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

Voice services

In the area of mobile voice services, in 2010 Telefónica O2 continued to build a strong awareness of the simplicity of its O2 NEON tariffs. At the same time, as part of the project to simplify its product portfolio, the Company actively supported the migration of customers from older tariffs to O2 NEON. Customers would benefit from more freedom that O2 NEON tariffs offer and could take full advantage of fixed broadband internet access in the form of discounts on other services, calls to a selected number and many others.

In March 2010, Telefónica O2 came out with a special proposition to new users of O2 NEON tariffs: customers (registered small business owners or entrepreneurs) who activated a new number with O2 NEON L, L+, XL or XXL during the period from 1 to 14 March 2010 were eligible for a 30% discount for the whole duration of the contract (2 or 3 years, depending).

From 1 June, Telefónica O2 started offering an add-on service O2 Navzájem, which came with unlimited calls within a group of up to seven friends, any time of day, for a flat fee. The service was offered to contract customers and the users of the O2 pre-paid card. Each person in the group paid the same monthly fee and the service offered more value for money as the number of ‘friends’ increased. The unlimited communication with selected contacts makes the service an ideal complement to O2 NEON tariffs.

New customers of the mobile pre-paid service from Telefónica O2 could enjoy a unique offer between 1 April and 30 June 2010. Users of O2 NA!PIŠTE and O2 NA!HLAS could sign up for a special promotion offering one minute of call for only CZK 1. Additional benefits that come with the pre-paid service also included a choice of four top-up packages: calling on weekend or in the evening for CZK 0.50 per minute, weekend SMS for CZK 0.50 or internet in a mobile device for CZK 20 per week. For every top up, pre-paid customers could claim one of the guaranteed rewards via www.odmenazadobiti.cz (‘reward for top-up’). At the end of 2010, Telefónica O2 went live with its innovated Reward for Top-up loyalty programme for the customers of pre-paid services. The goal of the innovation was to bring the programme even closer to the target group of customers by offering them a range of rewards, which depended on the number of months the customer actively used the number for.

O2 DA was Telefónica O2’s proposition to Russian- and Vietnamese-speaking customers. The tariff came with cheaper calls to sixteen countries: calls and SMS to Russia or Vietnam were, for instance, only CZK 5.50 per minute and CZK 2.60, respectively.

Having performed a detailed analysis of small business and entrepreneur customers’ needs for mobile voice communication, from April 2010 Telefónica O2 expanded its offer of mobile tariffs designed for this important customer segment with the addition of the new O2 Podnikání tariffs which were the first in the Czech market to offer unlimited calls within business hours included in the monthly fee. This benefit did not come with any time limitation and could be enjoyed as long as the tariff was subscribed. The new O2 Podnikání tariffs came in four options: O2 Podnikání M, O2 Podnikání L, O2 Podnikání XL and O2 Podnikání XXL. The highest tariff offered, within the monthly subscription fee, unlimited calls between 9 am and 5 pm anywhere, without network restrictions. In the case of the other tariffs, the unlimited calls were tied to the same hours as above, and to more than 7 million numbers in the O2 network, including all fixed lines in the Czech Republic. Thanks to O2 Podnikání, customers no longer have to monitor their usage and costs and dedicate their time in full to their business.

From May, Telefónica O2 began to market O2 Business, innovated tariffs for SMEs. The new O2 Business Unlimited was offered as a truly unlimited option, giving its users unlimited calls, data and SMS to all networks in the Czech Republic for the new price of CZK 2,900 (exclusive of VAT). The other O2 Business also offered a lot of value – more free minutes, lower per-minute rates and lower monthly fees. To complement O2 Business, customers could choose one of the O2 Podnikatel add-on tariffs offering value on-net calls.

In the fixed line area, traffic continued to be gradually carried over from traditional fixed lines to Voice-over-IP (VoIP). Naturally, in 2010 Telefónica O2 focused on further development of this technology and introduced O2 Unlimited Line and O2 Virtual Exchange, two services offering a reasonably priced virtual PABX exchange included in the monthly fee. Telefónica O2 marketed its VoIP services as an additional option with its data services of guaranteed quality. The number of VoIP customers more than doubled during the course of 2010.

Customers in the lower segments, which do not require a virtual exchange functionality and use asymmetric internet access via ADSL, were the target group for Telefónica O2’s new IP service (IP telefonní přípojka). For a monthly fee of CZK 230 exclusive of VAT, the customer had a guaranteed telephone service over ADSL, with unlimited calls to all fixed line networks in the Czech Republic and a rental of a high-quality VoIP telephone set. The service was open only to business customers.

On its quest to continuously develop and improve its VoIP service, Telefónica O2 introduced a guaranteed fax service (Faxová přípojka) for the customers of O2 Unlimited Line, O2 Virtual Exchange and the IP telephony service.

In December 2010, Telefónica O2 expanded its offer of calling from home options. All fixed access customers were offered calls to all mobile networks with prices starting already at CZK 2 per minute if they subscribed to O2 Calling Mobile 60 or O2 Calling Mobile 120. Telefónica O2 at the same time expanded its offer of international calling packages; customers could call 47 international destinations for prices starting at only CZK 2 per minute.

From February, deaf or hearing-impaired customers could use the free assistance service O2 Deaf Call. Telefónica O2 operated a 24/7 line where specially trained operators helped people with a complete or partial loss of hearing communicate with hearing persons. The service could previously be used via a text telephone or fax, and now communication via e-mail and SMS were introduced. The service works on a simple principle: the operator receives instructions from the non-hearing customer via e-mail, fax or SMS and conveys the message to the hearing recipient. Likewise, the operator can interpret information to the deaf or hearing impaired recipient, in which case the message is transcribed and despatched using the preferred means.

From 1 November 2010, Telefónica O2 has been offering O2 Emergency Care, a service which is a valuable addition to the portfolio of Telecare and eHealth services. Telefónica O2 was the first – and is as yet the only mobile operator in the Czech Republic – to offer a mobile emergency care service. The aim of O2 Emergency Care is to reduce the health and social risks for senior citizens or people with disabilities, allowing them to lead a quality life in their own social environment. The mobility of the solution is a particular benefit over the fixed-line based services on the market. Users of the service can call for help in emergencies not only from their home but from anywhere.