O2 Czech Republic : January to June 2016 Financial Results – Press Release (28 July 2016)

Press release

28 July 2016

• Numberof customers watching digital television O2 TVvia web and mobile application increased two and half times year-on-year. Together with traditional watching via set topbox number of O2 TVwatchers for the first time exceeded half a million

• For its customers O2 acquired additional exclusive sport content and in August in will launch new O2 TV Footballchannel

• Customers with brand new unlimited fixed tariff, which is already used by vast majority of households, call by 40% more
• In recently finished spectrum auction O2 invested the most of all operators. For its customers it acquired more than a half of all available spectrum to cover the increasing data consumption (by 80% more year-on-year)
• Thanks to increasing customers' demand for new services and all times high loyalty the net income increased by 10% year-on-year to CZK 2.552 billion

O2 today announced its operating and financial results for the first half 2016. Consolidated figures include the results of subsidiaries, including O2 Slovakia.

Despite continuous pressure mainly in corporate segment and since May also impact of new roaming regulation, O2 succeeded in maintaining flat revenue year on year and slightly increase operatingprofitability. It strengthened its position in digital O2 TV, mobile data and Slovakia. In addition O2 recorded positive feedback among the customers to the new unlimited tariff for fixed calling.

"Unlimited callings from fixed lines to all networks, which we have been offering since beginning of the year are popular among our customers. This is confirmed by the fact, that with the new tariff they call by 40 % more, number of minutes to mobile networks increased by as much as 210%", says Tomáš Budník, Chief Executive Officer and the Chairman of the Board of Directors ofO2 Czech Republic "Also the popularity of digital television O2 TVis growing. In last twelve months we recorded 35 thousand new customers. Number of those who watch TV via internet or at mobile devices increased by two and half compared to last year", he adds.

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"Growing customers' demand is positively reflected also in our financial results. So we were able to invest into the areas which will bring customers new enjoyments. We acquired additional exclusivesport rights so at the beginning of August we will introduce brand new O2 TVFootball channel. To be able to offer our customers faster mobile data connection, in recent auction we acquired more than a half of available spectrum", adds Tomáš Kouřil, company's Chief Financial Officer and Vice-Chairman of the Board of Directors.

As of the end of June 2016, mobile services provided by O2 were used by a total of 4.898 million customers. The number of contract customers increased by 1.4% year-on-year reaching 3.298 million. Thus they represent already 67.3% of the mobile customer base, up by 1.6 percentage point. Number of prepaid customers reached 1.600 million customers.

Helped by LTE network rollout and tariff proposition with increased data package mobile data traffic increased by 80% year-on-year. Number of internet in handset service went up by 15% year-on-year to 1.672 million.

More than 50% of handsets in O2 network is already a smartphone and one fourth supports LTE technology. Number of customers with LTE smartphone and with USIM card, which supports the new technology, reached 661 thousand at the end of June and continues growing.

Numberof active customers of O2 TVservice provided on O2 fixed line as well as on internet connection from any provider reached 217 thousand (IPTV and OTT), up by 14.4% year-on-year. This number includes also customers who subscribed for the free service within special "Try and Keep" promotion and decided to switch to a paid tariff. A complementary service MULTI which enables customers watching TV on more TV sets at one time became very popular. More than 30 thousand customers subscribed for this service and thus O2 can show off with almost 250 thousandactive set top boxes. Unique features (time shift, recording etc.), and also own O2 Sport channel with multidimension drive increasing demand for digital television.

The customers also lie watching O2 TV via internet and mobile application, or in Staropramen restaurants, pubs and bars. Number of watchers, who actively watch O2 TV via internet and mobile application, increased two and half times year-on-year and in June these means of watching TV were already used by close to 300 thousand watchers.

Number of xDSL fixed internet customers reached 782 thousand at the end of June 2016. Thanks to internet speed increase through installation of remote DSLAMs, the share of customers enjoying VDSL technology on total xDSL base reached already 60%, up by 9 percentage points. During the first half 2016, O2 increased the internet speed for as many as close to 80 thousand households.

Vast majority of households has been passed to new tariffs, introduced in January, which offer unlimited calls from fixed line to all mobile and fixed networks in the Czech Republic. The proposition thanks to which the customers do not need to count called minutes and are not charged any fee for line rental is liked among the customers. This is confirmed by the fact that with new tariffs customers call in average by 40% more. Total number of fixed voice lines reached 760 thousand at the end of June 2016.

Number of mobile customers in Slovakia increased by 7.4% year-on-year to 1838 thousand. Through O2 Business Services O2 in Slovakia newly offers also fixed services for corporate customers.

In Slovakia revenue reached CZK 3.280 billion, marking a year-on-year decrease of 0.6%.

Financial indicators for the Group

Operating indicators - Czech Republic