TECHNICOLOR_REGISTRATION_DOCUMENT_2017

- 1 PRESENTATION OF THE GROUP Organization & business overview

CONNECTED HOME [G4-4] [G4-8] [G4-21] [G4-DMA Market presence]

1.2.2

technological scale across all major geographies, particularly in North America, the largest market in volume and value. The segment is structured around dedicated teams focused on the development of our partnership with Pay-TV operators and Network Service Providers. The segment also benefits from a strong transversal services organization including operations, global supply chain management, procurement, sales operations, quality assurance, and hardware performance. This organization also hosts all business re-engineering and transformation programs for Connected Home. Connected Home had approximately 1,900 employees at the end of December 2017, of which around 340 employees belong to the Manaus manufacturing facility in Brazil. Contract structuration and process In most cases, a Connected Home customer issues a request for proposal (“RFP”) or a request for quotation (“RFQ”) for a product they wish to procure. All vendors, including Technicolor, quote their best terms, based on their understanding of the product. Typically, a shortlist of considered vendors is created and technical discussions are held with those vendors. A best and final offer is made, and one or two vendors are awarded. The offers, which includes pricing, are made considering the best view we have on forward looking component costs, the R&D effort to develop the product, and fixed costs. The standard contractual process is divided into four main steps: 1. Request for Price/Request for Quote process ■ 2. Development, which ranges widely from about 9 to 18 months ■ Global Internet traffic is growing, fueled by increasing service consumption, particularly video through Over-The-Top services, as well as the connectivity of millions of additional devices, often referred to as IoT. With the increasing amount of data that will cross global IP networks in the next few years, households will demand greater connectivity speed, which will drive transition to new standards and technologies (HEVC, DOCSIS 3.1, G.fast, 10G Fiber, and 5G). The Smart Home and IoT ecosystems can increase customer retention and generate additional revenue as NSPs go beyond traditional triple-/quad-play offerings and develop new services to increase Average Revenue Per User (“ARPU”). 3. Deployment ■ 4. Maintenance ■ Industry Trends

GRI

Business overview Connected Home segment offers a complete portfolio of Broadband and Video Customer Premise Equipment (“CPE”) to Pay-TV operators and Network Service Providers (“NSPs”), including broadband modems and gateways, digital set top boxes, and Internet of Things (“IoT”) connected devices. The CPE portfolio of the Connected Home segment can be further described as follows: in Broadband, modem and gateway CPE are access devices ■ designed for Cable, Telecom and Mobile operators to allow the delivery of multiple-play services (video, voice, data, and mobility) to their residential and business subscribers over fixed wire and wireless networks (cable, xDSL, fiber, LTE/5G). Connected Home offers a complete range of broadband CPE devices, including high-end triple and quad-play gateways, business gateways, integrated access devices, double-play wireless gateways with data and VoIP functionalities, as well as Wi-Fi routers, extenders, and IoT connected devices; in Video, digital set top box CPE are designed for Cable, Satellite, ■ Telecom and Mobile operators to enable the delivery of digital video entertainment and advanced services to their subscribers over broadband, broadcast, and hybrid networks. Connected Home offers a wide range of products including IP set top boxes, broadcast set top boxes, hybrid set top boxes, and media servers. These products enable NSPs to offer access to Broadcast TV, Internet TV and OTT services in Standard (“SD”), High (“HD”) and Ultra High Definition (“UHD”). Technicolor typically provides the design and validation of the CPE. In addition, the segment manages all the logistics and supervises the manufacturing and assembly on behalf of its customers. The manufacturing and assembly services are performed by CEMs (“Contract Electronic Manufacturers”). For tax reasons, the Company operates a single manufacturing facility in Manaus (Brazil), to serve the Brazilian market. Organization With the acquisition of Cisco Connected Devices in November 2015, Connected Home doubled its size, and increased its industrial and

17

TECHNICOLOR

REGISTRATION DOCUMENT 2017