheet date. Management considered this amendment to IAS 39 and concluded that it is not relevant to the Company.

– IFRS 1 (Amendment), First-time Adoption of International Financial Reporting Standards and IFRS 6

(Amendment), Exploration for and Evaluation of Mineral Resources (effective from January 1, 2006). These amendments are not relevant to the Company’s operations.

– IFRS 6, Exploration for and Evaluation of Mineral Resources (effective from January 1, 2006). IFRS 6 is not

relevant to the Company’s operations. – IFRS 7, Financial Instruments: Disclosures, and a complementary amendment to IAS 1, Presentation of Financial

Statements – Capital Disclosures (effective from January 1, 2007). IFRS 7 introduces new disclosures to improve the information about financial instruments. It requires the disclosure of qualitative and quantitative information about exposure to risks arising from financial instruments, including specified minimum disclosures about credit risk, liquidity risk and market risk, including sensitivity analysis to market risk. The amendment to IAS 1 introduces disclosures about the level of an entity’s capital and how it manages capital. The Company has not yet completed its assessment of the impact of IFRS 7 and the amendment to IAS 1 to the level of disclosures currently provided. The Company will apply IFRS 7 and the amendment to IAS 1 from annual periods beginning January 1, 2007.

– IFRIC 4, Determining whether an Arrangement contains a Lease (effective from January 1, 2006). IFRIC 4 requires

the determination of whether an arrangement is or contains a lease to be based on the substance of the arrangement. It requires an assessment of whether: (a) fulfillment of the arrangement is dependent on the use of a specific asset or assets (the asset); and (b) the arrangement conveys a right to use the asset. Management is currently assessing the impact of IFRIC 4 on the Company’s operations but does not believe that it will have a material effect on the Company’s financial statements.

– IFRIC 5, Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds

(effective from January 1, 2006). IFRIC 5 is not relevant to the Company’s operations. – IFRIC 6, Liabilities arising from Participating in a Specific Market – Waste Electrical and Electronic Equipment

(effective from January 1, 2006). Management is currently assessing the impact of IFRIC 6 on the Company’s operations but does not believe that it will have a material effect on the Company’s financial statements.

– IFRIC 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies

(effective from January 1, 2007). IFRIC 7 is not relevant to the Company’s operations. – IFRIC 8, Scope of IFRS 2 (effective from January 1, 2007). IFRIC 8 clarifies that IFRS 2 applies to share-based

payment transactions in which the entity cannot specifically identify some or all of the goods or services received. Management is currently assessing the impact of IFRIC 8 on the Company’s operations but does not believe that it will have a material effect on the Company’s financial statements.

– IFRIC 9 Reassessment of Embedded Derivatives (effective from January 1, 2007). The Interpretation clarifies

whether an entity should reassess whether an embedded derivative needs to be separated from the host contract. IFRIC 9 concludes that reassessment is prohibited unless there is a change in the terms of the contract that significantly modifies the cash flows that otherwise would be required under the contract. Management is currently




F-15

assessing the impact of IFRIC 9 on the Company’s operations but does not believe that it will have a material effect on the Company’s financial statements.

3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY Critical judgements in applying the Company’s accounting policies Goodwill The Company performed its annual review for impairment during the third quarter of 2005 and 2004. Goodwill was allocated to one reporting unit. The key assumptions for the value in use calculations used to determine the recoverable amount are those regarding the discount rates and expected changes to selling prices/product offerings and direct costs during the period. Changes in selling practices and direct costs are based on past practices and expectations of future changes in the market. The calculation uses cash flow projections based on financial budgets approved by management, and a discount rate of 12.6 per cent based on current market assessments of the time value of money and the risks specific to the Company. Cash flows beyond the five-year period have been extrapolated using a steady 2 per cent growth rate. This growth rate does not exceed the long-term average growth rate for the industry. Management believes that any reasonably possible changes in the key assumptions on which the recoverable amount is based would not cause the carrying amount to exceed its recoverable amount. Key sources of estimation uncertainty Deferred Income Taxes As of December 31, 2005, Telenet Group Holding and its subsidiaries had available combined cumulative tax loss carry-forwards of €672,617 (2004: €1,056,185). Under current Belgian tax laws, these loss carry-forwards have an indefinite life and may be used to offset the future taxable income of Telenet Group Holding and its subsidiaries. Two subsidiaries acquired in a previous business combination made taxable profits of €37,135 (2004: €11,060) during the year and utilized tax loss carryforwards which had not been previously recognized as deferred tax assets resulting in a deferred tax expense of €14,917 (2004: €4,443). A deferred tax asset is recognised for the carryforward of unused tax losses to the extent that it is probable that future taxable profit will be available against which the unused tax losses can be utilized. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. In view of the Company's history of losses, no net deferred tax assets have been recognized.




F-16

4. PROPERTY AND EQUIPMENT

Land, buildings and

leasehold improvements Network

Construction in progress

Furniture, equipment

and vehicles Total

Cost At January 1, 2004............................... 35,499 1,228,242 9,732 21,099 1,294,572 Additions ............................................. 1,365 17,195 105,168 5,108 128,836 Transfers .............................................. 1,378 81,284 (82,662) - - Disposals.............................................. - (1,649) - (90) (1,739) At December 31, 2004 ........................ 38,242 1,325,072 32,238 26,117 1,421,669 Additions ............................................. 5,547 - 119,789 17,196 142,532 Transfers .............................................. 2,677 126,679 (129,356) - - Disposals.............................................. - - - (2,145) (2,145) At December 31, 2005 ........................ 46,466 1,451,751 22,671 41,168 1,562,056 Accumulated Depreciation At January 1, 2004............................... 2,783 293,926 - 6,425 303,134 Depreciation charge for the year ......... 1,052 150,247 - 8,022 159,321 Eliminated on Disposal ....................... - (1,472) - (90) (1,562) At December 31, 2004 ........................ 3,835 442,701 - 14,357 460,893 Depreciation charge for the year ......... 2,020 149,986 - 7,077 159,083 Eliminated on Disposal ....................... - - - (1,839) (1,839) At December 31, 2005 ........................ 5,855 592,687 - 19,595 618,137 Carrying Amount At December 31, 2005 ........................ 40,611 859,064 22,671 21,573 943,919 At December 31, 2004 ........................ 34,407 882,371 32,238 11,760 960,776 Carrying Amount of Finance

Leases included in Property and Equipment

At December 31, 2005 ........................ 18,256 5,790 - 468 24,514 At December 31, 2004 ........................ 18,950 6,254 - 573 25,777 5. GOODWILL A reconciliation of the changes in goodwill is depicted below:

December 31, 2005

December 31, 2004

Beginning balance ........................................................................................... 1,027,461 1,031,904 Use of net operating losses acquired in business combinations (Note 13)..... (14,917) (4,443) 1,012,544 1,027,461




F-17

6. OTHER INTANGIBLE ASSETS

Network

user rights

Trade name Software Customer

lists Other

Total

Cost At January 1, 2004 .................. 120,334 121,000 58,657 67,473 29,258 396,722 Additions ................................. 16,522 - 12,063 518 4,074 33,177 Disposals ................................. - - - - (5,577) (5,577) At December 31, 2004 ............ 136,856 121,000 70,720 67,991 27,756 424,323 Additions ................................. 1,311 - 34,632 - 8,859 44,802 Disposals ................................. - - - - (23,962) (23,962) At December 31, 2005 ............ 138,167 121,000 105,352 67,991 12,653 445,163 Accumulated Amortization At January 1, 2004 .................. 19,000 22,183 37,661 9,958 14,806 103,608 Charge for the year.................. 9,685 8,067 10,928 6,540 9,788 45,008 Disposals ................................. - - - - (5,069) (5,069) At December 31, 2004 ............ 28,685 30,250 48,589 16,498 19,525 143,547 Charge for the year.................. 10,343 8,067 13,720 6,532 8,570 47,232 Disposals ................................. - - - - (23,962) ) (23,962) At December 31, 2005 ............ 39,028 38,317 62,309 23,030 4,132 166,816 Carrying Amount At December 31, 2005 ............ 99,139 82,683 43,043 44,961 8,521 278,347 At December 31, 2004 ............ 108,171 90,750 22,131 51,493 8,231 280,776 The Company's intangible assets other than goodwill each have a finite life and are comprised primarily of network user rights, trade name, software development and acquisition costs, customer lists, broadcasting rights and contracts with suppliers. These intangible assets are amortized on a straight-line basis over their estimated useful lives. The Company evaluates the estimated useful lives of its finite intangible assets each reporting period to determine whether events or circumstances warrant revised estimates of useful lives. Primarily in connection with the acquisitions of Telenet Holding NV (“Telenet Holding”) in March 2001 and the Canal+ acquisition in December 2003, certain identifiable intangible assets, including customer lists, broadcasting rights, supply contracts and the “Telenet” trade name, were recorded separate from goodwill. Customer lists reflect €53,000 relating to the estimated value of the customers with access to the Combined Network at the time of the acquisition of Telenet Holding and €14,991 relating to the estimated value of the subscriber base of Canal+ upon acquisition. Supply contracts were assigned a value of €2,125 based on the estimated value of the agreements Canal+ had with major content providers at the time of the acquisition. Broadcasting rights were valued at €12,435 at the time of the Canal+ acquisition and additions are recorded when the value of the contract is reasonably determinable upon signing. The trade name recognized in intangible assets relates to the “Telenet” trade name acquired in the 2001 acquisition of Telenet Holding. Fair market valuations of acquired intangible assets were performed for these and other acquisitions made by the Company. The identified intangible assets are amortized on a straight line basis over 3 to 20 years.




F-18

7. TRADE RECEIVABLES

December 31, 2005

December 31, 2004

Trade receivables ............................................................................................. 117,771 100,331 Less: provision for impairment of receivables................................................ (19,094) (15,544) Trade receivables, net 98,677 84,787 The Company recognised a loss of €4,520 and €7,941 for the impairment of its trade receivables during the years ended December 31, 2005 and 2004, respectively. The loss has been included in cost of services provided in the income statement. There is no concentration of credit risk with respect to trade receivables, as the Company has a large number of customers. 8. OTHER CURRENT ASSETS

December 31, 2005

December 31, 2004

Prepaid taxes and VAT.................................................................................... 1.190 4,168 Inventory.......................................................................................................... 8,212 - Receivable from Electrabel ............................................................................. 7,965 8,039 Miscellaneous receivable................................................................................. 3,705 3,582 Prepaid content ................................................................................................ 2,270 2,125 Prepayments .................................................................................................... 3.111 2,889 Other ................................................................................................................ 215 47 26,668 20,850 9. CASH AND CASH EQUIVALENTS

December 31, 2005

December 31, 2004

Cash at bank and on hand................................................................................ 11,422 13,082 Commercial paper............................................................................................ 159,664 - Certificates of deposits .................................................................................... 39,273 132,106 210,359 145,188 The Company holds commercial paper with a weighted average interest rate of 2.31% (2004 : 2.1%) and an average maturity of 32 days (2004 : 61 days). The certificates of deposits have a weighted average interest rate of 2.3% (2004 : 2.1%) and an average maturity of 9 days (2004 : 13 days)




F-19

10. SHAREHOLDERS' EQUITY Following the end of the Employee Offering on October 21, 2005 and the expiry of the Over Allotment Period relating to the Secondary Offering on November 9, 2005, the shareholders are as follows.

Name of shareholder Number of

shares Percentage of

shares

Liberty Global Consortium(1)........................................................................... 21,542,474 21.5%Mixed Intercommunales(2) ............................................................................... 16,187,545 16.1%GIMV NV(3)..................................................................................................... 4,003,794 4.0%Financial Consortium(4) ................................................................................... 9,711,089 9.7%Pure Intercommunales/Interkabel Vlaanderen CVBA(5) ................................ 4,163,190 4.2%Electrabel ......................................................................................................... 91,909 0.1%Suez Connect(6) ................................................................................................ 360,000 0.4%Other(7) ............................................................................................................. 258,226 0.2%Free Float (arising from Primary and Secondary Offerings).......................... 43,886,626 43.8%Total 100,204,853 100.0%

(1) The Liberty Global Consortium includes two entities controlled by Belgian Cable Investors ("BCI"), InvestCo Belgian

Cable 1 S.à R.L. and InvestCo Belgian Cable 2 S.à R.L and Chellomedia Investments BV. BCI is ultimately controlled by Liberty Global, Inc., Evercore Capital Partners Cayman L.P., Evercore Capital Partners (NQ) Cayman L.P., Evercore Capital Offshore Partners Cayman L.P. and Evercore Co-Investment Partnership Cayman L.P. are also members of the consortium (collectively, "Evercore"). Additional members of the consortium are CDP Capital Communications Belgique Inc., a private investment subsidiary of the Caisse de dépôt et placement du Quebec ("CDPQ") and MLPE.

(2) The ten MICs are Intercommunale Maatschappij voor Gas en Electriciteit van het Westen, Intercommunale Maatschappij

voor Energievoorziening Antwerpen, Intercommunale Vereniging voor Energieleveringen in Midden-Vlaanderen, Intercommunale Maatschappij voor Televisiedistributie, Intercommunale Vereniging voor de Energiedistributie in de Kempen en het Antwerpse, IVERLEK, Intercommunale Maatschappij voor Televisiedistributie in het Gebied van Kempen en Polder, Intercommunale Maatschappij voor Televisiedistributie op de Linker Schelde-Oever, Intercommunale Maatschappij voor Televisiedistributie in Oost-Vlaanderen and Intercommunale Maatschappij voor Televisiedistributie in West-Vlaanderen.

(3) GIMV NV owns these Shares together with its affiliates Adviesbeheer GIMV Information & Communication Technology

NV, V.I.M NV and Gimfin NV. (4) The "Financial Consortium" is composed of the following regional financial institutions: Finstrad NV, Gevaert NV, Ibel

NV, KBC Private Equity NV and Sofinim NV. In its role as an arranger under the Senior Credit Facility, KBC Bank NV directly holds 47,154 Shares.

(5) The four PICs are Provinciale Intercommunale Electriciteitsmaatschappij van Limburg, Intercommunale voor

Teledistributie van het Gewest Antwerpen, West-Vlaamse Energie- en Teledistributiemaatschappij and Provinciale Brabantse Energiemaatschappij. The PICs hold their Shares through Interkabel Vlaanderen CVBA (“Interkabel”), which is an entity controlled by the PICs.

(6) On December 9, 2003, pursuant to the acquisition of Telenet Solutions and its subsidiaries, 360,000 Shares of Telenet

Group Holding were issued to Suez Connect SA. (7) Includes the 14,269 shares that were issued under the Employee Offering. Telenet Group Holding currently has the following shares outstanding, all of which are treated as one class in the loss per share calculation:

• 98,039,912 ordinary Shares;




F-20

• 2,164,911 dispreference shares that are held by Interkabel and the Liberty Global Consortium, which have the same rights as the ordinary Shares except that they are subject to an €8.02 liquidation dispreference, such that in any liquidation of Telenet Group Holding the dispreference shares would only participate in the portion of the proceeds of the liquidation that exceeded €8.02 per Share. Dispreference shares may be converted into ordinary Shares at a rate of 1.04 to 1; and

• 30 Golden Shares held by the mixed intercommunales, which have the same rights as the ordinary Shares and which also give their holders the right to appoint representatives to the Regulatory Board, which oversees the public interest guarantees related to our offering of digital television.

In December 2004, Cable Partners Europe sold a majority controlling interest in its subsidiary CAHB to an entity controlled by Liberty Media International. Prior to this transaction, CAHB was the controlling shareholder of the Cable Partners Consortium, which represented 21.4% of the Shares. Following the transaction, CAHB was renamed Belgian Cable Investors LLC and the CAHB subsidiaries Callahan Associates Belgium 1 S.à R.L. and Callahan Associates Belgium 2 S.à R.L. were renamed InvestCo Belgian Cable 1 S.à R.L. and InvestCo Belgian Cable 2 S.à R.L. respectively. Together with the other shareholders in InvestCo Belgian Cable 1 S.à R.L. and InvestCo Belgian Cable 2 S.à R.L., and with the interest in Telenet Group Holding owned directly by Chellomedia Investments BV and several affiliates of Evercore Partners, Inc. (together, “InvestCo Belgian Cable”), Belgian Cable Investors LLC controls 21.5% of the Shares as majority shareholder of the Liberty Global Consortium. Employee Stock Based Compensation 1999 and 1998 Plans On November 23, 1999 (the “1999 Plan”) and November 25, 1998 (the “1998 Plan”), Telenet Holding granted options to certain employees to purchase 77,500 and 42,250 of its shares, respectively, at an exercise price of €24.79 per share for these purposes. Options were fully vested in January 2003 for the 1999 Plan and March 2002 for the 1998 Plan, and can be exercised annually through 2009 and 2008, respectively, in the months March, June, September and December, with the exception of the last exercise period that runs from November 1 to November 30. In October 2001, the holders of options were granted the contractual right pursuant to which they were entitled to sell 55% of the Telenet Holding shares, which they obtained upon the exercise of the options, to CAI Belgium at the fair value of such shares at the time of exercise of the put option. Also in October 2001, following the restructuring of the Company, Telenet Holding, on behalf of Telenet Group Holding, granted to the option holders an additional contractual rights to convert shares, which they obtain upon the exercise of options to purchase Telenet Holding shares, to Telenet Group Holding shares. The exchange ratio will reflect the fair market valuation of Telenet Holding and Telenet Group Holding at the time of the exchange. These contractual rights can be exercised within a period of one month after the exercise of the options and will expire upon the maturity of the 1998 and 1999 plans. On September 29, 2005, in anticipation of the Offering, the Company requested the holders of the remaining 44,390 options under the 1999 and 1998 Plans to exercise their outstanding options and offered to either sell the Telenet Holding shares they received from the exercise of the options to Telenet Bidco for cash or to convert them into shares of Telenet Group Holding. All the option holders exercised their remaining Telenet Holding options and sold their Telenet Holding Shares to Telenet Bidco for €50 per share plus an additional amount contingent upon the closing share price for the Company on the first day of trading on Euronext. The Company paid the option holders €1,120 in September 2005 and an additional amount of €324 in October 2005 for the contingent consideration. 2003 Plan In September 2003, Telenet Group Holding adopted the 2003 Plan to grant warrants to acquire up to 500,000 shares of the Company. This plan was cancelled in December 2004 prior to any options being granted.




F-21

Class A and Class B Options In August 2004, the Company granted 1,500,000 Class A Options to certain members of management to subscribe to 1,500,000 Class A Profit Certificates (“Class A Options”). Except for 506,712 Class A Options that vested immediately upon grant, the vesting period of the Class A Options extends to a maximum to 40 months and can be exercised through June 2009. The fair value of the Class A Options was determined on the date of grant to be €8.46 using the Black-Scholes option-pricing model with the following assumptions: annual Euro swap interest rate for each respective expiration date, expected life of 4.9 years, and a dividend yield of 0.0% and volatility of 24% In December 2004, the Company offered 1,251,000 of the 1,350,000 authorized Class B Options to certain members of management to subscribe to 1,251,000 Class B Profit Certificates (“Class B Options”). Of the 1,251,000 Class B Options offered by the Company, 1,083,000 were accepted in February 2005. The remaining 267,000 Class B Options were cancelled on September 20, 2005. Except for 105,375 Class B Options that vested immediately upon grant, the Class B Options vest over 4 years and can be exercised through December 2009. The fair value of the Class B Options was determined on the date of grant to be €5.12 using the Black-Scholes option-pricing model with the following assumptions: annual Euro swap interest rate for each respective expiration date, expected life of 4.9 years, and a dividend yield of 0.0% and volatility of 20% The Class A and the Class B Options must be exercised in multiples of three, giving the right to acquire three Class A Profit Certificates against payment of €20 or three Class B Profit Certificates for €25. The Class A and Class B Profit Certificates are exchangeable into shares of the Company on a one for one basis, subject to certain conditions being met. Upon exercise, these profit certificates give the holders the right to receive dividends equal to dividends distributed, if any, to the holders of the Company’s shares. In the case of an initial public offering or a change of control, the vesting for half of the remaining non vested Class A Options would be brought forward to the date of the offering or change in control. In contemplation of the IPO, the Board of Directors decided at its September 2, 2005 meeting to accelerate the vesting of 121,968 Class B Options, contingent upon the closing of the IPO which occurred on October 11, 2005. The terms and conditions of the certificates as originally granted did not provide for such accelerated vesting but allowed the Board of Directors the possibility of accelerating vesting subsequent to grant. As a result of this modification, additional compensation expense of €576 was incurred in October 2005 based on the increase in the intrinsic value of the Class A Option at the date of grant. The remaining non vested Class A and Class B Options will vest over the remaining original vesting periods. All Plans A summary of the activity of the Company's stock options for the years ended December 31, 2005 and 2004 is as follows:

Outstanding Options

Number of

Options Weighted Average

Exercise Price Balance, January 1, 2004............................................................................... 44,390 24.79 Class A Options granted................................................................................ 1,500,000 6.67 Balance December 31, 2004.......................................................................... 1,544,390 7.19 Class B Options granted ................................................................................ 1,083,000 8.33 1998 Plan & 1999 Plan options exercised .................................................... (44,390) 24.79 Class B options exercised.............................................................................. (62,877) 8.33 Balance December 31, 2005.......................................................................... 2,520,123 7.34




F-22

The following table summarizes information about stock options outstanding and exercisable as of December 31, 2005:

Number of Options

Outstanding

Number of Options

Exercisable

Weighted Average

Remaining Contractual

Life

Weighted Average

Exercise Price (in Euros)

Class A Options...................................... 1,500,000 1,395,807 42 months 6.67 Class B Options ...................................... 1,083,000 461,892 48 months 8.33

Warrants Subordinated Debt Warrants The Company has 3,426,000 subordinated debt warrants outstanding (the ‘‘Subordinated Debt Warrants’’). Of these, 2,960,000 warrants relate to warrants that had previously been issued to the Cable Partners Consortium, GIMV, the Financial Consortium and the MICs and whose terms where restated and amended in conjunction with the December 2003 issuance of the Senior Notes and the Senior Discounts Notes, and the modification of the Senior Credit Facility (the “Refinancing”). The remaining 466,000 Subordinated Debt Warrants were issued to GIMV and the Financial Consortium in connection with the Refinancing in 2003. Each Subordinated Debt Warrant entitles the holder thereof to three shares of Telenet Group Holding upon payment of an exercise price of €40. Alternatively, holders may opt for a ‘‘cashless’’ exercise of the Subordinated Debt Warrants. In such a case, they will be entitled to acquire a reduced number of shares of Telenet Group Holding , using the value of their warrants (measured by the market value of the shares of Telenet Group Holding at the time of exercise less the exercise price of the warrants) to acquire shares of Telenet Group Holding at their market value. The warrants can be exercised at any time during the exercise period ending on August 9, 2009. Bank Warrants In conjunction with the Senior Credit Facility obtained in July 2002, the Company issued in August 2002 a total of 100,000 detachable warrants, which vested immediately upon issuance. Until the expiration date in August 2007, these warrants gave the holders the right to purchase a number of the Company's ordinary shares for €0.01 per warrant. The number of shares would only be known at the exercise date as it was ultimately based on the number of outstanding shares at that August 9, 2002 adjusted by various factors, including additions for shares issued upon the exercise of other warrants. These warrants are no longer held by the lenders and all but 15,714 have been cancelled. The remaining 15,714 warrants were transferred as part of the settlement of the subordinated shareholder debts that were repaid on December 22, 2003. On August 24, 2005, the Company’s Chief Executive Officer exercised the 15,714 Bank Warrants acquired in 2004 at a price of €0.01 per 21 shares, and, as a result, acquired 329,994 shares.




F-23

11. DEBT AND OTHER FINANCING

December 31,

2005 December 31,

2004 Senior Credit Facility: Tranche A ........................................................................................................ 218,880 314,045 Tranche B......................................................................................................... 11,120 15,955 Tranche C2....................................................................................................... - 110,000 Tranche E......................................................................................................... 405,000 300,000 Senior Notes..................................................................................................... 493,175 500,000 Senior Discount Notes (1) ................................................................................. 220,861 263,150 Clientele Fee .................................................................................................... 42,379 43,748 Annuity Fee...................................................................................................... 53,822 57,281 Finance lease obligations................................................................................. 26,497 27,350

1,471,735 1,631,529 Plus : accrued interest 17,829 13,080 Less: deferred financing fees........................................................................... (44,650) (63,845) 1,444,914 1,580,764 Less: current portion........................................................................................ (156,129) (20,009) Total long-term debt ........................................................................................ 1,288,785 1,560,755 ___________ (1) Accreted balance of the Senior Discount Notes, converted to Euros on December 31, 2005 and 2004 at the accounting

rate of $1.1797 to €1.00 and $1.3621 to €1.00, respectively. Total debt is denominated in Euros with the exception of the Senior Discount Note which is denominated in U.S. Dollars. Fixed interest rates applied to 48.5% of the total financial debt (2004: 46.8%). The weighted average interest rates at year end was 9.77% on fixed interest rate loans (2004: 9.86%) and 4.83% on floating interest rate loans (2004: 5.34%). Senior Notes On December 22, 2003, Telenet Communication issued Senior Notes with a principal amount of €500,000, receiving net proceeds of €482,310. Interest on the notes is payable semi-annually at an annual rate of 9%. The notes do not have required principal repayments prior to maturity on December 15, 2013.

Telenet Communications initiated an offer for approximately €125,522 of principal and accrued interest of its Senior Notes on November 30, 2005. Under the terms of the offer, which closed in January 2006, Telenet Communications redeemed €124,773 of principal of the Senior Notes plus accrued interest of €749, and paid a 9.0% redemption premium of €11,230, resulting in a total payment to holders of the Senior Notes of €136,752. Senior Discount Notes On December 22, 2003, the Company issued Senior Discount Notes at 57.298% of par value with a principal amount at maturity of $558,000 (or €450,654 using the exchange rate obtained upon the issuance of $1.2382 per €1.00), receiving net proceeds of €242,527. Interest on the notes started accreting from December 22, 2003 at an annual rate of 11.5%, compounded semi-annually. Commencing on June 15, 2009 until maturity on June 15, 2014, interest is payable semi-annually at an annual rate of 11.5%. There are no required principal repayments prior to maturity. In connection with the issuance of the Senior Discount Notes, the Company entered into a registration rights agreement pursuant to which it undertook to either complete a registered exchange offer (or, if required, cause a shelf




F-24

registration statement to become effective) with respect to the Senior Discount Notes by June 30, 2005, or to pay in cash liquidated damages at a rate equal to 1% per annum of the accreted value of the Senior Discount Notes until December 31 2005. The accreted value of the Senior Discount notes as of June 30, 2005 was $379 million. Because the Company has not completed a registered exchange offer (or caused a shelf registration statement to become effective) with respect to the Senior Discount Notes as of June 30, 2005, it paid liquidated damages of $1,150 (or €973) to holders of the Senior Discount Notes on December 15, 2005. Under the terms of the registration rights agreement, the obligation to pay liquidated damages will continue until the earlier of the date that (i) a registered exchange offer is completed with respect to the Senior Discount Notes, (ii) a shelf registration statement, if requirement under the registration rights agreement, is declared effective by the SEC, or (iii) the period referred to in Rule 144(k) under the Securities Act expires with respect to the Discount Notes.

On October 17, 2005, Telenet Group Holding initiated an offer for up to 35% of the accreted value of its Senior Discount Notes, as calculated under the terms of the indenture governing such Notes, including an adjustment for amounts redeemed under the Change of Control Offer for the Senior Discount Notes, described below, such that not less than 65% of the Senior Discount Notes remains outstanding. Under the terms of the offer, which closed on November 23, 2005, Telenet Group Holding redeemed Senior Discount Notes with an accreted value of $136,171 (€115,233), representing 34.6% of $393,743 (€465,286), the total accreted value of the Senior Discount Notes as of such date, and paid an 11.5% redemption premium of $15,660 (€13,252). In addition, Telenet Group Holding paid $552 (€467) in accrued liquidated damages with respect to the redeemed Senior Discount Notes. The redemption cost associated with this exercise was recorded as an increase in interest cost in the fourth quarter of 2005. Change of Control Offers for the Telenet Group Holding Senior Discount Notes and Telenet Communications Senior Notes Certain of the Company’s shareholders entered into an agreement on October 14, 2005 which, among other matters, amended certain governance terms. The Company concluded that these changes resulted in a Change of Control within the definitions of the relevant indentures. Therefore, on October 17, 2005, Telenet Group Holding and Telenet Communications initiated change of control offers for the full accreted value and outstanding principal amount of Senior Discount Notes and Senior Notes, respectively (the “Change of Control Offers”). As per the terms of the indentures governing the Senior Discount Notes and Senior Notes, the Change of Control Offers were made at 101% of accreted value and outstanding principal amount, respectively. The Change of Control Offers expired on November 18, 2005 at which time $2,523 of face value at redemption of the Senior Discount Notes and €6,825 of the Senior Notes were tendered for redemption and settled during November 2005 together with accreted or accrued interest, as appropriate, the 1% redemption premium and the accrued liquidated damages in respect of the Senior Discount Notes. Pursuant to the Change of Control Offers, the total cost of the Senior Discount Notes purchased was $2,559 and the total cost of the Senior Notes purchased was €7,165. Senior Credit Facility The Company has a senior secured facility currently providing up to €835,000 in committed financing from a syndicate of lenders and in various tranches (the “Senior Credit Facility”). A further €150,000 in uncommitted senior secured facilities has also been obtained by the Company. Since the date that the Senior Credit Facility was originally signed in July 2002, the Company has amended the terms and structure and made partial prepayments of the Senior Credit Facility in line with its requirements and its evolving credit profile. In March 2004, the Company prepaid €100,000 of the Senior Credit Facility using proceeds of the Senior Notes issued on December 22, 2003. On March 31, 2005, as part of a series of amendments to its Senior Credit Facility, the Company paid €210,000 to partially reduce the outstanding principal of Tranches A and B and to fully repay the outstanding principal of Tranche C2 of the Senior Credit Facility, while at the same time drawing €105,000 under Tranche E, resulting in a net prepayment of €105,000. The Company cancelled Tranche C2 including its undrawn balance and increased the available committed revolving credit facility under Tranche D from €100,000 to €200,000, resulting in an increase in undrawn committed facilities from €140,000 to €200,000. In addition, the Company obtained an uncommitted acquisition and liquidity facility of €150,000, Tranche C, from the senior lenders and reduced the




F-25

margins applicable for Tranches A, B, D and E. As a result of these amendments, the Company wrote off €6,799 of debt issuance cost related to the Senior Credit Facility in the first quarter of 2005 and capitalized new debt issuance costs for an amount of €1,497. As of December 31, 2005, the major terms and conditions of the various committed tranches of the Senior Credit Facility were as follows: • Tranche A: The Tranche A facility provides for an amortizing term loan and guarantee facility

expiring in 2009 for an amount of up to €218,880 (2004: €314,045). Amounts under the facility bear interest at Euribor plus a margin of 2.50% as of December 31, 2004 and 3% from January 1, 2005. This margin decreases over time to the extent that the Company's leverage is reduced.

• Tranche B: The Tranche B facility provides for an amortizing revolving credit facility, expiring in

2009, of up to €11,121 (2004: €15,955). Amounts under the facility bear interest at Euribor plus a margin of up to 2.50% as of December 31, 2004 and up to 3% from January 1, 2005. This margin decreases over time to the extent that the Company's leverage is reduced

• Tranche C2: Tranche C2 was a nonamortizing term loan with a principal amount of €150,000 which

matured in 2010. Amounts under the Tranche C2 facility incurred interest at Euribor plus a margin of up to 3.75% (2004: 3.75%). The outstanding principal under this facility was fully repaid on March 31, 2005.

• Tranche D: The Tranche D facility provides for a revolving credit facility, expiring in 2009, of

€200,000. Amounts under the facility bear interest at Euribor plus a margin of up to 3.50% (2004: 3.50%). This margin decreases over time to the extent that the Company's leverage is reduced. On March 31, 2005 the company increased the Tranche D facility from €100,000 to € 200,000. As of December 31, 2005, the undrawn availability was € 200,000 (2004: € 100,000)

• Tranche E: The Tranche E facility provides for a non-amortizing term loan, expiring in 2011, of

€405,000. Amounts under the facility bear interest at Euribor plus a margin of 2.50% (2004: 3.25%). On March 31, 2005 the Company increased the Tranche E facility from €300,000 to €405,000 and the Company drew € 105,000 under the Tranche E facility to repay € 105,000 under the Tranche C2 facility. As of December 31, 2005 and 2004, this facility was fully drawn.

A commitment fee of 0.75% is payable on the undrawn balance of Tranche D. No commitment fees are payable in respect of Tranches A, B and E. The Senior Credit Facility contains representations and warranties, covenants, information requirements, events of default and financial covenants. The availability of the undrawn credit facilities is subject to meeting certain covenant and access tests. The financial covenants, which are tested on a quarterly basis, measure performance against, among others, standards for leverage, debt service coverage, revenues, and earnings before interest, taxes, depreciation, and amortization (“EBITDA”). As part of the 2005 amendment to the Senior Credit Facility, the financial covenants are based on IFRSs as adopted by the EU. Additionally, the agreements contain provisions requiring mandatory loan prepayments under specific circumstances. As of December 31, 2005 and 2004, the Company was in compliance with all of its financial covenants. Clientele and Annuity Agreements In 1996, the Company entered into a Clientele Agreement and an Annuity Agreement with the Pure Intercommunale Companies (“PICs”), through Interkabel Vlaanderen CVBA (“Interkabel”), which is a related party of the Company. The clientele fee payable under the Clientele Agreement is payable by the Company in return for access to the cable network customer database owned and controlled by the PICs. The clientele fee is payable as long as the Company maintains its usage rights to the cable network, and is adjusted periodically depending on the level of inflation. Such




F-26

payments allow the PICs to recover part of their historical investment to upgrade the original cable network to allow for two-way communication (the “HFC Upgrade”). Considering this, the present value of the clientele fee payments over the first 20 years (being the life of the longest lived assets that are part of the HFC Upgrade) has been accounted for as network user rights under intangible assets, and is amortized over 10 or 20 years depending on the useful life of the underlying assets that make up the HFC Upgrade. In accordance with the terms of the Annuity Agreement, the PICs charge an annuity fee, which in substance covers the remaining 60% of the cost of the HFC Upgrade incurred by the PICs, to the Company. Payments under the Annuity Agreement are due over a period of 10 or 20 years, depending on the useful life of the underlying assets that make up the HFC Upgrade incurred by the PICs. The present value of the future payments under the Annuity Agreement has been capitalized as network user rights under intangible assets, and is amortized over 10 or 20 years depending on the useful life of the underlying assets that make up the HFC Upgrade. Finance Lease Obligations

Minimum lease payments Present value of

minimum lease payments December 31,

2005 December 31,

2004 December 31,

2005 December 31,

2004 Within one year ...................................... 2,159 1,902 1,184 943 In the second to fifth years, inclusive .... 11,509 10,342 8,223 6,989 Thereafter................................................ 22,091 24,993 17,090 19,418 Total minimum lease payments.............. 35,758 37,237 26,497 27,350 Less: future finance charges................... (9,261) (9,887) - - Present value of lease obligations .......... 26,497 27,350 26,497 27,350

Less: amount due for settlement within 12 months .................................... 1,184 943 Amount due for settlement after 12 months .................................................... 25,313 26,407

The Company leases certain assets under finance leases including buildings, head-ends and certain vehicles with average lease terms of 12, 20 and 5 years, respectively. Leases of head-ends include the equipment used to receive signals of various devices, whether directly from the transmitter or from a microwave relay system. These devices are used, among other things, to transmit data and telephony and television signals. For the year ended December 31, 2005, the average effective borrowing rate was 3.76% (2004: 3.56%). Interest rates are fixed at the contract date. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments. The Company’s obligations under finance leases are secured by the lessors’ title to the leased assets.




F-27

Repayment Schedule Aggregate future principal payments on the total borrowings under all of the Company's debt agreements other than finance leases, are as follows:

December 31,

2005 December 31,

2004 On demand or within one year ........................................................................ 12,342 5,986 In the second year ............................................................................................ 51,725 14,773 In the third year................................................................................................ 52,166 71,090 In the fourth year ............................................................................................. 52,485 71,527 In the fifth year ................................................................................................ 52,199 71,841 After five years ................................................................................................ 1,224,321 1,368,962 1,445,237 1,604,179 Guarantees Obligations under the Senior Notes, Senior Discount Notes and the Senior Credit Facility are guaranteed and cross-guaranteed by certain subsidiaries of Telenet Group Holding. The obligations are also secured by mortgages and by pledges of certain equity interests, material contracts, and other rights and claims held by certain of Telenet Group Holding's subsidiaries including, on a consolidated basis, property and equipment of €943,919, intangible assets of €278,347, trade receivables of €98,409 and other current assets of €97,894. 12. DERIVATIVE FINANCIAL INSTRUMENTS The Company seeks to reduce its foreign currency exposure through a policy of matching, to the extent possible, assets and liabilities denominated in foreign currencies. In addition, the Company uses certain derivative financial instruments in order to manage its exposure to exchange rate and interest rate fluctuations arising from its operations and funding. The Company has identified certain foreign exchange forward contracts, interest rate swaps, caps and collars as cash flow hedges and has determined that it has no significant embedded derivative instruments that are required to be bifurcated and measured at fair value. The Company is also exposed to credit risks. Foreign Currency Cash Flow Hedges In order to hedge the foreign exchange exposure resulting from the issuance of U.S. dollar-denominated Senior Discount Notes, the Company purchased a series of foreign exchange forward contracts for a total nominal amount of $558,000, which is the fully accreted value of the Senior Discount Notes as of December 15, 2008 (the “Full Accretion Date”). On November 23, 2005, the Company used the proceeds of the sale of new shares in the primary offering to use its right to redeem 35% of the accreted value of Telenet Group Holding’s Senior Discount Notes, representing €117,368 in principal (resulting in a total redemption amount of €131,118 including the repurchase premium, accrued interest, accrued liquidated damages and based on the transaction exchange rate of U.S.$ 1.1817 per euro). The redemption reduced the outstanding accreted value on that date from $396,264 to $257,571. The fully accreted value of the Senior Discount Notes as of the Full Accretion Date decreased to $362,700. In order to align the total nominal amount of the foreign exchange forward contracts with the outstanding debt on the Full Accretion Date, the Company has unwound a portion of these contracts on the early redemption date. The termination of the contracts resulted in a settlement cost of €4,955.




F-28

The hedging instrument in this hedging relationship is the spot value of the foreign exchange forward contracts, as defined by the difference between the spot rate at inception and the closing spot rate. The risk being hedged is the variability of the Euro-equivalent cash flows related to (i) the anticipated fully accreted amount of the Senior Discount Notes as of the Full Accretion Date, and (ii) the estimated early redemption amount. Hedge effectiveness is assessed periodically, based on the U.S. dollar spot rate, comparing the change in spot value of the foreign exchange forward contracts with the change in anticipated Euro-equivalent cash flows upon the future repayment of the fully accreted value of the Senior Discount Notes. This implies that the impact of ineffectiveness, together with changes in the fair value of the forward points on the foreign exchange forward contracts, will be recorded directly through earnings. As of December 31, 2005 and December 31, 2004 outstanding foreign exchange forward contracts that qualified as cash flow hedges were as follows:

December 31,

2005 December 31,

2004

Forward purchase contracts Notional amount in U.S. dollars...................................................... 362,700 558,000 Weighted average contract price (U.S. dollars per Euro)............... 1.1930 1.1968 Maturity ........................................................................................... December 15, 2008 December 15, 2008 Foreign Exchange Risk Related to Operations The Company has used forward and option contracts in order to limit its exposure to the U.S. dollar fluctuations against the Euro for transactions that are part of daily operations. These derivatives are economic hedges but have not been accounted for as cash flow hedges. Derivative financial instruments covering operational foreign exchange risk exposure as of December 31, 2005 and December 31, 2004 were as follows:

December 31,

2005 December 31,

2004

Option contracts Notional amount in U.S. dollars...................................................... 17,500 8,000 Weighted average strike price (U.S. dollars per Euro)................... 1.17 1.27

Maturity ........................................................................................... From January to

July 2006 From January to

July 2005

Interest Rate Risk Cash Flow Hedges The Company has entered into interest rate swaps, caps and collars designed to hedge the interest rate exposure associated with various floating rate debts. The differential between the fixed rate of the swap or the strike of the option and the floating interest rate multiplied by the notional amount of the contract is the gain or loss of the contract. This gain or loss is included in interest expense in the period for which the interest rate exposure was hedged if the hedge is deemed to be effective Interest rate swaps qualifying for cash flow hedge accounting have been designated as hedging instruments in their entirety. The time value of cap and collar contracts has been excluded from the designation. Hedge effectiveness is determined using the hypothetical derivative method. Cumulative changes in the fair value of the hedging instrument are compared to cumulative changes in the fair value of the hypothetical derivative. When the Company determines that a derivative is not highly effective as a hedging instrument, hedge accounting is discontinued prospectively. Consequently, amounts accumulated in other comprehensive income are




F-29

transferred to earnings in the same periods during which the hedged forecasted transaction affects earnings. When hedge accounting is discontinued because it is no longer expected that a forecasted transaction will occur, the Company reclassifies amounts accumulated in other comprehensive income to earnings immediately.

During 2005, interest rate swaps for a total notional amount of €341,756 were disqualified as hedging instruments since the hedges were assessed to be no longer highly effective. The impact in hedging reserves of these disqualifications is quantified in the summary table. As of December 31, 2005 and December 31, 2004, the outstanding contracts were as follows:

December 31,

2005 December 31,

2004

Interest rate swaps Notional amount ......................................................................... 180,762 472,312 Average pay interest rate ............................................................ 4.78% 4.3% Average receive interest rate ...................................................... 2.4% 2.1% Maturity....................................................................................... From 2008 to 2011 From 2005 to 2011 Caps Notional amount ......................................................................... 59,504 738,138 Average cap interest rate ............................................................ 4.4% 4.0% Maturity....................................................................................... From 2009 to 2017 From 2005 to 2017 Collars Notional amount ......................................................................... 450,000 450,000 Average floor interest rate .......................................................... 2,5% 2.5% Average cap interest rate.......................................................... 5,4% 5.4% Maturity....................................................................................... From 2009 to 2011 From 2009 to 2012 Summary The cumulative impact of the all of the derivative instruments described above has been allocated between hedging reserves and earnings as follows:

Fair Value Hedging Reserves

Earnings

January 1, 2004 ........................................................... (30,778) (1,765) (29,013) Change in fair value of foreign exchange forward

contracts................................................................... (44,660) (36,881) (7,779) Change in fair value of foreign exchange forward

contracts reclassified into earnings ......................... - 23,973 (23,973) Change in fair value of foreign exchange option

contracts................................................................... 94 - 94 Change in fair value of interest rate derivatives

prior to hedge inception........................................... 12,166 - 12,166 Change in fair value of interest rate derivatives after

hedge inception........................................................ (17,956) (11,954) (6,002)

December 31, 2004 ..................................................... (81,134) (26,627) (54,507)




F-30

Change in fair value of foreign exchange forward

contracts................................................................... 51,576 62,161 (15,540) Change in fair value of foreign exchange forward

contracts reclassified into earnings ......................... - (43,403) 43,403 Change in fair value of foreign exchange option

contracts................................................................... 251 - 251 Change in fair value of interest rate derivatives

qualifying for hedge accounting.............................. 252 (70) 322 Change in fair value of interest rate derivatives not

qualifying for hedge accounting.............................. 6,383 - 6,383 Amortization of the change in fair value of interest

rate derivatives frozen upon discontinuance of hedge accounting. ................................................... - 9,017 (9,017)

December 31, 2005 ..................................................... (22,672) 1,078 (28,705)

The difference between the cumulative change in fair value of the derivative instruments and the cumulative amounts booked in the hedging reserve and earnings amounts to €4,955. This corresponds to the settlement of foreign exchange forward contracts as described in detail above. Credit Risk Credit risk relates to the risk of loss that the Company would incur as a result of non-performance by counterparties. The Company maintains credit risk policies with regard to its counterparties to minimize overall credit risk. These policies include an evaluation of a potential counterparty's financial condition, credit rating, and other credit criteria and risk mitigation tools as deemed appropriate. The largest share of the gross assets subject to credit risk is accounts receivable from residential and small commercial customers located throughout Belgium. The risk of material loss from nonperformance from these customers is not considered likely. Reserves for uncollectible accounts receivable are provided for the potential loss from nonpayment by these customers based on historical experience. With regards to credit risk on financial instruments, the Company maintains a policy of entering into such transactions only with highly rated European and U.S. financial institutions. Fair market value The carrying amounts and related estimated fair values of the Company’s significant financial instruments were as follows:




F-31

December 31, 2005 December 31, 2004 Carrying

Amount Fair

Value Carrying

Amount Fair

Value Long-term debt (including short-term

maturities)............................................. (1,471,734) (1,558,466) (1,631,529) (1,741,770) Foreign exchange forward ..................... (10,904) (10,904) (62,480) (62,480) Foreign exchange options ...................... 27 27 (224) (224) Interest rate swaps .................................. (7,994) (7,994) (14,194) (14,194) Caps ........................................................ (718) (718) (623) (623) Collars..................................................... (3,083) (3,083) (3,613) (3,613)

Total derivative instruments.............. (22,672) (22,672) (81,134) (81,134)

Total........................................................ (1,494,406) (1,581,138) (1,712,663) (1,822,904) The fair values of interest rate swaps and foreign exchange forwards are calculated by the Company based on swap curves flat, without extra credit spreads. Confirmations of the fair values received from the contractual counterparties, which are all commercial banks, are used to validate the internal calculations. The fair value of derivative instruments containing option-related features are determined by commercial banks and validated by management. The fair values of our long-term debt instruments are derived as the lesser of either the call price of the relevant instrument or the market value as determined by quoted market prices at each measurement date, where available, or, where not available, at the present value of future cash flows discounted at rates consistent with comparable maturities with similar credit risk to the appropriate measurement date. The carrying amounts for financial assets classified as current assets and the carrying amounts for financial liabilities classified as current liabilities approximate fair value due to the short maturity of such instruments. The fair values of other financial instruments for which carrying amounts and fair values have not been presented are not materially different than their related carrying amounts. Management has applied its judgment in using market data to develop estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company would realize in a current market exchange. 13. DEFERRED TAXES

Telenet Group Holding and its consolidated subsidiaries each file separate tax returns in accordance with Belgian tax laws. For financial reporting purposes, Telenet Group Holding and its subsidiaries calculate their respective tax assets and liabilities on a separate-return basis. These assets and liabilities are combined in the accompanying consolidated financial statements. The tax effects of significant temporary differences and tax loss carry-forwards are presented below:




F-32

December 31,

2005 December 31,

2004 Deferred income tax assets Financial instruments.................................................................................... 12,251 9,800 Bad debt allowance....................................................................................... 5,929 2,156 Other ............................................................................................................. - 125 Tax loss carry-forwards................................................................................ 307,349 358,997 Total deferred tax assets ............................................................................... 325,529 371,078 Deferred income tax liabilities Property and equipment................................................................................ 1,448 5,299 Other ............................................................................................................. 420 - Total deferred tax liabilities.......................................................................... 1,868 5,299 Net deferred income tax assets ..................................................................... 323,661 365,779 Net deferred income tax recognized in the balance sheet............................ - - As of December 31, 2005, Telenet Group Holding and its subsidiaries had available combined cumulative tax loss carry-forwards of €672,617 (2004: €1,056,185). Under current Belgian tax laws, these loss carry-forwards have an indefinite life and may be used to offset the future taxable income of Telenet Group Holding and its subsidiaries. As Telenet Group Holding and virtually all of its subsidiaries have never realized any substantial taxable profits, no deferred taxes have recognized. Two subsidiaries acquired in a previous business combination made taxable profits of €37,135 (2004: €11,060) during the year and utilized tax loss carryforwards which had not been previously recognized as deferred tax assets. The utilization of tax losses carried forward from previous business combinations is recorded as a reduction of goodwill using the historic tax rate of 40.17% applicable at the time of the acquisition while the deferred tax asset is established using the current tax rate of 33.99%. This results in a deferred tax expense of €14,917 (2004: €4,443). Available tax loss carry-forwards were reduced by €381,689 during 2005 as a result of taxable profits being recognized on permanent tax differences and adjustments related to the mergers and disallowed expenses. Deferred income tax liabilities of €14 (2004 €10) have not been recognized for the withholding tax and other taxes that would be payable on the undistibuted earnings of certain subsidiaries, because reversal of the related temporary differences is controlled by the Company and it is possible that they will not reverse in the foreseeable future.. Undistributed earnings totaled €839 as of December 31, 2005 (2004 €585). 14. OTHER LIABILITIES

December 31,

2005 December 31,

2004 Copyright fees.................................................................................................. 11,131 18,611 Employee benefit obligations.......................................................................... 9,868 10,170 Other ................................................................................................................ 2,756 2,647 23,755 31,428 In 2004, the Company, together with other Belgian cable operators, concluded negotiations with certain of the broadcasters and copyright collection agencies in Belgium that determined the copyright fees due by cable operators that represented the significant majority of the claims previously outstanding. The Company remains in litigation with smaller copyright collection agencies and broadcasters and has reached an agreement in principle on




F-33

some of the outstanding terms. The Company has accrued €22,884 (2004: €28,818) for settlement of these fees of which €11,753 (2004: €10,207) is considered to be short term and is recorded under accrued expenses and other current liabilities. 15. EMPLOYEE BENEFIT PLANS As part of the acquisition of MixtICS NV (“MixtICS”) in August 2002, the Company entered into a service and transfer agreement with Electrabel. Pursuant to this agreement, Electrabel agreed to provide certain operational services (such as installation, maintenance and call centre services) to the Company from August 9, 2002 to April 1, 2004, on which date the Electrabel employees who provided operational services to the Company were transferred to Telenet NV. Based on management’s best estimate of the obligations assumed for the employee benefit plans upon the transfer of employees which occurred on April 1, 2004, the Company recorded a one time charge of €2,923 in the second quarter of 2004 which was allocated between operating expenses and selling, general and administrative expenses. The assumed employee benefit plans include long term service awards, health care premiums, early retirement plans, death benefits and a defined benefit pension plan among others. The majority of Telenet's (other) employees participate in defined contribution plans. By law, those plans provide an average minimum guaranteed rate of return over the employee's career equal to 3.75% on employee contributions and 3.25% on employer contributions paid as from January 1, 2004 onwards. Since the actual rates of return have been significantly higher, no provisions have been accounted for. During 2005, an amount of €1,430 was paid by the employer with respect to those plans. The accumulated plan assets amount to €11,759 at December 31, 2005. The Company has also recognized a liability of €1,591 at December 31, 2005 for long term service awards. The amounts recognized in the balance sheet are as follows: Defined Benefit Plans Postretirement Plans 2005 2004 2005 2004 Present value of funded obligations........... 4,719 2,265 - - Fair value of plan assets ............................. (1,878) (1,462) - - 2,841 803 - - Present value of unfunded obligations....... - - 3,471 1,855 Unrecognized net actuarial loss................ (1,440) (101) (490) - Net liability in balance sheet ...................... 1,401 702 2,981 1,855

The amounts recognized in the income statement are as follows: Defined Benefit Plans Postretirement Plans 2005 2004 2005 2004 Service cost ................................................ 2,186 1,787 984 1,788 Interest cost .............................................. 206 77 142 67 Expected return on plan assets.................. (74) (53) - - Actuarial losses recognized in the year .... 5 - - - Total............................................................ 2,323 1,811 1,126 1,855

Of the charge for the year, €2,825 (2004: €3,314) is included in costs of services provided in the income statement, €350 (2004: €261) is included in selling, general and administrative and €274 (2004: €91) is included in finance cost.




F-34

Changes in the present value of the defined benefit obligation are as follows: Defined Benefit Plans Postretirement Plans 2005 2004 2005 2004 Opening defined benefit obligation ........... 2,265 410 1,855 - Service cost................................................. 2,186 1,787 984 1,788 Interest cost................................................. 206 77 142 67 Plan participants contributions................... 57 40 - - Actuarial loss (gain) ................................... 326 (23) 490 - Benefits paid............................................... (321) (26) - - Closing defined benefit obligation............. 4,719 2,265 3,471 1,855

Changes in the fair value of plan assets are as follows: Defined Benefit Plans Postretirement Plans 2005 2004 2005 2004 Opening fair value of plan assets ............... 1,462 317 - - Actual return on plan assets ...................... 74 53 - - Company contributions ............................. 1,625 1,142 - - Plan participants contributions................... 56 40 - - Actuarial (loss) gain ................................... (1,018) (64) - - Benefits paid............................................... (321) (26) - - Closing fair value of plan assets................. 1,878 1,462 - -

The principal assumptions used for the purpose of the actuarial valuations are as follows: Defined Benefit Plans Postretirement Plans 2005 2004 2005 2004

Discount rate at December 31................... 4.00% 4.87% 4.00% 5.00% Rate of compensation increase ................. 3.11% 3.13% - - Expected return on plan assets ................. 4.83% 4.92% - - Underlying inflation rate .......................... 2.00% 2.00% 2.00% 2.00% Increase of medical benefits ..................... - - 3.00% 2.50%

16. ACCRUED EXPENSES AND OTHER CURRENT LIABILTIES

December 31,

2005 December 31,

2004 Customer deposits............................................................................................ 25,451 29,261 Compensation and employee benefits............................................................. 30,574 20,592 Financial instruments....................................................................................... 2,465 8,333 VAT and withholding taxes ............................................................................ 1,616 2,275 Copyright fees.................................................................................................. 11,753 10,207 Other current liabilities .................................................................................... 2,270 2,950 74,129 73,618




F-35

17. REVENUES The Company's revenues comprise:

For the years ended December 31, 2005 2004

Cable television: - Basic Subscribers (1)................................................................................ 198,557 197,373 - Premium Subscribers (1).......................................................................... 51,808 58,776 - Distributors/Other................................................................................... 17,211 8,817 Residential: - Internet .................................................................................................... 231,097 192,288 - Telephony ............................................................................................... 170,293 157,213 Business ....................................................................................................... 68,526 66,658 Total ............................................................................................................. 737,492 681,125

Residential telephony revenue also includes interconnection fees generated by business customers. The Company also has unearned revenues as follows:

December 31,

2005 December 31,

2004 Cable television: - Basic Subscribers (1)................................................................................. 107,861 104,852 - Premium Subscribers (1)........................................................................... 3,756 7,293 - Distributors/Other.................................................................................... 777 - Residential: - Internet..................................................................................................... 8,079 6,163 - Telephony ................................................................................................ 2,062 1,440 Business ........................................................................................................ 1,878 2,052 Total .............................................................................................................. 124,413 121,800 Current portion.............................................................................................. 112,876 113,835 Long-term portion......................................................................................... 11,537 7,965

Unearned revenues are generally fees prepaid by the customers and, as discussed in Note 2, are recognized in the Income Statement on a straight-line basis over the related service period. (1) Basic and premium cable television substantially comprises residential customers, but also includes a small proportion of

business customers.




F-36

18. EXPENSES BY NATURE

For the years ended December 31 2005 2004

Employee benefits: - Wages, salaries, commissions and social security costs.............................. 89,203 86,233 - Share options granted to directors and employees ...................................... 2,196 1,140 - Other employee benefit costs ....................................................................... 18,854 20,097 Employee benefits ..................................................................................... 110,253 107,470 Depreciation..................................................................................................... 159,083 159,321 Amortization .................................................................................................... 39,087 35,647 Amortization of broadcasting rights................................................................ 8,144 9,361 Network operating and service costs............................................................... 208,386 178,934 Advertising, sales and marketing .................................................................... 49,402 44,226 Other costs ....................................................................................................... 31,563 41,513 Total costs and expenses ................................................................................. 605,918 576,472 The average number of full time equivalents employed by the Company during the year ended December 31, 2005 was 1,503 (2004: 1,257). 19. FINANCE COSTS


Interest expense ............................................................................................... 142,676 168,397 Interest income................................................................................................. (3,420) (4,552) Interest expense, net......................................................................................... 139,256 163,845

Net foreign exchange transaction (gains)/losses on financing transactions ... 40,263 (27,499)

(Gains)/losses on derivative financial instruments (Note 12)......................... (25,802) 25,494

Loss on extinguishment of debt....................................................................... 39,472 - Finance costs, net............................................................................................. 193,189 161,840 20. INCOME TAX EXPENSE


Current tax expense ......................................................................................... 136 78 Deferred tax expense (Note 13) ...................................................................... 14,917 4,443 Income tax expense ......................................................................................... 15,053 4,521 The tax on the Company’s loss before tax differs from the theoretical amount that would arise using the Belgian statutory tax rate applicable to profits of the consolidated companies as follows:




F-37


Loss before tax................................................................................................. (61,614) (57,186) Income tax expense/(benefit) at the Belgian statutory rate of 33.99%........... (20,943) (19,438) Expenses not deductible for tax purposes ....................................................... 20,738 9,756 Recognition of previously unrecognized acquired tax losses through

goodwill at the historic Belgian statutory rate of 40.17% ........................... 14,917 4,443 Utilization of previously unrecognized tax losses .......................................... (14,929) (3,759) Tax losses for which no deferred income tax asset was recognised............... 15,270 13,519 Tax expense for the year.................................................................................. 15,053 4,521 21. LOSS PER SHARE Basic loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares during the period. Diluted loss per share is calculated adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. During the years ended December 31, 2005 and 2004, the Company had six categories of dilutive potential ordinary shares: Class A and Class B Options, stock options under the 1999 and 1998 Plans, the Bank Warrants and the Subordinated Debt Warrants. Of these, only the Class A and Class B Options and the Subordinated Debt Warrants are still outstanding as of December 31, 2005 as the other instruments were exercised during September 2005. The effects of the dilutive potential ordinary shares were not included in the computation of diluted loss per share for the years ended December 31, 2005 and 2004 because they are anti-dilutive. 22. COMMITMENTS AND CONTINGENCIES Interconnection Litigation The Company has been involved in legal proceedings with Belgacom related to the increased interconnection fees that have been charged since August 2002 to telephone operators to terminate calls made to end users on the Company's network. The Company obtained approval from the Belgian Institute for Postal Services and Telecommunications (BIPT) to increase its interconnection rates for inbound domestic calls in August 2002. Belgacom increased the tariffs charged to its telephony customers calling Telenet numbers to reflect the Company’s increased termination rates. Belgacom challenged the Company's increased interconnection termination rates before the Commercial Court of Mechelen (Rechtbank van Koophandel) alleging abusive pricing. Belgacom has further challenged the BIPT's approval of the Company's increased domestic interconnection termination rates before the Council of State (Raad van State), the highest administrative court in Belgium. The Council of State may affirm the BIPT's decision or return the case to the BIPT for reconsideration. The Council of State rejected an emergency request from Belgacom to suspend the implementation of the increased interconnection termination rate. On January 20, 2004, the President of the Commercial Court in Mechelen rendered a judgement in the case where Belgacom contested the validity of the Company's interconnection tariffs which was heard on September 23, 2003. The judgement stated that there is no indication that the Company's interconnection tariffs constitute a breach of the unfair trade practices law, competition law or pricing regulations as invoked by Belgacom. As a result, the judge determined that Belgacom's potential claim is limited to a contractual matter upon which the judge who heard the case was not competent to rule, considering the nature of the procedure initiated by Belgacom. The judge therefore dismissed the claim. The Company's is currently not required to change the interconnection rates it currently charges to Belgacom and which were approved in 2002 by the BIPT.




F-38

Belgacom appealed this judgement in April 2004. On March 17, 2005, the Court of Appeals of Antwerp dismissed Belgacom’s claims. Although Belgacom retains the right to further appeals on technical grounds, we do not expect that the outcome of such further appeals would arise before 2007. Capital Commitment Telenet NV entered into an agreement in March 2005 to purchase land in conjunction with the planned construction of additional office space adjacent to the current principal offices in Mechelen. The purchase price of the land has been agreed at €5.805, and was paid in Februay 2006. Operating Leases The Company leases facilities, vehicles and equipment under non-cancelable operating leases. The following schedule details, at December 31, 2005, the future minimum lease payments under non-cancellable capital and operating leases:

December 31,

2005 December 31,

2004 Within one year................................................................................................ 7,762 8,082 In the second to fifth years, inclusive.............................................................. 10,849 16,061 Thereafter......................................................................................................... 1,146 3,082 Total minimum lease payments....................................................................... 19,758 27,225 Minimum lease payments recognized as an expense in the year.................... 19,325 16,786 23. RELATED PARTIES Related Party Identification

The related parties of the Company mainly comprise its shareholders that have the ability to exercise significant influence, namely the Liberty Global Consortium (formerly known as the Cable Partners Consortium), the MICs and Electrabel as a result of its direct and indirect ownership of the Company. Suez was deemed to be a related party as a result of its direct ownership of the Company and its indirect ownership of Electrabel. As a result of the sale of their investment in the Company in December 2004, Cable Partners Europe L.L.C. (“CPE”) (formerly known as Callahan Associates International L.L.C.) and Callahan InvestCo Belgium 1 S.à.R.L. (“CIB”) are no longer related parties. The MICs, Electrabel and Suez are no longer related parties as a result of the changes in ownership at the time of the IPO in October 2005.

Other related parties included in the tables below relate to entities that are significantly influenced by key

management of the Company. Related Party Transactions

Transactions with CPE include payment of transaction expenses related to the acquisition of MixtICS. In addition, Telenet Operaties and CPE entered into a Strategic Services Agreement dated March 31, 2001 (the “Management Agreement”). Under the Management Agreement, CPE provided strategic advice and assists with the expansion, development and growth of the Company. This agreement was terminated on May 11, 2005.

Transactions with other related parties primarily relate to leasing and derivative contracts held with a

financial institution.




F-39

The following table summarizes material related party balances: Balance Sheet

December 31,

2005 December 31,

2004 Purchases of property and equipment Other related parties.................................................................................... 6 17 Accounts receivable Electrabel and Suez..................................................................................... - 437 Other related parties.................................................................................... - 601 Other receivables Electrabel .................................................................................................... - 8,039 Other related parties.................................................................................... 1,486 86 Accounts payable Liberty Media ............................................................................................. 23 - Electrabel and Suez..................................................................................... - 4,019 CPE ............................................................................................................. - 2,753 Accrued expenses Electrabel and Suez..................................................................................... - 2,250 Other related parties.................................................................................... 974 1,166 Current portion of long-term debt Other related parties.................................................................................... 808 590 Long-term debt Other related parties.................................................................................... 19,110 19,827 Derivative financial instruments Other related parties.................................................................................... 6,255 10,838 The following table summarizes material related party transactions for the period: Income Statement


Operating Leases and other operating expenses – Electrabel and Suez ..................... (4,691) (8,685) Leases and other operating expenses – Liberty ......................................... (1,961) Management and advisory fees – CPE....................................................... (5,441) Service agreement – Electrabel and Suez .................................................. (18,083) Other operating income – Electrabel and Suez.......................................... 1,063 1,784 Interconnect net result – Other related parties ........................................... (10,284) (5,621) Other operating expenses – Other related parties ...................................... (3,501) (2,624) Finance costs Interest income – Electrabel and Suez ....................................................... - 2,484 Finance income (loss) – Other related parties............................................ 3,387 (8,077)




F-40

Key management compensation

December 31,

2005 December 31,

2004 Salaries and other short-term employee benefits ............................................ 3,750 2,999 Post-employment benefits ............................................................................... 150 85 Other long-term benefits.................................................................................. - - Termination benefits........................................................................................ - - Share-based payments ..................................................................................... 1,620 1,140 5,340 4,223

On August 24, 2005, the Company’s Chief Executive Officer also exercised the Bank Warrants as described in

Note 10. 24. SUBSIDIARIES Details of the Company and its subsidiaries as of December 31, 2005 are as follows.

Company National Number

Address % Held

Consolidation Method

Telenet Group Holding NV

477.702.333 Liersesteenweg 4, 2800, Belgium - Parent company

Telenet Communciations NV

473.416.814 Liersesteenweg 4, 2800, Belgium 100% Fully consolidated

Telenet Bidco NV 473.416.418 Liersesteenweg 4, 2800, Belgium 100% Fully consolidated

Telenet Holding NV 458.837.813 Liersesteenweg 4, 2800, Belgium 100% Fully consolidated

Telenet NV (formerly Telenet Operaties NV)

439.840.857 Liersesteenweg 4, 2800, Belgium 100% Fully consolidated

Telenet Vlaanderen NV 458.840.088 Liersesteenweg 4, 2800, Belgium 100% Fully consolidated

Merrion Communications

6378934T 62, Merrion Square, Dublin 2, Ireland

100% Fully consolidated

Telenet Solutions NV 447.892.550 De Kleetlaan 5, 1831, Belgium 100% Fully consolidated

Telenet Solutions Luxembourg SA

1.999.223.4426 Rue de Neudorf 595, 2220 Luxembourg, Luxembourg


Phone Plus SPRL 465.384.719 Chaussée de Saint-Job 638, 1180 Uccle, Belgium


In order to simplify the internal corporate structure of the Company and to align the corporate structure with the operating functioning of the Company, the Company completed the mergers of MixtICS and PayTVCo with Telenet NV during July 2005 with effect from January 1, 2005.




F-41

25. SUBSEQUENT EVENTS Redemption of Senior Notes Following Initial Public Offering On January 9, 2006, the Company applied the remaining net proceeds of its IPO towards a partial redemption of the Senior Notes. Telenet Communications redeemed €124,773 of principal of the Senior Notes plus accrued interest of €749, and paid a 9.0% redemption premium of €11,230, resulting in a total payment to holders of the Senior Notes of €136,752. After the IPO redemption and the change of control offer redemptions which were settled in November 2005, the outstanding balance of the Senior Notes was €368,402. Acquisition of Assets of Hypertrust On February 2, 2006, the Company announced the acquisition of the assets and rights of Hypertrust, a Belgian provider of on-line digital photography services. Hypertrust’s technology, which was previously marketed under the Pixagogo and Photoblog brand names, will allow Telenet broadband internet and iDTV customers to easily store, manage and share digital photographs. BIPT Proposal Regarding Interconnection Termination Rates On February 7, 2006, the regulator of the Belgian telephony industry, the Belgian Institute for Postal Services and Telecommunications (Belgisch Instituut voor Postdiensten en Telecommunicatie / Institut Belge des Services Postaux et des Telecommunications) (the “BIPT”) issued a consultation statement on the market for fixed voice termination in which it proposed that the Company, as well as other non-incumbent providers of fixed line telephony, should adopt a mandated path reducing the higher interconnection rate which we currently charge for calls terminated on our network to the lower rate that is charged by Belgacom over a three year period. Although the Company has always projected a decrease in the interconnect termination rates that it will receive as its telephony customer base grows, it is expected that its future interconnect termination revenue would decrease at a faster rate than projected if the BIPT’s consultation is adopted. The Company believes that the BIPT’s basis for its position is not consistent with EU regulation and is contesting their proposal. Announcement of Mobile Services Venture with Mobistar On February 14, 2006, the Company announced a series of agreements with Mobistar, Belgium’s second largest mobile telephony operator, to establish a new mobile virtual network operator (MVNO). The MVNO will carry Telenet’s branding and use capacity on Mobistar’s network. We anticipate that Telenet mobile services will become available later this year. Submission by Belgacom of Interconnect Case to the Belgian Supreme Court On February 24, 2006, Belgacom submitted its commercial case against Telenet regarding our interconnection termination rates to the Belgian Supreme Court (Hof van Cassatie / Cour de Cassation). This followed a decision on March 17, 2005, when the Court of Appeals of Antwerp dismissed Belgacom’s claim. The Belgian Supreme Court only has the authority to review whether or not there has been a mistake of law or breach of certain formal procedural requirements in the case. The Company expects that a final decision may take up to three years to be reached since the Supreme Court can refer the case back to the Court of Appeal. Internal Reorganization In order to align our corporate structure with the operational functioning of the group, we merged Telenet Solutions into Telenet NV on December 31, 2005 with effect from January 1, 2006. On January 31, 2006, we liquidated Telenet Holding NV, since it no longer fulfilled any function in our group structure.




F-42

26. FIRST-TIME ADOPTION OF IFRSs AS ADOPTED BY THE EU

The consolidated financial statements have been prepared in accordance with IFRSs as adopted by the EU, as described in Note 2 to the consolidated financial statements. Those principles differ in certain significant respects from U.S. GAAP, the principles previously used by the Company. These differences relate mainly to the items that are described below and are summarized in the following tables. Such differences affect both the determination of net result and shareholders' equity, as well as the classification and format of the consolidated financial statements. The following is a summary of the effects of the differences between IFRSs as adopted by the EU and U.S. GAAP on the Company’s total shareholders’ equity as of January 1, 2004 and December 31, 2004 and profit and loss for the year ended December 31, 2004.

Effect of Transition to IFRS as adopted by the EU

U.S. GAAP

Deferred

Taxes Share-based

Payments

Copyright

Fees

IFRS as adopted by

the EU

Equity January 1, 2004 ............ 574,088 - - 2,302 576,390 Net result .............................. (60,518) (684) 379 (884) (61,707) Other changes in equity........ (23,344) - (379) - (23,723) Equity December 31, 2004 ...... 490,226 (684) - 1,418 490,960

Measurement and Recognition Differences Between IFRSs as Adopted by the EU and U.S. GAAP A. Deferred Taxes Historically under U.S. GAAP, 100% valuation allowances were recorded against tax losses carried forward by subsidiaries acquired in previous business combinations. The Company started using these tax losses carried forward in 2004 and reduced goodwill using the current tax rate of 33.99%. IFRSs as adopted by the EU requires the Company to utilize the tax rate in effect at the time of the acquisition, or 40.17%, to reduce goodwill while using the current tax rate of 33.99% to establish the deferred tax asset resulting in additional deferred tax expense as these tax loss carryforwards are utilized. This results in a decrease in goodwill and an increase in deferred tax expense of €683 as of and for the year ended December 31, 2004. There was no impact to the opening balance sheet as the Company had not utilized any acquired tax loss carryforwards as of January 1, 2004. B. Share-based Payment The intrinsic value method is used to account for the Company’s stock option plans under U.S. GAAP. Accordingly, the excess of the grant date fair value of the Company’s ordinary shares over the exercise price of the stock options is recognized as compensation expense over the vesting period of the options. Under IFRSs as adopted by the EU, warrants granted after November 7, 2002 that had not vested before January 1, 2005 are recorded at the fair value of each option granted as estimated on the date of grant using the Black-Scholes option-pricing model. Warrants granted on or before November 7, 2002 were not modified subsequent to this date and, as a result, the related expense and increase in contributed capital of €2,689 included in the January 1, 2004 U.S. GAAP financial statements was reversed under IFRSs as adopted by the EU. The total cost calculated for the warrants granted after November 7, 2002 that had not vested before January 1, 2005 is expensed over the vesting period of the respective warrants and the increase in capital is reclassified from additional paid in capital under U.S. GAAP to capital reserves under IFRSs as adopted by the EU. As of and for the year ended December 31, 2004, this results in an increase in capital reserves of €1,140 and decreases in contributed capital of €2,500, deferred stock compensation of €982 and compensation expense of €378. These adjustments did not have tax consequences.




F-43

C. Copyright Fees Under U.S. GAAP, the Company retained an accrual in other liabilities for the gross amounts that the Company expects to pay as a result of settlements with certain of the broadcasters and copyright collection agencies. Under IFRSs as adopted by the EU, the Company is required to record these amounts at the present value of the expenditures expected to be required to settle the obligation. This results is a decrease in accrued copyright fees of €1,417 and €2,301 as of December 31, 2004 and January 1, 2004, respectively, and an increase in interest expense of €884 during the year ended December 31, 2004. These adjustments did not have tax consequences. Presentation Differences Between IFRSs as Adopted by the EU and U.S. GAAP D. Depreciation and Amortization Expense Under U.S. GAAP, the Company reported depreciation and amortization expense as separate line items on the face of the statement of operations. Under IFRSs as adopted by the EU, the Company is required to allocate these expenses to costs of services provided and selling, general and administrative expenses. E. Broadcasting Rights Under U.S. GAAP, the Company recorded a current asset for prepaid content and amortized the cost to operating expenses over the related life. Under IFRSs as adopted by the EU, broadcasting rights are capitalized as an intangible asset when the value of the contract is measurable upon signing and are amortized to costs of service provided on a straight-line basis over contractual life. The change in treatment results in a reclassification of certain assets to intangible assets and an accrual for unbilled broadcasting rights on the balance sheet and classification as amortization expense on the income statement under IFRSs as adopted by the EU. F. Foreign Exchange Gains and Losses Under U.S. GAAP, the Company reported all foreign exchange gains and losses within other income and loss on the statement of operations. Under IFRSs as adopted by the EU, the Company has allocated all foreign exchange gains and losses related to operations to the costs of services provided and selling, general and administrative expenses. G. Employee Benefit Plans Under U.S. GAAP, the Company reported all expenses related to the employee benefit plans within operating income on the statement of operations. Under IFRSs as adopted by the EU, the Company has allocated the expected return on plan assets and the interest cost related to the employee benefit plans to finance costs. H. Deferred Finance Fees Under U.S. GAAP, the Company reported the deferred portion of loan origination costs as an asset on the balance sheet. Under IFRSs as adopted by the EU, the Company is required to show these amounts as a reduction of the related debt balance. I. Classification of Derivative Financial Instruments Historically, the Company has presented derivative financial instruments as current assets or current liabilities under U.S. GAAP. IFRSs as adopted by the EU requires the Company to classify its derivative financial instruments as current or non-current resulting in a reclassification of long term derivative financial instruments from current assets and liabilities to non-current assets and liabilities.




F-44

J. Copyright Fees Under U.S. GAAP, the Company has reported copyright fees as a long term liability on the balance sheet. Under IFRSs as adopted by the EU, the Company has reclassified the portion of the accrual for copyright fees that is either expected to be paid within one year after the balance sheet date or does not have a stated payment date to short term accruals. K. Warrants Under U.S. GAAP, detachable warrants to purchase shares issued in connection with debt issuances were valued by allocating the proceeds of the debt securities issued based on the relative fair values of the warrants and the debt at the time of issuance. Any resulting discount or premium on the debt securities was recognized using the effective interest rate method over the contractual term of the debt and the warrants were recorded as additional paid in capital. These warrants and the related debt instruments were retired prior to the transition to IFRSs as adopted by the EU. Under IFRSs as adopted by the EU, the fair value of debt securities is determined using a market interest rate for an equivalent debt instrument. Any resulting discount or premium on the debt securities is recognized using the effective interest rate method over the contractual term of the debt. The remainder of the proceeds is allocated to the detachable warrants and is recognized and included in shareholders’ equity, net of any income tax effects. As a result of this difference in valuing the detachable warrants, the Company has recorded the difference between the allocated fair value under U.S. GAAP and the value as determined under IFRSs as adopted by the EU as a reduction in capital and retained losses as of the opening balance sheet. L. Accrued Interest Under U.S. GAAP, the Company has reported accrued interest on the accrued expenses and other current liabilities line of the balance sheet. Under IFRSs as adopted by the EU, the Company has reclassified accrued interest to be shown as a component of the related debt. Explanation of material adjustments to the cash flow statement: As noted above under item E. Broadcasting Rights, the Company recorded a current asset for prepaid content and amortized the cost to operating expenses over the related life under U.S. GAAP. Under IFRSs as adopted by the EU, broadcasting rights are capitalized as an intangible asset when the value of the contract is measurable upon signing and are amortized to costs of service provided on a straight-line basis over contractual life. As a result of the reclassification of certain assets to intangible assets, expenditures for these rights are included as a cash flow from investing activities under IFRSs as adopted by the EU rather that a cash flow from operating activities under U.S. GAAP. There are no other items that resulted in transfer between categories of cash flows.




F-45

For the year ended December 31, 2004

U.S. GAAP

Effect of Transition to IFRSs as adopted

by the EU

IFRSs as adopted by

the EU

Cash flows from operating activities ................................................................ 223,138 11,166 234,304 Cash flows from investing activities................................................................. (141,498) (11,166) (152,664) Cash flows from financing activities ................................................................ (107,478) - (107,478) Reconciliation from U.S. GAAP to IFRSs as Adopted by the EU: The following presents the effect of the transition from U.S. GAAP to IFRSs as adopted by the EU on the Company’s consolidated statements of income and consolidated balance sheets considering all of the items discussed previously in this note. Reconciliation of profit and loss for the year ended December 31, 2004: Effect of Transition to IFRSs as adopted by the EU

U.S. GAAP

Measurement

and

Recognition


IFRSs as adopted

by the EU

Revenues..........................

681,125 -

- 681,125 ................................. Revenue



(247,770) (84)

B (182,798) D E F G (430,652)




(133,788) 463

B (12,495) D G (145,820) Selling, general and

........................ administrative Depreciation..................... (159,321) - 159,321 D Amortization.................... (35,647) - 35,647 D


104,599 379

(325) 104,653


Finance costs, net ............ (161,280) (884) C 325 F G (161,839) .................. Finance costs, net


(56,681) (505)

- (57,186)



NET LOSS....................... (60,518) (1,189) - (61,707) .............................NET LOSS


(0.70) (0.71)





F-46

Reconciliation of equity at December 31, 2004:



and Recognition

Note

Presentation


by the EU


Property and equipment ............. 960,776 - - 960,776 Goodwill ..................................... 1,028,145 (684) A - 1,027,461 Other intangible assets................ 274,209 - 6,567 E 280,776 Deferred finance fees.................. 63,845 - (63,845) H - Other assets ................................. 1,009 - - 1,009

Total non-current assets .............. 2,327,984 (684) (57,278) 2,270,022

CURRENT ASSETS: Trade receivables ........................ 84,787 - - 84,787 Other current assets .................... 23,635 - (2,785) E 20,850 Cash and cash equivalents.......... 145,188 - - 145,188

Total current assets...................... 253,610 - (2,785) 250,825 TOTAL............................................ 2,581,594 (684) (60,063) 2,520,847 EQUITY AND LIABILITIES EQUITY:

Contributed capital...................... 2,309,899 (2,500) B (39,275) B K 2,268,124 Deferred stock compensation..... (982) 982 B - - Other reserves ............................. - 1,140 B - 1,140 Hedging reserves ........................ (26,627) - - (26,627) Retained loss ............................... (1,792,064) 1,112 A B C 39,275 B K (1,751,677)

Total equity.................................. 490,226 734 - 490,960




debt .......................................... 6,929 - 13,080



I J L 73,618 Unearned revenue....................... 113,835 - - 113,835

Total current liabilities ................ 415,750 - (58,811) 356,939 Total liabilities............................. 2,091,368 (1,418) (60,063) 2,029,887 TOTAL............................................ 2,581,594 (684) (60,063) 2,520,847




F-47

Reconciliation of equity at January 1, 2004:



and Recognition

Note

Presentation


by the EU


Property and equipment ............. 991,438 - - 991,438 Goodwill ..................................... 1,031,904 - - 1,031,904 Other intangible assets................ 280,679 - 11,220 E 291,899 Deferred finance fees.................. 75,114 - (75,114) H - Other assets ................................. 1,070 - - 1,070

Total non-current assets .............. 2,380,205 - (63,894) 2,316,311

CURRENT ASSETS: Trade receivables ........................ 84,783 - - 84,783 Other current assets .................... 28,029 - (1,487) E 26,542 Cash and cash equivalents.......... 171,026 - - 171,026

Total current assets...................... 283,838 - (1,487) 282,351 TOTAL............................................ 2,664,043 - (65,381) 2,598,662 EQUITY AND LIABILITIES EQUITY:

Contributed capital...................... 2,307,399 - (39,275) B K 2,268,124 Deferred stock compensation..... - - - - Other reserves ............................. - - - - Hedging reserves ........................ (1,765) - - (1,765) Retained loss ............................... (1,731,546) 2,302 C 39,275 B K (1,689,969 )

Total equity.................................. 574,088 2,302 576,390




debt .......................................... 5,814 - 13,107



E I J L 68,988 Unearned revenue....................... 99,358 - - 99,358

Total current liabilities ................ 332,703 - (8,924) 323,779 Total liabilities............................. 2,089,955 (2,302) (65,381) 2,022,272 TOTAL............................................ 2,664,043 - (65,381) 2,598,662

F-48

THIS PAGE INTENTIONALLY LEFT BLANK