Introduction

  • Independent auditor's report
  • Interview with Luis Antonio Malvido, the Chairman of...
  • Financial and operational highlights
  • Calendar of key events in 2011

01
About Telefónica Group

  • About Telefónica Group – Introduction

02
Board of Directors' Report on Business Activity

  • Telefónica O2 Czech Republic Group
  • The telecommunications market in the Czech Republic
  • Consumer segment
  • Business and SME
  • Corporate and government
  • National and international wholesale services
  • Payment services
  • Comments on the financial results

03
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

04
Corporate governance

  • Corporate governance of the Telefónica...
  • Subsidiaries, associates and other ownership interests
  • The organisation of Telefónica CR
  • 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 CR's Declaration of Compliance with the...
  • Information relating to matters according to Section...

05
Consolidated financial statements

  • Consolidated financial statements – Introduction

06
Financial statements

  • Financial statements – Introduction

07
Other information for shareholders and investors

  • Other information for shareholders and investors

National and international
wholesale services

Interconnection

The consolidation within the electronic communications marketplace continued also in 2011; companies merged, specific services or customer segments were sold off both in the mobile and fixed access segment.

In the area of interconnection of our fixed network with those of other operators, changes occurred in connection with the mergers and acquisitions in the electronic communications marketplace. At the end of 2011, our fixed network was interconnected with 15 other operators of fixed public electronic communications networks and 3 operators of mobile electronic communications networks.

As regards Local Loop Unbundling, the order volume is strong but some services, for which promotions of our clients have ended, are getting cancelled. As a result, the number of active unbundled loops is growing at only a moderate pace.

In 2011, the number of customers who used the services of other operators based on our Wholesale Line Rental (WRL) proposition, continued to grow. On the other hand, the number of customers for CS/CPS continued to decline, albeit at a slower rate. The total volume of CS/CPS traffic is falling only slightly as these services are still used by mostly corporate customers of operators who are interconnected with us.

We achieved our sales targets for 2011, despite the pronounced effect of the interconnection rates cuts (especially mobile termination rates) and the escalating financial crisis in Europe that pas produced an overall economic stagnation and recession

International wholesale services

International data and internet

The growing demand for international transmission capacity of our partners means also an increased demand for transmission capacity from us. The services of international IP connectivity and Ethernet-based services also saw a growth.

International voice

In the area of international wholesale voice, we implemented a new NGN international interconnection platform in our network. The reason for this investment was also the growing demand for capacity propelled by higher volumes of mutually provided services and the continued expansion of our commercial activities, especially in Eastern Europe, Russia and the Near and Middle East. The new technology will help us in following the modern trend in VoIP interconnection.

We achieved our sales targets for 2011. We increased the number of our direct interconnections to new mobile and fixed network operators.

Compared to 2010, the transit voice traffic grew 16% to a record of almost 2.025 billion minutes. The high quality of voice service was maintained. In the area of international services, we continue to build on our cooperation across the Telefónica Group with the international operator TIWS (Telefónica International Wholesale Services)

National wholesale services

The year 2011 was the year of stabilisation of the telecommunications market. As in the previous year, telecommunications operators contained their costs and implemented austerity measures. The measures affected mainly the network operations area, which resulted in a pressure to drive down the wholesale data prices. At the same time, the intensive construction of the mobile 3G networks continued. The Wholesale Division was actively involved in this exercise, which spurred the demand for backbone data services and the related revenues. The project of 3G network sharing with T-Mobile also continued.

All mobile operators in the Czech Republic also forged ahead with their strategies to transform their operation for a purely mobile business to an integrated telecommunications business offering a wider portfolio of services, including fixed access. Consequently, the strong demand for the wholesale ADSL service continued, with a 25% year-on-year increase in the number of accesses to 89,000 at the end of 2011. The upside was facilitated by adding the technology variant of VDSL to the portfolio, which allows for higher transmission speeds.

The demand for our Ethernet-based data services also increased. The Company responded by expanding the coverage and introducing changes to the product portfolio in favour of 1Gbit/s and faster speeds.