Telefónica O2 Germany GmbH & Co OHG

Performance highlights for the first half ended 30 June 2009

Access our full set of first half results for the six months ended 30 June 2009.

• Telefónica O2 Germany GmbH & Co OHG total revenues for the first half were €1,781 million – an increase of 1.9% year-on-year.
• Telefónica O2 Germany GmbH & Co OHG total ARPU reached €15.8 (-10.6% year-on-year).
• OBIDA totaled €432 million – an increase of 29.0% year-on-year (excluding restructuring charges).
• Telefónica O2 Germany GmbH & Co OHG increased the total mobile base to 14.9 million representing growth of 10.0% year-on-year.
• Total customer numbers reached 16.459 million (mobile, broadband, wholesale).

Telefónica O2 Germany GmbH & Co OHG first half operating review

Telefónica O2 Germany GmbH & Co OHG business highlights

Telefónica O2 Germany GmbH & Co OHG builds foundations for further growth

As part of the 3.5 billion euros investment program for 2007-2010 announced in October 2007, Telefónica O2 Germany GmbH & Co OHG will expand both its GSM and UMTS network coverage using a dual vendor strategy.

This will provide the business with a strong platform to capture the significant growth opportunities in Germany, including the business segment, leveraging the global reach of Telefónica to offer new propositions to multinational corporations as well as in the areas of the country not currently covered by the O2 network.

In conjunction, the national roaming agreement which allowed for roaming by O2 customers in Germany on the T-Mobile 2G and 3G mobile networks was cancelled. Roaming minutes available as part of the agreement can be used until the end of 2009. Telefónica O2 Germany GmbH & Co OHG will also double its store network to 1,000 over the next 2 years.

Improving the customer experience

Our customers' personal experience of the O2 brand is central to our growth strategy.

Our O2 Online shop has continued to show a strong performance, bringing us new customers with good ARPU at low cost. Customers also value the opportunity for face-to-face interaction and the first 'flagship' O2 store was opened in Munich in December 2004.

In October 2004, Telefónica O2 Germany GmbH & Co OHG launched a 50/50 joint venture, Tchibo Mobilfunk, with Tchibo - a well-established consumer brand known for its value-for-money offers. This additional and exclusive sales channel complements O2's target segments.

Our unique O2 Genion service continues to attract new customers. O2 Genion's advanced technology offers reduced tariffs in the customer's chosen geographical area - usually near the home or workplace. With its higher revenues and considerably lower churn rate compared to other mobile products, O2 Genion is key to our focus on more profitable customers.

Improving our offer to business customers

Our Business Unit team has been winning major new business customers and forging new partnerships with sales channels and software suppliers. We also extended our range of tariffs and services, offering packages tailored to the specific needs of business customers. We acquired a number of new high-profile customers, including MTU Aero Engines, Tchibo and Christian Dior, and strengthened relationships with longstanding customers such as BMW.

DSL

The enlarged Telefónica Europe Group is helping O2 towards its push to moving beyond mobile into fixed broadband and converged services.

We are already seeing evidence of this such as the launch of DSL in Germany. Here, O2 is the only provider of integrated communication services in Germany to offer mobile, fixed voice and fixed internet services. O2 DSL customers get one monthly bill, backed by a single customer service number and competitive monthly charges. Customers can choose from three different DSL packages and will receive a discount if they are also a mobile contract customer of O2.

Mobile data goes from strength to strength

The appeal and impact of our O2 Active portal service has already won external recognition. Europe's best-selling telecom magazine Connect gave O2 Active two awards - from both readers and experts - as the best mobile portal in Germany.

Looking ahead

In the coming year, we will focus on our target of profitable growth. We will extend our sales channels, including service providers and Tchibo. We will continue to develop our innovative, high-speed 3G data services and tariff models such as bundles and prepaid top-up vouchers will give customers greater control of costs, while driving revenues for O2.

For further information regarding Telefónica O2 Germany GmbH & Co OHG and our products and services, please visit:
http://www.o2online.de/