27 October 2011 Company Announcements Office Australian Securities Exchange Limited Exchange Centre 20 Bridge Street Sydney NSW 2000 Dear Sir or Madam Austar United Communications Limited (AUN) – Q3 2011 financial results AUSTAR CEO John Porter will host a briefing via teleconference and audio webcast for the Company’s Q3 2011 financial results at: 11.00am Australian Eastern Daylight Time Thursday 27 October 2011 Teleconference dial-in details are as follows: Conference ID: 8619812 (required to access the call) Domestic Participants: 1800 554 798 International Participants: +61 2 8113 1401 Webcast details are available on www.austarunited.com.au A copy of the presentation to be delivered by Mr Porter is attached, together with the news release. Yours sincerely Deanne Weir Company Secretary F

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Q3 2011 Results  

 

Key Highlights • Total subscribers increased by 1,328 on Q2 2011 to 765,578; • MyStar penetration at 40 percent of residential subscriber base; and • Total ARPU increased one percent on Q2 2011 to $86.96. • Adjusted Operating Cash Flow1 increased eight percent on Q3 2010 to

$66 million with Adjusted OCF margin at 37 percent; • Available liquidity increased 78 percent on Q3 2010 to $306 million; and • Net leverage at 1.9x as at 30 September 2011.  

Austar United Communications (“AUSTAR”, ASX: AUN) today released its unaudited results for the quarter ended 30 September 2011. Total subscribers ended the quarter at 765,578, an increase of 1,328 on the second quarter. Customer churn increased 10 basis points on the second quarter to 1.41 percent. Total Average Revenue Per Unit levels have been maintained over the quarter, increasing one percent on Q2 2011 to $86.96. The benefits of MyStar are now being enjoyed by 40 percent of residential subscribers. Chief Executive Officer, John Porter said: “As we indicated in our half year results the consumer environment is tough, this is still the case. While we experienced marginal growth in our subscriber numbers, we were able to control costs and achieve a very pleasing financial result. “MyStar continues to be a strong differentiator for AUSTAR in an increasingly competitive environment and over the coming months our 2012 AFL offering will be unveiled. We know live, uninterrupted coverage along with a dedicated AFL channel will be compelling for consumers in rural and regional Australia.” Adjusted Operating Cash Flow1 increased by eight percent to $66 million compared with the corresponding period. Net profit for the nine months was $100 million, a 130 percent increase on the corresponding period. Cash capital expenditure decreased two percent to $24.4 million compared with the previous corresponding quarter. Free Cash Flow2 decreased by 13 percent to $24 million on the corresponding period. AUSTAR has a history of strong cash generation, and available liquidity increased by 78 percent to $306 million at September 30, 2011 as compared to September 30, 2010.

News release 27 October 2011

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Mr Porter said: “The outlook for subscriber growth remains challenging with consumer sentiment at an all time low however demand conditions should gradually improve. Now in the fourth quarter, we are focused on stabilising our costs and building on the opportunity our AFL investment will create in 2012.” AUSTAR announced on 11 July that it had entered into definitive transaction agreements with Liberty Global Inc (LGI) and FOXTEL Management Pty Limited (FOXTEL) under which FOXTEL will acquire AUSTAR. It is anticipated the transaction will be finalised in early 2012 subject to a number of conditions being met. The ACCC plans to release its decision on the transaction by 30 November, 2011. Notes: 1. Operating Cash Flow – represents Revenue, less operating expenses, excluding stock based

compensation, foreign exchange, depreciation, amortisation, impairment and restructuring. Adjusted Operating Cash Flow is defined as Operating Cash Flow excluding costs associated with the FOXTEL transaction.

2. Free Cash Flow – defined as net cash flows from operating activities less cash capital expenditures.

Non-GAAP measures – Operating Cash Flow, Adjusted Operating Cash Flow and Free Cash Flow are non-GAAP measures as contemplated by the U.S. Securities and Exchange Commission’s Regulation G. For related definitions and reconciliations, see the Investor Relations section of the Liberty Global, Inc. website (http://www.lgi.com). Liberty Global, Inc. is our controlling shareholder.

For further information contact: Deanne Weir Group Director, Corporate Development +61 2 9295 0103 or 0402 865 300 dweir@austar.com.au

Catherine DouglasGroup Manager, Corporate Affairs +61 2 9394 9573 or 0477100978 cdouglas@austar.com.au

Austar United Communications (AUSTAR) www.austarunited.com.au AUSTAR (Australian Stock Exchange “AUN”) is a leading provider of subscription television services in regional and rural Australia, with more than 750,000 customers enjoying satellite digital television services. AUSTAR is also a significant provider of programming in the Australian television market through its 50% owned joint venture, XYZnetworks, which owns and/or distributes Nickelodeon, Nick Jr, Discovery Channel, Channel [V], [V]Hits, MAX, Arena, The Lifestyle Channel, Lifestyle Food, LifeStyle You, Country Music Channel and The Weather Channel. Liberty Global, Inc., the largest international broadband cable operator in terms of subscribers, holds an indirect controlling stake in AUSTAR. 

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Q3 2011 ltQ3 2011 resultsThree months ended 30 September 2011

John Porter, Chief Executive Officer27 October 2011

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Operational and financial highlights765,578 total subscribers, up 1,328 subscribers on Q2 2011

Total residential ARPU of $86.96, up 1% or $0.66 on Q2 2011$ , p $

1.41% average churn in Q3 2011, up 10bps on Q2 2011

MyStar penetration at 40% of residential subscriber base

SUBSCRIBERS

Revenue flat at $180 million, with $2 million less contribution from mobile1

FINANCIALS

Gross margin up 2% to $102 million with margin at 57%Adjusted OCF2 up 8% to $66 million with Adjusted OCF margin at 37%Capital expenditure decreased by $0.5 million to $24 million with 91% of it subscriber related$306 million of liquidity, up 78%1.9x net leverage

All comparisons refer to Q3 2011 vs. Q3 2010 unless otherwise stated1 Mobile business was sold to M2 Telecommunications on 22 February 20112 Adjusted Operating Cash Flow is defined as Revenue less Operating Expenses and excludes stock-based compensation, foreign exchange, depreciation and

amortisation, impairment, restructuring and costs associated with the FOXTEL transaction

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Growth remains cautious

744 747762 764 756 764 765

Total Subscribers (000s)The retail environment remains challenging

130 131138 139 141 144 149

744 747remains challenging for near-term while demand conditions should gradually i 130 131 141improve

Consumers remain cautious

624 625

MyStar continues to gain momentum with 14,000 net add in Q3

614 616 624 625 615 620 6162011

MyStar penetration at 40% of residential

Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011

Residential Commercial

base as at 30 September

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Q3 churn reflects environment

1 72%

Average monthly churn (%)Q3 churn up 10

1.72% basis points on Q2 churn

Free-to-Air1.52%

1.39% 1.41%

Free to Air multichannels continue to impact churn and

1.27%

1 25%

1.33%

1.31%

consumer behaviours over the short-term

1.14%

1.25%1.24% 1.23% Q1 2011 churn

was significantly impacted by

t l di t

Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11

natural disasters in regional Australia

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ARPU levels maintained

$85.53 $85.94$85 08

$86.30 $86.96Average Revenue Per Residential Subscriber ($)

$

$6.04 $6.49$6.73

$

$6.23$6.04

$83.85$ $85.08

$83.39

$6.37 $5.47

$77 48$79.49 $79.45 $78.35 $77.92

$80.07 $80.92

$77.48 $

+$1.47 or +2% in Recurring APRU

Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11

Recurring Residential ARPU Other Residential ARPU

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Cost control delivers positive results

22 1% 21 8%

60

Operating Expenses1 ($m) and Percentage of Revenue (%)

39.3 39.2

20.0%

22.1% 21.8%

18.8%

21.3%20.4% 20.1%

22.050

10.110.8 10.5

8.510.3 8.3 9.3

34.8 33.736.9 36.3 36.1

17.0

30

40

10.213.2 12.5

10.6 10.4 12.4 11.312.0

20

14.5 15.3 16.2 14.6 16.2 15.6 15.5

7.0

10

2.00

Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11

Salaries & labour Advertising, Marketing & Sales Other Percentage of revenue (%)

61 Operating expenses exclude stock-based compensation, foreign exchange, depreciation, amortisation and costs

associated with the FOXTEL transaction

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History of strong cash generation

3.5x

Net Leverage(net debt : annualised quarterly OCF)

3.2x3.1x 3.1x

3.0x2.9x$17m 2.8x

2.7x$17m

buyback

2.2x2.1x

1.9x$120m Spectrum Sale

Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11

A il bl li idit f $306 illi 78%Available liquidity of $306 million, up 78% pcp

Average tenure of debt is 4 years

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Acquisition updateDefinitive transaction agreements signed on 11 July 2011 with deal price of $1.52 per share

C diti d t i FIRB ACCC d IRS l b f i it h h ldConditions precedent remain FIRB, ACCC and IRS approvals before minority shareholder approval

Initial ACCC analysis released in its 22 July Statement of Issues conflicts with the reality of th di i t d t i l th t l d i i f th C i ithe media environment and materials that were already in possession of the Commission. AUSTAR subsequently made further submissions to address ACCC concerns.

ACCC has announced it will make a decision by 30 November

AUSTAR, FOXTEL and LGI all remain committed to implementation of the transaction

Due to the ACCC delays, implementation of a scheme of arrangement will now be delayed until early 2012 Scheme includes two phases:until early 2012. Scheme includes two phases:

o LGI will acquire all AUSTAR shares that LGI does not control at $1.52 per share

o FOXTEL entities will acquire LGI’s interest in AUSTAR for $1.52 per shareq p

AUSTAR minority shareholders and LGI will receive the same gross proceeds of $1.52 per share

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Appendices

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Appendix 1 – Financial highlights Operating Cash Flow Reconciliation and other financial information for the period ending 30 September 2011

Sep-11 Sep-10 Change Sep-11 Sep-10 Change Sep-11 Jun-11 Mar-11 Dec-10$ 000's $ 000's $ 000's %Change $ 000's $ 000's $ 000's %Change $ 000's $ 000's $ 000's $ 000's

Profit & Loss

Nine Months Ended Three Months Ended Three Months Ended

Profit & Loss

Total Service and Other Revenue 531,935 531,981 (46) (0)% 180,184 180,117 67 0% 180,184 178,022 173,729 179,247

Programming and Communications Expenses (232,488) (237,008) 4,520 2% (77,746) (79,527) 1,781 2% (77,746) (76,998) (77,744) (82,054)

Gross Margin 299,447 294,973 4,474 2% 102,438 100,590 1,848 2% 102,438 101,024 95,985 97,193

Operating Expenses (109 479) (113 264) 3 785 3% (36 189) (39 199) 3 010 8% (36 189) (36 352) (36 938) (33 697) Operating Expenses (109,479) (113,264) 3,785 3% (36,189) (39,199) 3,010 8% (36,189) (36,352) (36,938) (33,697)

Adjusted Operating Cash Flow 189,968 181,709 8,259 5% 66,249 61,391 4,858 8% 66,249 64,672 59,047 63,496

Foxtel Transaction Costs (3,065) 0 (3,065) NM (1,177) 0 (1,177) NM (1,177) (1,888) 0 0

Operating Cash Flow 186,903 181,709 5,194 3% 65,072 61,391 3,681 6% 65,072 62,784 59,047 63,496

Stock-based Compensation (3,221) (7,160) 3,939 55% (867) (2,123) 1,256 59% (867) (973) (1,381) (4,816)

Foreign Exchange Gain / (Loss) (459) (1,237) 778 63% 90 (1,505) 1,595 NM 90 (416) (133) (1,259)

Depreciation and amortisation (84,735) (85,130) 395 0% (27,466) (33,107) 5,641 17% (27,466) (27,972) (29,297) (30,331)

Share of Associate Profits/(Loss) (697) (1,230) 533 43% (41) (568) 527 93% (41) 406 (1,062) 901

Profit before interest and taxation 97,791 86,952 10,839 12% 36,788 24,088 12,700 53% 36,788 33,829 27,174 27,991

Net interest (41,620) (45,806) 4,186 9% (13,780) (15,226) 1,446 9% (13,780) (13,968) (13,872) (14,995)

Significant items:Interest rate swap gain/(loss) (8,742) 3,181 (11,923) NM (5,853) 5,901 (11,754) NM (5,853) (36) (2,853) 4,970

Spectrum sale / impairment reversal 95,751 0 95,751 NM 0 0 0 NM 0 0 95,751 19,420

Profit/(Loss) before taxation 143,180 44,327 98,853 223% 17,155 14,763 2,392 16% 17,155 19,825 106,200 37,386

Income tax (expense)/benefit (43,121) (834) (42,287) NM (5,754) 8,042 (13,796) NM (5,754) (5,349) (32,018) 18,774

Profit/(Loss) after taxation 100,059 43,493 56,566 130% 11,401 22,805 (11,404) (50)% 11,401 14,476 74,182 56,160

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Appendix 1 – Financial highlights (cont.)Austar United Communications Ltd

Unaudited subscriber information

Sep-11 Sep-10 Change %Change Sep-11 Sep-10 Change %Change Sep-11 Jun-11 Mar-11 Dec-10 Television

Total Revenue - $ 000's- Residential 478,897        476,534        2,363 0% 162,422        161,086          1,336             1% 162,422        160,580        155,895        160,447       - Commercial 51,393 47,646 3,747 8% 17,591 16,604 987 6% 17,591 17,213 16,589 16,550

Nine Months Ended Three Months Ended Three Months Ended

51,393          47,646          3,747 8% 17,591          16,604            987                6% 17,591          17,213          16,589          16,550         530,290        524,180        6,110 1% 180,013        177,690          2,323             1% 180,013        177,793        172,484        176,997       

Subscribers

- Residential 616,086          624,001          (7,915) (1%) 616,086          624,001          (7,915) (1%) 616,086          619,682          614,620          625,492         - Commercial equivalent 149,492          137,918          11,574            8% 149,492          137,918          11,574 8% 149,492          144,568          141,021          138,727         

765 578 761 919 3 659 0% 765 578 761 919 3 659 0% 765 578 764 250 755 641 764 219765,578        761,919        3,659             0% 765,578        761,919          3,659 0% 765,578        764,250        755,641        764,219       

Recurring Residential ARPU 79.64$            78.81$            $0.83 1% 80.92$            79.45$            $1.47 2% 80.92$            80.07$            77.92$            78.35$           Other Residential ARPU 5.91$               6.30$               $(0.39) (6%) 6.04$               6.49$               $(0.45) (7%) 6.04$               6.23$               5.47$               6.73$              Total Residential ARPU (excluding installation revenue) 85.55$            85.11$            $0.44 1% 86.96$            85.94$            $1.02 1% 86.96$            86.30$            83.39$            85.08$           

Churn % 1.48% 1.32% 0.16% (13%) 1.41% 1.24% 0.17% (14%) 1.41% 1.31% 1.72% 1.23%

Selected Financial Information ($ 000's)

Senior Debt (drawn) 676,545        773,744        (97,199) (13%) 676,545        773,744          (97,199) (13%) 676,545        725,000        750,000        773,744       

Cash 184,391          97,426            86,965 89% 184,391          97,426            86,965 89% 184,391          210,240          224,575          108,653         Available facilities 121,794          75,050            46,744 62% 121,794          75,050            46,744 62% 121,794          123,794          98,794            75,050           Available liquidity 306,185          172,476          133,709 78% 306,185          172,476          133,709 78% 306,185          334,034          323,369          183,703         

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Appendix 2 - Cashflow A$m Q3 2011 Q3 2010 Change % ChangeAdjusted Operating Cash Flow $66.2 $61.4 $4.8 8%

Change in working capital $1.4 $7.1

Long Term Incentive Plan ($4.6) -

Net interest and financing costs ($14.6) ($16.0)Net interest and financing costs ($14.6) ($16.0)

Cash flow from operating activities $48.4 $52.5 ($4.1) (8%)Cash capital expenditure ($24.4) ($24.9)

Free Cash Flow $24 0 $27 6 ($3 6) (13%)Free Cash Flow $24.0 $27.6 ($3.6) (13%)Net repayment of borrowings ($48.5) -

Other ($1.3) -

C ($ ) $Net change in Cash ($25.8) $27.6

Cash $184.4 $97.4Available liquidity $306.2 $172.5 $133.7 78%Net debt (1.9x annualised OCF) $492.1 $676.3

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Appendix 3 - Summary of termsTotal TV Residential ARPU - Total television residential revenue less installation revenue for the period divided by the average number of residential television subscribers, divided by the number of months in the period. ARPU is expressed on a per month basis.

Recurring TV Residential ARPU - Recurring television residential subscription revenue for the period divided by the average number f id ti l t l i i b ib di id d b th b f th i th i d ARPU i d th b iof residential television subscribers, divided by the number of months in the period. ARPU is expressed on a per month basis.

Churn - Number of account holders whose service is terminated during the period, less those accounts which are restarted within 30 days of termination, divided by the average number of Subscribers for the period, divided by number of months in the period.

Commercial Equivalent Basic Unit (“EBU”) - Calculated by dividing recurring monthly commercial revenue by a basic residential Co e c a qu a e t as c U t ( U ) Ca cu a ed by d d g ecu g o y co e c a e e ue by a bas c es de areference rate of $40.86

Gross margin - ‘Total Service and other Revenue’ less ‘Programming and Communications expenses (inc. satellite costs)’

Operating Cash Flow (OCF) - represents revenue less operating expenses and excludes stock-based compensation, foreign exchange depreciation and amortisation impairment and restructuringexchange, depreciation and amortisation, impairment and restructuring

Adjusted Operating Cash Flow – Operating Cash Flow excluding costs associated with the FOXTEL transaction

Free Cash Flow - Defined as net cashflows from operating activities less cash capital expenditures (see Appendix 2)

Subscriber - Residential television subscribers, plus Commercial EBU

Non-GAAP measures – Operating Cash Flow, Adjusted Operating Cash Flow and Free Cash Flow are non-GAAP measures as contemplated by the U.S. Securities and Exchange Commission’s Regulation G. For related definitions and reconciliations, see the Investor Relations section of the Liberty Global, Inc. website (http://www.lgi.com). Liberty Global, Inc. is our controlling shareholder.

All results in this presentation are unaudited. Certain statements in this presentation may constitute "forward-looking statements," which involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of AUSTAR and any of its subsidiaries to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements.

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