O2 at a glance

Telefónica O2 Europe plc

The Telefónica O2 Europe group comprises integrated fixed/mobile businesses in the UK, Ireland, Germany, the Czech Republic and Slovakia - all of which use 'O2' as their consumer brand.     

Telefónica O2 Europe also owns 50% of the Tesco Mobile joint venture business in the UK and Ireland, as well as, the Tchibo Mobilfunk joint venture in Germany. In addition, the group includes the Isle of Man fixed/mobile operator, Manx Telecom.      

We have more than 41 million fixed and mobile customers across Europe and 29,000 employees across the Group.

In increasingly competitive European markets, O2 delivered a strong set of results for 2007, adding 3.04 million mobile customers during the year and over 1 million in the fourth quarter alone, taking the total mobile customer base to 38.26 million, 8.6% higher than last year. Non-SMS data revenue continues to grow with €680 million recorded in 2007, a growth of 26% year on year. This trend is expected to accelerate throughout 2008.
 
The businesses in the UK and Ireland are both established and profitable, with a track record of revenue and customer growth and a strong presence in high-value markets, such as business and mobile data services.

O2 UK continues to outperform the market, posting like for like revenue growth of 9.5% for the year. Helped by the sales of the iPhone, the fastest selling device we've ever had in the UK, the business added 483,000 net customers in the fourth quarter, including 276,000 on contract, the highest number ever. Whilst it is still to soon too say we are immune to any slowdown in the global economy, we are currently seeing no evidence of a decrease in our customers spend and the mobile is an indispensable part of many customers lives. Blended monthly ARPU growth of £1 year on year in the UK illustrates that we are successfully focusing on higher value customers.

O2 Ireland continues to trade well, with revenue growth of 11.9% for 2007. The business added 22,000 net contract customers in the fourth quarter, increasing the total customer base to nearly 1.65 million. This stands at 1% higher than at the same time last year.

The launch of O2 Broadband, our wireless mobile broadband solution, continues to exceed our expectations in both the UK and Ireland, offering a real alternative to fixed broadband in the home, in a market that is under penetrated and has good growth potential.

In Germany, we added 244,000 new contract customers, an increase of 26.5% over the fourth quarter last year and our new Fonic brand has attracted over 200,000 customers in just less than 4 months. The total mobile customer base finished the year at 12.472 million, representing 13.1% year on year growth.

Our Telefónica Deutschland DSL business continues to perform well, with a 3½ fold increase in unbundled lines to 671,000, and reached our target of OIBDA breakeven on a monthly basis before the end of the year. Our re-launched O2 DSL service added 38,000 customers during the quarter and has a strong order pipeline.

Across the Czech Republic and Slovakia total revenues for the fourth quarter were €590 million, up 1.7% year on year in local currency. In line with the first nine months of the year' the Czech Republic business was the key driver of this growth adding 158,000 customers, an increase of 51% on the same quarter last year.  The percentage of contract customers in the base now stands at 43.8%, compared to only 38.5% at the end of December 2006.

The total number of ADSL lines stood at 570,000 at the end of December compared to 470,000 for the same period last year in the fixed line business.

Telefónica O2 Slovakia continued building its footprint in the Slovak market, with key activities focused on marketing of the company's prepaid and recently introduced postpaid offer, customer care enhancement with the aim to further expand the customer base and improve the customer mix via migration to postpaid tariffs. By the end of 2007, the total number of mobile registered customers in Slovakia amounted to 565,000

Manx Telecom provides mobile, fixed line and internet services on the Isle of Man to 71,000 customers. It is the pioneer of broadband mobile networks, the platform on which we supply 3G services Europe-wide. Manx Telecom launched Europe's first superfast 3G, in partnership with Lucent Technologies, using HSDPA technology towards the end of 2005. HSDPA offers the possibility of communication speeds up to three times faster than current commercial 3G services.