Press release

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Key performance indicators for the quarter ended 31 December 2007:

Total revenue (in local currency)¹:

• O2 UK total revenue grew by 7.8% in the fourth quarter and by 18.7% for the full year;
• O2 Germany total revenue was broadly flat in the fourth quarter and grew by 6.7% for the full year;
• O2 Ireland total revenue grew by 1.4% in the fourth quarter and by 11.9% for the full year;
• O2 Czech Republic group^2,3 total revenue grew by 1.7% in the fourth quarter and by 2.9% for the full year

Mobile average revenue per user (monthly, in local currency):

• O2 UK blended ARPU £24.0 (Q4 2006: £23.0)
• O2 Germany blended ARPU €19.4 (Q4 2006: €23.7)
• O2 Ireland blended ARPU €45.7 (Q4 2006: €45.0)
• O2 Czech Republic ARPU CZK 540  (Q4 2006: CZK 528)

Mobile data

• Group data revenue of €3.5 billion, with non-SMS data revenue of €680 million in 2007
• Over 8 billion SMS messages sent during the quarter - 16% growth year on year.

Matthew Key, Chairman & Chief Executive of Telefónica Europe, commented:
"For 2007 O2 has delivered a strong set of results 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 is growing fast with €680 million recorded in 2007, growth of 26% year on year, and this trend will accelerate in 2008.

In the UK, we outperformed the market again, posting like for like revenue growth of 9.5% for the year, above the top end of our guidance range. The UK added 483,000 net customers in the quarter including 276,000 on contract, the highest number ever, helped by sales of the iPhone, the fastest selling device that we have ever had in the UK. 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.

In Germany, the trend in total revenue improved from the first nine months of the year and was flat in the fourth quarter, compared to the same period last year. However, the market continues to be challenging, with blended quarterly monthly ARPU down 17.9% year on year. We were pleased with net additions of 244,000 contract customers during the quarter, 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.

The Czech Republic business has had a strong year, delivering 2.9% group revenue growth compared to 2006, with 4.8% service revenue growth in the Czech mobile business, which added 158,000 customers in the quarter, 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. In our fixed line business, the total number of ADSL lines stood at 570,000 at the end of December, compared to 470,000 at the same time last year.

In a competitive market O2 Ireland traded well, adding 22,000 net contract customers in the quarter, an increase of 26.8% compared to the same period last year, ending the period with a total customer base of 1.646 million, 1% higher than at the same time last year. The launch of O2 Broadband, our wireless mobile broadband solution, continues to exceed our expectations, offering a real alternative to fixed broadband in the home in a market that is under penetrated and has good growth potential."

¹ Comparative period for FY'07 is 11 months to 31 December 2006. Fourth quarter comparative period is 3 months to 31 December '06.
² Telefónica O2 Czech Republic group consists of Telefónica O2 Czech Republic and Telefónica O2 Slovakia.
³ Comparative period for FY'07 is 12 months to 31 December 2006. Fourth quarter comparative period is 3 months to 31 December '06.

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