Introduction

  • Independent auditor's report
  • Financial and operational highlights
  • Letter from the Chairman of the Board of Directors
  • Calendar of key events in 2010

02
About Telefónica Group

  • About Telefónica Group – Introduction

03
Board of Directors' Report on Business Activity

  • Telefónica O2 Czech Republic Group
  • The telecommunications market in the Czech Republic
  • Networks and technology
  • Voice services
  • Internet, data and value added services
  • Convergent services
  • Payment services
  • ICT services, solutions for business and for the...
  • Interconnection
  • Comments on the financial results

04
Corporate Social Responsibility (CSR)

  • Corporate Social Responsibility (CSR) – Introduction
  • Business Principles
  • Market conduct and customer care
  • Caring for employees and the workplace environment
  • Caring for the environment
  • Supporting communities

05
Corporate governance

  • Corporate governance of the Telefónica O2...
  • Subsidiaries, associates and other ownership interests
  • The organisation of Telefónica O2
  • Governing bodies
  • Board of Directors
  • Executive management
  • Report by the Company's Supervisory Board
  • Supervisory Board
  • Audit Committee
  • Rules for the remuneration of persons with executive...
  • Other information relating to persons with executive...
  • Telefónica O2's Declaration of Compliance with the...
  • Information relating to matters according to Section...

06
Consolidated financial statements

  • Consolidated financial statements – Introduction

07
Financial statements

  • Financial statements – Introduction

08
Other information for shareholders and investors

  • Other information for shareholders and investors

Market conduct and customer care

Customer Experience

In 2010, Customer Experience became the key pillar of the Bravo! Programme. In Telefónica O2, customer experience translates into four customer promises:

  1. People make the difference – we want our customers to know that we try our best to address their needs.
  2. The best online experience – we give our customers a comprehensive, affordable and serious offer of internet at home, on the road, at work and in the mobile phone.
  3. Being an O2 customer always pays off – all our offers deliver real value.
  4. We build on trust – we offer a reliable service and the experience that O2 delivers on its promises and gives the customer the care he truly deserves.

In 2010, the above became a yardstick by which new and existing products and services were measured; existing products and services were modified to reflect our philosophy. Its execution, and the overall quality of customer experience, was monitored by the Company using a number of regular or one-off surveys. The main one, Customer Satisfaction Index (CSI), showed a positive trend in all segments.

The consumer segment showed a marked improvement in the quality of customer care at call centres. The priority was to ensure a high availability of the call centre and that the customer’s request is adequately resolved at the first call. Customers who could not reach the call centre during the time when the call centre was handling an increased volume of traffic could opt for a call-back. To improve the quality of care for small business customers, Telefónica O2 implemented the so-called ‘virtual agent’, to accelerate targeted referral to qualified operators. During the year, SOHO and medium business segments were merged, and the corresponding service model was modified, which occurred without any negative impact on customer experience. The medium business segment enjoyed an innovation of the so-called ‘business partners’, personal account managers giving medium businesses individual care.

The Company also focused on reducing the wait times in its brand stores. The installation of Queue Management Systems and the scaling of capacities to the traffic and other operating considerations delivered a reduction in the number of people leaving without service. At the beginning of the year, a system to measure feedback from customers served by our retail network was implemented, and the results were used to improve the quality of care and the effectiveness of customer care, and to eliminate the causes of dissatisfaction of customer, which related, for example, to the accuracy of order taking. The Company also introduced a concept of the so-called ‘in-store SME specialists’ who gave this customer segment specialised care.

With regard to fixed service delivery and repair, the Company focused on keeping the promised installation dates and on active communication with the customer during the process of handling of the request. Telefónica O2 implemented a new process of fixed service delivery, which included a specialised back office team which took over the responsibility for the end-to-end handling of the request, while the sales channels now focus mainly on the taking of the order. Telefónica O2 also implemented a new simplified claims handling process at the front office level. At the same time, the year 2010 saw the elimination of some of the causes of frequent complaints, which produced a reduction in the number of unwanted calls to the call centre and a drop of approximately 30% in the number of claims. In the area of online services, the Company debuted its new website www.o2.cz and held an active presence in social networks (Facebook, Twitter).

In the corporate segment, the Company phased out its IVR system and the live operators were able to answer more than 95% of calls within 15 seconds.

The lead time of service delivery, especially of mobile services, was shortened to ‘next-day delivery’ based on the feedback from corporate customers.

The POTR project, a part of the BRAVO programme, reviewed the causes of the frequent errors in invoices. The result was a change in the work procedures, modifications of systems, reduction of claim handling lead times, implementation of quality assurance processes and more information for the customer. At the same time, the product portfolio was simplified and many customers were migrated from old tariffs to the new ones.

The satisfaction of corporate customers has been rising steadily every month since the beginning of the year; the biggest improvement could be seen in claims handling and service delivery. The customers were also much more satisfied with the quality of commercial relations and the quality of contact with the call centre.

Products and services for people with special needs

In 2010, Telefónica O2 focused on helping and supporting people with special needs, especially senior citizens and people with disabilities, by making their communication easier.

The Company launched Aligator, a new version of special handset for senior citizens. Aligator is exceedingly simple to operate, especially for senior citizens and people with disabilities who find it challenging to operate regular mobile devices. The handset had side buttons to facilitate access to the main functions of the telephone, and the control keys were robust, big, and the display of a considerable size is well lit for better recognition of characters and digits. The price, too, was lower compared to the predecessor product.

Telefónica O2 improved its offer and marketed this device to customers at a special promotional price. The pre-paid offer contained the handset Aligator A400 and a SIM card with a credit of CZK 100. Every such set also came with a gift – the brochure The Internet School for Senior Citizens. The post-paid option offered the handset for the symbolic price of CZK 1 together with the purchase of O2 Neon Senior tariff.

Deaf Call

Also in 2010, Telefónica O2 continued to operate Deaf Call, a service which lets deaf or partially-deaf customers really communicate in the case of emergency or in various life situations – when making a medical appointment, ordering a repairman or consulting directory services. The service helps people who are deaf or hard of hearing communicate with the hearing and the vice versa. Specially trained operators are available 24/7. The Company has been offering this service free of any charge from the beginning of 2010. During the course of the year, the operators handled 13,438 calls; fax, e-mail, ICQ, SMS and the fixed line were the most popular options for communication.

Discounts

In 2010, Telefónica O2 continued to provide a discount on O2 fixed line service to people with a dependency of the 1st degree – in spite of the fact that the Czech government no longer subsidises the discount. The Company also preserved the option for people with disabilities to rent a special telephone set.

INSPO 2010 conference and the competition Internet and My Handicap

In 2010, Telefónica O2 was became the general partner of the 10th INSPO conference Internet and Information Systems for Persons with Special Needs, the only event of its kind in the Czech Republic. The Company’s representatives presented Deaf Call and Emergency Care services for people with disabilities and senior citizens, which they followed up with a demonstration. In addition to financial support to the conference, the Company also donated gifts for the speakers and the winners of the writing competition Internet and My Handicap, whose results were announced at the INSPO conference.

Floods in 2010 – emergency response

In the summer of 2010, Telefónica O2 responded to the emergency brought on by floods and, again, decided to provide relief to people stricken by the disaster. The Company prepared special programmes and services to help them address the situation: a free-of-charge issue of a new SIM card with the same telephone number; a discount of up to CZK 1,000 against the purchase of a new mobile handset or fixed line telephone set, ADSL or ISDN modem or a set-top box for O2 TV. Furthermore, customers could arrange for a postponement of the due date for their bills for contract mobile and fixed-line services, by up to a quarter of a year. The collection of receivables, which existed prior to the floods, was also suspended, and the numbers with restrictions on service due to non-payment were restored to full service.

Telefónica O2 also offered a 50% discount on mobile calls within the Czech Republic for the duration of two billing cycles. Pre-paid customers could claim an extra CZK 100 credit for a period of 6 months. Telefónica O2 at the same time organised an employee fundraiser to help the victims of floods, and match the total amount of employee donations with an equal amount from its own pocket. The O2 Foundation presented the total donation of CZK 1,423,706 to the People in Need Foundation, which is its longstanding partner in emergency relief operations in the event of natural disasters, etc.

We help to guide children through the world of communication technology

As a provider of communications services, Telefónica O2 is committed to using all available means to help eliminate potential risks that come with modern technology. Protecting children and creating a safe environment for them in the world of information and communication technology has always been a key priority with regard to the Company’s customers. Several specific actions were taken in the area of child protection.

Telefónica O2 continued to observe its policy on the marketing to children, which summarises the principles respected in all the Company’s marketing activities and which had been adopted previously. In 2010, the Company also started blocking websites with child pornographic content. All websites that were made illegal in all EU countries were blocked in the O2 network.

Supporting campaigns to benefit children

In February 2010, the Company joined the celebrations of the International Safer Internet Day, together with the National Centre for Safer Internet, gave its support to the pan-European campaign, which focused on identity protection in online environments and which was called ‘Think B4 U Post’. Telefónica O2 was also member of an advisory committee of the Saferinternet project.

In June 2010, Telefónica O2 gave its support to an expert conference organised in the seat of the Senate of the Czech Parliament by the National Centre for Safer Internet. The conference focused on the issues of cybercrime prevention, especially with regard to children. The event was organised under the auspices of the 1st Vice-chair of the Senate PaedDr. Alena Gajdůšková, JUDr. Miroslav Antl, Vice-chair of the Constitutional Law Committee of the Senate and RNDr. Igor Němec, President of the Personal Data Protection Office.

In September 2010, the Company prepared and had printed, on recycled paper, a brochure to inform and warn parents ‘(Teach Your Children) Surf Safely’, which explained the risks of children surfing online and gave tips to parents how to effectively mitigate those risks. The brochure was distributed via the network of O2 brand stores and as a supplement to the employee bulletin O.pen; it was also available from the Safety Line.

In November 2010, Telefónica O2 gave its support to the International Safer Internet Conference, this time headlined ‘Safer Cyberspace: European Inspiration and Czech Experience’. Fourteen speakers (including a representative from Telefónica O2), of which five were international guests, spoke at the conference. The conference provided a common platform for the public sector and business to discuss the issues of computer security and online safety.

The end of 2010 saw already the 8th Cyberspace International Conference, which explored the effects of the internet on the society and which was organised by the Faculty of Law, Masaryk University, in collaboration with the Faculty of Social Studies of the same institution. Telefónica O2 was the general partner of the event.