Telefonica O2 Czech Republic, a.s. : Telefónica Czech Republic further consolidates its position…

• Total number of mobile customers increased to 5.1 million in third quarter
• Internet in handset revenues doubled year-on-year
• Total mobile voice traffic increased by 18% thanks to FREE tariffs
• The new O2 TV attracted 5,000 new customers

Despite strong competitive environment on the Czech market, Telefónica has further consolidated its position in all key segments in the first nine months of 2013. The company has confirmed that it has gained 117,000 new customers of contract mobile services. The total number of mobile customers stood at 5.1 million at the end of September 2013.

In April 2013, Telefónica simplified its portfolio of mobile tariffs and introduced the new FREE tariffs which attracted one half of existing contract customers by the end of September. Total mobile voice traffic (incoming calls + outgoing calls + outgoing roaming) within the O2 network grew by 18% in the third quarter. The duration of all calls within the O2 network in the past nine months amounted to a total of 7,909 million minutes.

Telefónica continues to support the sales of smartphones, namely with the introduction of its O2 Mobil service, its data packages that are available with the FREE and Vario tariffs, and its best price on the market guarantee for the most popular devices. The proportion of customers using smartphones within the O2 network exceeded 32% by the end of September, marking a year-on-year increase of one-third. This was one factor that contributed to a year-on-year doubling of revenues from the Internet in handsets. The most popular smartphones in the third quarter included the Samsung SIII mini, the Huawei Ascend Y300 and the Nokia Lumia 520.

With the new O2 TV platform, viewers are no longer bound by TV schedules as they can watch any show or film up to 30 hours after its original broadcast time. As many as 5,000 customers ordered the new service in the third quarter alone. At the end of September 2013, the number of O2 TV customers reached a total of 148,000, marking a year-on-year increase of 5.6%.

Despite the current economic squeeze, Czechs continue to travel. O2 operating statistics indicate that the most frequently visited summer destinations included Germany, Slovakia, Croatia, Austria and Italy. A good result was recorded especially for summer (July to September 2013) data traffic, which showed an increase of 114% over the summer 2012 figure, thanks to one-off data packages.

O2 continues expanding its coverage of the Czech Republic with the fastest mobile internet LTEnetwork. This technology is currently available to customers that are located within more than one-quarter of Prague's territory, including Václav Havel Prague Airport and Jesenice u Prahy. Starting from October, LTE has become also available in Brno, where the technology is accessible in a wider area of the city and at the Brno Fair and Exhibition Grounds. The LTE technology offers data download speeds of up to 75 Mbps and data uploads of up to 38 Mbps, with very low response times (ping) of 20 to 25 milliseconds.

O2 has also recorded a year-on-year increase in the number of customers using the broadband internet xDSL service, specifically a rise of 1.9% to 919,000. The VDSL technology is currently used by as many as 336,000 customers, representing year-on-year growth of 41%.

On 30 October 2013, Telefónica Czech Republic and T-Mobile Czech Republic signed an agreement on sharing their existing second-generation and third-generation mobile networks. The objective of the collaboration between the two companies is to ensure optimum 2Gand 3Gcoverage across the territory of the Czech Republic and to improve the operating efficiency of both operators' networks. The planned network sharing will thus contribute significantly to improving the quality of provided mobile services. The agreement is a result of negotiations initiated in August of this year.

Total consolidated operating revenues decreased in the first nine months of 2013 by 5.8% year-on-year to CZK 35,579 million. Operating revenues, excluding impact of lower mobile termination rates (MTR), which do not directly affect operating profit, decreased by 1.7% year-on-year.

Telefónica also profits from focusing on data traffic where revenues from mobile data services increased by 26.5% year-on-year (excluding SMS and CDMA). Revenues from mobile data services showed a year-on-year growth of 35.8% in the third quarter.

OIBDA (operating income before financial expenses, tax, depreciation and amortisation) decreased in the first nine months of 2013 by 9.3% year-on-year.

Free cash flow increased year-on-year for the period January to September 2013 by 6.7% to CZK7,466 million.

Revenues generated in Slovakia demonstrated further positive development. These revenues increased in the first nine months of 2013 by 9.4% year-on-year to EUR 155 million. Operating revenues, excluding lower mobile termination rate payments (MTR), which do not directly affect operating profit, increased by 20.7% year-on-year to EUR 171 million.

FINANCIAL AND OPERATIONAL INDICATORS

Contacts
Katerina Miksovska
Press Department
Telefónica Czech Republic, a.s.
e-mail: katerina.miksovska@telefonica.com
tel: +420 728 540 294

Telefónica Czech Republic is a major integrated operator in the Czech Republic. It is now operating almost eight million lines, both fixed and mobile, making it one of the world's leading providers of fully converged services. The organization offers the most comprehensive portfolio of voice and data services in this country. It is paying special attention to the exploitation of the growth potential, particularly in the data and Internet sector. Telefónica Czech Republic operates the largest fixed and mobile network including a 3rd generation network, CDMA (for data), and UMTS, enabling voice, data and video transmission. Telefónica Czech Republic launched a LTE (Long Term Evolution) 4th generation mobile communication network as the first operator in the Czech Republic. The new network offers the fastest available mobile Internet nowadays. Telefónica Czech Republic is also a notable provider of ICT services.

Telefónica is one of the world's largest telecommunications operators by market capitalisation. Its activities are centred mainly on the fixed and mobile telephony businesses, while its broadband business is the key growth driver underpinning both. It operates in 25 countries and has a global customer base of 312 million. Telefónica's growth strategy is focused on the markets in which it has a strong foothold: Spain, Europe and Latin America. Telefónica is a 100% private sector company with its shares listed in Madrid and other stock exchanges and more than 1.5 million individual shareholders.