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  • January 2006SKY Perfect Communications Inc.

    Financial Summary of 3Q/FY2005and Our Business Strategy

  • 2 2006 SKY Perfect Communications Inc., All Rights Reserved

    Number of New Subscribers and Churn Rate

    3733 34 34 35

    3730 29

    4447 44

    3643

    37 40 3632

    93

    9.6% 9.7%10.2%

    9.3% 9.0% 9.3%10.1%

    9.0%

    10.0%

    8.2% 8.0%8.3%

    9.6%8.8%8.4% 8.1%

    8.6%

    8.6%

    0

    20

    40

    60

    80

    100

    120

    Apr May Jun Jul Aug Sep Oct Nov Dec-1.0%

    1.0%

    3.0%

    5.0%

    7.0%

    9.0%

    11.0%

    Number of new subscribers FY04 Number of new subscribers FY05

    Churn rate (individual subscribers) FY04 Churn rate (individual subscribers) FY05

    (Thousands)

    Commencement ofantenna feeinstallation campaign

    Commencement of

    rental service of

    set-top boxes

    Full digitizationin CTA(39 thousands)

    End of NBP baseballseason

    Improve in the number of new subscribers and churn ratein all months from the same period of previous year

    (1Q-3Q 2005)

  • 3 2006 SKY Perfect Communications Inc., All Rights Reserved

    Data Network CenterCorporation

    (51.0%)Customer managementCustomer management

    businessbusiness

    SKY PerfectWell Think Co., Ltd

    (100.0%)Content development andContent development and

    investment businessinvestment business

    Cabletelevision

    AdachiCorporation

    (77.3%)

    InformationNetwork

    Koriyama Inc.(66.7%)Multi Channel

    Entertainment Inc.(90.0%)

    Pay Per ViewJapan, Inc.

    (65.0)

    CS NowCorporation

    (100%)

    SKYPerfectMarketing Co., Ltd.

    (51.0%)STB rentalSTB rental

    service businessservice business

    SKY PerfectMobile, Inc.

    (51.0%)Content distributionContent distribution

    business forbusiness formobile phonemobile phone

    OptiCast Inc.(100.0%)

    Content distributionContent distributionBusiness viaBusiness via

    telecommunicationstelecommunicationscarrierscarriersfacilitiesfacilities

    OptiCast Marketing Inc.(1000%510%)

    Contract agency businessfor broadcasting

    Financial Summary (Consolidated/Non-Consolidated)and Our Group

    System Create Inc.(32.3%)

    CD-ROM DistributingBusiness

    J SPORTS BroadcastingCorporation

    (15.0%)

    Broadcasting Business

    *Solid line: consolidated company*Dotted line:Equity-Method Affiliates*Red line:Addition during 1-3Q

    Condolidated Non-Consolidated

    Difference

    Revenues 61,585 55,683 5,902

    Operating Profit -1,400 406 -1,806

    Ordinary Income -1,074 951 -2,025

    Net Income -756 1,320 -2,076

    Total Assets 127,754 121,251 6,503TotalShareholders'Equity 92,136 96,200 -4,064

    CATVCATV

    Samurai TV Inc.(80.3%)

    Broadcasting Business

    Content distributionContent distributionbusiness viabusiness viatelecommunicationstelecommunicationscarrierscarriersfacilitiesfacilities

  • 4 2006 SKY Perfect Communications Inc., All Rights Reserved

    Financial Summary of 3Q/FY2005

    Section

  • 5 2006 SKY Perfect Communications Inc., All Rights Reserved

    Summary of Consolidated Statement of Income

    Consolidated Statements of Income (Millions of Yen)

    FY04 FY05 FY03 FY051-3Q 1-3Q Difference 3Q 3Q Difference

    Individual Gross Addition (thousands) 314 407 +93 104 160 +56Individual Sub. at FY-End (thousands) 3,265 3,501 +236 3,265 3,501 +236

    Revenues: 55,589 61,585 +1,600 18,442 20,561 +2,119

    Subscriber-Related Revenues 36,385 37,737 +1,352 12,023 12,254 +231Transmission-Related Revenues 7,354 6,809 -545 2,407 2,219 -188Other Fees and Revenues 11,849 17,039 +5,190 4,011 5,817 +1,806

    Operating Expenses 52,601 62,986 +2,031 18,614 21,539 +2,925Operating Income 2,988 -1,400 -4,388 -171 -976 -805Ordinary Income 3,635 -1,074 -4,709 35 -966 -1,001Net Income 3,674 -756 -4,430 263 -433 -696Retained Earnings 5,875 3,514 -2,361 5,875 3,514 -2,361

    Total Dealing Amount of SubscriptionFees and Others 102,426 104,393 +1,967 33,696 34,627 +931EBITDA 5,797 2,489 -3,308 952 814 -138EBITDA Margin 10.4% 4.0% -6.4 5.2% 4.0% -1.2

  • 6 2006 SKY Perfect Communications Inc., All Rights Reserved

    390 390 390 390 390 390 390

    2,663 2,655 2,596 2,563 2,611 2,627 2,561

    323 327 304 275 278 279 258

    199199253 225 216 218 217

    04/1Q 04/2Q 04/3Q 04/4Q 05/1Q 05/2Q 05/3QBasic Fee/Unit Monthly Fee/Unit

    PPV Fee/Unit Revenues from Own Program

    390 390 390 390 390 390 390

    758 755 740 732 754 756 734

    51 52 49 44 44 45 43

    199199217218216225253

    04/1Q 04/2Q 04/3Q 04/Q 05/1Q 05/2Q 05/3Q

    Basic Fee/Unit Monthly Commision/UnitPPV Commision/Unit Revenues from Own Programs

    ARPU(CS124/128+CS110)

    Subscription Fees per Subscriber Subscriber-Related Revenues per Subscriber(Yen) (Yen)

    3,6291,4523,597 1,4223,505

    1,3953,446 1,3843,496 1,4053,495 1,393,408 1,366

  • 7 2006 SKY Perfect Communications Inc., All Rights Reserved

    SAC(CS124/128+CS110)

    (Millions of Yen)

    Total SAC SAC per Subscriber(Millions of Yen)

    * All the figures shown above are calculated adding the expenses of SKY Perfect Communications Inc. andSKYPerfect Marketing, Co., Ltd.

    * Advertising expenses includes the expenses related to the SKY PerfecTV! Tokyo Plage 2005 and excludes publicrelations costs

    5,197 5,389

    4,950

    1,5823,900

    3,880

    FY04/1 3Q FY0 /1 3Q

    Sales incentives Promotional expenses Advertising expenses

    34,066

    10,661

    14,240

    39,051

    16,608 14,779

    13,575

    10,6965,058

    12,400

    FY04/1 3Q FY0 /1 3Q

    Sales Incentives Promotional expenses Advertising expenses

  • 8 2006 SKY Perfect Communications Inc., All Rights Reserved

    Summary of Consolidated Balance Sheets

    Balance Sheets: Consolidated (Millions of Yen)

    Sep DecFY05 FY05 Difference

    Current Assets 61,734 56,207 -5,527Fixed Assets 65,265 71,547 +6,282Total Assets 126,999 127,754 +755

    Current Liabilities 28,935 24,980 -3,955Fixed liabilities 5,361 7,416 +2,055Total Liabiliteis 34,297 32,397 -1,900Minority Interests 3,315 3,221 -94Common Stock 50,083 50,083 +0Capital Surpluses 43,995 43,995 +0Earned Surpluses 3,947 3,514 -433

    Unrealized (Losses) Gains on Securities 1,642 4,825 +3,183Treasury Stock -10,282 -10,282 +0Total Shareholders' Equity 89,387 92,136 +2,749Total Liabilities, Minority Interests, andShareholders' Equity 126,999 127,754 +755

  • 9 2006 SKY Perfect Communications Inc., All Rights Reserved

    Summary of Consolidated Cash Flows

    1-3Q/FY05 3Q/FY05Net cash from Operating Activities -551 -3,257Net Cash from Investing Activities +5,403 +10,659Net Cash from Financing Activities -2,492 -209Effect of Exchange Rate Changes +0 +0Net Decrease in Cash and CashEquivalents +2,359 +7,192Cash and Cash Equivalents at theend of period (A) 34,599 34,599Cash and Negotiable Securities atthe end of period (B) 36,599 36,599Total Anmount of Fund((B)+Securities for FinancialInstruments) 65,955 65,955

    * Difference between (A) and (B) is due to fixed-term deposits (2,000 million yen) andnegotiable securities (2,012 million yen), whose terms are over 3 months.

    (Millions of Yen)Consolidated

  • 10 2006 SKY Perfect Communications Inc., All Rights Reserved

    Revision of FY2005 Business Result Forecast

    (Thousands)

    Privious Revised Previous RevisedForecast Forecast Forecast Forecast

    New Indi v i dua l Subscribers 540 540i ndi v i dual Sub. Net Addi ti on 248 248 8.5% 8.5%Indi v i dual Sub. At Peri od-End 3,558 3,558Total Sub. At Period-End 4,071 4,110

    (Millions of Yen)

    Annual Previous Revised Dirrerence Previous Revised DifferenceRevenues 84,000 82,500 -1,500 75,500 74,500 -1,000Ordi nary Income 300 0 -300 3,800 3,500 -300Net Income 300 500 +200 3,700 3,900 +200

    Consolidated Non-Consolidated

    *1 Forecast of the number of new individual subscribers is kept at 540 thousand.

    SKY PerfecTV! : 39 400 thousands, SKY PerfecTV!110 : 90100 thousands, HIKARI PerfecTV! : 50 thousands[Subscribers of Cable television Adachi are included.]

    *2 Net income forecasts are revised in consideration that revenues will decrease in non-consolidated basis, that sales cost willbe spent more effectively and that part of Indexs shares were sold.

    *3 750 yen/share annual dividend forecast is not changed.

  • 11 2006 SKY Perfect Communications Inc., All Rights Reserved

    Section

    Business Strategy

  • 12 2006 SKY Perfect Communications Inc., All Rights Reserved

    Diversifying CustomersPreference

    Services and Targeted Market

    SKY PerfecTV124/128Growth of Optical

    Fiber Networks Digitalization of TV

    General Segment

    SensitiveSegment

    Termination of AnalogBroadcasting

    3 Wave TunersOlympics (TorinoBeijing)HD Broadcasting

    NTTs Mid-Term PlanCompetition among CarriersPopularizing Triple-play ServiceExpansion of Service AreaAlliance with NTT East & West

    SKY PerfecTV110

    HIKARI PerfecTV

    Digitalization of CATV

    Wired

    Rental System for STBNew Packages

  • 13 2006 SKY Perfect Communications Inc., All Rights Reserved

    New Packages for SKY PerfecTV! (CS124/128)

    -The Simplicity and valuable price make the the number ofsubscription exceed 300 thousands at the end of December 2005.(Subscription to Valuable Pack amounts to more than 70%)-About 50% of new subscribers in December select new packages-Contribute to improve churn rateDecrease of churn attributed tocontent

    68 ch 3,500/month

  • 14 2006 SKY Perfect Communications Inc., All Rights Reserved

    Digital TV sets with built-in 110tuner wil