Tiscali 2001 Annual Report Download - page 49

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Report on Operating Performance
France
In March 2002, Tiscali Reseaux SA (formerly Tiscali France SA), 100% owned by Tiscali SpA,
was transferred to Liberty Surf Telecom SA for EUR 5mn.
Outlook
At end-2001, Tiscali had a customer base of 7.3mn active subscribers, i.e. users who in a
30-day reference period made at least one Internet connection through Tiscali.
Tiscali's strategy for 2002 is focused on the development and rationalisation of its range of
Internet access products on a pan-European level. To this end, the Company is in the
process of centralising its services onto a single platform. In this context we should
mention Tiscali 10.0, an Internet access software which was launched in Italy in October
2001. With just one user ID and password this immediately gives users access to Tiscali's
whole range of personalised Internet services: E-Mail, Agenda, Net Phone, Tiscali Fax,
Messenger, Tiscali Mobile and more. This product will give Tiscali users throughout Europe
easy access to the network and existing and future services, greatly facilitating customers'
surfing.
Based on past experience and the most reliable market surveys, we believe that the
Internet will continue to develop at a fast pace, in terms of both user numbers and
connection minutes. We feel confident in forecasting marked growth in access revenues,
which are expected to remain Tiscali's core business.
Tiscali will also continue to offer a wide range of Internet access options, from dial-up to
satellite technology, enabling customers to choose the solution that best meets their
specific requirements.
More specifically, the Company plans to launch new dial-up and broadband access
services, following the cuts in interconnection prices imposed by telecommunications
regulators in several countries, including Italy and the UK.
The most noteworthy new products are flat-rate schemes, offering unlimited Internet
access against payment of a fixed fee, and ADSL. Both services, as well as pre-paid
packages (in which the user purchases a set number of Internet connection hours in
advance), will alter the Company's corporate revenues structure to a certain degree.
Revenue flows from direct customer billing will be higher than under the traditional
"reverse" model, whereby the ISP receives from the former incumbent provider part of the
cost borne by the customer for Internet access.
To support these products and encourage generalised growth in its user base, the
Company has earmarked funds for an advertising campaign to raise the profile of the
Tiscali brand in all its countries of operation.
Tiscali believes that, thanks to its Europe-wide user base and increased brand awareness,
it can play an important role as a platform for distributing other Companies' services and
content.
The integration of all activities under a single brand name will contribute to the success of
Tiscali portals throughout Europe. This will enable the Company to present itself as a first-
choice partner for Companies wishing to sell or advertise their products and services on a